TOP STORIES
- Knesset Approves State Budget Proposal in First Reading
- Netanyahu Seeking Foreign Bank of Israel Governor
- BIRD to Invest $11 Million in 14 New Projects
- China's Fosun to Set Up Technology Incubator in Israel
- Hello Doctor - The Missing Link in PHR Management
- Record Number of Tourists Visit Israel in May
- JORDAN: Pipeline to Boost Kingdom’s Energy Flows
- UAE: IMF Says Finances Strengthening But Risks in Dubai
- EGYPT: Gay Egyptians Come Out of the Closet
- TURKEY: The Spring of Turkey, The Fall of Erdogan
TABLE OF CONTENTS:
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Knesset Approves State Budget Proposal in First Reading
1.2 Netanyahu to Head New Strategic Social-Economic Cabinet
1.3 Finance Ministry Says 2012 Defense Budget Hit a New Record
1.4 Natural Resources Royalties Committee Announced
1.5 Netanyahu Seeking Foreign Bank of Israel Governor
1.6 Israel & Colombia Sign Free Trade Accord
1.7 Israel & EU sign Open Skies Agreement in Luxembourg
2: ISRAEL MARKET & BUSINESS NEWS
2.1 Google Confirms Waze Acquisition
2.2 BIRD to Invest $11 Million in 14 New Projects
2.3 Delek To Accelerate Hydrocarbons Discovery Process In Cyprus
2.4 Development of Leviathan Gas Field Estimated to Cost $4.5 Billion
2.5 youAPPi Secures $1 Million in Funding from Glilot Capital Partners
2.6 China's Fosun to Set Up Technology Incubator in Israel
2.7 Idomoo Closes $9 Million Funding Round for Its Personalized Video Service
2.8 Northrop Grumman Israel Supplier Delivers Advanced Composite Component
3: REGIONAL PRIVATE SECTOR NEWS
3.1 IVF Clinic Eyes Expansion Across Arabian Gulf Region
3.2 Cherokee Brand Launches at UAE’s Max Stores
3.3 Saudi Arabia Goes to Detroit to Introduce the 'Next Automotive Hub'
3.4 Sikorsky Exclusive Agreement with Subsidiary of Turkey's Alp Aviation
3.5 Datacolor Expands with Opening of New Turkish Facility
3.6 Cold Stone Creamery Enters Turkey
4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS
4.1 Tel Aviv Municipality Tries Out 25 Electric Scooters
5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Lebanese Smoke 2,379 Cigarettes Per Capita
5.2 Statistics Put Jordan’s Inflation at 7% Until the End of May 2013
5.3 Jordan Receives $200 Million US Grant
♦♦Arabian Gulf
5.4 Qatar to Invest $500 Million in India
5.5 Abu Dhabi's CPI Increases One Point
5.6 Dubai's GDP Rises By 4.4%
5.7 IMF Says Oman Must Slash Spending To Keep Budget Sustainable
5.8 Oman Inflation Slows to New 40-Month Low
5.9 Saudi Inflation Eases to 3.8% in May 2013
5.10 Saudi Arabia Approves 32 More Water Projects
♦♦North Africa
5.11 Egypt's Inflation Rate Reaches 8.2% in May
5.12 Egypt in Late Stages of Verifying IMF Economic Reform Program
5.13 CAPMAS Says 9.3% of Egyptian Children Work
5.14 Libya in Deal to Sell Tunisia 10 Million Barrels of Oil
6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS
6.1 Turkey's Automotive Industry Grows 13%
6.2 New $5 Billion Thermal Power Plant on the Way in Turkey
6.3 Turkish President Gül Approves Controversial Bill Restricting Alcohol
6.4 Value of Greek Exports Up 13.6% in April as Imports Fall by 1%
6.5 Shock As Greece Shuts Down Public Broadcaster
*ISRAEL:
*REGIONAL:
7.2 Qatar Emir Prepares to Cede Power To His Son Tamim
7.3 ‘Lady in Red’ Image from Turkey Protest Goes Viral
8.1 BioLineRx Collaborates with CTTQ to Develop Hepatitis C Drug
8.2 Yissum Novel Method for Diagnosing Retinal Micro-Aneurysms
8.3 Teleflex Buys Israel's Eon Surgical
8.4 Kadimastem Successfully Completes an IPO and Raises $5.5 Million
8.5 Teva Settlement Agreement with Pfizer & Nycomed for Generic Protonix
8.6 Teva Acquires MicroDose Therapeutx
8.7 RegeneCure Clinical Study for Dental Implants
8.8 Mapi Pharma Granted US Patent for Pain Relief Medication Tapentadol
9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 Sensoil Innovations Detects Potential Leaks in Dam Near Dead Sea
9.2 Waterfall Announces Support for OSIsoft PI Asset Framework
9.3 Hello Doctor - The Missing Link in PHR Management
9.4 Viewbix Reaches New Milestone with 50,000 Registered Business Users
9.5 Mellanox FDR 56Gb/s InfiniBand Deliver Leading Application Performance
9.6 N-trig DuoSensePen a Requirement for Next Generation Ultrabook
9.7 GibbsCAM Demonstrates 3 Times Faster Machining With VoluMill
10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's May Annual Inflation Rate Rises from Six-Year Low
10.2 Israel's Economy Grows Annualized 2.7% In First Quarter
10.3 Record Number of Tourists Visit Israel in May
10.4 Israeli Tourism to US on the Decline
10.5 Israeli Food Exports to US Reaches $224 Million in 2012
10.6 Survey Finds 57% of Israelis Have Smartphones
11.1 LEBANON: Making The Most of Hydrocarbons
11.2 JORDAN: Pipeline to Boost Kingdom’s Energy Flows
11.3 JORDAN: Amman Facing More Problems Than Ever
11.4 JORDAN: Web Policy Mistake
11.5 QATAR: Expanding Energy Horizons
11.6 QATAR: Regional Consequences of Qatar's Leadership Transition
11.7 UAE: IMF Says Finances Strengthening But Risks in Dubai
11.8 SAUDI ARABIA: Saudi Arabia's Quiet Transition
11.9 SAUDI ARABIA: Risk Alert - The Next Property Bubble?
11.10 EGYPT: Securing Energy Supplies
11.11 EGYPT: Egypt Studies Implications of Ethiopian Nile Dam
11.12 EGYPT: Gay Egyptians Come Out of the Closet
11.13 TUNISIA: IMF Approves a 24-month $1.74 Billion Stand-By Arrangement
11.14 ALGERIA: Home-Grown Food to Cut Costs & Maybe Subsidies
11.15 TURKEY: The Spring of Turkey, The Fall of Erdogan
11.16 TURKEY: The Protests - Letting off Steam or Engine of Change?
11.17 GREECE: IMF Admits 'Notable Failures' In 2010 Rescue
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Knesset Approves State Budget Proposal in First Reading
On 17 June, the Knesset passed the 2013-14 State Budget Bill in its first reading, with 58 legislators voting in favor of the budget while 44 were opposed. The budget's main item includes the NIS 13-14 billion in tax hikes to cover the deficit and achieve a deficit target of 4.65% of GDP in 2013. The accompanying Economic Arrangements Bill also passed its first reading.
The Ministry of Finance's tax package, which the government passed in May, has generated fierce public and political foment. The plan includes the VAT hike to 18%, which came into effect at the beginning of June, and which is projected to raise NIS 4.6 billion in revenues; levying a 3.5% purchase tax on people moving upmarket, which will come into effect on 1 September if the Knesset approves the measure in its current format; and a 1.5% income tax hike, which will face strong opposition in the Knesset along with the cancellation of the tax exemption on pension deposits. The Ministry of Finance has therefore been drawing up alternatives and improvements to the tax plan that will generate tax revenues, but will be more politically acceptable. The ministry said that there were few alternatives, because the tax plan touches on almost every kind of tax, leaving little maneuvering room.
The Ministry of Finance opposes several alternative tax proposals, which a top official called "populist, with unclear tax revenues generation capability, and which are liable to harm fiscal credibility." The alternative proposals include tighter tax collection and trapped profits. The ministry also opposes cancellation of the tax breaks under the Law for the Encouragement of Capital Investments, since the tax plan already reduces them. It also vetoed an estate tax, and it will try to rebuff MKs' proposals to raise the marginal income tax rate on high income-earners to 55% and to raise the capital gains tax. (Globes 11.06)
1.2 Netanyahu to Head New Strategic Social-Economic Cabinet
The government voted to form a new social-economic cabinet headed by Prime Minister Netanyahu. Netanyahu will head a 10-minister forum that will include Finance Minister Lapid, Economy and Trade Minister Bennett, Justice Minister Livni, Energy and Water Resources Minister Shalom, Minister for International, Intelligence & Strategic Affairs Steinitz, Interior Minister Sa'ar and Communications & Home Front Defense Minister Erdan. The new social-economic cabinet will convene at least three times a year, but it will not oversee day-to-day economic and social policies, leaving those under Lapid's jurisdiction. The forum's main objective will be to formulate social and economic strategies based on relevant situation assessments and the government's desire to addresses certain issues, including current points, such as the controversy surrounding natural gas exports, the Open Skies deal with the European Union, the proposed reforms for the Haifa and Ashdod seaports, the reform in the Israel Electric Corporation and housing and real estate reform. The social-economic cabinet will also formulate long-term strategies for a period of 5-15 years. (IH 09.06)
1.3 Finance Ministry Says 2012 Defense Budget Hit a New Record
Israel’s defense budget hit a new record in 2012, adding $1.27 billion and amounting to $18.38 billion - an 8.2% increase compared to the original budget appropriated to the defense establishment. The data was released following harsh criticism leveled at the government by the defense establishment over its decision to cut $817 million in defense spending in 2013. Recently, Israel Defense Forces Chief of Staff Lt. Gen. Gantz announced a series of cutbacks to military training and operational deployment meant to meet the new budget goals. The cuts prompted IDF officials to warn that major spending cuts could result in a debilitated army that may not be up to the security challenges Israel faces.
According to the Finance Ministry's data, the 2012 defense budget was set at $15.4 billion, but reached $16.7 billion. The state budget has a built-in reserve of $1.66 billion, meant to fund the intelligence services' needs, should they exceed their budgets. The additional defense spending was approved by the subcommittee on the defense budget, which operates by proxy of the Knesset's Foreign Affairs and Defense Committee and the Knesset's Finance Committee. The data further indicated that in 2012, the budget appropriated to the intelligence services, namely the Mossad and the Israel Security Agency (Shin Bet), amounted to $1.64 billion, with a $74.5 million contingency for conditional expenditures.
