TOP STORIES
TABLE OF CONTENTS:
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Netanyahu Says Israel to Reconsider Nuclear Plants
1.2 Minister Shalom Advocates for Sunday as Weekend
1.3 Governor Fischer Displeased With Bank Fees
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 Opportunities for Funding US-Israel Cooperation for Renewable Energy & Efficiency
2.2 Snaptu to be Acquired by Facebook
2.3 Delek US Acquires Control of Arkansas Refinery
2.4 Dell Inaugurates Israeli R&D Center
2.5 PepsiCo & Strauss Joint Venture for Healthier Dips to Markets Outside of No. America
2.6 AMIMON Secures $15 Million in Funding
2.7 Israeli Start-Ups Invited To Bid for €32b EU Fund
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Redline & Waseela Sign to Distribute Redline Wireless Systems in the Middle East
3.2 Qatar's American Golden Pass LNG Terminal Starts Commercial Operations
3.3 Kempinski Delays Dubai Project as it Expands in the Middle East
3.4 Dubai Among World's Fastest Growing Airports In 2010
3.5 US Lingerie Retailer Set To Make Middle East Debut
3.6 Home Centre Considers Saudi & UAE Expansion in 2011
3.7 Dining Out in Saudi Arabia
3.8 LaserCard Receives $2.1 Million Order for Saudi Arabia National ID Card Program
3.9 Itron Delivers Smart Water Meters for Nation-Wide Grid in Malta
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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS
4.1 S.D.E's Sea Wave Power Plant Technology Approved by the World Bank
4.2 Makhteshim Ramat Hovav, of Makhteshim Agan Group, is Switching to Natural Gas
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Increase in Car Imports Boosts Lebanese State Revenues
5.2 Jordan Pharmaceuticals and Healthcare Report Q1 2011
5.3 Arabian Gulf States Spending On Rail Projects Exceeds $106 Billion
5.4 Kuwait Retail Report Q1 2011
5.5 Qatar Pharmaceuticals and Healthcare Report Q1 2011
5.6 Qatar Workforce Seen Growing by 448,000 by 2030
5.7 UAE is Top Weapons Importer in Middle East
5.8 UAE Nuclear Program Being Reviewed
5.9 Abu Dhabi's Non-Oil Economy Set For 8.5% Growth To 2030
5.10 Abu Dhabi Inflation Hits 3.1% In February
5.11 Dubai World Signs Final Agreement To Restructure Debt
5.12 Dubai Sees 8.3% Y-O-Y Increase in Exports & Re-Exports In February
5.13 Oman to Spend $1 Billion to Boost Gas Output
5.14 Saudi Inflation Slows To 10-Month Low in February
5.15 Saudi King Doles Out $91 Billion in Handouts
5.16 Saudi Arabia Sets Up New Ministry For Housing
5.17 Saudi Arabia Food and Drink Report Q1 2011
5.18 Study Says Saudi Arabia Needs 1.65 Million New Homes by 2015
5.19 USA - Morocco Trade Exchange Stood At Over $2.5 Billion in 2010
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 Turkey Attracts Over 275,000 Health Tourists in Three Years
6.2 Cyprus & Israel Leaders Discuss LNG Shipping Deal
6.3 Cyprus Car Registrations Continue To Decline in February
6.4 Greece's Massive Sell Off Plan Moving On
6.5 Greece's Jobless Rate May Rise to 16.5% in 2011
6.6 EBRD Predicts 2.6% Economic Growth for Bulgaria In 2011
6.7 Bulgaria Saw Largest Increase In EU Road Freight Transport 2009
6.8 Bulgaria Aims For R&D Spending of 1.5% OF GDP IN 2020
6.9 Russian Company Wins Bid for Sofia Metro Trains
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 IDF Clinic in Japan Commences Work
7.2 Israel Likes Facebook
7.3 Bank of Israel Cites Rise in Ultra-Orthodox Work Studies
*REGIONAL:
7.4 Vast Majority of Arab Youth Want Right to Vote
7.5 Egyptian Government Passes a Law Criminalizing Protests & Strikes
7.6 Egypt Votes "Yes" To the Constitutional Amendments
7.7 UAE to Hold Second Ever Election in September
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8: ISRAEL LIFE SCIENCE NEWS
8.1 Teva Receives Positive Opinion for NOMAC/E2 from European Committee
8.2 FDA Supports the Safety & Effectiveness of NovoTTF-100A System
8.3 Protalix BioTherapeutics Announces Proposed Public Offering of Common Stock
8.4 Procter & Gamble & Teva Form Consumer Health Care Partnership
8.5 Crospon & Smart Medical Systems Sign Collaborative Development Deal
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 Hebrew University, TAU & Technion Sign Research Collaboration with Google
9.2 Wavion & ECNEX Provide High Speed Internet Access in Mexico Hotels
9.3 CMP Selects TowerJazz's Advanced Power Management and CMOS Image Sensor Processes
9.4 BSNL & VMC Select Alvarion 4G Solution for Wireless Broadband Deployment in India
9.5 Elbit Systems & IAI to Perform Advanced Training Aircraft Project for IAF
9.6 Magic Software's uniPaaS Jet Opens to a New Generation of Application Developers
9.7 Optibase's New MGES 6000 Release with Inputs for Analog, Digital & HDMI Signals
9.8 SnapKeys Unveils How It Replaced the Smartphone Keyboard with Your Imagination
9.9 Altair & Alcatel-Lucent Deliver LTE Band Class 12 Solution in North America
9.10 Wizcom's Ultimate Portable Dictionary & Scanning Device - Quicktionary TS Premium
9.11 Screenovate Demonstrates Wi-Fi Smartphone Beaming Technology
9.12 Second Year in a Row - Red Dot Award for Keter Plastic Products
9.13 SintecMedia Launches MAM Module into OnAir Broadcast Management System
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's Unemployment Drops Sharply
10.2 State of the Economy Index Shows Continued Economic Growth
10.3 Investments in Israel Increase By 12.7% in 2010
10.4 Israeli Home Prices Continue to Rise
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11: IN DEPTH
11.1 ISRAEL: Most Active Venture Capital Funds in Israel - 2010
11.2 LEBANON: Economic Growth Projected at 5.5% in 2011
11.3 LEBANON: Staying in Touch
11.4 IRAQ: IMF Executive Board Completes Second Review Under Stand-By Arrangement
11.5 BAHRAIN: Demography and Bahrain's Unrest
11.6 BAHRAIN: Police State Politics
11.7 QATAR: Going into Overdrive
11.8 OMAN: Hitting the Gas
11.9 SAUDI ARABIA: Fueling the Future
11.10 EGYPT: Next Steps in Egypt's Transition
11.11 EGYPT: Enduring Appeal
11.12 TUNISIA: A Profitable Year
11.13 MOROCCO: Gearing Up To Meet Demand
11.14 MOROCCO: Will Morocco's King Deliver on Reforms?
11.15 TURKEY: Trade & Diplomacy
11.16 Greece Downgraded To 'BB-' On Confirmed ESM Borrowing Terms
11.17 BULGARIA: Home Appeal
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Netanyahu Says Israel to Reconsider Nuclear Plants
On 17 March, Prime Minister Netanyahu commented on nuclear power plants for the first time in an interview with CNN. "The situation in Japan has certainly caused me to reconsider the projects of building civilian nuclear power plants," Netanyahu said, adding, "I have to tell you I was a lot more enthusiastic about it than I am now. In fact you'd have to give me a very good argument to do it, and fortunately we found natural gas." Asked whether he would stop Israel's civilian nuclear program, Netanyahu replied, "I don't think we're going to pursue civil nuclear energy in the coming years. We'll go for the gas; I think we'll skip the nuclear." Netanyahu said leaders would have to review expansion of the use of civilian nuclear energy, referring to the growing criticism in recent days of the safety of setting up nuclear power plants in various countries. (Globes 17.03)
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1.2 Minister Shalom Advocates for Sunday as Weekend
On 17 March, Minister of Galilee & Negev Development Shalom presented his proposal for a long weekend of Saturday and Sunday to the Federation of Israeli Chambers of Commerce. He proposed that the workday on Friday end at 14:00 during daylight savings time and at 13:00 during winter. "Anyone who claims that Friday won't be a productive workday vis-à-vis overseas is wrong," said Shalom. "Part of the objections to the initiative is psychological. People want to go shopping on Friday for their Sabbath meals. So let them do their shopping on Thursday and some Saturday hosting will be postponed to Saturday night. "Everything will be different, and we'll need time to adapt. We'll also have to reopen collective agreements with public sector workers, but there are a lot of advantages to a long weekend. It will make the capital market more efficient because there won't be such arbitrage gaps with foreign markets." (Globes 17.03)
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1.3 Governor Fischer Displeased With Bank Fees
On 22 March, Governor of the Bank of Israel Prof. Fischer criticized the fees charged by Israeli banks. Speaking at a meeting of the Knesset Economic Affairs Committee, he said, "Every time I check my bank account, I don't like the fees that I see." Talking about stability in the banking system Fischer said, "The lessons learned from the global financial crisis show that instability in the banking system is very dangerous for the economy. This is especially true for Israel where each of the two large banks has a market share of 30%. The collapse of one of these banks, if it happened, would be very expensive to the state if the bank was bailed out, and to the country's citizens if it is not." He added, "The responsibility for bailing out a bank is in the hands of the Bank of Israel and the full responsibility for the stability of the banking system has to be in the hands of the Supervisor of Banks at the Bank of Israel, which is the only professional body in this sector. Handing over decision making in this sector to the political echelon, as the current bill proposes, could be very dangerous for the economy." (Globes 22.03)
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 Opportunities for Funding US-Israel Cooperation for Renewable Energy & Efficiency
BIRD Energy announced its third funding cycle with a call for US-Israel joint project proposals focusing on Renewable Energy and Energy Efficiency. To be considered, a project proposal should include R&D cooperation between two companies or cooperation between a company and a university/research institution (one from the U.S. and one from Israel). The proposal should have significant commercial potential and the project outcome should lead to commercialization. The following research and development topics are within the scope of this call: Solar Power, Alternative Fuels, Advanced Vehicle Technologies, Smart Grid, Wind Energy or any other Renewable Energy or Energy Efficiency technology. The maximum conditional grant per project is up to 50% of the R&D costs associated with the joint project, and no more than $1 million per project. The application process is web-based and requires prior discussion with the BIRD Foundation. Initial concept submissions due by May 5, 2011, full proposals due by June 30 2011, and final project selection to be completed by mid September 2011. Please refer to BIRD's website for submission details - http://www.birdf.com.
BIRD Energy was established following an agreement between the U.S. Department of Energy/EERE and the Israel Ministry of National Infrastructures (MI) to promote and support joint research and collaboration in the field of Alternative Energy and Energy Efficiency. BIRD Energy is administered by the BIRD Foundation who has been promoting cooperation between Israeli and U.S. companies in many different technology areas since 1977. (BIRD Energy 28.03)
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2.2 Snaptu to be Acquired by Facebook
Snaptu announce on 20 March that the company recently agreed to be acquired by Facebook. Earlier in 2011, Snaptu announced the launch of a new Facebook mobile application to give people a great mobile experience on a broad range of feature phones. The Facebook for Feature Phones app currently works on more than 2,500 devices. The company soon decided that working as part of the Facebook team offered the best opportunity to keep accelerating the pace of our product development. The acquisition is expected to close within a few weeks. Tel Aviv's Snaptu (http://www.snaptu.com) is both a product and a company–the goal of both is to significantly improve the way the world uses the mobile web. Specifically, our goal is to help millions of mobile users access the web easily and quickly - regardless of the mobile phone they're using. For mobile consumers our Snaptu application delivers a fast, fun and effective user experience for popular mobile Internet applications on virtually every mobile phone. For online service providers, media companies and content owners we provide a large and rapidly growing global channel that requires little setup and no financial or technical investment. (Snaptu 20.03)
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2.3 Delek US Acquires Control of Arkansas Refinery
Delek Group subsidiary Delek US Holdings will acquire the 53.7% controlling interest in Lion Oil Company from Ergon in cash, shares, and debt transaction. Delek US will pay $45 million in shares and $50 million in cash. It will also guarantee a $50 million note issued by Lion Oil to Ergon. The deal involves the payment or replacement of Lion Oil's debt to Erdon. Delek acquired 34.6% of Lion Oil in 2007. The deal with Ergon will bring Delek US's stake in Lion Oil to 88.3%. Delek US expects to close the deal in the second quarter. The rest of the shares are held by private investors, and Delek US may try to buy their holdings to achieve full ownership of Lion Oil. Lion Oil owns a refinery which produces 80,000 bpd of oil products and an asphalt distribution terminal in El Dorado, Arkansas, several pipelines in Arkansas and Louisiana, and three light product distribution terminals in Memphis and Nashville, Tennessee, and in El Dorado. (Globes 22.03)
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2.4 Dell Inaugurates Israeli R&D Center
On 23 March, Dell Inc. inaugurated its Israeli R&D center. The center is based on Exanet, which Dell acquired last year. Dell has since invested in establishing the infrastructures and building the R&D center, which is part of the company's Enterprise Storage Business. Dell's Israeli R&D center is the first of its kind in Israel. It will focus on developing storage technologies and cloud computing solutions, which will be embedded in Dell products worldwide. With the inauguration of the R&D center, Dell Israel is expected to launch a major hiring campaign, whose first target is to double the center's manpower by the end of the year, and to consolidate the center as a global leader. The R&D center currently has 70 employees. (Globes 23.03)
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\2.5 PepsiCo & Strauss Joint Venture for Healthier Dips to Markets Outside of No. America
PepsiCo and Strauss Group announced their commitment to form a joint venture partnership that will produce and sell fresh dips and spreads in key markets outside of North America. The two companies have operated a successful North American joint venture since 2007 under the Sabra brand. In North America, Sabra is the number one brand of hummus and the leader in the chilled dips and spreads category. PepsiCo and Strauss will leverage their existing infrastructures and invest in manufacturing plants, technologies and employees to set up local operations on a country or regional level. Each partner will own 50% of the new entity. Financial terms were not disclosed. With nearly 50% category share in North America, Sabra's products include hummus, fresh salsa and eggplant dips. Sabra's 2010 revenues totaled $159 million, up nearly 45% from the prior year. The new joint venture follows recent efforts by both PepsiCo and Strauss to promote health and wellness throughout their product portfolios. In October 2010, PepsiCo formed its Global Nutrition Group to accelerate product development in the areas of fruits and vegetables, whole grains, dairy and functional nutrition. PepsiCo has set a goal of tripling its annual revenues from nutritious and functional foods from approximately $10 billion in 2010 to $30 billion by 2020.
Strauss Group, Israel's second-largest Food & Beverage Company, is today an international corporation with around 13,000 global employees operating 19 production sites in 20 countries. In the last seven years the Group has consistently achieved growth, generating around $1.83 billion in turnover at the end of 2010, of which 46% came from international activities. Strauss Group is comprised of four core business units: Strauss Israel, Strauss Coffee, Strauss North America and Strauss Water. (PepsiCo 16.03)
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2.6 AMIMON Secures $15 Million in Funding
AMIMON has raised $15 million in its latest round of funding. This round of funding comes from a blend of new and strategic investors together with existing investors. The funding will accelerate the development of follow-on generations of AMIMON's WHDI chipset enabling further integration, cost reduction and facilitating the growth in the wireless home video market: products such as wireless HDTV, PC-to-TV, etc. Also, it will enable AMIMON to expand its foothold in the mobile and tablet markets, answering the growing demand for a mobile- and tablet-to-TV connection. AMIMON is ramping up production to deliver WHDI chipsets to multiple OEMs and CE manufacturers. Numerous companies are developing products (wireless HDTVs, PC-to-TV, tablet-to-TV, HD Wireless Bridges, etc.) based on AMIMON's WHDI chipsets. Herzliya's AMIMON (http://www.amimon.com) is a leading high-definition video semiconductor solution for universal connectivity among CE video devices. AMIMON is a founding member of the Wireless Home Digital Interface (WHDI) consortium formed by leading CE companies to define a new industry standard for in-room and multi-room wireless HDTV connectivity. (AMIMON 23.03)
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2.7 Israeli Start-Ups Invited To Bid for €32b EU Fund
The EU Seventh Framework Program for Research and Development has invited Israeli companies to submit grant applications. These grants are considered the cheapest money available for technology companies. Companies that successfully pass the bureaucratic hurdles and meet the criteria can gain access to millions of euros, which are offered without strings attached. The venture even keeps the intellectual property. The EU Seventh Framework Program for R&D forum decides its high-tech investments. The forum reviews the grant applications, sifts them and picks the projects that will receive financing. The EU program has €32 billion for 2007-13. EU member states participate in the funding, along with other countries, such as Israel. The budget is divided into "calls", which are programs in various fields published every few months. Some €780 million is targeted for various technology companies. (Globes 17.03)
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Redline & Waseela Sign to Distribute Redline Wireless Systems in the Middle East
Toronto's Redline Communications Group, a leading global provider of specialized broadband wireless solutions, signed a strategic partnership agreement with Jordan's Waseela, a leading systems integrator specializing in broadband wireless technologies for telecom operators, service providers and large enterprises. As part of the partnership agreement, Waseela will present itself as Redline's preferred system integrator in the Middle East. The partnership will provide end users with easy access to Redline radios and a full spectrum of engineering services including advanced consultation, planning, design, integration and support services. Coordinating broadband wireless requirements from one specialized regional company makes the Redline broadband wireless solutions more practical, more reliable, simpler and more cost-effective for buyers. Additionally, end-users will enjoy a faster supply cycle due to the availability of local stock within the region. Amman's Waseela is a regional integrated telecommunication solutions supplier specialized in broadband wireless solutions, consultation and managed services and has strong partnerships with leading international telecom vendors for the MENA region. (Redline 27.03)
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3.2 Qatar's American Golden Pass LNG Terminal Starts Commercial Operations
Qatar's Golden Pass LNG terminal in US starts commercial operations. The terminal is a joint venture owned 70% by Qatar Petroleum International (QPI) - Qatar Petroleum's international arm, 17.6% by ExxonMobil and the remaining 12.4% by ConocoPhillips. LNG for the Golden Pass Terminal will be supplied primarily from RasGas 3 and the Qatargas 3 projects. The terminal will have the capacity to deliver the equivalent of 2.5 billion cubic ft/ day of natural gas, when it reaches full operation. QP said the formal inauguration ceremony of the terminal, would be held in New York April 6 - 7 as part of the Business and Investment in Qatar Forum. (QP 15.03)
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3.3 Kempinski Delays Dubai Project as it Expands in the Middle East
Luxury hotel operator Kempinski is delaying a Dubai project by two years, even as it expands elsewhere in the Middle East because authorities have allowed the market to become oversupplied, according to the company's president for the region. A 253-room development on Dubai's palm tree-shaped artificial island will remain a "shell" for the time being, with the opening pushed back until 2013Dubai occupancy rates and room prices probably will decline as 30,000 additional hotel rooms are added over the next five years to the current supply of about 50,000, Deloitte LLP estimated in December. The number of visitors would need to rise to about 12 million annually from 9.5 million now to fill the hotels, the auditing company said. Kempinski plans to open nine properties in the next three years in Abu Dhabi, Bahrain, Saudi Arabia, Oman, Lebanon, Syria and Egypt. The company will open 82 luxury serviced apartments and 10 villas on Palm Jumeirah in June.