According to the Finance Ministry, the IDF spent some $5.75 billion on its career servicemen's salaries and pension plans, compared to $5.37 billion in 2011 - a $373 million increase. Wages and pension plans make up 34.3% of the annual defense budget. The military's budget for the retirement benefits paid to IDF officers increased by 21.5% or $242.7 million in 2012; while the wages paid to civilians employed by the military amounted to $636.5 million. The military's expenditures on reserve training came to $415 million, while the wages paid to the employees in the Defense Ministry's various autonomous units came to $359.7 million. (IH 10.06)
1.4 Natural Resources Royalties Committee Announced
On 18 June, Minister of Finance Lapid announced the composition of the Sheshenski 2 Committee, which will examine the policy of royalties paid to the state by private entities from the use of the country's natural resources. Prof. Eytan Sheshenski, who headed committee on oil and gas royalties, will chair the committee. The goal of the Sheshenski 2 Committee is to ensure that government returns (taxes, royalties, and other payments) will reflect what the public should receive from the use of national resources. The Sheshenski 2 Committee will examine the fiscal system currently in place regarding the government take from the proceeds of the use of national natural resources by private entities, will draw up an updated fiscal system for the principles relating to the government take for the use of natural resources by private entities (except for oil and gas for which a policy has already been set), and will examine applying the principles that will be drafted with regard to Dead Sea mineral extraction. (Globes 17.06)
1.5 Netanyahu Seeking Foreign Bank of Israel Governor
Press reports note that the next Bank of Israel governor will likely be a world famous foreign economist rather than a professor of economics living in Israel. It was announced that Prime Minister Netanyahu turned in recent days to at least four candidates living and serving in senior positions abroad. Outgoing Governor Stanley Fischer has so far been pushing for the appointment of his deputy, Dr. Karnit Flug, as his successor. Fischer will step down at the end of June and as of 1 July, Flug will serve as acting Bank of Israel governor until the appointment of a permanent governor. Fischer will have served as head of the central bank for eight years and two months and is not interested in extending his term.
The prime minister approached Israel Prize laureate Prof. Elhanan Helpman, who has been living in the United States for years. Netanyahu has also approached Federal Reserve Chairman Ben Shalom Bernanke, who will be ending his term soon after eight years in office. Stanley Fischer was Bernanke’s thesis advisor at MIT. Another candidate is Martin Eichenbaum, a professor of economics at Northwestern University and co-director of the Center for International Economics and Development. (Various 18.06)
1.6 Israel & Colombia Sign Free Trade Accord
On 10 June, Israel and Colombia signed a free trade agreement during a visit by President Santos, Israel's closest South American ally. Santos met Israeli President Peres at his official Jerusalem residence, where officials from the two governments also signed agreements on aviation and technological innovation. The free trade agreement covered services and investment as well as goods. Santos also met Prime Minister Netanyahu in Jerusalem. (TDS 11.06)
1.7 Israel & EU sign Open Skies Agreement in Luxembourg
Minister of Transport Katz and Irish Minister of Transport, Tourism and Sport Varadkar, on behalf of the EU, signed the Open Skies agreement with the EU in Luxembourg on 10 June. Under the agreement, any European airline can fly to Israel and every Israeli carrier can go anywhere in the EU. The Open Skies agreement will come into effect in April 2014, and will be implemented in stages over five years. It will supersede bilateral agreements between Israel and EU member states. (Globes 11.06)
2: ISRAEL MARKET & BUSINESS NEWS
2.1 Google Confirms Waze Acquisition
Google has confirmed the acquisition of navigation and traffic report app Waze ( http://www.waze.com). The amount of the acquisition was not disclosed but sources believe it was for $1.1 billion. Google said the Waze product development team will remain in Israel and operate separately for the time being. Google is excited about enhancing Google Maps with some of the traffic update features provided by Waze and enhancing Waze with Google’s search capabilities. (Globes 11.06)
2.2 BIRD to Invest $11 Million in 14 New Projects
On 5 June, the Board of Governors of the Israel-U.S. Binational Industrial Research and Development (BIRD) Foundation, approved $10.95 million in funding for fourteen new projects between Israeli and American companies. In addition to the grants from BIRD, the projects will access private sector funding, boosting the total value of all projects to approximately $33 million. The BIRD Foundation ( http://www.birdf.com) promotes collaboration between Israeli and American companies in various technological fields for the purpose of joint product development. In addition to providing conditional grants of up to $1 million for approved projects, the Foundation assists by working with companies to identify potential strategic partners and facilitate introductions.
The fourteen projects approved by the Board of Governors are in addition to the 863 projects which the BIRD Foundation has approved for funding during its 36 year history. To date, BIRD's total investment in these projects has been over $300 million, helping to generate direct and indirect sales of more than $10 billion. The approved projects are as follows:
1. Accells Technologies (Israel) and 41st Parameter (Scottsdale, AZ) will develop a capability for mobile authentication with device detection to fight cyber-attacks.
2. Asymmetric Medical (Israel) and Flextronics (Irving, CA) will develop asymmetric laser tools for surgery.
3. Curapipe (Israel) and Milliken (Spartanburg, SC) will develop a leakage cure system for urban water pipes.
4. Dor Chemicals (Israel) and Turbulent Energy (Buffalo, NY) will develop and commercialize diesel/methanol hybrid fuels.
5. Freshpoint Quality Assurance (Israel) and West Pharmaceutical Services (Exton, PA) will develop novel printable integrated threshold indicators for monitoring the quality of unit level pharmaceutical products.
6. Hanita Coatings (Israel) and Whirlpool Corporation (Harbor, MI) will develop super-efficient thermal insulation for refrigerator doors through an integrated vacuum insulation technology.
7. InSightec (Israel) and Focused Ultrasound Surgery Foundation (Charlottesville, VA) will develop non-invasive brain surgery for movement disorders.
8. iReveal Design Automation (Israel) and Forte Designs Systems (San Jose, CA) will develop an electronic system level verification product.
9. Kadoor Microelectronics and Broadcom (Irvine, CA) will develop a RF MEMs switch.
10. Nortec (Israel) and Gas Technology Institute (Des Plaines, IL) will develop and manufacture an advanced barcoding solution for underground asset lifecycle tracking.
11. Novoxel (Israel) and Edge Systems Corporation (Signal Hill, CA) will develop an aesthetic/medical product line based on novel thermal technology.
12. Rambam Health Corporation (Israel) and Orlucent (San Francisco, CA) will develop a molecular imaging system for melanoma detection.
13. TransBioDiesel (Israel) and Heliae Development (Gilbert, AZ) will develop high value esters for nutraceuticals using 3rd generation enzymatic technology.
14. Water Flow Tech (Israel) and Mueller Water Products (Atlanta, GA) will develop a capability for low flow detection.
The deadline for submission of Executive Summaries for the next BIRD cycle is on 10 September 2013. Approval of projects will take place in December 2013. (BIRD 17.06)
2.3 Delek To Accelerate Hydrocarbons Discovery Process In Cyprus
Delek Drilling Chairman and CEO Tadmor said on he is looking forward to accelerating the process of developing hydrocarbon reserves found within Cyprus’ Exclusive Economic Zone (EEZ). He and Delek Group head Tshuva made the remarks when received by Cypriot President Anasatasiades in the presence of Cyprus Energy Minister Lakkotrypis. Tadmor expressed his satisfaction over the meeting and the hope for “a long lasting cooperation between our company, the state of Israel and the state of Cyprus”. He further expressed his company’s satisfaction over investing in the energy sector of Cyprus “for the benefit of all”. On 7 June, Noble began drilling at the A-2 appraisal well location in block 12, which will take 60 to 90 days. In 2011 Noble announced that exploratory drilling in block 12`s A-1 well revealed an estimated resource of 5 trillion cubic feet (tcf) to 8 tcf, with a mean of 7 tcf. Noble Energy operates Block 12 with a 70% working interest. Delek Drilling Limited Partnership and Avner Oil Exploration Limited Partnership each own 15%. (FM 10.06)
2.4 Development of Leviathan Gas Field Estimated to Cost $4.5 Billion
The U.S.-Israeli consortium developing Israel's Leviathan natural gas field estimates it will cost $4.5 billion to develop the offshore well, not including infrastructure for exports. The cost forecast was part of a development plan the consortium recently presented the government. The group has said export options include building a liquefied natural gas (LNG) terminal, a pipeline to a neighboring country, or even bringing in a new technology known as a floating LNG vessel, which alone would cost $3 billion to $4 billion to construct. Leviathan, discovered in 2010 with an estimated 19 trillion cubic feet (tcf) of natural gas, was the world's largest offshore discovery of the past decade.
The forecast came as Israel, long reliant on energy imports, struggles to find the balance between how much gas to keep and how much to export. At a recent parliamentary debate, exploration companies presented their case to set a high export quota, while a number of lawmakers and environmental groups demanded a large majority of Israel's reserves be kept for domestic use.
Texas-based Noble Energy, which leads the Leviathan group, has said that because Israel is such a small market, it could not commit to developing the field unless a significant amount of gas was allowed to be sold abroad. A government committee recommended last year that Israel should keep enough gas to satisfy its own needs for 25 years, which comes out to a bit less than half of Israel's total reserves, currently estimated at 33.5 tcf. But no final decision has been made. (IH 06.06)
2.5 youAPPi Secures $1 Million in Funding from Glilot Capital Partners
youAPPi has secured $1 million in funding from Glilot Capital Partners, an Israeli-based early stage venture capital firm. Glilot is also opening up its professional network and vast experience to youAPPi, which will augment its investment in the company’s growth. The raised capital will specifically be used to extend youAPPi’s matching and mobile application recommendation algorithms and support marketing and sales expansion. The market for mobile applications is expected to continue its tremendous growth in 2013. Portio Research forecasts 82 billion applications will be downloaded worldwide in 2013, and by 2017 there will be more than 200 billion downloads per year.