State-owned developer Nakheel PJSC, which built the palm island and a world map-shaped archipelago, said it will restart work on seven postponed projects in various stages of completion after prices fell by more than 60%. Nakheel, which along with Emaar Properties PJSC led Dubai's building boom, was forced to restructure $10.5 billion of loans and outstanding bills after the property market crashed in 2008. Both companies, along with most of Dubai's major developers, were forced to delay and cancel projects.
Kempinski, which manages 15 hotels in the Middle East and Africa, will open a new one in Bahrain in June. Construction is under way in Al Khobar, Jeddah and Riyadh in Saudi Arabia and Oman's capital, Muscat. A Cairo hotel will be opened in Giza near the pyramids. (BI-ME 16.03)
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3.4 Dubai Among World's Fastest Growing Airports In 2010
Dubai International Airport was one of the fast growing in the world in 2010 in terms of passenger numbers, according to the Airports Council International (ACI). It preliminary report for last year ranks Dubai as the 13th busiest globally with nearly 47.2 million passengers using its facilities. The passenger numbers represented a more than 15% growth compared to 2009, the report added, making it the third fastest growing, behind only Shanghai (27.2%) and Jakarta (18.4%). The busiest airport in the world in 2010 was Atlanta in the UA which saw 89.3m passengers last year, followed by Beijing (73.9m) and Chicago (66.7m), ACI said. ACI's study also showed that Dubai International Airport ranked in the top 10 globally for cargo traffic in 2010. It said that 2.3m metric tonnes of cargo was loaded and unloaded in Dubai, putting it eighth in the list, which was topped by Hong Kong. The total cargo traffic in Dubai represented a near 18% growth on the previous year. Regionally, the Middle East and Africa region saw nearly 125m passengers in 2010, an increase of 11.5% on 2009. (AB 19.03)
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3.5 US Lingerie Retailer Set To Make Middle East Debut
On 15 March, Frederick's of Hollywood Group announced an exclusive multi-year licensing agreement with Abu Dhabi-based Emirates Associated Business Group (EABG) to build and operate retail stores in the Middle East. The agreement will EABG open at least 10 Frederick's of Hollywood stores in six Middle Eastern countries over the next three years, with additional store openings possible in the future. In addition, a flagship store selling upmarket women's lingerie and swimwear is scheduled to open in Abu Dhabi next month, the company said in a statement. The agreement with EABG to open stores in multiple Middle Eastern countries is a first step for Frederick's of Hollywood in their international strategy. (AB 15.03)
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3.6 Home Centre Considers Saudi & UAE Expansion in 2011
Home Centre, the regional retailer, aims to add 17 new outlets to its global portfolio by the end of 2011. Occupying more than 2.89 million sq ft of retail space, Home Centre currently has 12 shops in the UAE and boasts 71 stores across the Middle East and North Africa (MENA) region and the Indian subcontinent. But the company, part of the Landmark Group, said it has plans to add another 17 this year in more countries. It is looking to open a further 4 shops in Saudi Arabia, one in the UAE and another in Lebanon. Home Centre, which revealed its revamped brand identity in March 2010 in the UAE, has started the process of deploying the new look across its retail network in the GCC. Progressing in a phased approach, its stores across Kuwait and Saudi Arabia have recently been revamped to reflect the new brand aesthetics. (AB 20.03)
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3.7 Dining Out in Saudi Arabia
Research and Markets (http://www.researchandmarkets.com) has announced a number of studies about dining out in Saudi Arabia. Dining out remains a habit among consumers in the Saudi Kingdom, with the lack of other entertainment venues due to religious issues. Therefore the trend of eating out is constantly growing among consumers and is becoming a regular habit, where singles will meet with their friends for a meal out on a daily basis, whilst families go out for meals at least three times a week. Generally, due to the wide choice of restaurants available, it is considered affordable to eat out. Due to Islamic restrictions, bars do not exist in the country. Cafes are the only type of outlet available, serving hot and cold drinks in addition to sandwiches and snacks. The main trend pushing the popularity of cafes as prime locations for networking is the widespread and rising availability of free internet. Consumers in the Kingdom spend more time on the internet for work, studying and socializing purposes, thus such outlets are increasingly attracting consumers.
Self-service cafeterias remain a niche market in the Kingdom and limited mainly to low-income consumers due the relatively cheaper unit price of menu items. Moreover, this type of outlets is also extremely limited to male consumers. This is due to the fact, that in such outlets consumers have to mix in order to select the food and pay for it. Furthermore, there are no separate seating areas for families which in a country like Saudi Arabia makes them unpopular with families or female consumers. (R&M 24.03)
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3.8 LaserCard Receives $2.1 Million Order for Saudi Arabia National ID Card Program
Mountain View, California's LaserCard Corporation, a leading provider of government ID solutions, has received a purchase order valued at approximately $2.1m for chip-ready, optical security media-based credentials for the Saudi Arabia National ID Card program. The ID cards are issued to Saudi citizens nationwide for identification, e-government and regional travel purposes. LaserCard's advanced ID credentials are trusted by governments worldwide to protect the personal identification of their citizens, foreign residents and government employees, and to provide official documentation such as driver licenses and vehicle registration cards. LaserCard Corporation is a leading provider of secure ID solutions to governments and commercial clients worldwide. (LaserCard 15.03)
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3.9 Itron Delivers Smart Water Meters for Nation-Wide Grid in Malta
Liberty Lake, Washington's Itron has started the delivery of 120,000 smart water meters to Malta's Water Services Corporation (WSC), as part of a contract that will continue through 2013. To date, 25,000 Itron water meters and communication modules to be connected to existing Ondeo Systems smart metering solution have been delivered as part of a large-scale smart water grid program managed by IBM. Malta is an island in the Mediterranean faced with the challenge of delivering an affordable, secure water supply to its residents - but it lacks significant natural water resources. Reliable, accurate water metering technology from Itron provides a foundation for residents to track and manage their consumption activity, ultimately allowing for better management of sensitive water reserves. By connecting Itron meters to the IBM Information Management System using the automated meter reading solution from Suez Environnement and Lyonnaise des Eaux, through their joint subsidiary Ondeo Systems, WSC will continue to ensure water sustainability. (Itron 22.03)
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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS
4.1 S.D.E's Sea Wave Power Plant Technology Approved by the World Bank
S.D.E's Sea Wave Power Plant (http://www.sde-energy.com) has been approved by MIGA - The Multilateral Investment Guarantee Agency of The World Bank. The technology S.D.E has developed is an innovative and unique technique for the production of electricity through "harvesting" of sea wave motions, a renewed and green source. This technology has proved itself as weather-proofed, low cost and low risk - plants models are built and designed in a way that only 10% of the whole system is actually inside the water, which minimizes the risk to the system in cases of storms and other natural disasters. S.D.E's power plants models are built and designed in a way that only 10% of the whole system is actually in the water, which minimizes the risk to the system in cases of storms and other natural disasters. The cost of building an S.D.E. sea wave power plant is more economical, costing $650,000/MW to build in comparison to $1.5 million/MW for coal, $900,000/MW for gas, $3 million/MW for solar energy and $1.5 million/MW for wind power. Additionally, the cost of producing electricity using S.D.E.'s technology is lower than when using coal, gas, solar energy or wind power, with electricity production cost $0.02 per KW/h. In addition, the technology developed by S.D.E is capable of producing electricity in a scale of 500 times of the world consumption today. S.D.E has a registered international patent. So far the company has established 10 models of power stations around the world, the last one recently finalized in China, funded by the Chinese Government. (SDE 23.03)
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4.2 Makhteshim Ramat Hovav, of Makhteshim Agan Group, is Switching to Natural Gas
Tel Aviv's Makhteshim Agan Group (http://www.ma-industries.com), a world leader in generic solutions for plant protection, announced the transition to the use of natural gas at its Makhteshim plant in Ramat Hovav, after more than four years of preparing the infrastructure and constructing a gas-operated system. The system will be fully assimilated within a few months, after which the use of fuel oil and diesel oil will be reduced significantly. The system was set up in the Makhteshim Ramat Hovav plant over the past six months, and all requisite approvals were obtained prior to signing the agreement with Israel Natural Gas Routes. The natural gas will substitute for the oils used until now for the steam boilers and other systems used to generate chemical processes. Total investment in infrastructures and the natural gas system at the Makhteshim plant is approximately NIS 30 million, and is expected to reduce the company's energy costs. The transition to the use of natural gas is another stage in the assimilation of Makhteshim Agan's environmental policy to minimize the environmental impact of its operations. The transition at the Makhteshim Ramat Hovav plant will reduce the Group's footprint from carbon dioxide emissions, and will further improve the air quality in Ramat Hovav. (MAI 28.03)
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Increase in Car Imports Boosts Lebanese State Revenues
A sharp rise in car imports to Lebanon from 2008 to 2010 allowed treasury to boost its revenues from customs, VAT and registration fees, the Lebanese Finance Ministry said in report on 18 March. It added that these revenues – consisting of excise taxes, customs duties, VAT and car registration fees – reached around 2.3% of GDP in 2008 and 2009, compared to a previous peak of 1.6% of GDP in 2007. State revenues from customs in 2010 fell to 2% of GDP, but despite this minor decline, treasury revenues remained the second highest on record since 1997. This was followed by a more substantial 42% rise in collection in 2004 associated with a hike in imports during that year. The year 2007 "witnessed normalization in collection after two years of depressed revenues and imports," it said. More recently, revenues from cars grew by a remarkable 79% in 2008, mirroring an 89% surge in car imports. In 2009, revenues from cars went further up by nearly 14%, reflecting an additional 8% rise in car imports. The first seven months of 2009 saw a continued rapid growth in car imports, before these came to a halt thereafter. The 34% rise in car imports in 2007 had been a catch-up effect after two years of depressed economic activity linked to severe deterioration in the security situation. In parallel, 2007 saw a rebound of 7.5% in GDP real growth.
The ministry said that the upswing in car imports has increased state revenues from taxes on gasoline consumption. In parallel to the upsurge in car imports, gasoline imports rose by 4.7% in 2008 and 10.7% in 2009. They then peaked at 2.188 billion liters by end-December 2010, well above the 1997-2007 average of 1.7 billion liters, ascertaining the existence of a larger stock of cars in circulation in the country. The ministry said the incremental revenue yield from gasoline taxes stemming from the surge in gasoline imports in 2008-10 was difficult to assess because the gasoline tax rate had been fluctuating between May 2004 and January 2009 (as gasoline retail prices were capped domestically). (TDS 19.03)
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5.2 Jordan Pharmaceuticals and Healthcare Report Q1 2011
Research and Markets' (http://www.researchandmarkets.com) "Jordan Pharmaceuticals and Healthcare Report Q1 2011" says after shrinking by 8.5% in 2009, BMI forecasts a return to growth in 2010, up 7.4% to $433m. The country's total pharmaceutical market is to increase from $403m in 2009 to $519m by 2014, at a CAGR of 5.18% in local currency terms, according to BMI's calculations. The growth in total healthcare expenditure in Jordan will decline in 2010 to 4.1%, having increased by as much as 10.9% in 2009. The Jordanian healthcare market will reach a value of $2.47b by 2014 at a CAGR of 5.49% in local currency terms from 2009. Jordan's overall healthcare expenditure will increase on the back of a $16.8m loan and grant from Switzerland, which was signed between the Swiss Confederation president and Jordan's Minister of International Cooperation in early October 2010. The funds are expected to be spent on hospitals and general healthcare in Jordan, including 90 specialized ambulances to strengthen the country's medical response capabilities. (R&M 22.03)
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5.3 Arabian Gulf States Spending On Rail Projects Exceeds $106 Billion
The six Arabian Gulf states have $106.2b worth of railway projects under construction as they tackle poor public transports networks and growing populations. Saudi Arabia, the wealthiest economy in the Gulf, leads the field with 23 rail projects worth an estimated $25.6b. The kingdom holds a 24% share of the region's railway developments, its largest being the $6b Mecca-Medina track set to link Saudi's holiest cities. Qatar, which is gearing up to spend $100b on overhauling its infrastructure ahead of the 2020 World Cup, has a 23% share of the Gulf's rail market thanks to its $25b Qatar National Rail Scheme. The gas-rich emirate's integrated rail system will link into the GCC Railway network, a $30b planned track that will connect all six Gulf emirates by 2017. Qatar's portion alone is expected to create 7,000 jobs. In the UAE, eight railway projects are underway with a combined value of $20.6b. The largest of these – the $11b, 2,500km Emirates Railway Project – will also connect the country to neighboring Oman and Saudi Arabia on completion in 2017. Other key rail projects include Kuwait's $17b national rail, road and metro system, Oman's National Freight and Passenger Railway, valued at $10b, and Bahrain's Rapid Transport Network at an estimated $8b. (AB 20.03)
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5.4 Kuwait Retail Report Q1 2011
Research and Markets' (http://www.researchandmarkets.com) "Kuwait Retail Report Q1 2011" report forecasts that the country's retail sales will grow from an expected $8.41b in 2011 to $11.92b by 2015. Key factors behind the forecast growth in Kuwait's retail sales are a favorable long-term economic outlook, a sophisticated consumer base and high levels of disposable income. Kuwait's nominal GDP is predicted to be $144.97b in 2011, with 2010's growth rate of 2.0% expected to increase to 2.3% in 2011 as the economy continues its slow recovery. Average annual GDP growth of 3.0% is forecast by BMI between 2011 and 2015. With the population estimated to rise from 2.9m in 2011 to 3.2m by the end of the forecast period, GDP per capita is predicted to reach $59,335 by 2015.
Approximately 80% of the Kuwaiti population are expatriates, while foreign workers crossing the border from Iraq also stimulate the retail market. In 2005, 73.8% of the Kuwaiti population was described by the UN as economically active, with 37.9% in the 20-44 age range important to retail sales. In 2010, an estimated 74.6% of the population was active, while the proportion of those in the 20-44 age band reached an estimated 39.4%. A very high level of urbanization is also contributing to a vibrant retail sector. In 2005, more than 96% of the population was classified by the UN as urban, and this is forecast to increase to almost 99% by 2015. By the end of 2010 the gross leasable area in Kuwait's retail sector was estimated to stand at 1.15m square meters, compared with the 345,000m2 in use in 2006. Property consultancy Colliers International expected Kuwait to have the third-largest supply of retail space in the Gulf by 2010. (R&M 24.03
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5.5 Qatar Pharmaceuticals and Healthcare Report Q1 2011
Research and Markets' (http://www.researchandmarkets.com) "Qatar Pharmaceuticals and Healthcare Report Q1 2011" says the development of the Qatar pharmaceutical market will be shaped by the recent decision made by the Supreme Council of Health (SCH) to abolish government controls over the pricing of medicines and also to end the monopoly that a small number of importing agents have held in the Emirate, which had produced high pharmaceutical prices. The regulations previously dictated that it was in the interests of retailers to only stock the most expensive drugs in order to maximize their profit margins. The new system is an opportunity for lower-priced branded drugs and generics to move into the Qatar market. However, the market's value at consumer prices will result from both upward (including healthcare modernization and high per capita GDP) and downward pressures.
The main downward pressure is the fact that open market competition on drug prices and the availability of cheaper alternative drugs, should drive down artificially inflated prices, though this is unlikely to happen rapidly. In fact, the Qatari SCH has stated that drug makers will still need to obtain import licenses by meeting stringent regulatory conditions, and that current retailers and distributors are unlikely to slash prices or move onto cheaper drugs if they think it will hurt their businesses' profitability. There is also likely to be a degree of consumer loyalty to branded drugs, particularly among those with high incomes and private doctors. At this juncture, we expect the country's pharmaceutical market to post a compound annual growth rate (CAGR) of 16.07% in the 2009-2014 period, to reach QAR2.61b ($716m) in value, boosted by strong economy. (R&M 23.03)
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5.6 Qatar Workforce Seen Growing by 448,000 by 2030
Qatar's potential workforce is expected to rise by nearly half a million people by 2030, an increase of 30%, a new report by Euromonitor International has said. Driven by immigration, Qatar's population grew at an average rate of nearly 12% per year in 2000 - 2010 but the pace will slow dramatically in later years. The growth is expected to continue as the Gulf state embarks on a number of huge infrastructure projects, such as preparation for the 2022 World Cup and a nationwide railway network. However, by 2020-2030, the average rate will fall to just 1.2% per year, the study added. In 2030, the population of Qatar will reach 2.4 million, an increase of 32.8% from 2010, driven by huge increases in the population aged between 40 and 50 years old which will double in the period under review. The largest concentration of residents in 2030 will be among those aged between 25 - 50. This group will account for 56.2% of total population in 2030, compared to just 30% in 2010. The number of those aged 19-32 years will fall by 148,000 in 2010-2030 (a 21.5% drop). The number of residents living in Qatar will first exceed the two million mark in 2016, just 10 years after it passed the benchmark of 1 million. Between 1980 and 2030, the country's population will increase more than tenfold, the study revealed. In 2010, middle agers (40-64 years) represented one in every 4.4 people but by 2030 this group will account for one in every 2.6 people, it added. (AB 18.03)
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5.7 UAE is Top Weapons Importer in Middle East
The UAE is the largest arms importer in the Middle East and the sixth largest buyer of weapons worldwide, a report by the Stockholm International Peace Research Institute said. The Gulf state occupied the top spot in the four years between 2006 to 2010, accounting for 23% of all major weapons deals in the region. The US, France, Italy and Russia were named as the Gulf state's key suppliers. Flush with petrodollars, the six Arabian Gulf countries have unveiled ambitious plans to modernize their small armed forces. The region is forecast to spend as much as $100b in the next few years in overhauling their military, in part to counter the perceived threat posed by Iran. Saudi Arabia, the Gulf's wealthiest state, was ranked at No.22 on the list of global arms importers for the period of 2006 to 2010, SIPRI said.
The kingdom is likely to significantly improve that ranking in coming years, however, on the back of a slew of major military deals. Saudi is to spend as much as $60b in buying up to 84 F-15 fighters, upgrades for 70 existing jets, just under 200 helicopters, laser-guided missiles and bombs, and advanced radar systems from the US. The deal is the single largest in US history. The UAE in February signed $1.1b worth of military deals at the annual IDEX defense show, held in Abu Dhabi. As a region, the Middle East accounted for 17% of major conventional weapons deals between 2006 - 2010, SIPRI said, down from 21% in the period between 2001 to 2005. (AB 15.03)
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5.8 UAE Nuclear Program Being Reviewed
The United Arab Emirates' nuclear safety regulator is conducting a thorough review of the country's atomic power plans including seismic safety and will draw lessons from the recent nuclear accidents in Japan. "Before any plant operation is authorized, a second review, focusing on operational safety, will also be conducted, according to the director-general of the UAE's Federal Authority for Nuclear Regulation. Once they fully understand the details of what has happened in Japan, the authority use this information to enhance the safety of the peaceful nuclear power program in the UAE. (AB 20.03)
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5.9 Abu Dhabi's Non-Oil Economy Set For 8.5% Growth To 2030
Abu Dhabi's non-oil sector is set to grow by 8.5% annually to 2030 as the emirate aims for a truly diversified economy. By 2030, the non-oil economy will make up 64% of real GDP, compared to 40% in 2005, according to the director of Economic Planning at the Abu Dhabi Department of Economic Development. Abu Dhabi is becoming the breakout emirate for investment and growth. Abu Dhabi's appeal with regional and international investors crosses sectors, from oil and gas to the battered corporate banking and real estate markets, executives said. It was reported that the construction industry in Abu Dhabi saw $35.5bn contracts awarded in 2010, counting for 66% of the value of all contracts awarded in the UAE last year. Consultancy firm Ventures Middle East said the contract amount for 2011 will reach $39.8bn, up 12%. The total value of all construction projects in the emirate is currently $562.8bn. (AB 19.03)
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5.10 Abu Dhabi Inflation Hits 3.1% In February
Inflation in Abu Dhabi was 3.1% in February, the Abu Dhabi Statistics Centre (SCAD) announced, rising 0.1% compared to January. SCAD's report also indicated that the average rise in consumer prices for the first two months of 2011 was 3.3%, compared to the same period of 2010. It added that the food and drinks sector was the largest contributor to the rise, followed by housing, water, electricity, gas and other fuels. The main cause underlying the increase in the average price of this group was a rise of 3.4% in house rents. By contrast, the clothing and footwear group saw prices retreat by 14% during the reviewed period. The UAE's Minister of Economy said that the country's economy was growing faster than expected. The Gulf state's economy is forecast to grow by 3.3% this year, the IMF said earlier this month. (AB 19.03)
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5.11 Dubai World Signs Final Agreement To Restructure Debt
DUBAI World, which rocked markets across the globe in late 2009 with its debt woes, announced that it has signed a final agreement to restructure $14.7 billion of debt. The government-owned conglomerate announced in September that it has reached an agreement with 99% of its lenders on a proposal to restructure $24.9 billion of debt. The final agreement restructures all Dubai World's liabilities with some 80 creditors, the Dubai government office said, adding the group's assets had 'appreciated over past months' on the back of a relative global recovery. It said Dubai World will divide its liabilities into two tranches, with $4.4 billion to be repaid in five years and the remaining $10.3 billion to mature in eight years. The government of the formerly booming Gulf city state announced last year that it will convert $8.9 billion of financial support for Dubai World into equity. Dubai, a regional business, leisure and tourism hub, rocked global financial markets in November 2009 when it announced a freeze in debt repayments by Dubai World, its largest group. (BI-ME 23.03)
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5.12 Dubai Sees 8.3% Y-O-Y Increase in Exports & Re-Exports In February
Dubai saw exports and re-exports rise 8.3%, annually, in February 2011 to AED17.6 billion despite a 30% annual drop in re-exports of goods to Libya, Egypt and Tunisia. The Dubai Chamber of Commerce and Industry said that 2011 will be an extension of Q4/10 in terms of strengthening tourism, trade and retail. Pundits believe that while economic recovery in the UAE will continue to be led by Abu Dhabi in 2011, Dubai will contribute to this recovery owing to its trade and services' hub status, as it benefits from the recovery in its externally-facing sectors such as tourism and trade. Since 2010, tourism and trade data coming out of Dubai, and the pick-up in retail activities, had been evident of the unfolding of this recovery. Still, Dubai's structural adjustments and the correction in its property market is denting overall sentiment levels and banks' risk appetite, thus weighing down the overall level of real GDP growth in the Emirate and UAE-wide. (Beltone 17.030
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5.13 Oman to Spend $1 Billion to Boost Gas Output
Oman is to invest $1b in a field southeast of Muscat to boost gas production. Like most of its Gulf neighbors, Oman is short of the gas it needs to meet rapidly rising demand for industry and power. Oman Oil Exploration and Production Co (OEPC) is planning to produce 90 million cubic feet of gas per day from block 60 by Q1/13 to cater for increasing local demands. Block 60, covering nearly 1,500 square kilometers, was ceded by British-based BG in October and its assets were bought by OEPC. BG had planned to start gas output from the block in 2012 and has already made substantial drilling investment there. Oman, a non-OPEC producer, produces 864,000 barrels per day of crude oil and an average of 3 billion cubic feet of gas per day. (AB 20.03)
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5.14 Saudi Inflation Slows To 10-Month Low in February
Saudi Arabia's annual inflation slowed to a 10-month low of 4.9% in February, with growth in housing and transport costs subsiding. Inflation in the world's top oil exporter has been falling since it reached an 18 month high of 6.1% in August, reaching 5.3% in January. However recent handouts by the Saudi king to appease potential unrest could add to inflationary pressures. On a monthly basis, living costs in the biggest Arab economy rose by 0.2% in February, slightly up from a 0.1% increase in the previous month, data from the Central Department of Statistics showed. Some of new social spending worth $93b, offered by King Abdullah recently to avoid the anti-government protests similar to those that have swept through nearby Arab countries, could also boost prices in the future through higher wages and social benefits. The overall package amounts to nearly 30% of economic output when combined with handouts worth an estimated $37b initially announced last month to ease tensions in the desert kingdom, where more than 10% of Saudis are without a job.
Saudi food prices, which have the largest 26% weight in the consumer basket, rose 0.1% on a monthly basis in February after a 0.5% drop in the previous month. Housing and transport costs rose by 0.6% and 0.3% month-on-month, respectively, slower than in January, the data showed. In January, the OPEC member's central bank governor said he was worried that a global rise in food prices this year may drive up inflation in the import-reliant desert kingdom. (AB 20.03)
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5.15 Saudi King Doles Out $91 Billion in Handouts
Saudi King Abdullah offered $91 billion in handouts on 18 March and boosted his security and religious police forces, opting for a mixture of carrot and stick to stave off unrest rocking the Arab world. The rare televised address to the nation was devoid of any concessions on political rights in a country where the public square is dominated by the Saudi royal family, political parties are banned and there is no elected parliament. There was no word either on a much-anticipated reshuffle of a cabinet where the main posts are held by senior Saudi princes, some of whom have been in the job for over four decades. The ageing king appeared to thank Saudis for not having taken to the streets in large numbers as pro-democracy protests sweep the Middle East and the conservative Gulf Arab region.
Almost no Saudis in major cities answered a Facebook call for protests on 11 March, in the face of a massive security presence around the country, but minority Shi'ites have staged a number of street marches in the Eastern Province, where most of Saudi Arabia's oil fields are located. Some Saudis reacted by taking to the streets of central Riyadh in cars, waving flags and beeping horns.
After a brief speech, state television announced a series of decrees outlining a boost in welfare benefits, a minimum wage of $800 for state employees, bonuses for public sector workers and students, and a drive to build new housing. The numbers announced were large: $66.7b would be spent on 500,000 housing units and $4.3b on more medical facilities. This follows a $37b package announced last month in an initial move to ease social tensions.
The king ordered the creation of 60,000 security jobs within the interior ministry, promised more money for the religious police and, in a sign Saudi's ruling Sunni elite will tolerate no dissent, said the media must respect the Sunni clerics, who oversee the application of Sharia law in the Islamic state. Abdullah said new branches would be built around the country of the religious body headed by Grand Sheikh Abdul-Aziz Al al-Sheikh that is responsible for issuing official religious opinions (fatwas). The decree said the move was part of efforts to promote "moderation" and fight extremism. He also announced a new commission for combating corruption, in a further effort to assuage the concerns of ordinary Saudis about government in the country without conceding them a role in decision-making. The kingdom has been slow to carry out reform promises in the conservative state since Abdullah came to power in 2005. Diplomats say the king faces opposition to political openings from some senior princes and clerics. (AB 18.03)
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5.16 Saudi Arabia Sets Up New Ministry For Housing
Saudi Arabia has set up a ministry for housing, the kingdom's state news agency said, as the world's largest oil exporter seeks to address huge demand for new homes. Saudi is facing a massive housing problem due to rapid population growth and an inflow of expatriate workers coming to the kingdom. Shwaish bin Saud al-Duwaihi al-Mutairi was appointed minister of housing. King Abdullah's announced $93 billion in social handouts included $66.7b to be spent on 500,000 new homes was part of the ruler's efforts to stave off a wave of Arab unrest that has gripped neighboring Bahrain, Yemen and Oman. Saudi Arabia is an absolute monarchy where political parties are banned and there is no elected parliament. (AB 26.03)
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5.17 Saudi Arabia Food and Drink Report Q1 2011
Research and Markets (http://www.researchandmarkets.com) "Saudi Arabia Food and Drink Report Q1 2011" says a promising domestic demand story continues to take shape in Saudi Arabia. Two key factors drive BMI's core Saudi consumer view. First, a relatively large population thoroughly distinguishes it from the rest of the Arabian Gulf region, which bodes particularly well for long-term carry in household spending growth. Second, household spending is coming off a fairly low base in Saudi Arabia compared to the UAE, Qatar and Kuwait in particular, on a per capita GDP basis. As incomes rise, Saudi consumers will spend more on fast-moving consumer goods (FMCGs), which will bump up per capita food consumption and mass grocery retail sales. In the luxury sector there is potentially huge scope for growth in Saudi Arabia. Like their Gulf counterparts, Saudi consumers are very brand conscious. As incomes grow, demand for high-value luxury goods will follow suit as more high-end retailers flock to the country. (R&M 23.03)
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5.18 Study Says Saudi Arabia Needs 1.65 Million New Homes by 2015
Saudi Arabia needs 1.65 million new homes by 2015 to meet growing demand in the world's largest oil exporter, Banque Saudi Fransi said in a report. Saudi Arabia is facing a massive housing problem due to rapid population growth and an inflow of expatriate workers coming to the kingdom which is rolling out a $400b infrastructure spending plan. The report estimates private and public developers will need to build about 275,000 units a year through 2015 for a total of 1.65 million homes over six years. This figure would "cater to demands of a population that has doubled in size since 1988 and grows more than 2% annually" it added. Considering the housing supply-demand gap and the impending boom in youth demand for homes, Banque Saudi Fransi is bullish on the housing sector and confident the mortgage law will widen the scope of home ownership in the long term. Still, reforms to address the market's structural deficiencies will need to compliment the law. Developers must focus on building supply of affordable housing since prevailing salaries are largely not high enough to support a mortgage finance boom," the report said. Saudi Arabia's long-awaited mortgage law has been in the planning stages for almost a decade. Saudi Arabia's population is expected to reach 30 million in 2017, double the figure just 30 years ago. The kingdom's population growth to 2030 also shows the number will hit 36.5 million by the end of the period under review, representing a near-40% rise compared to 2010. (AB 20.03)
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5.19 USA - Morocco Trade Exchange Stood At Over $2.5 Billion in 2010
Trade exchange between Morocco and the United States, which are bound by a free trade agreement (FTA), stood at more than $2.6b in 2010, with Morocco's exports to the US market rising by 54% since the entry into force of the agreement in 2006, the US Department of Commerce (USDC) said. Bilateral trade has, thus, markedly risen in 2010 from a year earlier when it had stood at $2.1b. Moroccan exports to the United States reached $685m in 2010, posting a 46% over 2009. The two countries' officials say the USA-Morocco free trade agreement, the unique such agreement signed by the USA in the entire Africa, attests to the excellent, special bilateral relations. (map.ma 26.03)
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 Turkey Attracts Over 275,000 Health Tourists in Three Years
Turkey is rising in the health tourism sector, which has reached $100 billion worldwide, as the nation has a well-established infrastructure, thanks to a recent increase in the number of private hospitals. The Health Tourism Department of the Health Ministry's Basic Health Services General Directorate and the Gazi University faculty of commercial and tourism education have taken an inventory of health tourism in Turkey. According to the study, the number of health tourists coming to Turkey for medical treatment has been increasing regularly for the past three years. While 74,093 patients came to Turkey in 2008, there were 91,952 in 2009 and 109,678 last year. The total number of patients who came to Turkey in the past three years is 275,723. Among those patients, 94% received treatment in private hospitals while 6% went to public hospitals.
According to the study, foreign patients choose to receive treatment in Turkey because of its reasonable prices, high quality of service, pleasant climate, abundance of vacation opportunities and short waiting time. The infrastructure, competent doctors and reputation of hospitals are listed among the other reasons. The eye, brain surgery, orthopedic and cardiology departments attract the largest number of patients. Turkey attracts the largest number of health tourists from Germany, the Netherlands and France, where the population of people with Turkish roots is high. Patients from Balkan countries and Turkic republics are also among the largest groups. (Zaman 23.03)
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6.2 Cyprus & Israel Leaders Discuss LNG Shipping Deal
Cypriot and Israeli leaders have discussed cooperating to transport their newly discovered natural gas from an offshore Israeli field to Cyprus before shipping to the rest of Europe. On 14 March, Israeli Prime Minister Netanyahu met Cyprus President Christofias and discussed "forming a work team to examine the possibility of transporting gas from Leviathan to Cyprus and from there to the markets in Europe." The Israeli gas would come from the Leviathan field, some 130 km off the Israeli coast, which has estimated reserves of 16 trln cubic feet. Delek Group, an Israeli partner in a consortium with U.S.-based Noble Energy that will produce the gas, has proposed creating a facility in Cyprus to process it into liquefied natural gas. The consortium in December said Leviathan was the world's biggest deepwater find of the past decade and that it expected to begin production there in about 2017. Noble Energy has also said it is confident of similar discoveries in Plot 12 of the Cyprus Exclusive Economic Zone. Christofias said that his visit concludes three years of close cooperation and signing of ten bilateral agreements in many fields, primarily in the areas of health, political, economic and energy relations. Cooperation agreements and a memoranda of understanding were also signed between Cypriot and Israeli institutions. Other areas of cooperation between Israel and Cyprus include medicine and agriculture. (FM 16.03)
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6.3 Cyprus Car Registrations Continue To Decline in February
Registrations of motor vehicles continued to decline in February, with the number of registrations falling by 8.9% over the year earlier in February to 3,223, according to figures from the Statistical Service. Passenger car registrations dropped by an even steeper 13.2%. For the first two months of the year total registrations of motor vehicles dropped by 7.3% to 6,474 from 6.984 in January - February 2010. Registrations of private saloon cars decreased by 8.7% to 4,831 from 5,292 in January - February 2010. (FM 16.03)
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6.4 Greece's Massive Sell Off Plan Moving On
Greece hopes to raise its first revenue from its ambitious €50 billion privatization program by this summer, Finance Minister Papaconstantinou said on 22 March. The first phase of the program calls for 15 billion euros from privatizations in the next three years. Papaconstantinou said that by the last quarter of the year, Greece will have appointed all of its outside advisors for its privatization program. In order to help reduce its massive debt pile, Greece earlier this year disclosed a plan to raise some €50 billion from the privatization of public assets by 2015. Among the first moves to be considered by the government's privatization committee today, are steps to privatize the national lottery; extend the privately-managed concession for the Athens International Airport; and sell-off the government's stake in natural gas monopoly DEPA. Despite progress in deficit reduction efforts, tax collections have been consistently falling short of targets. Data released by the Finance Ministry showed that Greece's central government budget deficit increased 8.5% in the first two months of the year to €1.024 billion from €944 million a year earlier. Ordinary budget revenues reached €7.9 billion, down 9.1% on an annual basis. (ekathimerini.com 22.03)
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6.5 Greece's Jobless Rate May Rise to 16.5% in 2011
Greece's unemployment rate could rise to 16.5% by the end of the year if negative labor market trends in the last quarter of 2010 continue, according to the Bank of Greece. The Bank of Greece said that this could be prevented by the right mix of reforms being introduced into the economy, which is in its third year of recession. The latest data on the labor market shows that job cuts are continuing at a fast pace. According to figures from the Hellenic Statistical Authority (ELSTAT), unemployment jumped to a record 14.2% in the fourth quarter of last year, from 12.4% in the third quarter, as nearly 100,000 people lost their job in three months. Greece's total jobless numbered 712,065 people at the end of last year while the working population amounts to about 4.2 million people. (ekathimerini.com 22.03)
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6.6 EBRD Predicts 2.6% Economic Growth for Bulgaria In 2011
Bulgaria can achieve economic growth of 2.6% in 2011, according to the forecast of the European Bank for Reconstruction and Development (EBRD). The Bank warns the country is facing significant challenges while the biggest source of alarm is the possibility for the lessons from the crisis to not transfer into reforms. EBRD points out exports are important not only for the economic growth, but for innovations and recommends improving the business environment, the efficiency of the Customs Agency, the capital markets in the entire region, and removing bureaucratic hurdles. (SMN 23.03)
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6.7 Bulgaria Saw Largest Increase In EU Road Freight Transport 2009
Bulgaria was only two EU members which registered a road freight transport increase in 2009, according to Eurostat. In 2009, all member states showed declines in their road freight transport compared with 2008, except for Bulgaria (+16%) and Poland (+10%). However, in 2009 Bulgaria also saw the largest decline in rail freight transport in the whole bloc (-33%). In the same period, rail freight transport decreases were observed in all Member States, except Estonia, which remained nearly stable. On an EU level in terms of tonnes-kilometers (tkm)3, road freight transport was more than 4 times larger than rail freight transport (1 690 billion tkm compared with 370 b tkm in 2009). In 2009, road freight transport was the dominant mode of freight transport in all Member States, except Estonia and Latvia. (SMN 23.03)
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6.8 Bulgaria Aims For R&D Spending of 1.5% OF GDP IN 2020
Bulgaria's Finance Ministry has unveiled a "National Program for Reforms 2015" designed to boost economic and labor competitiveness with a variety of measures within EU's "Europe 2020" strategy. The National Reform Program was presented by Deputy Finance Minister Pencheva specifies Bulgaria's major goals within the application of the Europe 2020, including reaching a 76% employment by 2020, and spending on research and development amounting to 1.5% of the GDP. While the goal for the entire EU is 2.8%, Bulgaria's lower goal has been based on the fact that its current R&D spending is much smaller than the EU average. By 2020, Bulgaria's energy efficiency is supposed to increase by 25%, while the renewable energy sources as calculated in the end consumption of energy are supposed to reach 1.5% of the GDP. In the next 10 years, the government plans to lift 260 000 Bulgarians out of poverty, to reduce the number of school dropouts by 11%, and see 36% of the Bulgarians aged 30-34 with university education. Bulgaria's Finance Ministry is supposed to submit the final version of the National Reform Program to the European Commission by April 30, 2011, once it has been approved by the Cabinet. (SMN 29.03)
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6.9 Russian Company Wins Bid for Sofia Metro Trains
The Russian Metrovagonmash is the winning bidder in the public procurement tender for the delivery of trains for the Sofia metro. The Russian plant, located near Moscow, will deliver 18 trains of three cars each. The cars are from the 81-740/741 "Rusich" series. The other participant in the tender has been the Spanish company CAF. Since it first opened doors in 1998, the subway in the Bulgarian capital has used only Metrovagonmash trains. It now has 85 cars. The Russian company has also delivered trains for the subways in Moscow, Kazan, Budapest, Warsaw and Prague. (SMN 23.03)
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 IDF Clinic in Japan Commences Work
Members of the Israel Defense Forces aid mission to Japan held a status evaluation on 28 March in the Miyagi Prefecture, which was hit hard by a devastating earthquake and tsunami more than two weeks ago. The delegation, headed by Brigadier-General Ben Aryeh, discussed the current situation with Home Front Command Chief Golan and Chief Medical Officer Ash. It has begun setting up an Israeli clinic which includes orthopedics, surgical, and intensive care units as well as a delivery room and a pharmacy. The IDF clinic is to provide medical assistance to locals for a number of weeks. The 60-member delegation mainly consists of doctors and nurses from the Medical Corps. The delegation includes 50 doctors and brought with it 62 tons of medical equipment and 18 tons of humanitarian aid, including some 10,000 coats, 6,000 blankets, 8,000 gloves and 150 portable toilets. Seven Hebrew-speaking Japanese interpreters are helping the Israelis communicate with locals. The mission's primary goal is to provide humanitarian aid and ease the Japanese people's suffering. (Ynet 28.03)
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7.2 Israel Likes Facebook
Israel likes social media. comScore reports that Israel has the second highest Facebook penetration rate in the world at 89.8% of internet users. The figure refers to people who accessed Facebook at least once (unique online visitors), in February 2011. Israel has three million Facebook members and the number is growing daily. According to the TIM survey for February, Facebook has the second highest exposure rate, after Google, with a weekly exposure rate of 72%. Facebook has over 600 million members worldwide, and the number is growing rapidly. The Philippines has the highest penetration rate, with 92.9% of Internet users. Turkey is in third place, at 89.6%, followed by the Chile (88.8%), Argentina (88.4%), Malaysia (87.4%), Indonesia (86.2%), Colombia (85.8%), Canada (85.6%) and Venezuela (84.9%). (Globes 24.03)
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7.3 Bank of Israel Cites Rise in Ultra-Orthodox Work Studies
The number of Haredi (ultra-Orthodox) Jews learning professions has tripled to 6,000 over the last three years, the Bank of Israel announced, reflecting a continuing trend of the entry of the community into the job market. Business management and law head the professions that most interest Haredi-religious Jews in Israel. A Ministry of Industry study last year revealed that the overall employment rate of Israel's Haredi-religious sector, including both men and women, is 43.2%, with 65% of unemployed men saying they would not work in a mixed setting with female or non-religious co-workers. Israel's Haredi community is reported to be roughly 650,000 people, comprising 8-9% of the Israeli population. The number of the community's men and women of working age, between 20 and 64, is estimated at approximately 235,000 and is expected to grow by 7% a year. (IsraelNN 28.03)
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*REGIONAL:
7.4 Vast Majority of Arab Youth Want Right to Vote
More than 90% of respondents in the third annual ASDA'A Burston-Marsteller Arab Youth Survey said democracy was very important to them. The poll surveyed Arab youngsters aged between 18-24 years, across 10 Middle East countries. An initial 2,000 interviews were carried out between December 2010 and January. A further 500 interviews were conducted in February and March following the political unrest in the region, in Egypt, Jordan, Lebanon, Bahrain and Iraq.