Ra’anana’s youAPPi ( http://www.youappi.com) delivers a unique mobile application discovery, monetization and user acquisition solution which benefits mobile publishers, advertisers and users. youAPPi’s technology discovers, matches and displays in real-time contextual, relevant and personalized apps to each individual user within the mobile publishers’ content. Glilot Capital Partners ( http://www.glilotcapital.com) is an Israeli-based venture fund that offers seed and early stage investments. (youAPPi 05.06)
2.6 China's Fosun to Set Up Technology Incubator in Israel
China’s Fosun International will establish a technology incubator in Israel, Fosun International chairman Guo told Prime Minister Netanyahu. The move follows the acquisition of Alma Lasers by Fosum International unit Shanghai Fosun Pharmaceutical Group Co. for $240 million in April. The Fosun Group intends to increase its commercial presence in the form of a technological incubator to locate and promote Israeli technologies, as well as find additional business opportunities for cooperation with Israeli companies and distribute their products in the Chinese and international markets.
When Fosun Pharma announced its acquisition of Alma Lasers, it said that it planned to utilize Israeli capabilities to find additional technologies, like other large foreign companies which make their first acquisition of an Israeli company. Fosun Pharma said it would establish Alma Lasers as a management platform for the R&D, manufacturing and sales of high-end medical devices, providing an internationalized development path for the company. (Globes 12.06)
2.7 Idomoo Closes $9 Million Funding Round for Its Personalized Video Service
Idomoo has closed a $9 million round of equity funding led by New York based Marker. Idomoo’s Personalized Video as a Service (PVaaS) platform enables companies to generate massive numbers of personalized videos quickly and efficiently to individual customers based on their personal details. The platform is being used by companies such as TIM Cellular in Brazil, Portugal Telecom and Generali, the global insurance company to communicate critical information to their customers. Personalized video communication provides value to enterprises by reducing churn, increasing conversions and significantly improving brand loyalty. To date, Idomoo has served tens of millions of videos in 16 different languages each automatically generated for an audience of one. Founded in 2008 and headquartered in Hod Hasharon, Idomoo ( http://idomoo.com) helps leading global companies deliver millions of personalized videos to their customers. (Idomoo 12.06)
2.8 Northrop Grumman Israel Supplier Delivers Advanced Composite Component
Northrop Grumman Corporation's supplier in Israel – Elbit Systems-Cyclone – delivered its first advanced composite component for the F-35 Lightning II joint strike fighter center fuselage produced by Northrop Grumman. This delivery is a significant milestone for the F-35 program, as it is the first composite part manufactured by a country committed to purchasing future F-35s under the U.S. foreign military sales agreement. The composite component delivered is one of 16 unique parts to be manufactured by Elbit Systems-Cyclone under a seven-year F-35 agreement with Northrop Grumman, which was signed in December 2011.
As a principal member of the Lockheed Martin-led F-35 industry team, Northrop Grumman performs a significant share of the work required to develop and produce the aircraft. In 2012, the company delivered 32 center fuselages and is on track to exceed 2012 delivery quantities in 2013. Northrop Grumman is a leading global security company providing innovative systems, products and solutions in unmanned systems, cyber, C4ISR, and logistics and modernization to government and commercial customers worldwide. (Northrop Grumman 10.06)
3: REGIONAL PRIVATE SECTOR NEWS
3.1 IVF Clinic Eyes Expansion Across Arabian Gulf Region
A new IVF clinic has opened in Abu Dhabi with the company behind it saying it is planning more facilities in the Gulf region over the next few years. Following clinics in Dubai and North America, Fakih IVF said it has opened the doors of a new fertility treatment center in the UAE capital. The center uses groundbreaking technology which is not readily available in many other clinics, in the UAE or abroad. Fakih IVF is planning to open a more centers in the UAE and other countries in the GCC in the next few years. The Fakih IVF center in Abu Dhabi offers a range of fertility treatments, such as In Vitro Fertilization (IVF), Intra-Cytoplasmic Sperm Injection (ICSI), Natural Cycle IVF, Pre-implantation Genetic Diagnosis (PGD) for recurrent miscarriages and gender selection, genetic testing of hereditary diseases, male infertility treatment including azoospermia, preserving fertility in cancer patients and many others.
In the UAE particularly, a UN report said the Arab state had one of the fastest declining birth rates in the world, falling from 5.7 children per woman to less than two in the last 30 years. Among men, doctors say the average sperm count has halved in recent years, dropping from approximately 30 million sperm, to 15 million. (AB 08.06)
3.2 Cherokee Brand Launches at UAE’s Max Stores
Sherman Oaks, California’s Cherokee, a global marketer of style-focused lifestyle brands, announced the Cherokee brand has launched at 48 Max stores throughout the United Arab Emirates, Saudi Arabia and Kuwait as part of an exclusive partnership entered into with Max brand in July 2012. Over the coming months, Max will roll-out the Cherokee brand at additional store locations. Max, originally launched in 2004 by the Landmark Group, is one of the largest retail conglomerates in the Middle East and India. An established ‘Superbrand,’ the retailer strives to fulfill its brand promise of ‘More Fashion More Value’ to its customers, complementing Cherokee’s own mantra to exceed customer expectations by bringing premium-quality, affordable fashion to the entire family. (Cherokee 17.06)
3.3 Saudi Arabia Goes to Detroit to Introduce the 'Next Automotive Hub'
Saudi Arabia is the largest importer of cars and automotive parts in the Middle East and a gateway for distribution to the broader Middle East and North Africa (MENA) region. New vehicle sales in Saudi Arabia are booming, with new passenger car sales in 2012 at more than 700,000 units, an increase of 18% over the previous year. Driving this demand is a rising level of disposable income and a large youth population - two-thirds of the population is under 30 years of age. Saudi Arabia's automobile accessories, repair, and after-sales service equipment market has been valued at more than $2.5 billion while the Middle East spare parts and accessories trade is valued at around $11 billion. OEMs are also giving Saudi Arabia a new look. Isuzu began light truck assembly in the country in 2012 and Jaguar/Land Rover (JLR) has signed a Letter of Intent to build a manufacturing plant that could be producing 50,000 vehicles per year by 2017. Among OEM suppliers, Johnson Controls and Denso already have active joint venture operations in the country. Saudi Arabia is positioning itself as a new automotive production and distribution hub for the MENA region and beyond. In addition to a package of incentives and infrastructure support, the country boasts a competitive advantage because of its extensive base of companies providing manufacturing input materials for the auto industry. (AB 09.06)
3.4 Sikorsky Exclusive Agreement with Subsidiary of Turkey's Alp Aviation
Sikorsky Aerospace Services (SAS) signed a spare parts distribution agreement with AlpTeknik Havacilik, a wholly owned subsidiary of Alp Aviation based in Ankara. The agreement provides for in-country warehousing and distribution of spare parts in support of Turkey's military and government agency rotary and fixed wing operators. SAS is the aftermarket business of Sikorsky Aircraft Corp., a subsidiary of United Technologies Corp. SAS said their ability to maintain a local inventory of high turnover OEM parts will enhance Turkey's fleet readiness while reducing overall operational expenses. As part of the agreement, LifePort – their mission equipment company - will offer its full portfolio of products including armor protection, MEDEVAC and VIP luxury interiors. This expanding collaboration continues to strengthen SAS' position in the European market.
Formed in 1998, Alp Aviation Company is a Joint Venture between Alpata Group and Sikorsky Aircraft Corp. Alp Aviation's efficient operations and lean manufacturing methods enable the company to compete successfully in the global arena and exceed customers' expectations of quality and on-time delivery. Alp Aviation is a qualified supplier of international BLACK HAWK and SEAHAWK helicopter transmission systems and the third-largest aerospace exporter in Turkey, contributing approximately 20% of all Turkish aerospace exports. (SAS 17.06)
3.5 Datacolor Expands with Opening of New Turkish Facility
Lawrenceville, NJ’s Datacolor, a global leader in color management solutions, announces the establishment of its direct sales and service organization in Turkey. The base will serve as a customer center, providing resources for service and more direct product information, demonstration and access that will allow customers to be more effective in their color management processes. By going direct in Turkey, Datacolor is better able to participate in the country’s growing market for key color-related industries such as textile, apparel, pigments and plastics. The facility will be operated by long-time Turkish partners of Datacolor, who have been serving the region on behalf of the company for more than ten years, to ensure local customers continue to experience the same great service they are accustomed. Focusing on solutions for textile, automotive, paint and coatings markets, Datacolor continues to provide manufacturers and other relevant companies with high-quality options for accurate and consistent color including spectrophotometers, light booths, automatic dispensing systems and dye machines. (Datacolor 06.06)
3.6 Cold Stone Creamery Enters Turkey
Scottsdale, Arizona’s Cold Stone Creamery entered the brand's 25th country also comes during the year Cold Stone Creamery celebrates its 25th birthday. Kahala, the parent company of Cold Stone Creamery, signed a Master Franchise Agreement with Ulker Golf with a goal of opening 15 stores in the market over the next five years in Turkey. Ulker, the leading food and beverage brand in Turkey, has been a part of the daily lives of many Turkish families since 1944. They started with the production of a single biscuit and now manufacture a wide span of products such as chocolate, candy, chewing gum, dairy products, carbonated beverages, fats and oils, soups, ketchup, mayonnaise, coffee and baby food; which has now entwined in the day-to-day lives of Turkish consumers. The ice cream brand of Ulker; Ulker Golf is the biggest local ice cream producer in Turkey. With their second factory in construction to begin production in 2014, their total production capacity will increase to 160 billion liters a year. Today, 2.5 billion Ulker Golf products are consumed throughout the world. (CSC 11.06)
4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS
4.1 Tel Aviv Municipality Tries Out 25 Electric Scooters
As part of a broader citywide program to reduce air pollution, greenhouse gas emissions and noise, the municipality of Tel Aviv-Jaffa is launching a pilot program to potentially replace its fleet of scooters with electric versions. To this purpose, the city has decided to purchase about 25 electric scooters to examine their effectiveness in comparison to the gasoline ones that municipal workers currently use. If the pilot yields positive results, the municipality will explore the possibility of gradually replacing its entire 300-scooter fleet with their electrical counterparts, the city said. City officials will be examining a number of parameters during the pilot program, including the scooter performance capabilities, riding experience, environmental footprint, cost effectiveness and safety, they explained. The first unit of city employees to make use of the electric scooters will be the municipal "green patrollers," followed by workers from the sanitation and inspection departments, the municipality said.