In Iraq, 91% of respondents said the right to vote was a key concern, a figure that dropped to less than a third in Qatar. In the UAE, 75% of those polled wanted the right to vote. In protest-hit states such as Lebanon and Jordan, the majority of respondents in the second round of interviews cited a lack of democracy as a key trigger factor in the uprisings. In Jordan, 98% named democracy as a key issue, as did 97% of those in Lebanon. In Bahrain, which has seen nearly two months of street protests demanding political reform, just 56% of respondents saw democracy as a factor behind unrest. Just over half of those polled in Bahrain 54% wanted the right to vote.
Rising demand for political change in the region may be partly attributed to the percentage of Arab youngsters concerned about social factors. More than half of those polled (52%) said crime was a worry, while nearly 60% cited fears about the quality of education in the Middle East. Some 59% of respondents said the lack of affordable housing in the region was a concern, while 65% felt a shortage of quality healthcare would impact on the region. Some 70% of youngsters said the uprisings sweeping the Arab world would have a positive outcome. (AB 15.03)
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7.5 Egyptian Government Passes a Law Criminalizing Protests & Strikes
On 23 March, the Egyptian government passed a law criminalizing protests and strikes. Under this law, anyone organizing or calling for a protest will be sentenced to jail and/or a fine of LE500,000. The new law will be enforced as long as the current Emergency Law is in place, said the Council of Ministers. The Emergency Law has been in force since 1981 following the assassination of former President Sadat. The new law will apply to anyone inciting, urging, promoting or participating in a protest or strike that hampers or delays work at any private or public establishment. Since the resignation of former President Mubarak on 11 February, Egypt has witnessed nationwide labor strikes and political protests. Among those protesting have been university students, political activists, railway workers, doctors, pharmacists, lawyers, journalists, pensioners, and the police force. The law, which still needs to be approved by the SCAF, is more likely to face further protests and discontent. The Egyptian public has only just found its political voice and will, most likely, view this decision as another attempt to silence it. There is a need for work to resume normally once again, for Egypt's economy to begin its recovery process, but Beltone also believes that the government's decision to criminalize protests and strikes could provoke further discontentment and more protests. (Beltone 24.03)
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7.6 Egypt Votes "Yes" To the Constitutional Amendments
Of the 18 million individuals who voted in the 19 March referendum, 77.2% voted in favor of the proposed constitutional amendments, the final count of the votes showed as communicated by the Head of the Electoral Committee, Judge Attiya. The outcome of the referendum from the different cities varied, such as the more densely-populated governorates like Cairo (65% yes), Giza (60% yes) and Alexandria (65%) saw a narrower gap between those in favor of and against the amendments. The committee supervising the voting process indicated that the turnout was 41% of Egypt's eligible voters.
Beltone said the approval of the constitutional amendments now pave the way for an immediate and prompt power handover from the Supreme Council of Armed Forces (SCAF) to a newly-elected Parliament and President, by September 2011. According to the original plan by SCAF, immediate preparations for Parliamentary elections (for both upper and lower houses) will begin over the coming few months, to be followed by a Presidential elections. Once complete, the power handover from SCAF to the new civilian government would take place by September 2011. The President and Parliament (lower house) are then to establish, jointly, a 100-person committee to compose a new Constitution draft within a six-month period (by March - April 2012) from the committee's establishment. Once the new Constitution is approved, another round of Parliamentary and Presidential elections are to take place. Beltone highlights their concern that the tight timeframe within which those milestones outlined by SCAF are to be achieved would not provide ample time for new, grassroots movements to establish themselves and increase their political footprint, leaving the already well-organized and structured former ruling party (the NDP) and the Muslim Brotherhood (both being the key supporters and campaigners of the ‘Yes' vote) as the main political players that, under this limited time, would influence the structure of the committee to be set up to review the Constitution, post the parliamentary elections. (Beltone 21.03)
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7.7 UAE to Hold Second Ever Election in September
The United Arab Emirates will hold the second election in its history in September to pick half the members of its advisory national assembly. The move to set the election for September 24 comes as anti-government protests rock the Arab world, including the wealthy Gulf Arab region. In February, the world's No. 3 oil exporter tripled the number of voters handpicked by its rulers to take part in electing half of the 40-member Federal National Council (FNC), an advisory body with limited parliamentary powers, in a cautious step towards political reform in the Gulf state. The announcement comes as Shiite protesters in nearby Bahrain demand a constitutional monarchy, with some hardliners calling for abolishing the monarchy to set up a republic. Recently, a group of UAE intellectuals petitioned their rulers for free elections, in a sign some Emiratis share growing Arab demands for a greater say in government.
The first elections for the FNC were held in 2006 with 6,600 voters, including 1,160 women. The voters, who accounted for less than 1% of the population, were named by the rulers of the seven emirates that make up the UAE federation. Unlike other Arab countries such as Egypt and Tunisia, where decades of poverty and political repression left their populations clamoring for political and economic reforms, the UAE's mix of wealth and established ruling families has cushioned the oil-exporter and trading hub against unrest. There has been no sign of street protests in the UAE. (BI-ME 17.03)
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8: ISRAEL LIFE SCIENCE NEWS
8.1 Teva Receives Positive Opinion for NOMAC/E2 from European Committee
Teva Pharmaceutical Industries announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) adopted a positive opinion for NOMAC-E2, an investigational contraceptive pill combining 1.5 mg of 17-beta-estradiol with 2.5 mg of nomegestrol acetate in a 24/4 monophasic regimen. Unlike currently available contraceptive pills, NOMAC-E2 is a monophasic regimen containing an estrogen which is structurally identical to the major estrogen produced by the ovaries of healthy non pregnant women, combined with a selective progesterone analogue (nomegestrol acetate). The CHMP issued its positive opinion following a review of data derived from clinical trials evaluating NOMAC-E2.
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. Headquartered in Israel, Teva is the world's largest generic drug maker, with a global product portfolio of more than 1,450 molecules and a direct presence in about 60 countries. Teva's branded businesses focus on neurological, respiratory and women's health therapeutic areas as well as biologics. (Teva 18.03)
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8.2 FDA Supports the Safety & Effectiveness of NovoTTF-100A System
Novocure announced that the U.S. FDA Neurological Devices Advisory Panel of the Medical Devices Advisory Committee voted that for patients with supra-tentorial glioblastoma multiforme (GBM) tumors that recur after maximal surgical and radiation treatments, there is reasonable assurance that the benefits of the NovoTTF-100A System (NovoTTF) outweigh its risks when administered as a monotherapy in place of standard medical therapy. The committee's recommendation followed a review of data from the EF-11 Trial, a randomized phase III trial for 237 patients with glioblastoma tumors that had recurred or progressed despite previous treatments. The committee received and considered the final data from the EF-11 Trial, which updated data previously reported at the American Society for Clinical Oncology Annual Meeting in June 2010. The trial demonstrated that patients treated with the NovoTTF alone achieved a comparable overall survival time to patients treated with the physician's choice of the best chemotherapy. Patients treated with the NovoTTF also had higher rates of progression free survival at six months (PFS6) and higher tumor response rates (RR) compared to chemotherapy treated patients in the trial (PFS6 of 21% vs. 15% and RR of 14% vs. 10%). NovoTTF treated patients reported better quality of life scores and fewer side effects during the trial compared to patients treated with chemotherapy. The NovoTTF's most commonly reported side effect was a mild-to-moderate rash beneath the electrodes.
NovoTTF-100A is a portable, non-invasive medical device designed for continuous use throughout the day by the patient. Novocure (http://www.novocuretrial.com) is an oncology company pioneering Tumor Treating Fields (TTF) therapy, a new modality for treating solid tumors. Novocure's US operations are based in Portsmouth, NH and the company's research center is located in Haifa, Israel. (Novocure 17.03)
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8.3 Protalix BioTherapeutics Announces Proposed Public Offering of Common Stock
Protalix BioTherapeutics intends, subject to market conditions, to offer and sell shares of its common stock in an underwritten public offering. Citi and Barclays Capital are acting as the joint book-running managers for the offering. The offering is subject to market conditions, and there can be no assurance as to whether or when the offering may be completed, or as to the actual size or terms of the offering. The Company expects to use the net proceeds from the sale of the shares for one or more of the following: to fund clinical trials for the Company's product candidates; to fund the Company's research and development activities; to enhance the Company's manufacturing capacity; and for working capital and general corporate purposes. Carmiel's Protalix (http://www.protalix.com) is a biopharmaceutical company focusing on the development of unique and proprietary plant cell culture and bioreactor systems, which provide a highly efficient system for the expression and industrial-scale production of human therapeutic proteins. (Protalix 17.03)
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8.4 Procter & Gamble & Teva Form Consumer Health Care Partnership
The Procter & Gamble Company and Teva Pharmaceutical Industries signed a master agreement to create a partnership in consumer health care by bringing together both companies' existing over-the-counter (OTC) medicines and complementary capabilities to accelerate growth. This new business model combines P&G's strong brand-building, consumer-led innovation and go-to-market capabilities with Teva's broad geographic reach, its experience in R&D, regulatory and manufacturing and its extensive portfolio of products. The partnership will include a joint venture that combines the companies' OTC businesses in all markets outside of North America. The markets included in the joint venture generated sales of more than $1 billion in 2010. Teva will provide access to its unparalleled portfolio of medicines and global R&D and manufacturing expertise and infrastructure. As part of the partnership, the companies intend for Teva to take global responsibility for manufacturing to supply the joint venture markets and P&G's existing North American business. This partnership will enable both companies to generate greater value from their existing OTC businesses. By broadening its OTC product offerings, Teva will further strengthen its position with major pharmacy customers around the world. For P&G, the partnership will accelerate global expansion of its leading OTC brands such as Vicks, Metamucil and Pepto-Bismol. The transaction is expected to close in the fall of 2011 subject to receipt of required regulatory approvals.
Jerusalem's Teva (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 nearly 1500 molecules and a direct presence in about 60 countries. (P&G 24.03)
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8.5 Crospon & Smart Medical Systems Sign Collaborative Development Deal
Galway, Ireland's medical device developer Crospon and Smart Medical Systems signed a collaborative agreement whereby Smart Medical will produce a custom version of their NaviAid external channel endoscope accessory for Crospon, to permit deployment and positioning of Crospon's EndoFLIP imaging catheter. Smart Medical also announced that the endoscopic accessory, known as the EF-800 External Channel Device (ECD), has recently received CE mark approval. The EF-800 is scheduled to be launched in May 2011. Crospon develops leading edge minimally invasive medical devices for monitoring, diagnosis and therapy in the gastroenterology area. Ra'anana's SMART Medical (http://www.smartmedsys.com) is a pioneer in the development and manufacture of innovative medical devices in the field of gastro-intestinal (GI) endoscopy. Its NaviAid family of products provides a standard endoscope with the means to overcome major challenges in GI endoscopy, through a series of single-use balloon devices and delivery systems. Its commercial products are marketed by a global network of sales agents and distributors. In addition to developing its own unique products, SMART collaborates with other prominent companies in the GI endoscopy field to launch successful joint projects. (Crospon 25.03)
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 Hebrew University, TAU & Technion Sign Research Collaboration with Google
Yissum Research Development Company, the Technology Transfer Company of the Hebrew University of Jerusalem, Ramot at Tel Aviv University, and TRDF, the Technion Research & Development Foundation announced that Google will sponsor them to conduct around 20 research projects to address the opportunities of the internet economy, with a particular focus on the fundamentals of online auctions.
For example, unlike in TV advertising, where the advertiser buys a fixed number of commercials, online systems like Google's AdWords use a computerized auction where advertisers determine how much they are willing to pay and other relevance signals then contribute to an algorithm determining the online selection and rank of a particular ad. These auction systems involve complex computation, and result with overall more relevant and effective ads.
To date, these auctions have been developed mainly by the internet industry. Academic research in such disciplines, as algorithmic game theory and algorithmic mechanism design, could greatly benefit from insights learned from the practice of the new industry, and may be able to provide future insights to improve online advertising auctions and create more opportunity for advertisers, users, and the online economy at large. Google will support a cluster of research projects which will explore the basic questions which lie at the heart of this new economy. Such questions include the economic effects of viral networking, the dynamics of electronic markets, and new formats of selling advertisements, which could be beneficial to the user and the advertisers.
Yissum Research Development Company (http://www.yissum.co.il) of the Hebrew University of Jerusalem was founded in 1964 to protect and commercialize the Hebrew University's intellectual property. Ramot at Tel Aviv University (http://www.ramot.org) is the technology transfer arm of Tel Aviv University (TAU), the largest university in Israel. As a subsidiary of the Technion - Israel Institute of Technology, The Technion Research & Development Foundation (TRDF- http://www.trdf.co.il) offers a unique gateway to the Technion cutting edge scientific and technological knowledge and capabilities. (Yissum 16.03)
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9.2 Wavion & ECNEX Provide High Speed Internet Access in Mexico Hotels
Wavion, together with ECNEX, a leading provider of broadband technology solutions for the hospitality industry in Latin America, announced the deployment of Wavion's Wi-Fi base stations for high speed internet access in major hotels in Mexico. The deployment is based on Wavion's WBS-2400 base stations and includes a prestigious Hotel in Polanco, Mexico City, the Holiday-Inn hotel in Leon Guanajuato, the Silver Sands and Capri Hotels in the Mayan Riviera and the Holiday-Inn Hotels in Pachuca, Queretaro and Cuernavaca. Wavion's unique and powerful WBS-2400 spatially adaptive Beamforming base stations provide extended coverage, higher throughput and superior indoor penetration. Unlike conventional indoor Wi-Fi equipment, which requires an access point for every few rooms, Wavion's solution enables coverage for a complete hotel environment, utilizing a minimal number of outdoor base stations, even in surroundings where foliage is dense. This eliminates the need for indoor drilling and wiring, and furthermore, enables coverage for all indoor and outdoor space, making Wavion an excellent solution for hotels and resorts.
Yokneam's Wavion Wireless Networks (http://www.wavionnetworks.com) is a worldwide technology leader in outdoor Wi-Fi applications in metro and rural areas with deployments in more than 65 countries. The company's true digital Beamforming and Space Division multiple access (SDMA) technologies are the first and only to resolve the significant performance, penetration and profitability challenges facing large scale metro and rural deployments. Featuring Wavion Base Stations (WBS), in 2.4 GHz and 5 GHz unlicensed bands and in 700MHz licensed band, Wavion offers end-to-end solutions including access, backhaul, CPEs and management solutions. (Wavion 16.03)
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9.3 CMP Selects TowerJazz's Advanced Power Management and CMOS Image Sensor Processes
TowerJazz announced that its advanced 0.18 micron power management and CMOS image sensor (CIS) technology and sophisticated process design kits (PDKs) are now available for prototyping to companies, universities and research labs through the services provided by CMP. Since 1981, CMP, an independent non-profit organization, has helped more than 1,000 organizations from 70 countries access affordable commercial foundries by consolidating their designs onto Multi-Project wafers. CMP works with several foundry vendors supporting a range of technologies and has chosen TowerJazz for its excellence in process technology as well as its broad IP portfolio. CMP offers its customers experience with the entire design, layout, verification, and tapeout process, as well as the export guidance. In power management, TowerJazz offers industry leading scalable Bipolar-CMOS-DMOS (BCD) platforms with state of the art Rdson values including non-volatile memory (NVM). TowerJazz also offers a proprietary Y-Flash technology, the leading solution for NVM in the market today due to its small cell size, zero mask adder and flexibility to implement various memory sizes. For high end CMOS image sensors, TowerJazz is one of the premier suppliers, well known for its internal pixel development and know-how. TowerJazz supports the customization of pixels per project needs and its superior performance (dark current, low noise and dynamic range) enables a rich offering for various digital imaging applications.
Migdal Ha'Emek's Tower Semiconductor (http://www.towerjazz.com) and its fully owned U.S. subsidiary, Jazz Semiconductor, operate collectively under the brand name TowerJazz, manufacturing integrated circuits with geometries ranging from 1.0 to 0.13-micron. TowerJazz provides industry leading design enablement tools to allow complex designs to be achieved quickly and more accurately and offers a broad range of customizable process technologies including SiGe, BiCMOS, Mixed-Signal and RFCMOS, CMOS Image Sensor, Power Management (BCD), and Non-Volatile Memory (NVM) as well as MEMS capabilities. (TowerJazz 16.03)
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9.4 BSNL & VMC Select Alvarion 4G Solution for Wireless Broadband Deployment in India
Alvarion was selected by Bharat Sanchar Nigam Limited (BSNL) and Alvarion's local partner Vuppalamritha Magnetic Components Limited (VMC), to supply base stations with related professional services for the building of a 4G wireless broadband network in rural India to bring wireless broadband services to underserved communities in the country. VMC will use Alvarion's 4Motion solution, including BreezeMAX base stations, in the 2.5 GHz frequency. The rollout is expected to begin in the next few months and will enable delivery of wireless broadband services by BSNL. Tel Aviv's Alvarion (http://www.alvarion.com) is a global 4G communications leader with the industry's most extensive customer base, including hundreds of commercial 4G deployments. Alvarion's industry leading network solutions for broadband wireless technologies WiMAX, TD-LTE and WiFi, enable broadband applications for service providers and enterprises covering a variety of industries such as mobile broadband, residential and business broadband, utilities, municipalities and public safety agencies. (Alvarion 16.03)
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9.5 Elbit Systems & IAI to Perform Advanced Training Aircraft Project for IAF
Elbit Systems announced the signing of a founder's agreement with Israel Aerospace Industries (IAI) to establish a joint company and a limited partnership to perform a potential project of purchasing and maintenance of advanced training aircraft, as well as additional services, for the Israeli Ministry of Defense (the MoD). The Joint Entity established under the Agreement, will be equally owned (subject to required regulatory approvals), and will supply the MoD with the products and services required for the Project's execution. Certain portions of the Project's work scope will be acquired from IAI and Elbit Systems, respectively, in accordance with a work sharing plan determined by the two sides. To the best of Elbit Systems' knowledge, the MoD is currently reviewing contractual possibilities with regards to the Project, and in this context has provided to Elbit Systems and IAI a request for information (RFI). It is the intention of the two companies to submit a response to the RFI in the coming days through the Joint Entity.