The pilot program is being promoted by the city's operations division for quality of life and environment, and is being carried out in cooperation with the European Union as part of the CIVITAS urban transportation project – for creating more accessible, sustainable and clean transportation. Embarking on this program also reflects the city's commitment to the international Climate Protection Agreement of ICLEI – Local Governments for Sustainability, according to the municipality. (JP 17.06)
5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Lebanese Smoke 2,379 Cigarettes Per Capita
Today, the annual average cigarette consumption rate in Lebanon is 119 packs per person, or about ten cigarette packs per month. The United Kingdom-based ERC consulting group estimates that the average cigarette consumption rate was 2,379 cigarettes per capita in 2012, which is nearly three times the global average. The per capita cigarette consumption rate in Lebanon rose by a striking 475% between 1990 and 2012. This is the second highest increase recorded globally, topped only by Burma, where cigarette consumption rose by 675% during that same period. While demand for nicotine was skyrocketing in Lebanon, the world was witnessing a decline in cigarette consumption by 11.7% as a result of increased awareness about the risks. According to the latest data by the UN World Health Organization, the total smoking rate in Lebanon is 38.5% among adults. The rate goes up to 46.8% among men, meaning nearly half of adult males in Lebanon are smokers. (TDS 10.06)
5.2 Statistics Put Jordan’s Inflation at 7% Until the End of May 2013
Jordan’s Department of Statistics (DoS) announced on 10 June that the increase in consumer price index came to 7% at the end of last month, compared with a 3.9% increase at the end of the same period in 2012. The computed figure was in particular due to higher prices of fuel, transport, red meat, chicken, vegetables and fruits, according to the DoS. Other goods which saw a drop in their prices were mainly tobacco and cigarettes, cereals and their products as well as medical care products. (Petra 10.06)
5.3 Jordan Receives $200 Million US Grant
The $200 million additional US grant announced during the visit of President Obama to Jordan in March was transferred to the Treasury, according to Finance Minister Toukan. The financial aid seeks to reduce the burdens on the Kingdom’s finances due to hosting hundreds of thousands of Syrian refugees, the minister said. He said that over the past few years, Jordan has continued to show resilience in the face of regional and international economic challenges, and to implement reforms to remove distortions from the economy. He explained that the government has made several fiscal reforms that aim at increasing public revenues while reducing the deficit from 7.7% of the gross domestic product in 2012 to 5.2% this year. The government, he said, will continue to remove all forms of subsidies, adding that if authorities see a need to provide support in the future, it will be through targeted subsidies to protect low-income groups. Among other reforms, the finance minister said the government has been working to enhance the business and investment environment in the Kingdom, which he described as attractive due to the qualified labor force in addition to the country’s strategic location and its security. (JT 11.06)
♦♦Arabian Gulf
5.4 Qatar to Invest $500 Million in India
Hassad Food Co., the agricultural investment arm of Qatar’s sovereign wealth fund, plans to invest $500 million in India after buying Bush Foods Overseas. The investment will be in the production of rice, coffee, cardamom and “ready-made foods.” Hassad said on 3 April that it had agreed to buy a majority stake in Bush, which owns basmati rice brands Neesa, Himalayan Crown and Indian Star. Hassad is seeking to secure supplies for Qatar through buying agricultural land and investing in food-production companies abroad. The company has focused on ventures in Asia and Africa and owns sheep farms in Australia. Hassad also seeks to invest in a sugar venture in Latin America this year after studying Brazilian sugar producers over the past two or three years. The company is also interested in South America for grains, red meat and poultry. (TDS 10.06)
5.5 Abu Dhabi’s CPI Increases One Point
The general price index in Abu Dhabi in Q1/13 showed substantial rise in prices of food commodities including the prices of (cereals, meat, oils and fats, dairy and sugar) scoring 74 points, up by 1 point compared to the same period of 2012. The most significant rise in prices in food items during the time of the survey, compared to the previous three months, according to national families, was that of meat. Prices of clothing increased during Q1/13 compared to Q1/12. The CPI rise is attributed to the increase in prices of rents which is reflected on other sectors including food sector. (GN 05.06)
Dubai’s economy continued to record strong recovery in 2012 as its GDP rose by 4.4%, the highest growth since 2009, the government’s statistics center said. In value terms, the emirate’s real GDP grew to Dh318.4 billion compared to Dh304.9 billion in 2011, indicating an increase of Dh13.4 billion to Dubai’s economy last year. The emirate’s GDP accelerated to 5.3% year-on-year in the last quarter of 2012, according to the Dubai Statistics Centre. During the first nine months of last year, the economy expanded 4.1% compared to the same period in 2011. Despite this, Emirates NBD has retained a 2013 growth forecast of 3.9%, despite the higher-than-expected growth in 2012. Activity in real estate and business services grew moderately, and grew by 1.7% to reach Dh39.9 billion as an added value. Last year, the main driver of growth was manufacturing, which expanded 13% year-on-year and contributed almost 2% to the overall growth rate of 4.4%. Industries contributed 15.4% to GDP.
GDP growth was fuelled by a 47% growth in exports, reaching Dh163 billion, and a 12% jump in imports to Dh737 billion, according to data from Dubai Customs. Transport, storage and communication grew 7.3% in 2012, compared to 2.7% in 2011 and contributed 1% to Dubai’s growth last year. Growth in this sector underscores Dubai’s status as a global and regional trade and logistics hub. Wholesale and retail trade, which accounts for almost one-third of Dubai’s economy, grew just 2.3% last year, slower than we had expected in the light of strong tourism figures. The restaurants and hotels sector saw the fastest growth in 2012 with a 16.9% year-on-year growth. This industry accounted for 4.5% of Dubai’s economy in 2012, up from 3.3% in 2008. (KJ 12.06)
5.7 IMF Says Oman Must Slash Spending To Keep Budget Sustainable
Oman needs to contain state spending and raise non-oil revenue in the medium term to keep its fiscal balance sustainable, the IMF said on 12 June, adding spending restraint and non-oil revenue enhancing measures are needed to support a sustainable fiscal policy in the medium term. The IMF mission, following annual consultations with Oman, recommended an initial adjustment of 1% of GDP in 2013 by rationalizing the planned increase in workforce, and restraining goods and services spending. The sultanate needs to adjust its fiscal balance by around 10% of GDP in total over the medium term as its budget health is becoming a significant challenge, the IMF added.
The IMF painted a bleak outlook for Oman's public finances in April, predicting the budget could slip into a deficit of 3.8% of GDP as soon as 2015, with the gap widening to as much as 13.3% in 2018. It predicted a 2015 shortfall of 0.9%, widening to 6.8% in 2018. The small non-OPEC oil exporter raised its planned budget spending by nearly 20% this year compared to last year's plan, to 12.9 billion rials ($33.5 billion), partly to help keep social peace after street protests demanding jobs and action against corruption in 2011. Steep rises in government hiring and a rise in the minimum wages of Omani citizens in the private sector have reduced the government's room to respond to economic shocks, the IMF said.
The IMF also said it would be difficult for Oman to put its state finances on a sustainable footing without changing subsidies, mainly on fuel, adding that domestic fuel prices should be raised gradually. The government of Sultan Qaboos bin Said, who has ruled the country since 1970, created 100,000 new jobs in the civil and defense sectors in 2011-13, the IMF said. Gradual cuts in high public sector wages would help make private sector jobs more attractive to Omani nationals, it said. Such measures would be politically difficult for the government, and it is not clear how Oman will respond to the IMF's advice. The government is considering a proposal to issue dollar-denominated sovereign bonds sometime in 2014, the first such issue since 1997, and this could lead to regular debt sales in the future to cover any budget deficits. (AB 12.06)
5.8 Oman Inflation Slows to New 40-Month Low
Oman's inflation slowed to 1.2% in April, the lowest level since December 2009, the National Centre for Statistics & Information said. Food prices, which make up over 30% of the basket, increased 1.5% on an annual basis in April but fell 0.8% from the previous month. Rents and energy costs, which account for over 21% of consumer expenses, rose 0.6% year-on-year but dipped 0.2% month-on-month in April. Separately, Oman's year-to-date budget surplus reached OR1.034b ($2.7b) at the end of April, a nearly 30% drop from the surplus in the same period a year ago, data from the finance ministry showed. Oman based its 2013 budget on a projected oil price of $85 per barrel, expected expenditure of OR12.9b and a deficit of OR1.7b. (AB 14.06)
5.9 Saudi Inflation Eases to 3.8% in May 2013
Inflation in Saudi Arabia has eased to 3.8% y-o-y in May 2013 from around 4.0% y-o-y in April 2013, according to the Central Department of Statistics. Consumer prices increased 0.1% m-o-m in May after a 0.2% m-o-m rise in April 2013. The slowdown was triggered by falling prices across core items in the CPI, including transport, recreation and culture, and other goods and services, which represent around 60% weight of the overall index. However, inflation continued to be driven by food prices, which increased to 6.4% y-o-y in May 2013 from 6.2% y-o-y in April 2013, contributing 1.4pps to headline inflation. The rent and housing category also accelerated to 3.6% y-o-y in May 2013, up from 3% y-o-y in April 2013, adding 0.9pps to headline inflation. (Beltone 16.06)
5.10 Saudi Arabia Approves 32 More Water Projects
Authorities in Saudi Arabia have given approval to 32 new water and sewerage projects valued at $87m, Minister of Water & Electricity Abdullah Al-Hussayen announced. The contracts included construction of reservoirs, pumping stations, sewerage networks and water treatment plants in parts of the country such as Tabuk, Najran, Al-Hafouf and Onaizah. Separately, Saudi announced in March that it would spend SR519m on 29 water-related projects throughout the kingdom. Included in the projects are the construction of a reservoir in the Asir region and a conveyor line from a treatment plant and another sewage related project in the Qassim area, the newspaper said. A wastewater treatment plant in Hail is to be completed in 24 months and the operation and maintenance of pumping and treatment stations in the Asir province are also part of the projects the government is undertaking. Saudi Arabia, the largest economy in the Arab world and biggest producer of oil globally, is spending more than $500b to expand its infrastructure. The kingdom's economy is projected to grow 4.2% this year, slowing from about 6% in 2012, according to the IMF. (AB 05.06)
♦♦North Africa
5.11 Egypt’s Inflation Rate Reaches 8.2% in May
Egypt’s annual inflation reached 8.2% in May but the rate of inflation slowed by 0.2% compared to April, according to CAPMAS. This was the first decline recorded since the beginning of the year. Meanwhile, inflation has severely affected the buying and selling trends in Egypt causing a state of “paralysis”, with sales in the country’s food market decreasing 40%, in addition to 70% in the retail market. Workers in the retail sector say prices for most products have increased significantly in recent months, due to increases in the price of the US dollar. Nearly 60% of goods consumed in Egypt are imported from abroad using foreign currency.