Haifa's Elbit Systems (http://www.elbitsystems.com) is an international defense electronics company engaged in a wide range of programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance, unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. The Company also focuses on the upgrading of existing military platforms, developing new technologies for defense, homeland security and commercial aviation applications and providing a range of support services. (Elbit 16.03)
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9.6 Magic Software's uniPaaS Jet Opens to a New Generation of Application Developers
Magic Software Enterprises announced that the uniPaaS Jet application development platform is now available. The company has revealed that thousands of developers have already downloaded and are currently using uniPaaS Jet. uniPaaS Jet is a single-user edition of Magic Software's uniPaaS and is now available for free development and deployment. uniPaaS greatly simplifies the process of building and deploying mobile, cloud, Software-as-a-Service (SaaS), and rich internet applications (RIA). Its application engine makes developing business applications easier, resulting in a faster time to market. The uniPaaS metadata-driven methodology enables developers to focus on their business vision rather than on programming. uniPaaS plays a key role in the success of Magic Software's many partners and software vendors, as well as independent developers. They have been using uniPaaS to create and develop thriving businesses, and they know that uniPaaS is a vital ingredient in their success. uniPaaS Jet is an ideal gateway for new developers who want to join Magic Software's global community. Or Yehuda'a Magic Software Enterprises (http://www.magicsoftware.com) is a global provider of cloud and on-premise application platform and business integration solutions. (Magic 16.03)
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9.7 Optibase's New MGES 6000 Release with Inputs for Analog, Digital & HDMI Signals
Optibase will demonstrate a new version of its MGES 6000 H.264 HD/SD quad encoding blade at the NAB show on April 11-14 in Las Vegas. The new release of MGES 6000 features HD/SD-SDI, analog (composite) and HDMI inputs that enable customers to flexibly mix and match different sources in a single deployment of the MGW 5100/1100/1000 blade system. The HDMI input includes support for advanced audio formats such as Dolby 5.1 and 7.1 as well as the ability to encode HDMI sources with protected and unprotected signals (HDCP). The new release also offers built-in AES-128 and 256 bit encryption, enabling operators to securely deliver Full Motion Video and IPTV content over IP. Encryption is fully integrated with Optibase EZ TV and FITIS Systems as well as with the Optibase Video-On-Demand and Network DVR servers. MGES 6000 features secondary stream functionality for streaming video sources at two different resolutions and data rates. MGES 6000 encoding blade is the market leader in processing density. It streams up to 4 broadcast-quality H.264 HD/SD primary streams at up to 1920x1080 resolution, as well as 4 secondary streams, to desktops, TVs and mobile devices. MGES 6000 supports ultra-low bit rates, variable frame rate and IPv6 streaming.
Herzliya's Optibase (http://www.optibase.com), a Vitec company, provides video compression and streaming solutions, specializing in video encoding, decoding, streaming and distribution of live and on-demand video for federal and state government agencies, enterprise organizations and the world's leading Telco and broadcast service providers. With a collection of innovative, professional-grade products, Optibase enables its customers to take full advantage of video distribution over their IP network, ensuring superb video quality in a scale of bit-rates for simple and effective video streaming to desktops, set-top-boxes and on-demand applications. (Optibase 17.03)
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9.8 SnapKeys Unveils How It Replaced the Smartphone Keyboard with Your Imagination
SnapKeys, inventors and developers of the revolutionary SnapKeys 2i text and data entry system for smart phones, tablets and other mobile devices, revealed how SnapKeys 2i works. Since its launch in January, viewers of the SnapKeys homepage video have been left spellbound by the unusual site of fingers typing on a blank screen. In preparation for revealing the "logic behind the magic," SnapKeys has commissioned an innovative usability study. 5th graders at the Lovell elementary school in Apopka, Florida, near Orlando, spent half an hour a day for 3 days typing on SnapKeys 2i. The key findings, highlighted in a short video, confirmed that 5th graders could blind-type instantly. Once shown the entire system, including correction and special characters, they picked it up immediately, they had fun and considered it like a game After one hour they were so advanced that they were already teaching their teachers and the principal. The industry recognizes that SnapKeys 2i provides the only solution to the critical problems of the traditional keyboard; which covers most of the screen and it forces people to endure a frustrating and unworkable typing experience. SnapKeys will be available in Android, iOS, and Windows devices, in all major European and Asian languages.
Jerusalem's SnapKeys (http://www.snapkeys.com) was founded in 2008, after nine years of research into solving the fundamental problem of the mobile device industry: how to easily and quickly enter information in the mobile environment. The company has developed a revolutionary text and data entry interface which works on both mobile and fixed devices - including touch-screen and hard-key keyboards - and is currently in negotiation with major smartphone and tablet manufacturers as well as major carriers around the world. (SnapKeys 22.03)
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9.9 Altair & Alcatel-Lucent Deliver LTE Band Class 12 Solution in North America
Altair Semiconductor announced that its Band Class 12 solution, combining Altair's 4G LTE chipsets and Alcatel-Lucent's LTE infrastructure, has successfully completed a three-month field trial with a large US wireless carrier and is now commercially available. Altair's solution is the first and only Band Class 12-compliant, commercially ready, LTE chipset solution in the industry. During the Band Class 12 trial, the trial system, comprised of Altair's chipset and Alcatel Lucent's infrastructure, demonstrated the ability to practically eliminate RF interference, achieved very high throughputs, and optimized the system's end to end performance. Due to powerful radio frequency (RF) interference, from sources such as terrestrial digital broadcast TV and MediaFlo, Band Class 12's spectral efficiency has been severely hampered. Using the unique capabilities of its SDR-based processor architecture, Altair developed and implemented cutting edge algorithmic solutions to dramatically improve and optimize the Band Class 12 spectrum usage.
Hod HaSharon's Altair Semiconductor (http://www.altair-semi.com) is the world's leading developer of ultra-low power, small footprint and high performance LTE semiconductors. The company's products provide device manufacturers integrating 4G LTE technology into their products with a highly power-optimized, robust and cost-effective solution. Altair's comprehensive product portfolio includes baseband processors, multi-band RF transceivers for both FDD and TDD bands, and a range of reference hardware and product level protocol stack software. (Altair 22.03)
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9.10 Wizcom's Ultimate Portable Dictionary & Scanning Device - Quicktionary TS Premium
Wizcom Technologies released the Quicktionary TS Premium, a pocket-sized, user-friendly portable dictionary and scanning device enabling students, and people working in multilingual environments to translate and define printed material anytime and anywhere, without disrupting their reading process. The Quicktionary TS Premium also scans printed text and transfers it to a PC. Their products are developed using unique expertise in linguistics and image processing. They have 'best-of-breed' achievements in the fields of microelectronics, electro-optics and Optical Character Recognition (OCR) algorithm engines. The product is customizable using the Wizcard, an extension card allowing for additional content to be added to the Pen, such as dictionaries, OCR languages and text-to-speech components. Users can easily switch between the Wizcard and original flash card to take advantage of the wide range of content available.
Rosh HaAyin's Wizcom (http://www.wizcomtech.com) is constantly developing new content in an effort to provide text solutions for a wide variety of languages, including those not previously addressed by any other device or program; for example their new Hebrew to Russian and Hebrew to English dictionaries. Hebrew is a language with particularly complex grammar, where meaning and spelling are influenced by a great number of factors. The dictionary combines modern Hebrew, slang and Biblical language. A further feature is transliteration of Hebrew into the Latin alphabet. (Wizcom 21.03)
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9.11 Screenovate Demonstrates Wi-Fi Smartphone Beaming Technology
Screenovate Technologies demonstrated their wireless beaming solution for smartphones on Qualcomm Incorporated's Snapdragon Mobile Development Platform (MDP) at CTIA, enabling better performance and easier integration by smartphone OEMs and wireless operators. The solution creates a distinct benefit for Snapdragon-enabled Android smartphones by providing a high frame rate, low latency capability for beaming the phone user interface (UI) onto other media platforms, such as TV, car display or PC monitor, over a standard Wi-Fi connection. The technology supports Qualcomm's efforts to enable new device capabilities that allow device manufacturers to create differentiated products that provide extraordinary user experiences. Smartphone OEMs can easily integrate the solution into their Android offering, leveraging Screenovate's Elastic UI layer to support the different beaming use cases. Screenovate demonstrated beaming of an interactive, high frame rate game from a smartphone to a TV, using the phone's motion sensors and touch screen to control the game while it's being displayed on the TV. Tel Aviv's Screenovate (http://www.screenovate.com) is a leading provider of Smartphone-Centric Computing software. Screenovate's software beams the smartphone UI to other media platforms, such as TV, car display and PC monitors. Screenovate's patent pending technology enables software only, high performance, interactive, UI mirroring over standard Wi-Fi connection and provides a powerful Elastic UI framework that optimizes the smartphone UI to the different uses case. (Screenovate 21.03)
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9.12 Second Year in a Row - Red Dot Award for Keter Plastic Products
The RealBarrow, by Keter Plastic, has been awarded the Red Dot Design Award: Product Design 2011, one of the most renowned international product competitions. This year, designers and companies from 60 countries entered 4,433 products in the red dot award. The recent award, marks Keter's receipt of the "red dot" seal of quality for high design, for the second year in a row. The RealBarrow, is the first heavy-duty work wagon to combine two positions: the archetype classic wheelbarrow shape together with the L shape "bulldozer" shovel. The bulldozer shovel uses a reinforced metal edge to help maximize the product performance. This unique combination creates a functional wheelbarrow, which gets a wide range of garden and other outdoor chores done with less effort than ever before. Herzliya's Keter Plastic (http://www.keter.com) is proud to be a member of the Keter Group, one of the world's leading manufacturers and marketers of resin-based home and garden consumer products. For over sixty years Keter Plastic has proven its commitment to innovation, quality and design in the home improvement business providing a one-stop-shop solution for its customers. (Keter Plastic 23.03)
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9.13 SintecMedia Launches MAM Module into OnAir Broadcast Management System
At NAB 2011 SintecMedia introduced OnMedia, an all-in-one, next generation MAM (Media Asset Management) solution targeting National networks, cable networks, and station groups. Integrated into the OnAir Broadcast Management Solution, OnMedia provides a complete solution for broadcasters seeking to take full advantage of their media assets. SintecMedia partnered with Vidispine, the innovative video technology provider, to develop this advanced MAM solution. Integrating Vidispine's enterprise grade Media Asset Management backbone with OnMedia, provides broadcasters with a complete, scalable and extensible system. OnMedia assets management module gives broadcasters an all-in-one comprehensive solution from planning and preparation to playout and archive. When combined into OnAir, the world-leading broadcast management system utilized by leading networks including ABC, BBC, CBC and NBC Universal among others, OnMedia provides quick and easy access to physical audiovisual content where physical media is linked to logical media.
Jerusalem's SintecMedia (http://www.sintecmedia.com) is a leading global provider of management solutions designed to meet the dynamic needs of broadcast and cable network, MSOs and station groups. OnAir, SintecMedia's core product, is used by leading networks for managing airtime sales, traffic, programming and new media. (SintecMedia 24.03)
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's Unemployment Drops Sharply
Israel's unemployment rate fell to 6.1% of the civilian labor force in January 2011 from 6.3% (revised) in December 2010, the Central Bureau of Statistics announced on 24 March. The unemployment rate was 7.1% in January 2010. The Central Bureau of Statistics also revised the unemployment rates for October and November downward to 6.5% and 6.4%, respectively. The last time that the unemployment rate was at 6.1% was in March 2008. The January 2011 figure is a trend figure, and therefore provisional. Final figures will be released in the Labor Survey for the first quarter. Nonetheless, the figure is consistent with many other macroeconomic figures, including GDP, the State of the Economy Index, consumption and export data, all of which indicate robust economic activity. (CBS 24.03)
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10.2 State of the Economy Index Shows Continued Economic Growth
The Bank of Israel's composite state of the economy index by rose 0.4% in February. The rise points to the continued growth in the economy, seen through a rise in domestic demand and in demand for exports. The index's rise is a function of a rise in nearly every component, except for imports of consumer goods. Manufacturing production increased 2.6% in January, following a 0.1% decline in December. The trade and services revenue index rose 1.8% in January, following a 0.4% fall in December. The services exports index rose in February by 6.1%, following a 3.2% decline in January. The index of consumer goods imports fell by 5% in February, after increasing by 4.5% in January. The index for January was revised upward from a rise of 0.4% to a rise of 0.5%. (CBS 17.03)
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10.3 Investments in Israel Increase By 12.7% in 2010
Investments in fixed assets in Israeli industries – including non-residential construction, machinery, equipment, vehicles and assets – rose by 12.7% in 2010, following a 9.8% drop in 2009. According to the Central Bureau of Statistics, investments in non-residential buildings and other construction work – including industrial structures, offices and roads – were up 2.6%, following a 4.9% drop. Investments in vehicles, deducting used cars sold to households, were up 29.7% after a 6.6% drop. Factories investments in machinery and equipment were up 9.8% compared to a 19.2% drop in 2009. The investments in intangible assets, like software and gas and oil searches, were up 20.4% following a 7% rise in 2009. Investments in infrastructures were down 6.8%. These investments include buildings, construction work and certain equipment in the transportation field – including ports, trains and roads, communication; energy – including electricity, oil and gas; water – including sewage and desalination; and development. The governmental sector's gross local investment in fixed assets totaled NIS 15.1 billion (about $4.26 billion) in 2010, 15.3% of the total investment in fixed assets in the economy's industries that same year. (CBS 28.03)
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10.4 Israeli Home Prices Continue to Rise
The Central Bureau of Statistics survey of tenant owned homes showed that home prices rose in February. The Home Prices Index rose by 0.4% rise in February, and the Home Rent Index rose by 0.3%. The rises continue the trend since December 2008, the last month that home prices fell. Recently published figures for Q4/10 show that nominal home prices rose 43% in 2008/10. Home prices have risen by 60.2% since the current rise began in 2007. The Central Bureau of Statistics says that the average home price was NIS 1.09 million in Q4/10, 3.4% higher than the NIS 1.05 million in the preceding quarter, and 16% higher than the NIS 937,600 in the corresponding quarter of 2009. Average monthly rent was NIS 3,039 in the fourth quarter, almost 2% higher than the NIS 2,982 in the preceding quarter and 7.7% higher than in the corresponding quarter. The rise in home prices is increasing the number of monthly salaries needed to buy a home. The Ministry of Housing & Construction reports that 129 average salaries were needed to buy a home in 2010, up from 119 salaries in 2009 and 105 salaries in 2007-08. (CBS 16.03)
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11: IN DEPTH
11.1 ISRAEL: Most Active Venture Capital Funds in Israel - 2010
On 29 March, the IVC Research Center released results of its survey to determine 2010's most active venture capital funds in Israel. IVC ranked Israeli and foreign venture capital funds according to the number of first investments made in Israeli and Israel-related companies in 2010. The data are based on information received directly from the VC funds and from the IVC-Online Database (http://www.ivc-online.com). The ranking reflects the number of deals only, not capital invested.
Evergreen was the most active fund in 2010 with six first investments. Second place was shared by two funds – Battery and Pontifax – with five first investments each. Four funds – Gemini, Genesis, Carmel and Cedar – were ranked third, each with four investments.
Evergreen is one of Israel's long-established venture capital firms, having one of the largest portfolios in Israel and investing in a wide range of technological sectors. Battery, a US fund that has been investing in Israel since the mid-1990s, opened a local office in 2008 to manage its expanding Israeli portfolio. Pontifax is a life sciences-specialized fund which holds 15% of Biomedix, which in turn has a majority stake in incubators ATI and Meytav. Pontifax also has, since 2009, a strategic agreement with pharmaceutical giant Roche for joint investments in Israeli life science start-ups.
In 2010, 75 first investments were made in Israeli and Israel-related companies. Deals performed by Israeli VC funds accounted for 69%, while those performed by foreign VC funds accounted for the remaining 31%.
Seed stage companies accounted for 24 deals or 32% of first investments or 24 deals.
The Internet sector attracted the largest number of first investments in 2010 – 19 deals or 25% of the total number of first investments. The software sector followed with 17 deals or 23%, while the life science sector was third with 12 deals or 16%.
In 2010, Israeli VC funds alone made 52 first investments in companies, compared to 66 first investments in 2009. According to the IVC-KPMG 2010 Venture Capital Survey, first investments accounted for 29% of the total amount invested by Israeli VC funds, as in 2009.
Marianna Shapira, IVC's Research Manager, pointed out that "In 2010, 50% of Israeli VC funds did not make any first investments, while in 2009, 42% of active funds failed to make first investments. This is a clear indication of the continued decline in Israeli VC fund activity, as well as the absence of new funds and new capital in 2010."
In 2010, seed stage companies attracted 20 deals or 38% of the number of Israeli VC fund investments, compared to 23 deals or 35% in 2009. Cedar and Magma made all their investments in seed companies, with four and three deals, respectively. Of the 20 Israeli venture capital funds that made first investments in 2010, eight did not invest in seed companies at all.
The life sciences attracted 11 deals or 21% of Israeli VC fund investments, followed by software and the Internet with 10 deals or 19% each. The same sectors were the most attractive in 2009 as well, with 16 deals or 24% made in the life sciences and 15 deals or 23% in the software and in the internet sectors.
In 2010, foreign VC funds made 23 first investments in Israeli and Israel-related companies. Battery was the most active foreign VC fund, with 5 investments, followed by Bessemer with three deals.
Only four deals with seed companies were made by foreign VC funds in this period, while 11 of 15 foreign VC funds did not make investments in seed companies at all. Moreover, no revenue growth stage deals were made by foreign VC funds. Internet companies attracted the largest number of investments by foreign VCs with nine deals (39%), followed by software with seven deals (30%). (IVC 29.03)
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11.2 LEBANON: Economic Growth Projected at 5.5% in 2011
Barclays Capital has projected Lebanon's real GDP growth at 5.5% for 2011 compared to 7.5% last year. The inability of political factions to agree on the formation of a new government is starting to weigh on the country's economic outlook, the bank has said. Barclays indicated that domestic political uncertainty, along with the rise in geopolitical risks in the MENA region, the absence of a government, and the constant political wrangling have led to a policy void, institutional paralysis, and a lack of direction or timeline for much-needed fiscal and economic reforms. It noted the current political stalemate is weighing on economic activity, as the Central Bank's coincident indicator slowed in the last quarter of 2010, reflecting receding activity in real estate, tourism, and a slowdown in consumption as indicated by softer growth in VAT receipts and customs revenues.
Barclays considered that increased political uncertainty in nearby Arab countries and its negative effect on growth prospects are adding to the complicated domestic picture. It noted that the destination of more than 50% of Lebanese exports is towards nearby Arab countries, especially to Egypt, Saudi Arabia and the UAE, also the main sources of foreign direct investment and tourism to Lebanon. It considered that weakening economic growth in Egypt and rising risks in the GCC, as well as an increasing tendency to employ nationals and rely on local companies across the region, could negatively affect Lebanese expatriates and companies dependent on these economies.
In parallel, it said rising global food and oil prices pose significant inflationary and fiscal risks. It stated that rising global prices will negatively impact Lebanon's import bill and current account deficit, as well as the government's budget. It noted that higher oil prices will raise the value of the transfers to Electricite du Liban, which will be compounded by the effect of the government's recent decision to lower the import tax on gasoline by 57%, at a cost of around 1.5% of GDP.
Barclays Capital expressed concerns about the possible reversal in debt-sustainability trends despite improved fiscal indicators. It said the total primary surplus increased by 11.6% and was equivalent to 3.3% of GDP in 2010. It noted, however, that capital spending remains relatively constrained and far below the levels required to upgrade and modernize Lebanon's infrastructure in the energy and transport sectors, where bottlenecks affecting growth are most acute.
Barclays said its base-case scenario is that a new government will be unable to ratify a budget without agreeing on the financing of the Special Tribunal for Lebanon. Accordingly, investment spending looks likely to remain at existing levels, with current spending rising further, bringing the deficit to around 8.2% of GDP this year up from 7.5% of GDP in 2010. It pointed out that the risks to the favorable debt dynamics are a slowdown in economic growth and a declining primary surplus, as a new government could increase current spending. (The Daily Star 27.03)
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11.3 LEBANON: Staying in Touch
Strengthening the IT sector, cutting costs to consumers and improving internet services are among Lebanon's priorities, although more than a few hurdles stand in its way. At the end of January Charbel Nahhas, the caretaker telecommunications minister, said the country's IT services were on the verge of a revolution, with the face of the industry set to change dramatically. Before the close of 2011, internet speeds would be increased to 21 Mbps, he said in an interview with English-language newspaper The Daily Star.
This increase, combined with improved telecoms services and reduced costs, would be the result of a new fibre-optics grid being installed by Swedish telecoms firm Ericsson, said Nahhas. Any speeding up of existing internet services would be welcomed by users and the industry alike, both of whom have long complained about slow transmission rates and a weak infrastructure backbone.
These complaints were given substance by a report issued in early March by web-based network diagnostic applications assessor Ookla, which showed that Lebanon had the slowest internet speeds in the world. The company's Household Download Index ranked Lebanon in last place out of 169 countries around the world in terms of internet download speed, and gave it the same ranking in the upload index.
According to Ookla's study, conducted in February 2011, the average download speed in Lebanon was 0.49 Mbps, dramatically below the global average of 9.14 Mbps and short of the 4.74 Mbps average enjoyed by countries in the Arab world. Lebanon's average upload speed was no better at 0.1 Mbps, well below the global average of 2.55 Mbps and the Arab world's average of 0.85 Mbps.
Another report, released in mid-February, was more optimistic, with market research firm Business Monitor International forecasting a near-12% increase in Lebanon's IT sector in 2011. This growth comes after a year in which total sales of technology amounted to $321m. Stepping up programs to put technology into Lebanon's classrooms, as well as the prospect of increased sales to the private sector, bode well for retailers in the industry.
With personal computer ownership rates below 20% in Lebanon, the potential for sales to the public is also extensive, more so if the economy continues to perform well and the effects flow through to a broad swath of the population.
The IT sector is expected to benefit from the huge investments in telecoms infrastructure that have been announced by the state, though this assessment could give rise to some skepticism. Many of the proposed investments in IT and communications infrastructure have been in the pipeline for a number of years, being dusted off and updated on a regular basis but never fully followed through.
Experts have warned that the economy will suffer if better services are not provided. Late last year, Gabriel Deek, the president of the Professional Computer Association of Lebanon, warned that the country risked missing out on foreign investment if it did not improve broadband capacity and cut costs. Deek also said state agencies such as the Telecommunications Ministry needed to understand that better services would garner higher revenues. "The ministry must be aware of the fact that providing people with more bandwidth will increase revenues, and not the contrary, because the number of subscribers will go up," he said.
One project that is well on the way to completion and will give a significant boost to IT and communications is the planned implementation of third-generation (3G) mobile phone technology. When in place, mobile phone users will be able to access the internet through their handsets, with connection speeds up to 40 times faster than the current DSL connectivity rates.
Though long delayed, with initial trials of 3G technology previously announced for early 2009, mobile phone service providers Alfa and MTC Lebanon are planning to have their upgraded networks on-line soon. This would mean more than 2.75m mobile subscribers would have access to vastly improved internet services. Lebanon will still need to do more to expand and improve internet links, cut costs and encourage greater usage if it wants to take advantage of the IT available and integrate it into the national economy. Doing so will see the country become increasingly connected to the online world. (OBG 22.03)
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11.4 IRAQ: IMF Executive Board Completes Second Review Under Stand-By Arrangement
On 18 March, the Executive Board of the International Monetary Fund (IMF) completed the second review of Iraq's economic performance under a program supported by a Stand-By Arrangement (SBA). Completion of the second review makes an about $471.1 million available for disbursement, bringing the total resources currently purchased by Iraq under the SBA to about $1.7 billion. The Executive Board also approved a waiver of applicability of the end-December 2010 performance criteria on the central government fiscal deficit and on the central government spending bill, for which data is not yet available. The Executive Board furthermore approved an extension of the SBA by five months to July 2012, and a rephasing of access under the SBA to match disbursements with Iraq's balance of payments financing needs.
The SBA was approved on February 24, 2010 for about $3.77 billion. The SBA supported program aims to ensure macroeconomic stability and provide a framework for advancing structural reforms in Iraq.
Following the Executive Board's discussion on Iraq, Mr. Naoyuki Shinohara, Deputy Managing Director and Acting Chair, stated:
"Iraq has maintained macroeconomic stability under difficult external and internal circumstances, while making efforts to rebuild key economic institutions. Inflation has remained subdued, and the exchange rate has remained stable. The 2011 budget aims to accelerate investment in public services and infrastructure, and accommodates higher social safety net provisions to support those in need. Iraq's rehabilitation needs remain large and the higher investment spending is essential to help create a vibrant private sector that provides employment opportunities for Iraq's large labor force, thus helping to reduce poverty. At the same time, a strong emphasis on ensuring the quality of public spending will be important.
"Decisive efforts to rebuild key economic institutions and improve governance will be critical for private sector development. The formation of the new government and the expected increase in oil production in the coming years offer an opportunity to do so while maintaining macroeconomic stability. Further strengthening public financial management encompasses the introduction of an automated financial management and information system and improvements in cash management which would eventually culminate in the establishment of a single treasury account. Establishing a framework for oil revenues to succeed the Development Fund for Iraq should help ensure continued accountability and transparency. In the financial sector, moving ahead with the financial and operational restructuring of the two largest state-owned banks and enhancing the central bank's supervision capacity will contribute to creating a financial sector that can provide essential services to the private sector.
"Iraq continues to make progress to conclude debt agreements and resolve outstanding claims under terms comparable to the 2004 Paris Club Agreement." (IMF 18.03)
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11.5 BAHRAIN: Demography and Bahrain's Unrest
Omar al-Shehabi wrote on 16 March in the Carnegie Arab Reform Bulletin (http://carnegieendowment.org/arb) that the introduction of GCC troops into Bahrain has been labeled a foreign "occupation" by the opposition, while the government has hailed it as brotherly support from its neighbors. In fact, this "native-foreigner" issue has a long history in the country and serious political implications not only in Bahrain but also throughout the Gulf.
The Bahraini monarchy has long relied on foreigners not only as military and police forces, but also to shift the political balance in the island kingdom. The opposition in Bahrain, drawing primarily but not exclusively on support from the country's majority of Shiite Muslims, has accused the government of fast-tracking the citizenship of carefully selected foreigners in order to change the demographic makeup of the country. The "politically naturalized," as they are called, are Sunni Muslims mainly from Bedouin tribes in Saudi Arabia, Syria, Yemen, Jordan and Baluchistan. They are seen as having close ethnic and cultural links to the local rulers. Estimates of their numbers range from 50,000 to 200,000, constituting between one-tenth and one-third of the total number of citizens.
The politically naturalized are mainly employed in the security and defense forces, increasing the perception that they have been brought in to contain the local population. The graphic videos surfacing of the recent attacks by security forces against protestors show actions that involved some foreign or politically naturalized individuals.
This systematic use of foreign forces is a tradition that goes back decades. It was first used in the region by the British in the nineteenth century, when divisions composed of individuals from Baluchistan and the Indian sub-continent were brought in to help establish control over the Trucial coast. It limits the risk of identification with locals and of defection. Fears about loyalty are less of an issue, as long as the right material incentives are provided.
These demographic tensions have come to the fore in the latest protests in Bahrain. There have been fights between local students and their recently naturalized counterparts at schools. A major scuffle broke out recently between local and politically naturalized youth in a suburban town of mixed composition, leaving several injured.
This issue is not only sect-based, however. Political naturalization has caused friction and aroused complaints from locals across the spectrum. One well-known incident two years ago involved clashes between members of a Sunni family and some of the politically naturalized, with the event becoming a cause célèbre on the island. Indeed, Sunnis frequently complain that they have been the most to suffer from the effects, as the politically naturalized tend to take up jobs in the security forces and live in areas that historically have been predominantly Sunni.
The regime has also tried to use some of the expatriate workforce on the island for explicitly political purposes. Groups of expatriates have attended the pro-regime demonstrations, whether willingly or not, helping to swell the size of the demonstrations. The majority, however, remain apolitical, with their interests largely confined to the economic domain.
The demographic makeup has also been used as a way to limit dependence on the local population in the economic sphere, helping the regime to avoid the labor unrest that has been a constant feature of Bahrain's modern history. Bahrainis currently constitute less than a quarter of the labor force, so their impact on the economy production-wise (should they choose to strike) is much more contained. They also make up less than half of the 1.2 million residents of the island (down from roughly two-thirds a decade ago).
While the problem is most intense in Bahrain due to the clear political ramifications, the foreigner-native issue is rooted in the institutionalized rentier-state system that prevails throughout the Gulf. It is based on a ruling elite who use the large oil revenues at their disposal to appease local residents through an extensive welfare state, while ensuring that they are marginalized on the political and economic fronts. Productive economic activity is carried out mainly by an expatriate workforce that is tightly controlled and has limited labor rights. Under this structure, it is much easier for locals to lay the blame on foreigners and vice versa. Unless the current rentier-state structure changes drastically, the demographic interplay between foreigners and locals - already playing a pivotal role in the current disturbances in Bahrain and Libya - will eventually affect the stability of other Gulf States as well.
Omar al-Shehabi is director of the Gulf Centre for Policy Studies. (CARB 16.03)
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11.6 BAHRAIN: Police State Politics
The Economist Intelligence Unit said on 16 March that Bahraini security forces have finally cleared the Pearl roundabout area of protestors following a final violent confrontation that left at least six people dead. The assault on 16 March came two days after forces from Saudi Arabia and the other Gulf Co-operation Council member states (the UAE and Qatar) entered Bahrain at the behest of the ruling Al Khalifa family, which proceeded to declare a state of emergency for three months. This marks a reversion to the repressive police state that held sway in Bahrain between the dissolution of the first elected parliament in 1975 and the tentative process of political liberalization launched in 2002. The country is likely to become the main battlefront in the Gulf between the two dominant regional powers, Saudi Arabia (a bastion of Sunni Islam) and Iran, to whose supreme leader many Shia Muslims in the Arab world owe allegiance. Its financial services industry will suffer as banks and insurance companies migrate to what they perceive to be safe havens in Doha, Dubai and Abu Dhabi.
The arrival of the GCC's Peninsula Shield Force, and the increased use of repressive tactics to deal with the protesters has fatally undermined chances of a negotiated settlement between the government and the opposition - signaling also the ascendancy of the prime minister (and subject of ire among the opposition), Sheikh Khalifa bin Salman al-Khalifa, at the expense of the crown prince, Sheikh Salman bin Hamad al-Khalifa, who has been tasked with leading the dialogue with the protesters.
The narrative of dialogue and reform that dominated the discourse throughout much of the last decade will likely be sidelined, as a more repressive, coercive brand of governance takes hold to secure the security situation. Mass arrests and rule by decree will be the order of the day, as the elected parliament disintegrates. The formal dissolution of parliament is expected soon, and is looking increasingly like a formality as 18 MPs (out of a total of 40) belonging to the opposition Al Wefaq political society pulled out, with unconfirmed reports of another eight following suit.
Detention
Based on the 1975 precedent, the regime can be expected to detain hundreds or perhaps thousands of people suspected of being opposition activists - most of these people will be from the Shia sect, widely considered to constitute the majority of the Bahraini population. The government has already intimated that Iran has played a central role in fomenting the unrest. This may prove to be a self-fulfilling prophecy. Iran wields influence over an important segment of the Bahraini Shia population, but the influence of Shia clerical schools elsewhere in the region - particularly Iraq and Lebanon - where the Iranian notion of velayat al-faqih (rule of the supreme jurisprudent) is rejected in favor of a more quietist approach to politics. The repression of all forms of opposition is likely to encourage more extreme tendencies, and there could well be a return to the violence of the 1980s and 1990s, potentially supported by Iranian-supplied weapons and explosives.
Financial Fall-Out
The choice of repression over dialogue may have been pushed on Bahrain's ruling family by their over-zealous partners in the GCC, who will be keen to present a united show of force to discourage any similar revolts or indeed demands for modest political reforms by their respective populations. This though, will lead to some international censure, and the impact on its reputation will make it far harder for Bahrain to maintain its position as a regional financial services hub. That position was already under threat from Doha and Dubai, and the decline of Bahrain is now likely to accelerate to the advantage of these newer financial centers.
The Economist Intelligence Unit has revised downwards its forecast for Bahrain's GDP growth for the year, to 2.8%, as exports suffer from a significant decline in service's credit. Bahrain will struggle to repair the damage done to its ''business friendly'' reputation, and many financial services companies (who will also be wary of the ever-increasing reputational risks of doing business with repressive regimes) may chose to base their operations in Dubai, as an alternative. The decline in the services sector will, however, be partially offset by the increase in the exports of goods, with oil prices expected to remain high for the year, and by an increase in government consumption. Bahrain has little oil of its own, but it receives the revenue from the export of about 150,000 barrels/day from the Abu Saafa field that it shares with Saudi Arabia and which is operated by Saudi Aramco. This dependence on Saudi Arabia is likely to increase. (EIU 16.03)
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11.7 QATAR: Going into Overdrive
The Oxford Business Group reported that with the government and international agencies alike predicting GDP to expand by almost 20% this year, and a budget surplus in the double-digit billions, Qatar's economy is set to outstrip nearly all others around the world in 2011. Just about the only cloud on the horizon is the return of demand-driven inflation, though even this concern seems likely to dissipate in the face of sustained growth.
In an address given by the minister of finance and economy, Yousef Hussein Kamal, on behalf of the prime minister and foreign minister, Sheikh Hamad bin Jassim bin Jabor Al Thani, on March 3, delegates attending a meeting of the Institute of International Finance in New Delhi were told Qatar's GDP would increase by at least 18% in 2011. The IMF is even more upbeat, forecasting that Qatar's economy will grow by 18.6% this year, on top of the 16% expansion in real GDP in 2010. Some – though no means all – of this growth is being powered by liquefied natural gas (LNG), with Qatar's annual output reaching its planned maximum level of 77m tonnes at the end of last year, up from 56m tonnes at the close of 2009.
According to a recent report by the Arab Monetary Fund, an additional spur for the economy is the higher level of state investment in infrastructure projects and other measures taken in 2010 to prevent any ripple effect from the global recession. Though this increased state spending may reduce the 2010/11 budget surplus, it should still come in at around 8.7% of GDP, the Abu Dhabi-based agency said on March 8, equating to some $12b. Even the forecast growth rates and budgetary surplus could prove to be on the conservative side, with oil trading well above the $55-per-barrel base rate used by the government in its budgetary projections – indeed, as of March 17 benchmark Brent crude was trading at nearly double that level, at just under $110 per barrel.
While the economy is expected to post significant growth, with this comes an old foe – inflation. In late January the finance minister forecast that inflation would remain fairly flat for 2011, with prices expected to rise by just 1% at the most. Though a turnaround from the 2.4% deflation experienced last year, the projected rise is a far cry from the double-digit increases seen in the middle of the last decade.
The minister told reporters that if there was excess liquidity fuelling demand, "then there will be intervention from the central bank because we don't want the inflation that we experienced in 2006 and 2007," he said.
While there have not been steep price rises so far in 2011, early indications are that the Ministry of Finance's target may be exceeded, with data released on March 1 showing inflation in January was running at 1.6% year-on-year. Though not a dramatic spike, it is a reversal of the deflationary cycle and a trend the government and the central bank will undoubtedly be watching. "I do not believe that managing inflation will present itself as a problem or concern," Kamal told OBG. "We have the flexibility and resources to exert strict fiscal and monetary control when it is necessary."
Another issue the central bank will likely be monitoring closely is the level of bad debt held by the country's lenders. Though most of Qatar's banks reported strong results for 2010 – with market leader Qatar National Bank alone posting a 35.7% jump in net profits and the banking and financial sector as a whole seeing profits rise by 25% – many also had to make greater provision for non-performing loans last year. Banks reported more than $275m of impairment losses on loans and advances last year, and between them had $2b worth of total provisions for bad or doubtful loans in January, up from the $1.8b as of November. With the sector showing black ink in the ledger again and easily able to carry what bad loans it may still have after last year's pruning, this pillar of the economy is expected to expand strongly in 2011. (OBG 23.03)
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11.8 OMAN: Hitting the Gas
In an effort to meet rising domestic demand and keep the cost of imports to a minimum, Oman is looking to boost its production of natural gas. However, the levels of investment necessary to exploit the Sultanate's difficult-to-tap reserves, means that margins may be squeezed until gas prices rise – something analysts are already predicting.
Oman's estimated gas reserves currently stand at more than 850b cu meters, though experts believe this is a very conservative figure. A new concession being developed by BP – the Khazzan and Makarem gas fields in Block 61 – could on its own hold a further estimated 850b cu meters. This agreement covers an area of some 2800 sq km in central Oman, which contains a number of reservoirs.
Last year, Oman produced 91m cu meters of gas per day, a 7% increase on output in 2009, with a similar rise in production planned for this year, according to Ministry of Oil and Gas data. While some of this was earmarked for the export market, mainly for clients in Asia (China and Japan are the main export markets), most was channeled into the domestic economy, particularly into power generation and the industrial sector.
This growing domestic requirement has led to an increase in exploration activities by both local and international firms. Petroleum Development Oman (PDO), for example, will invest around $1b for gas projects and another $3b for oil in 2011, Raoul Restucci, PDO's managing director, told the press at a media briefing highlighting the firm's progress in 2010 and future plans.
On 20 March it was announced that Oman Oil Company Exploration and Production (OOCEP) would invest $1b to develop the Block 60 gas field in central Oman. The concession for the 1485-sq-km block had previously been held by British firm BG Group, which relinquished its interest in late 2010. The block is expected to yield 90m cu feet of gas per day in the first phase.
Estimates for the reserves lying beneath Block 60 have varied greatly, with BG initially saying there could be up to 480b cu meters, though more recent assessments suggested the figure could be closer to 56b cu meters. While a number of test wells sunk by BG produced promising results, the big test for OOCEP – a subsidiary of the state-owned Oman Oil Company – will not only be to develop whatever reserves the block holds, but also to do so in a cost-effective manner.
Many of the new deposits being identified may be sizeable but they are also classified as "tight gas", meaning that the gas is hard to access as it is surrounded by compacted rock or sand. While improved technology will help, extraction costs for tight gas are likely to be higher than in conventional fields.
If, as some analysts expect, natural gas prices continue to increase, particularly on the back of growing Japanese demand, as the nation switches over to liquefied natural gas (LNG) to make up for lost nuclear capacity, this is likely to give new exploration and production efforts a boost by increasing the commercial viability of some projects.