However, compared to April where prices of several food items increased, including poultry, fish, eggs, soft drinks and more, CAPMAS said the current lower rate will now reduce these prices. Prices of poultry will be reduced by 0.2% after they increased in April by 2.22%. Prices of fish and seafood will reduce by 2.1% after they accelerated in April by 2.71%. Egypt, which strongly relies on imports, has been hit hard with a rise in prices for a number of products as its currency depreciates, adding to the problems of rising unemployment, depleted foreign currency reserves and a major fuel shortage. (CAPMAS 10.06)
5.12 Egypt in Late Stages of Verifying IMF Economic Reform Program
Egypt's government is in the late stages of verifying its economic reform program with the International Monetary Fund (IMF) before obtaining a $4.8 billion loan. Central Bank Governor Ramez told reporters that there have been no changes to the plan or the amount of aid the country is seeking. He said he could not offer any estimate for when the talks would finish, adding that, as far as he knew, there were no talks underway with other countries to obtain fresh financial aid in the form of deposits in the CBE. Asked about Morgan Stanley Capital International's recent warning that Egypt could eventually be excluded from the MSCI Emerging Market Index because of difficulties faced by investors in repatriating money, Ramez said: "They were talking about the availability of foreign currency. From our side, we opened the Repatriation Fund in March 2013 for any funds coming into stocks or the fixed income side. So anything that comes can go out at any point, there's no problem." In March 2013, the CBE opened a scheme giving foreign investors in the stock and government debt markets access to $ despite severe shortages of foreign currency. (Beltone 16.06)
5.13 CAPMAS Says 9.3% of Egyptian Children Work
About 9.3% of Egypt’s children as young as five work, according to a report by the Central Agency for Public Mobilization and Statistics (CAPMAS), suggesting shortcomings in legislation to prevent child labor. According to the report, the number of working children between the ages of five and 17 is 1.59m, or 9.3% of all children. In Egypt, children are extensively put to work in agriculture. Employers hire children because they accept the least paid jobs which adults would not take, though blocking children from that sector would lead to a hike in food prices. Mostly male children are sent to the field; they handle pesticides though they are not supposed to, and work under very harsh conditions. Female children stay home and look after family animals. In very poor families, girls are sent outside for work. The ILO called for measures to reduce poverty as a way to combat child labor. The organization also stressed the role of employers, workers organizations and civil society in acting against child labor. (CAPMAS 05.06)
5.14 Libya in Deal to Sell Tunisia 10 Million Barrels of Oil
Libya will sell Tunisia 10 million barrels of oil from August until the end of 2014 at an undisclosed price under a deal signed on 11 June. The crude would be delivered at the rate of 450,000 barrels a month through December and then at 650,000 barrels monthly next year. While no price was disclosed, Tunisia asked the authorities in the neighboring North African country in April to sell it oil at preferential rates. The deal, signed by Libyan Oil Minister Abdelbari al-Arussi and Tunisian Industry Minister Mehdi Jumaa, also envisions a Libyan “contribution toward the project to create an oil refinery in the Skhira region” of southern Tunisia. (Various 11.06)
6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS
6.1 Turkey’s Automotive Industry Grows 13%
The Turkish automotive market’s volume reached 323,000 units in the first five months of 2013, a 13% increase in comparison to the same period of 2012, while the total production did not change, but the total export and the sales of imported vehicles increased, the Automotive Manufacturers Association (OSD) said. The production of passenger cars decreased to 248,000 units by 4%, although the total production, including the production of passenger cars, light and heavy commercial vehicles, trucks and buses, remained the same at around 467,000 units. Meanwhile, Turkey’s automotive exports reached 351,000 during the first five months of 2013, 196,000 of them were passenger cars, marking a 7% increase in comparison to the same period of 2012. The total of passenger car sales increased by 21% while the sales of imported passenger cars increased 34%, but sales of domestic passenger cars decreased by 11%. (HDN 11.06)
6.2 New $5 Billion Thermal Power Plant on the Way in Turkey
Turkey plans to establish a 3,500-megawatt (MW) thermal power plant with a $5 billion investment in the western province of Afyon, which possesses 950 million tons of lignite, energy minister Yildiz announced. Yildiz added that Turkey’s goal was to generate one-third of its electricity via coal by 2023. Yildiz also said a coal field in Bitlis had been transferred to the private sector under the condition that a coal power plant be constructed. The private sector will build a thermal power plant that will have 240 MW of power and which will be worth $700 million. On average 1 MW of power can supply electricity to as many as 300 U.S. households per year. According to TÜIK figures, the average person in Turkey consumes 540 kW of electricity in one year.
The minister said they aimed to end Turkey’s dependence on $12 billion worth of natural gas imports with power plants fired by domestic coal. Turkey produces around half of its electricity from natural gas, a source for which it is largely dependent on Russia, Iran and Azerbaijan. Turkey has recently been encouraging the construction of coal-burning plants in an effort to break its large dependence on natural gas. The recent incentive system, which came into force in June 2012 allocated incentives to only low-calorie coal (low C class), but the recent decision will allow for incentives to be given also to high-calorie coal. (TDN 11.06)
6.3 Turkish President Gül Approves Controversial Bill Restricting Alcohol
Turkish President Gül has approved the controversial bill restricting the sale and advertising of alcohol. The controversial alcohol bill is seen as one of the reasons protesters have taken to the streets as part of the Taksim Gezi Park protests, voicing demands that include respect for their lifestyles. On 24 May, Parliament’s General Assembly adopted the alcohol bill proposed by the ruling Justice and Development Party (AKP), tightening restrictions on the sale and advertising of alcoholic beverages. Retailers will no longer be allowed to sell alcoholic beverages between 22:00 and 06:00, according to the bill.
All sorts of advertising campaigns will be completely banned, such as promotions, sponsored activities, festivals and free giveaways. The only exception will be the international fairs aimed at international marketing of the alcoholic beverages. Violators of the advertising ban will be punished with financial penalties ranging from Tl 5,000 to 200,000. Under the bill, alcohol companies would no longer be allowed to promote their brands and logos, these can only be used as part of service inside the facility. Additionally, all liquor bottles sold would have to display warning signs about the harms of alcohol, again similar to those found on cigarette packages.
In TV series, films and music videos, images that glorify the consumption of alcohol will be prohibited. Images of alcohol would be blurred, the same way as cigarettes are being blurred at the moment. Alcoholic beverages will not be allowed to be purchased from vending machines. Beverages could not be sold from see-through shop windows and cannot be sold to be consumed outside the facility. Student dormitories, health institutions, sports clubs, all sorts of education institutions and gas stations will be banned from selling alcohol. Already acquired licenses to sell alcohol will remain intact, yet to get new ones, facilities are required to be located outside the perimeter of 100 meters of educational and religious centers. (Various 10.06)
6.4 Value of Greek Exports Up 13.6% in April as Imports Fall by 1%
The value of Greek exports in April rose by 13.6% compared to a year earlier, whereas the value of imports fell by 1% during the same period, the Hellenic Statistical Authority said on 10 June. The total value of exports in April 2013 amounted to €2.47 billion against €2.18 billion in April 2012. This represented an increase of 13.6%. The total value of exports for the 12-month period of May 2012-April 2013 increased by 12% compared to the corresponding 12-month time period of May 2011-April 2012, compared to a year earlier. The total value of imports-arrivals in April 2013 amounted to €3.91 billion against €3.95 billion in April 2012, recording a drop of 1%. The total value of imports for the 12-month period of May 2012-April 2013 decreased by 1.2% compared to the corresponding 12-month time period of May 2011-April 2012. (HSA 10.06)
6.5 Shock As Greece Shuts Down Public Broadcaster
On 11 June, ERT - Greece’s public TV and radio channels - were off the air after a shock decision by the government to shut down the state broadcaster’s operations with immediate effect, a move affecting nearly 2,700 jobs. Thousands rushed to the broadcaster’s main headquarters in a northern Athens suburb shortly after the announcement to show their support. The government said that ERT is a case of an exceptional lack of transparency and incredible extravagance. This announcement comes after months of work stoppages by ERT employees in opposition to plans to restructure the broadcaster as demanded by debt-laden Greece’s troika of international creditors. As transmission was cut, the finance ministry released a statement saying the broadcaster as an entity had been abolished. The government said all 2.655 employees will be compensated and will be allowed to reapply for a job at a revamped organization. (Various 12.06)
7: GENERAL NEWS AND INTEREST
*ISRAEL:
The Jewish fast day of the 17th of Tammuz is observed this year from sunup to evening on Tuesday, 25 June. The fast day itself commemorates five tragedies: 1. Moses descended from meeting G-d and receiving the Torah on Mount Sinai, saw the Jews celebrating with the Golden Calf and broke the two tablets G-d had given him. 2. The daily offering, which had been brought regularly in Temple in Jerusalem, was halted during the Babylonian siege before the Temple was destroyed. 3. The Romans breached the walls of Jerusalem, prior to destroying the second Temple, in 70 CE. 4. A Greek or Roman official named Apostimos held a public burning of the Torah. 5. Idols were set up in the Temple itself; it is not clear what year this happened. The 17th of Tammuz is the second of the four fasts commemorating the destruction of the Temple and the Jewish exile.
In later years this day continued to be a dark one for Jews. In 1391, more than 4,000 Jews were killed in Toledo and Jaen, Spain and in 1559 the Jewish Quarter of Prague was burned and looted. The Kovno ghetto was liquidated on this day in 1944 and in 1970 Libya ordered the confiscation of Jewish property.
The 17th of Tammuz also marks the beginning of the “Three Weeks,” which ends with the fast of the 9th of Av. Some customs of mourning, which commemorate the destruction of Jerusalem, are observed from the start of the Three Weeks. Jewish mourning customs restricts the extent to which one may take a haircut, shave or listen to music, though communities and individuals vary their levels of observance of these customs. No Jewish marriages or other major celebrations are allowed during the Three Weeks, since the joy of such an event would conflict with the expected mood of mourning during this time. The Three Weeks can be thought of as having a variety of increasing levels of mourning. Some restrictions begin on the 17th of Tammuz, some from the beginning of the month of Av, and some only come into effect the week in which Tisha B'Av occurs.