"It's a little too early to say how the market will be affected, but there's likely going to be a tightening of the LNG market," Simon Henry, Royal Dutch Shell's chief financial officer, told the international press in mid-March. Any new commercially viable fields are of increasing importance to the Omani economy, not for the potential export earnings they could generate but for their capacity to power local generators. Since 2008 Oman has had to import gas to meet its domestic needs, which have grown dramatically over the past decade as a result of the increased level of industrialization across the economy.
While the growth of a strong manufacturing sector has broadened the base of the Sultanate's economy, it has also driven rising demand for electricity – which is mainly provided by gas-fired power plants – and for direct supplies of gas, which is used in many industrial processes. Add to this the increased pressure on the local power grid from consumers, especially during the hotter summer months, and Oman's domestic gas production has been unable to meet demand.
Another issue for Oman is ensuring that locally produced and imported gas is accessible in the regions that most need it. In late February the government announced it was considering building a pipeline from Saih Rawl in central Oman to Duqm, on the Wusta Coast of the Arabian Sea.
With Duqm being developed as a major port, logistics and industrial centre, the demand for electricity and gas is growing, Nasser bin Khamis Al Jashmi, the under-secretary at the Ministry of Oil and Gas, told media on 22 February. Initially the pipeline would feed a large-scale power station and water desalination plant there, with the line then to be tapped later to meet the needs of industry.
A guaranteed supply of gas to the industrial and trade centers being developed in Oman's coastal regions, in particular at Salalah near the Yemeni border, Duqm, Sur and Sohar – as well as to the capital, Muscat – is essential for the future growth of the economy. (OBG 24.03)
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11.9 SAUDI ARABIA: Fueling the Future
Saudi Arabia is looking to diversify its domestic power industry away from its existing reliance on fossil fuels by investing heavily to make renewable energy the Kingdom's central source of electricity, a move that will extend the life of its oil fields, protect export earnings and pay environmental dividends.
While sitting atop the world's largest hydrocarbons reserves, Saudi Arabia has earmarked most of its oil and gas for export, sales of which bring in foreign currency that in turn will be invested to broaden the base of the national economy and meet the needs of a growing population. However, that very program of economic diversification has put increased demands on the country's fossil fuel reserves.
According to official estimates, Saudi Arabia's demand for electricity will increase threefold in just over 20 years, while calls on hydrocarbons needed to fire the Kingdom's turbines would more than double by 2028, with this likely to have a significant effect on export earnings.
More than 8m barrels of oil equivalent (BoE) a day will be required to ensure adequate capacity if the projections for 2028 electricity consumption are accurate, a significant increase on the 3.4m BoE used in 2010. Given that oil production averaged around 8.25m barrels a day in November 2010, production will either need to be hiked dramatically – a move which would cut the life expectancy of local fields – or alternative power sources found.
In late January, Hashim Yamani, former commerce minister and now the head of the country's effort to develop renewable and atomic energy, warned that the rapid rise in demand for power will require a shift in policy towards alternative resources.
"The demand for electricity is steadily increasing – it was 40 GW in 2010 and is expected to reach 120 GW in 2032," Yamani told a conference in Riyadh on January 23. "The demand for oil has also been growing at an alarming rate. Over the past four years, the total local demand for oil has grown 27%. We will need to usher in a new energy mix to meet local needs, as well as maintain Saudi Arabia's leadership role in the changing global energy landscape."
Saudi Arabia is already moving down that path, having declared its interest in developing a civil nuclear power capacity and ramping up studies into what mix of alternative energy sources will best suit the Kingdom. Meanwhile, foreign firms are lining up to work with local companies in what could be one of the most lucrative energy markets in the coming decades.
French group Areva is just the latest to develop ties in the Kingdom, joining forces with the Saudi Bin Laden Group in January to cooperate on solar and nuclear energy projects. The firm's chief executive, Anne Lauvergeon, said Saudi Arabia was developing into an important market for solar thermal energy and that Areva wanted to be a long-term partner in what she called "a major energy evolution in the region".
"The division between fossil fuels and renewables is dead, as is the idea that there will be one energy that is more important than others. The world needs all the energy solutions," she said while in Riyadh.
The government has already earmarked $80b for investments to find those solutions and bolster the country's electricity generation and distribution facilities over the next 10 years. While this will ensure supplies and provide for some excess capacity in the shorter term, the expansion program will not meet the demands put on the grid in the coming decades.
The next wave of generation capacity will have a far different current, with Saudi officials proposing that investments will focus on renewable sources. Solar and wind energies are set to start making a major contribution to supply within eight to 10 years and nuclear power should also begin to kick in at the beginning of the next decade.
Luckily for Saudi Arabia, it has the time to develop alternatives. Official estimates put its known oil reserves at more than 260b barrels, enough to sustain current production levels for 80 years or more. With swathes of the country yet to be fully surveyed, it is believed the full potential of the Kingdom's fields is far higher, possibly enough to keep the wells flowing into the next century.
However, by investing in renewables and planning for a time when oil will not be the driving force of the economy, Saudi Arabia is playing the long game, one it intends to be on the winning side of in the distant and sunny future. (OBG 17.03)
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11.10 EGYPT: Next Steps in Egypt's Transition
Nathan Brown wrote on 22 March in the Carnegie Arab Reform Bulletin that the March 19 vote in favor of constitutional amendments in Egypt provides a strong boost to the military-led transition process and its vigorous electoral schedule. The voter turnout was impressive by Egyptian standards - 41% of eligible voters, at least double the turnout in any previous national election or referendum - and the victory was overwhelming at 77% of voters. But opponents attracted enough votes to make the outcome seem less like the predictable landslides of the authoritarian order. Those who objected to the content of the amendments and - more forcefully - to the process by which they were written and the political sequence they implied marshaled forceful arguments, campaigned hard, and then lost. Thus, Egypt's transition process will likely rush forward. What are the next steps? The basic sequence of events is clear, but the ruling Supreme Council of the Armed Forces (SCAF) has not revealed many of the details. Nor has it shared decision-making power over the sequence and rules in any serious way.
Constitutional Declaration
The amended articles - most of them governing presidential and parliamentary elections - are now clearly in effect. But the rest of Egypt's constitution remains suspended. Egypt's military rulers have suggested that they will very shortly issue a declaration indicating how authority will be exercised while Egypt's parliament and president are elected, which parts of the 1971 constitution will be brought back into effect, and what their own role will be.
Changes to Laws on Political Parties and Electoral System?
The committee that drafted the amendments also prepared amendments to various laws in order to bring them into conformance with the new provisions, but announcement of the changes was postponed until after the referendum. The SCAF is expected to issue those laws, which will likely be designed to make elections freer and fairer, by decree. The SCAF has suggested that it will change the law on political parties, making it much easier for new parties to register; the Muslim Brotherhood is one of the many groups that would likely take advantage of such a change. The SCAF might also move from the current electoral system of individual parliamentary districts to a proportional representation system in which at least some of the seats would be allocated by a party's share of the national vote instead of giving all of them to the winning candidates in each district. But if the SCAF is planning on such a move, it has not tipped its hand.
Timing of Parliamentary Election
The SCAF has suggested that parliamentary elections will be held before presidential elections; recently one of its members argued forcefully that attempts to reverse the sequence and have the president elected first (as some have suggested would be preferable because parliamentary elections will be much more complicated than presidential) might simply deliver another dictator. But the generals have also suggested that they may push parliamentary elections back from May or June (when they originally suggested they might be held) until September. This is likely a response to those who claim that Egypt's party system is simply not sufficiently organized for elections in two or three months.
Presidential Election
The SCAF initially suggested that it might hold the presidential election in the late summer or early fall; if parliamentary elections are postponed until September, then the presidential election might be pushed back until the end of the year.
Under new nomination procedures contained in the constitutional amendments, a party that gains at least a single seat in the upcoming parliamentary elections will be able to nominate a candidate. (If the Brotherhood is able to form a party and does gain seats, it has said it will not run its own candidate this time but it might still throw its weight behind one of the candidates who is running.) Independent candidates can get on the ballot either by getting a certain number of endorsements by parliamentary deputies or gathering signatures (30,000) from eligible voters.
Already some candidates have announced they will run. Most prominent are:
Amr Moussa, the former foreign minister and current secretary-general of the Arab League. While popular for his Arab nationalist stances, he will have to overcome his association with the past regime, which has already emerged as a major issue in his campaign.
Mohamed ElBaradei, former director of the International Atomic Energy Agency and Nobel Prize winner. While respected for his clear articulation of liberal political stances and courage in openly criticizing the Mubarak regime, he will have to overcome a reputation for an aloof and overly cerebral style. In addition, many Egyptians complain that he has spent (and continues to spend) too much time outside the country to be an appropriate candidate.
Hisham al-Bastawisi, leader of a group of judges who confronted the Mubarak regime over the last decade. Al-Bastawisi is, like ElBaradei, widely respected but does not appear to be a natural politician.
Ayman Nour, founder of al-Ghad Party. Nour came in a distant second to former President Hosni Mubarak in 2005 and spent the subsequent four years in prison on politically motivated charges. Known as a born politician and an effective campaigner, and admired for his uncompromising opposition to Mubarak, Nour nonetheless enjoys less of a national reputation than Moussa and ElBaradei.
Hamdeen Sabahi, founder of the Karama Party, a breakaway from the Nasserist Party that has long sought official licensing. Sabahi, like Nour, has been an important organizer within the opposition and is a gifted politician, but enjoys less widespread popularity than other candidates.
Writing a New Constitution
After the new parliament and president are elected, the provisional constitution allows (and, according to a reading endorsed by a SCAF member, actually requires) a constituent assembly to be selected to draft an entirely new constitution. While the opponents to the amendments wished to have this done as the first rather than the last step, they will ultimately get their wish for an entirely new document.
Nathan Brown is a professor of political science and international affairs at George Washington University and a nonresident senior scholar at the Carnegie Endowment for International Peace. (CARB 22.03)
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11.11 EGYPT: Enduring Appeal
There are signs that Egypt's tourism industry may be set to recover far more quickly than expected from the two months of political turmoil and protests that brought the country's economy to a near standstill. The Oxford Business Group reported that visitor numbers are starting to climb, although any rebound will of course be dependent on a prolonged period of stability.
One of the first victims of the unrest that ultimately saw the overthrow of former President Mubarak was the tourism sector, which is crucial to the economy, contributing 11.5% of GDP and providing jobs directly or indirectly for one in seven working Egyptians. In 2010 tourism brought $13b into the economy, thanks to the 14.2m overseas visitors that came through passport control.
Though it may be unable to match last year's figures, there is cause for optimism that the tourism industry will post just a few months of poor results following the political upheaval, rather than 12. While Egypt received only a fraction of the 1.2m visitors it would welcome in a normal February, with arrivals down by 80%, it seems that the age-old appeal of the land of the pharaohs is reasserting itself.
According to TUI Germany, the German branch of TUI Travel, Europe's largest tour operator, summer bookings to Egypt are down just 22% year-on-year, a remarkable performance considering the events of the past two months.
Volker Boettcher, the chief executive of TUI Germany, says that while there was a fall in reservations for holidays to Egypt, this could turn around later in the year when the confidence of travelers in Egypt as a destination returns. "I think we will have weeks near the end of the summer season when bookings reach the level of the previous year," he told the Reuters news agency on March 8.
For Mounir Abdel Nour, Egypt's newly appointed tourism minister, the recovery is already under way. "We have been hit very badly but I am confident that before the end of March we will be on track again," he said on March 10, while attending the ITB travel fair in Berlin. "Charter planes are landing in Hurghada and Sharm El Sheikh. Hotel occupancy is increasing. We believe that the situation is bouncing back quicker than we thought."
Though tourism may be rebounding, the government plans to act to give it an extra push. "We are determined to do whatever it takes to regain the confidence of travelers," Nour said. "We will advertise, communicate, visit and give incentives."
The new administration is cautiously confident that the economy will overcome the effects of the first two months of the year, with the recently appointed finance minister, Samir Radwan, predicting on March 11 that GDP will expand by 3% in the financial year ending June 30. Though down on the 6% forecast previously, even the lower growth rate will likely be better than those of some of its neighbors in the region.
Egypt is doing all it can to rebuild confidence and promote itself, even marketing its people-powered revolution, a move that Taleb Rifai, the secretary-general of the UN World Tourism Organization, says will add to the traditional appeal of the country as an international destination. "People go to Egypt to see many places – the Pyramids, Luxor, the Red Sea – and now they are adding Tahrir Square. It has become something for them to admire," he said, while attending the Berlin event.
Rifai also believes Egypt will bounce back quickly, with any impact on tourism in the country and the wider Middle East being what he describes as "immediate term", with the situation set to improve soon. "With regard to Egypt, the high season is October, November and December," he said. "We will have to monitor how it unfolds in other parts of the Middle East."
There may still be some unfolding to be done in Egypt itself that could pothole the sector's road to recovery, however. Though Tahrir Square has become a symbol of Egypt's democratic movement, it also continues to be the scene of protests and the occasional clash between supporters of the old regime and those pushing for an acceleration of the reform process. Images of ongoing unrest will do little to help Egypt re-establish its position as a leading tourism destination.
That said, the ancient land of Egypt is living proof that all things pass. While Mediterranean rivals in the sun-and-sand segment may lure some visitors who would otherwise have made Egypt their destination of choice this season, the early signs are that the attractions that have long made the country a world leader in tourism will again work their charm. (OBG 16.03)
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11.12 TUNISIA: A Profitable Year
Provided it is able to move past the political uncertainty of early 2011, following a strong year in 2010, the banking sector looks set to profit from the improving global economic outlook and renewed efforts to tackle the issue of non-performing loans (NPLs) in 2011. The Oxford Business Group did note that some questions do remain about the government's plans in the longer term, particularly in regard to efforts to make the North African state a regional centre for finance.
While final figures are not yet available, 2010 seems to have been a good year for the sector. Maxula Bourse, a leading local brokerage firm, estimated that net banking profits for the year rose by more than 20% on 2009 figures, to reach €257.08m. While not all banks have yet announced their end-2010 numbers, the early signs are positive, with the country's second-largest bank, the publicly owned Societe Tunisienne de Banque (STB), reporting that deposits grew by 8.46% to €2.6b in 2010, while its loans portfolio increased 12.46% year-on-year to €2.75b. This translated into profit growth of 5% over the previous year, to €21.42m.
The authorities are working to further improve the prospects for the sector, and the central bank is also taking action to ensure the smooth functioning of the financial system in the wake of the country's ongoing political transformation. While it is not yet clear whether the effort will continue following the change of government, the previous administration had been taking steps to transform Tunisia into a regional financial services center as part of a long-term development plan for the sector. In June 2010 the government had outlined a number of measures to help realize this goal, including reducing the country's NPL ratio to less than 7% of loans, promoting the establishment of 400 new bank branches and raising the sector's contribution to GDP from 3% to 5%.
Other steps outlined under the long-term plan for the sector included the creation of two new banking organizations, with the first, Tunisia Holding, developing strategy for the sector and monitoring publicly owned banks, and the second, Al Moubadara, specializing in providing short-term loans for small and medium-sized enterprises. Encouraging consolidation was another goal, with this designed to be achieved in part by increasing capitalization requirements to €51m by 2014.
Efforts to further reduce NPLs can build on the success of recent years, which has seen the NPL ratio fall from 24.2% in 2003 to 15.5% in 2008 and 13.2% in 2009, with the latter breaking down to 14.1% for publicly owned banks and 12.5% for private banks, according to the IMF. The provisions ratio for NPLs increased from 44.1% in 2003 to 58.3% in 2009 – 57.1% for state-owned banks and 59.2% for private banks. The ratios for both vary widely from bank to bank, however, with some institutions performing better than others.
While 2010 figures for the sector as a whole are not yet available, STB, for example, reported an NPL rate of 18.8% and a provisions ratio of 46.8% at the end of 2010. Attijari Bank reported a higher-than-average NPL provisions ratio of 68.1%, up from 64.2% in 2009. Arab Tunisian Bank's provisions ratio was higher still at 75.2%, up from 73.2% in 2009, with an NPL rate of 7.1% in 2010, down from 8.7% in 2009. Banque Internationale Arabe de Tunisie (BIAT) reported that NPLs fell to 8.2% with a provisions ratio of 71.3% at the end of 2010, down from 9.4% with 70.3% provisioning in 2009.
While the NPLs have been falling and provision rates increasing, the value of retail lending in the banking system has also been expanding. According to figures from the central bank, retail lending stood at €5.46b in December 2010, up approximately 21% on December 2009 figures. Housing loans/mortgages accounted for 78% of the total, and grew by 26% between December 2009 and December 2010, to €4.26b. Since 2005, mortgage lending has grown more than threefold. Vehicle loans, though accounting for a small proportion of overall consumer finance, have also seen rapid growth in the last five years, rising from €76.51m in December 2005 to €170.88m at the end of last year, an increase of over 120%.
To ensure the continued smooth functioning of the banking system in the light of recent political developments, in January the Tunisian central bank took control of two institutions which have been impacted by the upheaval, Banque de Tunisie and Zitouna Bank, the country's only Islamic bank. Similarly, in a move to reassure creditors, the central bank told the international press that it held sufficient foreign currency reverses to meet the country's financial obligations.
While the recent political changes may cause a short-term blip in the downward trend of NPLs, the longer-term picture should see progress on this front accelerate. Despite some uncertainty over the new government's longer-term plans for the sector, with the central bank front and center in ensuring the stability of the system and addressing the concerns of international creditors and investors, it looks like 2011 will be a year of business as usual for the country's banks. (OBG 17.03)
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11.13 MOROCCO: Gearing Up To Meet Demand
Long a key source of exports, the Moroccan textiles industry is showing signs of recovery from recent difficulties on the back of rising foreign demand, with industry groups and the government working together to help facilitate this. The government is also considering the introduction of procurement offset policies to further boost local industry as a whole and encourage technology transfers, with these steps likely to have knock-on effects for textiles as well.
While textiles and clothing has declined in importance relative to other industries as they have grown, the segment remains a major foreign-currency earner for the country, with clothing constituting the largest individual export product by value in 2010, at around 11.7% of the total, according to provisional figures from the Office des Changes. However, the sector has been hard hit by several developments in recent years, including the end of the Multifibre Agreement in 2005 and the global economic downturn of 2008-09, which saw demand from its main European export markets fall significantly. While still comprising the largest single export product, clothing exports fell approximately 2% from €1.57b in 2009 to €1.54b in 2010, with this representing a 15% decline from levels in 2006.
However, the result for 2010 pointed to a significant recovery towards the end of the year, as clothing exports began to rise after a 10% decline year-on-year for the first eight months. The gradual improvement in foreign demand, in particular from France and Spain, seems to have carried on into the new year, with the Moroccan press reporting that local firms attending the "Zoom by Fatex" textiles fair in Paris in early February 2011 came away with bulging order books, thanks to a range of factors including the global economic recovery as well as rising prices in China.
Indeed, in some cases, capacity has even become an issue, with Abdelmoula Ratib, head of local producer Le Groupe Ratib, telling Moroccan newspaper La Vie Eco that his company had to turn down orders of several million articles due to lack of capacity. As a result, the sector and government are working together to increase the availability of qualified manpower. Industry body Association Marocaine des Industries du Textile et de l'Habillement (Amith) and the government body Office de la Formation Professionnelle et de la Promotion du Travail (OFPPT) announced a plan in January to train 10,000 new textile workers over a three-month period to deal with growing orders, with plans to train a further 10,000 people later in the year.