*REGIONAL:
7.2 Qatar Emir Prepares to Cede Power To His Son Tamim
Qatar's powerful prime minister is preparing to step down as part of a wider power transition that may also see the country's ruler ceding power to his son, Crown Prince Sheikh Tamim. Such a change could inject an element of uncertainty into the foreign policies of the U.S.-allied gas exporter, which is a global investment powerhouse and a bankroller of Arab Spring revolts in alliance with the Muslim Brotherhood. Pundits say they understood the motive for the reported reshuffle was the desire of the leadership to have a smooth transition to a younger generation. Such a move would be relatively unusual in Gulf Arab politics: It is customary for Gulf Arab heads of state to continue in office until death.
One source said the transition was expected to start with Prime Minister Sheikh Hamad bin Jassim al-Thani, who also serves as the foreign minister, leaving his cabinet posts. Arab and Western diplomats in Doha and elsewhere in the region said that countries, including the United States, Britain, France and Saudi Arabia had been briefed on the plan.
A close US ally that hosts a large US military base, Qatar is the world's largest exporter of liquefied natural gas (LNG) and wealthiest nation per-capita. The tiny country whose economy once centered on pearl fishing now has a sovereign wealth fund that controls an estimated $100 billion in assets. Sheikh Hamad bin Khalifa al-Thani seized power from his father in a bloodless coup in 1995. Sheikh Hamad bin Jassim played a key role in facilitating the coup, for which he was rewarded with influence for life. British-educated Sheikh Tamim is believed to be closer to the Muslim Brotherhood than many in the current leadership, and may pursue more socially conservative policies. (MEO 11.06)
7.3 ‘Lady in Red’ Image from Turkey Protest Goes Viral
An image of a lady wearing a red dress has gone viral across social media networks as being an iconic symbol of the violent protests in Turkey, bringing up a debate on women’s freedoms in a country led by an Islamist government. The image of the woman, who appears to be attacked by police aiming a teargas canister at her, has become a leitmotif for female demonstrators and has sparked a debate involving Turkey’s political history.
Prime Minister Tayyip Erdogan branded the protesters as extremists "living arm in arm with terrorism," a description that seems to sit ill with the image of the woman in red. Erdogan recently designated new abortion laws, which involve a restriction to only having three children. They have been seen by women as an appeal to draw back their rights in the name of tradition and religion. Social identity has been discussed as one of the themes of the protests, with debates revisiting Turkey’s history and dating back to the era of the first president of Turkey, Kamal Ataturk.
During his rule, Ataturk had put emphasis on women’s rights to freely work and dress as they wish. Western perspectives were also encouraged to be applied through work and social life without the restrictions of religion. His single party regime lasted without interruption until 1945. Today, Erdogan is known to many as the most dominant Turkish leader since Ataturk. It has been stated that although he has been strongly supported by the working class since 2002, they have also recently joined the protests as an important factor towards empowering women’s rights in Turkey. Meanwhile, women are now becoming increasingly engaged in the protests. (KSA 04.06)
8: ISRAEL LIFE SCIENCE NEWS
8.1 BioLineRx Collaborates with CTTQ to Develop Hepatitis C Drug
BioLineRx signed an out-licensing agreement with Jiangsu Chia-tai Tianqing Pharmaceutical Co. (CTTQ), the leading Chinese pharmaceutical company in the liver disease therapeutic area, for the development and commercialization of BL-8030, an orally available treatment for the Hepatitis C virus (HCV). Under the terms of the agreement, BioLineRx will grant CTTQ exclusive rights to develop, manufacture and commercialize BL-8030 in China and Hong Kong. CTTQ will pay BioLineRx an upfront license fee, plus future development, regulatory and commercialization milestones, for a total potential deal value of approximately $30 million. In addition, BioLineRx has the right to receive high single-digit royalties on future sales of the drug. BioLineRx will retain the right to develop and commercialize BL-8030 in other parts of the world. CTTQ will adhere to FDA and EMA guidelines in pre-clinical development and manufacturing of BL-8030. BioLineRx will have access to all development and regulatory data generated by CTTQ, as well as the right to use this data for commercialization and regulatory purposes in all areas of the world outside of China and Hong Kong.
Jerusalem’s BioLineRx ( http://www.biolinerx.com) is a publicly-traded biopharmaceutical development company. BioLineRx is dedicated to building a portfolio of products for unmet medical needs or with advantages over currently available therapies. In addition, BioLineRx has five products in various pre-clinical development stages for a variety of indications, including central nervous system diseases, infectious diseases, cardiovascular and autoimmune diseases. BioLineRx’s business model is based on acquiring molecules mainly from biotechnological incubators and academic institutions. (BioLineRx 10.06)
8.2 Yissum Novel Method for Diagnosing Retinal Micro-Aneurysms
Yissum Research Development Company of the Hebrew University of Jerusalem introduced a novel method for detecting retinal micro-aneurysms that pose a high risk for leakage, an underlying cause of diabetic retinopathy. Diabetic retinopathy is a leading cause of blindness worldwide. The novel method will enable early diagnosis and treatment of the condition, potentially minimizing damage and saving vision. The technology was patented by Yissum, which is currently searching for an appropriate partner for the further development and commercialization of the invention.
Dr. Nahmias and his team from the Center for Bioengineering at the Hebrew University of Jerusalem developed a computational method to identify microvascular regions with high risk of leakage based on fluid dynamics. The method will enable ophthalmologists to identify microaneurysms with a high risk of leakage using adaptive optics. The scientists found that high risk is correlated with increased level of a protein called Von Willebrand factor (vWF), which has been associated with early development of diabetic retinopathy (a common diabetic complications of the eye).
Yissum Research Development Company of the Hebrew University of Jerusalem ( http://www.yissum.co.il) was founded in 1964 to protect and commercialize the Hebrew University’s intellectual property. Products based on Hebrew University technologies that have been commercialized by Yissum currently generate $2 Billion in annual sales. (Yissum 10.06)
8.3 Teleflex Buys Israel's Eon Surgical
Eon Surgical has been acquired by North Carolina Teleflex for several million dollars. Tel Aviv’s Eon Surgical ( http://eon-surgical.com) is engaged in microlaparoscopy - minimally invasive surgical procedures through small incisions in the abdomen, instead of a large one. The company's products allow surgical procedures through a minimum number of incisions. Through one incision, the company's device allows the insertion of a range of surgical tools, in contrast to current procedures in which each tool is inserted through a separate incision. The fewer incisions needed for surgical procedures, the easier recovery becomes and the less scarring is caused.
Eon Surgical has not yet reached sales, and the fact that it was acquired at this stage indicates that its technology is exceptional, and that the field in which it operates in thriving and attractive. According to IVC, the company has raised only a few million dollars from Rad BioMed Incubator, the Office of the Chief Scientist, Rutledge Vine Capital (which specializes in Asian investments) and a private investor. Teleflex is a global provider of specialty medical devices for a range of procedures in critical care and surgery, with $150 billion in sales. (Globes 10.06)
8.4 Kadimastem Successfully Completes an IPO and Raises $5.5 Million
Kadimastem closed its initial public offering on the Tel Aviv Stock Exchange. The tender, which included 3.1 million shares and 2 option series, recorded demands in the scope of approximately $5.5 million. The tender price closed at 1.81 $ per share. The company announced that the capital raised will be used to expand its current activities. Rosario Underwriting Services acted as sole book-running manager for the offering. Discount Underwriting & Issuing and Menora Mivtachim Underwriters & Management acted as co-managers for the offering. Ness Ziona’s Kadimastem ( http://www.kadimastem.com) focuses on the development and industrial commercialization of products based on human pluripotent stem cells. Kadimastem’s technology in embryonic stem cells serves for the production of unique human cells and tissue for two main types of medical applications, as a drug screening platform and in regenerative medicine. (Kadimastem 10.06)
8.5 Teva Settlement Agreement with Pfizer & Nycomed for Generic Protonix
Teva Pharmaceutical Industries entered into a settlement agreement with Wyeth/Pfizer and Altana/Nycomed to resolve all claims relating to Teva’s sales, commencing in December 2007, of its 20 mg and 40 mg generic Protonix (pantoprazole sodium) tablets. As part of the settlement, which provides for the release of all claims against Teva and its subsidiaries, Teva agreed to pay $1.6 billion to Wyeth/Pfizer and Altana/Nycomed. Teva will pay $800 million in 2013 and the remainder in 2014. As a result of this settlement, Teva expects to incur a charge of approximately $930 million in Q2/13 in addition to the $670 million provision previously recorded in its 2012 financial statements. The Company believes it may have up to $560 million of net insurance coverage in connection with this settlement, subject to recovery from the insurance carriers.
Altana Pharma and Wyeth Pharmaceuticals had previously sued Teva for patent infringement, and in September 2007, the United States District Court for the District of New Jersey had denied Wyeth’s motion for a preliminary injunction. In May 2009, the Court of Appeals for the Federal Circuit affirmed the District Court’s denial of the preliminary injunction. Subsequently, a jury trial was held, and in April 2010, the jury returned a verdict finding that the patent, which Teva had infringed, was not invalid. In July 2010, the District Court denied Teva’s motion to overturn the verdict.
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 leading generic drug maker, with a global product portfolio of more than 1,000 molecules and a direct presence in about 60 countries. (Teva 12.06)
8.6 Teva Aquires MicroDose Therapeutx
Teva Pharmaceutical Industries entered into a definitive agreement to acquire Monmouth Junction, NJ’s MicroDose Therapeutx, a privately-held pharmaceutical and drug delivery company focused on inhalation technologies and products for lung diseases and infections with the potential to dramatically improve efficacy and patient compliance. With the addition of MicroDose’s technologies and products, Teva is taking a significant step toward expanding its respiratory pipeline. Teva will now have access to MicroDose’s proprietary technology including its multi-dose dry powder nebulizer device, which requires no preparation and can be administered in under 30 seconds. MicroDose’s current pipeline is anchored by MDT-637 for respiratory syncytial virus (RSV) - an inhaled, low dose, small molecule, fusion inhibitor which prevents viral replication, delivered via MicroDose’s technology.
Under the terms of the deal, Teva will acquire all of MicroDose’s outstanding shares for a payment at closing of $40 million, additional payments of up to $125 million upon achievement of regulatory and development milestones, plus sales-based milestones and tiered royalty payments upon commercialization of MDT-637 and an earlier stage Asthma/COPD medicine.
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 leading generic drug maker, with a global product portfolio of more than 1,000 molecules and a direct presence in about 60 countries. (Teva 17.06)
8.7 RegeneCure Clinical Study for Dental Implants
RegeneCure announced the start of a clinical study using the company's proprietary AMCA Guided Bone Regeneration (GBR) Dental Membrane as a bone stimulating aid for patients requiring dental implants. RegeneCure's innovative AMCA GBR membrane has important quality and safety advantages over currently-used collagen-based membranes: The membrane is entirely synthetic, eliminating risk of contamination by pathogens present in animal-tissue-derived membranes. The AMCA GBR membrane is strong, degrades slowly over time, giving the natural bone more time to properly regenerate. The membrane also accelerates healing by enabling excellent cell adherence, proliferation and differentiation of stem cells into the bone tissue, while preventing connective tissue from infiltrating into the healing space.
Jerusalem’s RegeneCure ( http://www.regenecure.co.il) was founded in July 2010 to develop, produce and market synthetic implants for bone reconstruction and fracture fusion for the orthopedic, dental and aesthetic fields. AMCA Membrane Implant technology is protected by worldwide patents. The company submitted a 510(k) application to the FDA in April 2012 for an initial trauma indication. The privately owned company has manufacturing facility meeting the high production standards required by European and United States authorities. In 2012, the company received ISO 13485:2003 certification. (RegeneCure 18.06)
8.8 Mapi Pharma Granted US Patent for Pain Relief Medication "Tapentadol"
Mapi Pharma (Mapi), developer of complex bulk Active Pharmaceutical Ingredients (APIs), generic and innovative intermediates, and finished dosage forms based on selected drug delivery systems, announced that the company has been granted a United States patent for Tapentadol. Tapentadol is indicated in the US and Europe for the oral treatment of moderate-to-severe acute pain. US Patent number 8,410,176 B2 is titled Intermediate Compounds and Processes for the Preparation of Tapentadol and Related Compounds. Mapi's innovative process enables the company to obtain Tapentadol in an optically active pure form. The process is cost effective, uses easily available reagents and fits scalable industrial processes. Tapentadol is indicated for the relief of moderate-to-severe acute pain. This segment of pain relievers has continuously grown during the last decade as a result of improved delivery technologies, increased physician recognition of the need for effective pain treatment, and the rising requirement for pain medication by the growing ageing population.
Ness Ziona’s Mapi Pharma ( http://www.mapi-pharma.com) is an international pharmaceutical company specializing in complex bulk Active Pharmaceutical Ingredients (APIs), generic and innovative intermediates, high development barrier generics and novel finished dosage forms based on selected drug delivery systems. Mapi is focused on developing innovative delivery systems for pharmaceuticals such as long acting depot injections. (Mapi 18.06)
9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 Sensoil Innovations Detects Potential Leaks in Dam Near Dead Sea
Dynamic Applications Corp., a licensee and distributor in the US of advanced underground environmental control systems manufactured by Sensoil Innovations, announced that one of the primary product offerings, a warning system to alert customers to the immediate presence of ground contaminants, has been installed to monitor the integrity of a critical dam at a Dead Sea Works facility in Israel. The patented Sensoil Vadose Monitoring System (VMS) has been installed to provide instant warnings via SMS to factory operators and Sensoil's experts at the first indications that an adjacent dam has been compromised. The dam protects the facility from a riverbed that flows into the Dead Sea.
Due to Israel's arid desert climate, the river may be completely dry for months at a time during the hot summer months, and then suddenly become full during Israel's winter flash-flood season, leaving the dam susceptible to damage during severe and sudden changes in weather. The Sensoil VMS system monitors soil at the dam to instantly detect increased levels of water in the river and identifies if any conditions develop in the dam structure indicating that the dam may not be functioning. The instant warnings can enable the facility operators to take immediate steps to prevent widespread damage before a massive dam breach was to occur.
Herzliya Pituah’s SenSoil Innovations ( http://sensoils.com) is a leading developer of advanced soil monitoring technology that measures the subsurface hydraulic and chemical properties of water percolating in the vadose zone, the zone above the groundwater, up to the soil surface. The company’s technologies, based on its patented VMSTM (Vadose Monitoring System), offer real-time monitoring of soils for various uses. (DAC 05.06)
9.2 Waterfall Announces Support for OSIsoft PI Asset Framework
Waterfall Security Solutions announced a secure network integration solution for OSIsoft PI Asset Framework (PI AF). With this new version of the Waterfall PI connector, Waterfall Security Solutions replicates the PI Asset Framework from safety-critical and reliability-critical networks to corporate networks, creating new possibilities for secure integration. The OSIsoft PI Asset Framework provides uniform access to a wide variety of plant data sources. The new Waterfall solution allows all of data managed by the Asset Framework to be made available to business applications without introducing any risk to the safety or reliability of control system assets. The Waterfall solution replicates the Asset Framework itself to business networks, and replicates data sources accessible through plant AF installations out to business networks, both in like-to-like replications as well as in many-to-PI replications.
Rosh HaAyin’s Waterfall Security Solutions ( http://www.waterfall-security.com) is the leading provider of Unidirectional Security Gateways and data diodes for industrial control networks and critical infrastructures. Waterfall's Unidirectional Gateways reduce the cost and complexity of compliance with NERC-CIP, NRC, NIST, CFATS and other regulations, as well as with cyber-security best practices. Waterfall's products are deployed in utilities and critical national infrastructures throughout North America, Europe, Asia and Israel. (WSS 10.06)
9.3 Hello Doctor - The Missing Link in PHR Management
Recently launching its public beta, Hello Doctor ( https://hello.do/) is designed for people in complex medical conditions, such as cancer and heart diseases. It enables to intuitively organize all your medical records in "SmarLists" making sure you can easily navigate and access them, no matter how many different doctors or clinics you visit. With 90% of US patients wanting to self-manage their healthcare leveraging technology, Hello Doctor gives patients (and case managers) a Personal Health Records (PHR) management system that provides real-time access (online and offline) to all documents on the application. The records, from multiple electronic and paper sources, can be added using the device's camera, from the iPad library or from Dropbox. (Hello Doctor 11.06)
9.4 Viewbix Reaches New Milestone with 50,000 Registered Business Users
When it comes to small business marketing, it's hard to beat the power of video, which conveys messages efficiently and effectively. But many small and mid-sized companies struggle with integrating interactive tools into their videos to turn viewers into buyers. Viewbix, the leading video marketing platform, offers a solution with a simple, intuitive way for customers to transform videos into interactive marketing tools, and the response has been overwhelming, with more than 50,000 businesses now registered as Viewbix users. With Viewbix, companies can easily insert interactive apps like maps, email capture, eBay auctions, social media sharing tools, calls to action and much more to turn video viewing into an interactive experience and drive higher conversion rates. The ability to engage customers more deeply has resulted in a 20%-plus viewer engagement rate, with video viewers clicking call to action buttons or engaging with other apps inside the player. Viewbix also delivers powerful analytics, tracking and reporting customer actions in real time so businesses can optimize their approach for even better results. Tel Aviv’s Viewbix ( http://www.viewbix.com) offers a free basic service and premium pricing levels to meet individual customers’ online and mobile video marketing needs. (Viewbix 12.06)
9.5 Mellanox FDR 56Gb/s InfiniBand Deliver Leading Application Performance
Mellanox Technologies announced that its FDR 56Gb/s InfiniBand solutions deliver unmatched application performance over competing interconnect solutions. Benchmarks performed on multiple applications, such as OpenFOAM (Computational Fluid Dynamic), NAMD (Molecular Dynamics), RADIOSS (Structural Analysis), LAMMPS (Molecular Dynamics), WRF (Weather Research and Forecasting) and CP2K (Molecular Simulations) demonstrate higher performance – 20 to 30% higher performance with sixteen compute nodes compared to QDR 40Gb/s InfiniBand, and 100 to 200% higher performance compared to 10 and 40 Gigabit Ethernet. Furthermore, Mellanox’s Connect-IB FDR 56Gb/s InfiniBand adapter delivers 3X higher message rate over competing solutions, enabling 137 million messages per second. The performance capabilities demonstrated by FDR 56Gb/s InfiniBand are critical to High-Performance Computing (HPC), Web 2.0, cloud, Big Data and financial applications which require the highest bandwidth and the lowest latency to provide a competitive advantage to their users.
Yokneam’s Mellanox Technologies ( http://www.mellanox.com) is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage. Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability. (Mellanox 17.06)
9.6 N-trig DuoSensePen a Requirement for Next Generation Ultrabook
N-trig announced that its pen and touch controller powers Sony’s VAIO Duo 13 Ultrabook. DuoSense offers an active pen to improve the user experience and enhance productivity. N-trig’s DuoSensePen provides VAIO Duo 13 users with the write experience, including high accuracy, advanced palm rejection and hover capability for ease of control and navigation. Two different pen tips are included, providing different friction levels on the glass surface to closely pursue the desired pen-on-paper user experience. With these features, DuoSensePen serves as a natural method of enhancing the man-machine interface.
Leveraging its unique DuoSense technology, Kfar Saba N-trig ( http://www.n-trig.com) provides high performance pen and touchscreen single-chip controllers and a variety of active pen types for smartphone, tablet and Ultrabook devices. By enabling OEMs to use a single sensor for both pen and touch, the company’s technology facilitates slim and cost-effective designs. With advanced palm rejection and pressure sensitivity providing a natural feel, the N-trig active pen dramatically improves the creativity and productivity of touch-enabled systems, allowing an intuitive Hands-on computing experience. (N-trig 13.06)
9.7 GibbsCAM Demonstrates 3 Times Faster Machining With VoluMill
Cimatron Limited announced that GibbsCAM 2013, the newly released version of its acclaimed CAM software, will be showcased at the Technology trade show in Tel Aviv, Israel. Particular GibbsCAM features to be displayed at the event include the VoluMill option for ultra-high volume material removal, and the Multi-Task Machining (MTM) option. VoluMill in GibbsCAM enables up to 3 times faster machining and significantly reduced tool wear. VoluMill maximizes material removal rates by building toolpaths that optimally control tool cutting factors, automatically taking into account the best option for milling pockets, including the speed of a tool plunging into the material and material removal rates. Variation in tool load is smoothed, allowing the machine to use much higher speeds and feeds. GibbsCAM's powerful MTM provides seamless access to both turning and milling capabilities. The machine tool's specific configuration is automatically captured by GibbsCAM's settings, and full support is offered for the machine's utility operations.