Thanks in part to the government's industrial emergence plan and the creation of free zones throughout the country, a range of other industries, such as chemicals, pharmaceuticals, aerospace and car production, have taken off in Morocco in recent years, with this resulting in a relative reduction in the importance of textiles. Exports of industrial equipment, for example, grew by more than 30% in 2010, to €1.96b, with electric cables accounting for over half of the total. Meanwhile, in early February Renault announced that the factory it is building near Tangier, which is due to open in 2012 at a cost of €1b, will have an eventual capacity of 350,000 vehicles per year, transforming Morocco into a significant automobile exporter.
To further stimulate local industry, the government is working on a new procurement offset (compensation industrielle) policy. Under the policy reportedly being developed by the minister for industry and trade, Ahmed Chami, foreign companies that win government tenders worth more than €17.69m will be obliged to carry out local investments and purchases worth at least 50% of the value of the contracts. The measure is intended to boost the local industrial sector by ensuring that foreign companies invest locally, use local subcontractors and locally made products, and transfer technology to the country. While government ministries are currently able to impose offset requirements on companies bidding for state projects, the planned law will make these obligatory across all ministries and procurement efforts. The policy will probably not, however, affect US companies, as the 2004 US-Morocco free trade agreement bars the imposition of such requirements on US firms.
While the law has yet to be finalized, Moroccan press has cited French firm Alstom – which won the contract to build Morocco's high-speed train system and which is also responsible for the construction of tram networks in Rabat and Casablanca – as a positive example of how foreign firms benefitting from major procurement projects can also boost local industrial development. In January the company signed an agreement with the government that will see it establish a local production base for cabling and electronic components, creating 5000 jobs over 10 years, as well as establishing a rail sector training institute. Alstom also signaled its intention to step up purchases from Moroccan suppliers and service providers (such as local back-office offshoring services), for use in projects in other countries as well.
With the steady improvement in demand from key European export markets likely to continue as economic recovery takes hold, the outlook for Morocco's industrial sector in 2011 seems bright. While the textiles segment is no longer a central pillar of the sector, it is nonetheless a major contributor, and it seems set to continue to play an important role in the country's increasingly diversified industrial base. (OG 14.03)
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11.14 MOROCCO: Will Morocco's King Deliver on Reforms?
On 16 March, Intissar Fakir wrote in the Carnegie Arab Reform Bulletin (http://carnegieendowment.org/arb) that King Mohammed VI's March 9 pledge to sponsor broad constitutional reforms following moderately-sized protests on February 20 distinguishes him from other leaders in the region, most of whom have offered too little in terms of reforms and offered them too late in the process of uprisings to make a difference. On the surface, King Mohammed's proposed reforms are significant. But the lack of specifics about the depth of these reforms creates doubt in view of past experiences.
King Mohammed announced in a televised speech a process of constitutional change that will be put to a popular referendum. Proposed reforms would increase the parliament's powers in unspecified ways, create a more independent judiciary, and grant elected officials executive powers at the provincial and local level within a decentralization scheme first introduced in 2010. Decentralization will redistribute power from an appointed governor to new regional representatives to be elected by the people. Under the reforms, the prime minister would have greater executive powers, and the revised constitution would contain greater assurances of political and civil liberties and human rights.
A commission headed by constitutional law expert Abdelatif Mennouni is tasked with consulting with representatives of labor unions, political parties, civil society and other interest groups to discuss the scope of these reforms over the coming months. The 18-member commission will include representatives from professional syndicates and human rights groups (such as Amina Bouayach of the Moroccan Organization of Human Rights), political activists, judges, as well as technocrats such as Omar Izziman and Lahcen Oulhaj (who represents Amazigh/Berber interests). The committee's recommendations will be reviewed in June and then put to a national referendum. The king indicated that as soon as these reforms are ratified, they will be implemented.
For reformists, the king's proposal is promising, but some skepticism remains. The largest parties -Istiqlal, the Socialist Union of Popular Forces (USFP), and the Islamist Party of Justice and Development (PJD) - have lauded the initiative and hailed the king as a statesman, while some on the left have criticized the appointed commission, saying it should have been elected and pointing out that many of those on the committee (particularly Mennouni) are too close to the monarchy. Most of the organizers of February 20 protests reacted in much the same way; they indicated that the commission does not represent them and demanded a decisive stand against corruption, release of political prisoners, and greater freedom of the press. All are waiting to see whether reforms will impose any checks on the king's powers, the true test of their credibility.
Mohammed VI's approach fits a strategy that he has adopted since taking the throne in 1999, when he distanced himself from the repressive policies of his father Hassan II. Among his first acts as a new sovereign was to dismiss Driss al-Basri, his father's feared interior minister and close confidant. Mohammed VI supported the leftist-dominated of Abdelrahman al-Yussoufi, an outspoken critic of the policies of King Hassan II. At that moment Morocco seemed on the way to real change. The al-Yussoufi government started with high hopes and undertook an agenda of progressive reforms, but much of what was promised never materialized.
Nonetheless, the king emerged from this experience with a popular reputation as a reformer, while the politicians and technocrats were blamed for the failures of what he billed as foray into progressive politics. What followed was ten years of superficial change suggesting that the king was more concerned with making an early impression than with embarking on genuine reform.
The new chapter of promised constitutional reform could turn out to be similar in the sense that the king is once again outmaneuvering elected officials. The initial response of the government to the 20 February protests - promising to create jobs for several thousand recent university graduates - was a transparent attempt to tame and co-opt youth groups. The king's subsequent initiative calls on groups across the political spectrum to take ownership of the reforms and become accountable for their failure or success. Even if this initiative is genuine, it will put pressure on the politicians who have clamored for a chance to lead and have long complained that the king does not give them room to operate.
Mohammed VI is trying to get out in front of demands for change rather than be chased by them. What is still unclear is whether he will agree to reforms that would place checks on his power and move Morocco toward becoming a true constitutional monarchy. For now at least and until the protesters speak again, the 47-year-old king is trying to cement his position by making himself an ally of the protesters rather than their target.
Intissar Fakir is a special assistant to the Deputy President of the National Endowment for Democracy. (CARB 16.03)
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11.15 TURKEY: Trade & Diplomacy
Trade and diplomacy took center stage in 2010. In economic terms, it was a year in which Turkey was courted aggressively by both its Western partners and neighbors in the region. The country finished out 2010 with a number of trade agreements either inked or in the works, while the government made much headway in advocating Turkish business interests in its dealings with foreign partners. Meanwhile, Turkey's main business centre, Istanbul, received a significant publicity boost thanks to its status as the European Capital of Culture for 2010.
Mehmet Simsek, the minister of finance, announced in early February that the economy had grown by over 8% in 2010. The nation's debt-to-GDP ratio was reduced to 43%, within the targets set by the government's 2010-12 Medium-Term Program and well under the European Commission's Maastricht criteria. The latter is not a claim many Western European countries can make at the moment. Neighboring Greece has a debt-to-GDP ratio of 140.2%, while Italy's reaches 118.9%, and Belgium, Ireland, France, Germany and the UK all range between 75% and 100%.
The country's economic track record in recent years has given the government greater leverage in regional trade affairs, and the ruling Justice and Development Party (AKP) is currently pursuing a number of agreements with nearby states. For example, six years of negotiations with Lebanon concluded with a free trade agreement (FTA) in November 2010.
Meanwhile, in mid-February, the government announced its intention to cultivate closer ties with the Gulf Cooperation Council (GCC), with hopes of signing an FTA with the bloc by the end of the year.
Trade between Turkey and individual members of the GCC is already on an upward trajectory, with bilateral trade with the UAE, for example, expected to reach $10bn over the coming four years. This follows the signing of a memorandum of understanding (MoU) that outlines the establishment of a joint coordination body between the Chamber of Industry of Ankara and the UAE Federation of Chambers of Commerce & Industry.
As Sultan bin Saeed Al Mansouri, the UAE's minister of economy, told the local press, "We are looking to enhance bilateral relations at all levels, especially in the economic, trade and investment, energy, agriculture, small and medium-sized enterprises, and other areas and sectors which are considered common interests for both countries."
The Turkish government has indicated an interest in expanding its cooperation on major infrastructure projects across the GCC, including a $50bn railway project to connect the Gulf's major cities and economic centers.
Iran has also been a particular focus for the current administration. Turkey's largest neighbor is a potential economic powerhouse that Turkish business interests are keen to access, with energy a major pillar of bilateral trade. Since 2008 Iranian natural gas exports to Turkey have increased 100%, to some 30m cu meters per day. The cross-border pipeline infrastructure has the capacity to handle as much as 15bn cu meters per year, which would entail a rise of around 30% on current levels.
While natural gas sales are a key common interest, Turkish-Iranian trade is by no means limited to energy resources. In January, the countries' housing ministers finalized a deal for the development of joint housing and restoration projects. By mid-February a Turkish construction firm had been contracted to build 20,000 homes in a town near Tehran.
At the February 6 meeting of the Iranian-Turkish Joint Economic Cooperation Commission, officials signed a deal for increased trade cooperation, with a goal of reaching $30bn by 2015. At the signing, the Turkish planning minister, Cevdet Yilmaz, emphasized the importance of the "clear target for future trade". "This goal is easily achievable given the current capacity," Yilmaz told the press.
The increased Turkish-Iranian economic engagement has been a cause for concern for Europe and the US, and officials from both areas have been critical of Turkey's position. The US, for its part, recently enacted a range of sanctions against Iran in response to its ongoing nuclear program. In early February, the US went so far as to blacklist two Turkish individuals and three firms that have close business ties with Iran, including Macpar, Multimat and Step, which it accuses of being involved in the development of Iran's nuclear procurement program.
The move has angered Ankara, and while the US moved to freeze assets within its borders, the Turkish foreign trade minister, Zafer Caglayan, distanced the government from the US position. "This is America's blacklist, not ours," he told reporters on February 8. Adding that Turkey is bound by UN Security Council resolutions and its own laws, he said, "It is out of the question for us to impose any sanctions against those companies or to ban their activities outside the framework defined by Turkish law."
This came just as Hayati Yazaci, the Turkish state minister, was involved in discussions with officials from the US Department of Homeland Security. The two countries have pledged to cooperate in efforts to combat terrorism.
Given Turkey's strong economic position and more engaged diplomatic outlook, the Turkish government is poised to continue expanding the nation's regional influence and continue redefining its global position. With over $40bn in trade deals inked for the coming four years, the country's prospects look bright, although maintaining strong ties with both the West and Iran may require an increasingly delicate balancing act. (OBG 18.03)
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11.16 Greece Downgraded To 'BB-' On Confirmed ESM Borrowing Terms; Still On Watch Neg;
On 29 March, Standard & Poor's Ratings Services (http://www.standardandpoors.com) lowered its long-term sovereign credit rating on the Hellenic Republic (Greece) to 'BB-' from 'BB+'. The rating remains on CreditWatch with negative implications, where it was placed on Dec. 2, 2010. At the same time, Standard & Poor's placed its 'B' short-term sovereign credit rating on Greece on CreditWatch with negative implications. Both the '4' recovery rating and 'AAA' transfer and convertibility assessment are unchanged.
"The downgrade reflects our view of the concluding statement of the European Council (EC) meeting of March 24-25, 2011, that confirms our previously published expectations that (i) sovereign debt restructuring is a possible pre-condition to borrowing from the European Stability Mechanism (ESM), and (ii) senior unsecured government debt will be subordinated to ESM loans," said Standard & Poor's credit analyst Marko Mrsnik. "Both features are, in our view, detrimental to the commercial creditors of EU sovereign ESM borrowers."
The EC's concluding statement addresses the issues of sovereign debt restructuring and government bond subordination in items 1 and 3 of the ESM's term sheet (see "European Council Conclusions" toward the end of the text).
According to the EC: "If, on the basis of a sustainability analysis, it is concluded that a macro-economic program cannot realistically restore the public debt to a sustainable path, the beneficiary Member State will be required to engage in active negotiations in good faith with its creditors to secure their direct involvement in restoring debt sustainability. The granting of the financial assistance will be contingent on the Member State having a credible plan and demonstrating sufficient commitment to ensure adequate and proportionate private sector involvement."
"Like the IMF (International Monetary Fund), the ESM will provide financial assistance to a Member State when its regular access to market financing is impaired. Reflecting this, Heads of State or Government have stated that the ESM will enjoy preferred creditor status in a similar fashion to the IMF, while accepting preferred creditor status of IMF over ESM."
We see two key differences between the ESM, scheduled to be operational from mid-2013, and the current EFSF, both of which, in our view, would likely be detrimental to Greece's commercial creditors.
We believe that the abovementioned pre-conditions of the ESM, against the background of Greece's hefty government debt and high borrowing needs, undermine Greece's plans to resume commercial borrowing by mid-2013, when the current EU/IMF program of official financial support terminates, and increase the likelihood of debt restructuring. Following the expiration of the initial program of official support, Greece is likely, in our opinion, to seek ESM funding.
At the same time, we note growing risks to Greece's budgetary position, highlighted by what we view as the likely budgetary deterioration in 2010. The Greek government's recently released provisional data on its 2010 general government balance indicate, in our view, a relatively higher cash deficit and larger outstanding spending arrears than planned. This suggests that last year's general government deficit could exceed the government's 9.6% of GDP target. Moreover, we believe that the government has not tightened spending controls sufficiently to prevent further accumulation of arrears in 2011. In addition, government revenues have been underperforming budgetary expectations, most recently in the current quarter. In our view, prospects for enhanced tax collection remain uncertain, due both to the impact of weaker domestic demand and persisting inefficiencies in tax administration. In the absence of additional deficit-reducing measures, we believe that the government is unlikely to meet its 2011 budget deficit target of 7.5% of GDP.
We believe that additional measures to meet the targets could create further political and social pressures which, in turn, could undermine the government's resolve to fully comply with the EU/IMF program. We currently anticipate that Greece's general government debt, which we estimate at 144% of GDP in 2010, will peak in 2013 at just above 160% of GDP before declining.
"Standard & Poor's aims to resolve the CreditWatch listing within the next three months, after the Greek government releases its final data on 2010 budgetary performance and fiscal trends in 2011 become clearer," said Mr. Mrsnik.
We could affirm our sovereign credit ratings on Greece if our current expectations about the budgetary deterioration in 2010 and 2011 do not materialize.
If, on the other hand, there is evidence of budgetary deterioration, reflected in a significant worsening of Greece's fiscal position in 2010 relative to the government's target or in underperformance with respect to the government's 2011 budgetary targets, we could further lower our sovereign credit ratings on Greece by one or two notches.
We could lower our sovereign credit ratings on Greece for other reasons as well, notably if we were to conclude that the Greek government's ability to comply with its stabilization program were undermined by domestic political opposition. (S&P 29.03)
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11.17 BULGARIA: Home Appeal
With demand for domestic hardware and software recovering and renewed interest in the potential of high-value outsourcing operations, the outlook for Bulgaria's information and communications technology (ICT) sector appears to be considerably brighter.
Domestic IT market is expected to grow 5% in 2011, reaching a total value of $947m, up from $902m in 2010, according to Business Monitor International (BMI), a UK-based economic forecasting firm. Growth may not match rapid pre-crisis figures as Bulgaria's IT sector expanded from a low base and reaped the benefits of several consecutive years of economic expansion and modernization, along with the stimulus provided by EU accession in 2007. However, current numbers still represent very respectable and steady growth, particularly given that 2011 may be a slow year as the country emerges from deep recession in 2009 and stagnation in 2010. Personal computer sales in Bulgaria grew by a modest 3.8% in 2010, according to the International Data Corporation (IDC), a US-based market research and analysis outfit. Consumer spending is still subdued, and some businesses are still wary of investment after a difficult period.
Nonetheless, a substantial proportion of Bulgaria's population has enough disposable income to spend on computers and technology. As economic growth picks up, the market for IT products should expand as some citizens purchase their first home computers, and, more significantly, as the moderately well-off upgrade their equipment and software and seek new, high-tech services. There is particular scope for growth in notebooks and cloud computing. Meanwhile, on the business side, foreign investors can be expected to continue expanding and improving their IT systems, while Bulgaria's small and medium-sized enterprises (SMEs) – the much-overlooked backbone of the economy – look to computerize and upgrade to improve efficiency. BMI expects that computer sales will total $696m in 2011, with software sales reaching $92m, and predicts that both will continue to grow steadily over the next four years.
Bulgaria's State Agency for Information Technology and Communications (DAITS) has set a target for IT to contribute 10% to the country's GDP by 2011. It has set out a range of initiatives to help support IT development, including enhancing computerization and internet connectivity in schools, investing in training and a drive to make Bulgaria one of the world's top 40 countries in terms of e-government services. The latter goal dovetails with the government's aim of improving administrative efficiency, which is likely to see the public sector remain an important IT buyer for some years.
While the domestic market picks up again, attention is also returning to Bulgaria's advantages as an outsourcing centre. A number of major international firms as well as smaller players in a range of sectors – including IT – are outsourcing ICT-related functions to Bulgaria in areas such as customer support, call centers and business process outsourcing (BPO).
In the second half of the last decade, Bulgaria was increasingly recognized as a promising outsourcing destination, indeed among the best in Europe. Competitive advantages include low labor costs by European standards; a skilled labor force with excellent IT, foreign language and mathematical skills; relatively low property prices and overheads; and a convenient location in a similar time zone to other European countries (UTC +2) and within easy reach of headquarters and clients elsewhere in Europe. Personal and corporate taxation is also low and the country's cultural familiarity makes it an easy place for Europeans to do business. Additionally, political and macroeconomic fundamentals are stable, and the lev's peg to the euro greatly reduces currency risk that is a factor in other Eastern European and global outsourcing destinations. EU membership also allows for the free flow of capital and labor and ensures that the legal system operates along international standards.
While outsourcing activities slowed somewhat during the recession of 2008-09, with some companies even freezing operations, the global economy has returned to growth. However, many companies are ever more conscious of the need to cut costs, adding appeal to the Bulgarian market. Increased demand from existing outsourcing operations was a major driver behind the absorption of new office space in Sofia in 2010, providing a much-needed fillip for the sluggish real estate sector, Atanas Garov, managing director of property firm Colliers International Bulgaria, told the local press. In October 2010, for example, Hewlett Packard announced that it would create 2000 new jobs in Bulgaria with the opening of a new development and support centre, adding to the 3000 employees it already has in the country.
Garov sees huge potential in the outsourcing and offshore industry, asserting that it could become an even more important generator of employment. Colliers International estimate that, with "concentrated efforts to attract investors and major service users", Bulgaria could increase the number of people employed in outsourcing to 100,000 in five years, from 10,000-15,000 currently.
As industry leaders acknowledge, Bulgaria is relatively small in size – the population is around 7.5m and shrinking – and has higher costs in certain areas, including skilled labor, than some Asian and African rivals. Additionally, with inflation resulting in price increases each year and the currency peg holding the lev up, costs in Bulgaria will not remain so low for long. It will not compete as strongly on the same mass-market level as India, the Philippines or Egypt, for example.
However, given the workforce skill level and its location, Bulgaria has substantial potential as a high-value outsourcing centre. Garov sees potential in segments including IT services and research and development serving industries such as pharmaceuticals, banking and telecommunications.
Coordinated efforts at an industry level could boost Bulgaria's profile as an outsourcing destination and would help the industry to reach its potential. Furthermore, Bulgaria needs a diverse range of investors likely to make long-term commitments rather than temporary outfits looking to move on price alone. Bulgarian companies and local branches of international firms have proved their mettle over time, and now the country could well seize the opportunity to move to the next level. (OBG 18.03)
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