With 30 years of experience and more than 40,000 installations worldwide, Givat Shmuel’s Cimatron ( http://www.cimatron.com) is a leading provider of integrated, CAD/CAM software solutions for mold, tool and die makers as well as manufacturers of discrete parts. Cimatron is committed to providing comprehensive, cost-effective solutions that streamline manufacturing cycles and ultimately shorten product delivery time. (Cimatron 17.06)
10: ISRAEL ECONOMIC STATISTICS
10.1 Israel’s May Annual Inflation Rate Rises from Six-Year Low
The CBS announced on 14 June that Israel’s inflation rate rose in May from a six-year low the previous month, as electricity prices and cigarette taxes increased. Annual inflation accelerated to 0.9% from 0.8%. Consumer prices increased 0.1% from the previous month. Prime Minister Netanyahu’s government is raising taxes to reduce the budget deficit, which has ballooned as the economy slows and revenue falls short of expectations. The Bank of Israel reduced the benchmark interest rate twice in May by a cumulative half-point, bringing the benchmark to 1.25%, in an effort to help boost growth. Economic growth is forecast to slow to 2.8% this year, from 3.2% in 2012, excluding first-time natural-gas revenue forecast to add 1%.
A 1 June increase in value-added-tax to 18% from 17% probably pushed prices further up this month, he said. The 6% rise in electricity prices, due to an increase in input costs, and 15% jump in cigarettes were offset by declines in gasoline and bread. (CBS 14.06)
10.2 Israel’s Economy Grows Annualized 2.7% In First Quarter
Israel's economy grew an annualized 2.7% in Q1/13, slightly less than previously estimated due to smaller growth rates of exports and consumer spending and a steeper drop in investment, the Central Bureau of Statistics said. Growth is projected at 2.8% this year, excluding the start of natural gas production at a large well off Israel's Mediterranean coast, which is expected to add about 1% to the GDP. GDP growth was 3.2% in 2012. Partly to encourage economic growth, the Bank of Israel cut its benchmark lending rate to 1.25% in two quarter-point moves in May.
Exports, which account for some 40% of Israel's economic activity, grew by 12.8% in the first three months of 2013, below an initial estimate of 13.5%. Private spending rose 5% - slower than an initial 5.6% rate. Imports slipped 0.8%. Investment in fixed assets slid 23.3%, more than in the first estimate, for its fourth straight quarterly decline. Government spending edged down 0.4%. Fourth-quarter GDP was unrevised at an annualized 2.6% rate. (CBS 16.06)
10.3 Record Number of Tourists Visit Israel in May
Israel set an all-time monthly record for tourism in May, with 336,000 visitors entering the country, a 5% increase over the previous May. From the start of January through the end of May, 1.4 million visitors entered Israel, a 1% increase over the same period in 2012. Tourism creates jobs in cities and the periphery and generates about $8.3 billion every year for the state. The cancellation of the value added tax levy on incoming tourism, the Open Skies agreement and supportive government policies represent an important base for the Tourism Ministry's activities. Of the 336,000 visitors in May, 283,000 stayed in the country for more than 24 hours. (IH 11.06)
10.4 Israeli Tourism to US on the Decline
Despite the US dollar's low exchange rate and the large number of flights offered between Israel and the United States, figures published recently by the Office of Travel and Tourism Industries at the US Department of Commerce show that Israeli tourism to the US is on the decline. While in 2012 general tourism to the US jumped by 7%, reaching an all-time high of 67 million visitors, tourism from Israel recorded a mere increase of 0.3%. Moreover, the figures published by the Americans show that the number of tourists who entered the country from Israel in 2012 (303,629) is even lower than the number of Israelis who arrived in 2001 (305,431) – the year tourism experienced a dramatic fall following the September 11 terror attacks. The international visitation data are received from the US passport control and are based on the visitor's place of residence. In other words, even if an Israeli enters the US with a foreign passport, he or she must still fill in their permanent place of residence in the entry form. Some 308,000 tourists from Israel arrived in the US in 2009. The drop began a year later when the number of Israelis arriving in the US fell to 307,000. In 2011, the number further dropped to 302,673. (Ynet 18.06)
10.5 Israeli Food Exports to US Reaches $224 Million in 2012
Exports of Israeli Foods and Beverages to the US reached a record $224 million in 2012, according to the Israel Export and International Cooperation Institute. While it spelled a 3% increase over 2011, it represented nearly 50% growth since 2008 when exports were at $144 million. Sources told KosherToday that the dramatic increase in Israeli food exports was due in large measure to a far “more aggressive marketing strategy at all levels by the Israeli manufacturers and their US representatives.” Israeli foods have become a significant part of the kosher food aisle with American kosher food manufacturers increasingly importing Israeli products. One reason for the growing popularity of Israeli manufactured products is “vastly improved quality and packaging,” says one major retailer. A good example is the steadily increasing share of the Matzah category before Passover. While it was hard to find anyone who would offer a prediction for sales in the coming five years, several Israelis believe that it will reach $500 million by 2018. (KT 17.06)
10.6 Survey Finds 57% of Israelis Have Smartphones
Israel leads Europe and US in smartphone use, according to a Google survey published. Israelis use the internet more by smartphone (93%), use search engines more (86%), use more applications (84%), use maps and update social networks (82%). The viewing of video clips and YouTube is also high - 77%, and the percentage of Israelis who watch full programs online is 48%. The results for Israel show that, even though smartphones entered the Israeli market late, only in 2009 (compared with the worldwide launch in 2007), this has not prevented Israelis from bypassing the world's big countries when it comes to their smartphones.
In 2012, the smartphone penetration rate in Israel was 35%, less than in major European countries. But a year later, the data show a sharp increase in the number of users. This year, 57% of Israelis have a smartphone, 22% more than in 2012. In Germany, 40% of people have a smartphone, in France, 42%, and in Spain, 55%, close to the proportion in Israel. 50% of Israelis say that they use smartphones while watching television programs in real time or on video on demand. 53% of the respondents say that, in the past six months, they have carried out searches on a smartphone after seeing an advertisement on television. (Globes 10.06)
11: IN DEPTH
11.1 LEBANON: Making The Most of Hydrocarbons
By: Hadi Fathallah for Al-Monitor Lebanon Pulse ( http://www.al-monitor.com) on June 13 that oil and gas is a much contested topic in Lebanon. There is so much euphoria among the Lebanese, especially the politicians and oil experts, each with their own visions and plans, each with their own agendas and interests. Lebanon’s oil and gas has caught everyone’s imagination. The political factions, with their business oligarchy subdivisions and militias, managed to collude to kick-start Lebanon’s oil race and form the Petroleum Administration, the governing body for the oil and gas sector, during the tenure of the Mikati government. Fifty-two companies vied for Lebanon’s oil and gas during the first licensing round. But with international interest in Lebanon's hydrocarbon reserves dwindling, or at least temporarily stalled because of the crises in the region, many specialists are echoing Citibank’s research: Will it be Cinderella or Sleeping Beauty?
Oil or natural gas? In the early stages of exploration, this question remains a game of guessing. It is also far more loaded than its simplicity implies. Far from just being different products, they are two different markets, two different supply chains and infrastructure, two different policy strategies and two different income prospectuses. The data show accumulations of both oil and gas, technically lumped under one category: hydrocarbons.
Nevertheless, marketing interviews by the seismic acquisition companies PGS and Spectrum have focused more on natural gas, with government officials echoing this rhetoric. The public discourse emphasizes the word "petroleum" or "oil." The inability of the Lebanese to use the word "hydrocarbon" in Arabic, switching instead between "petroleum" and "natural gas," has not only swayed the public discourse on hydrocarbon development in Lebanon away from development reality, but has also shaped uninformed policy direction at the official level, creating a schizophrenic approach to oil and gas development in Lebanon.
Lebanon is still in the early stage of surveying. Exploration, the next step, is the process for looking for hydrocarbons. It does not matter whether it involves oil or gas at the beginning, the objective being the discovery of commercial accumulations that can be extracted. Lebanon stands, if one assumes a streamlined and transparent process, around two to three years away from concluding the initial exploration phase and starting the next one, reservoir development for the explored basin, assuming a successful exploration stage.
Only after development, where the size of the hydrocarbon accumulation and the physical properties of the reservoir are identified, will one know and the decision be made, oil or gas or both. Once the decision is made to exploit the reservoir, production starts (after reservoir development, which could take, optimistically, another three to five years if the reservoirs turn out not to be as complex as assumed). Production of either or both takes different rig types, and since gas is compressed in the subsurface, different storage and transportation facilities are needed.
The brunt of development and the up-front costs will all be paid by the licensed companies. Oil companies calculate their risks, but does the Lebanese government? With the government's official position being to manage the proceeds and the strategic direction of the oil and gas sector, leaving development to a laissez-faire model, it is as susceptible to risk as the exploration companies, not only in the exploration period, but beyond it.
The list
After the call for expressions of interest in the first licensing round, the list of companies “interested” in exploring hydrocarbon reserves was leaked, even before the “courting” period had ended. Disregarding the purposes of the leak, the lack of transparency it signaled, and which by now everyone is aware of, the Lebanese energy minister hailed the process an example of the global interest in Lebanese hydrocarbon reserves. The list of companies was then duly published. It included 14 operators and 38 non-operators, all presented to showcase that big companies are primed and ready to explore Lebanon’s hydrocarbon fields.
The list of companies is quite interesting. The Chinese, hungry for all sources of energy, have only reluctantly shown interest in Lebanon’s reserves. Entering the list of pre-qualifiers as the only “non-stated” company, the Chinese are still yet to determine where they fit in the East Med energy map. If China’s hesitation shows anything, however, it is the reluctance of a superpower — with national oil companies that have ventured into the least transparent deals with the most opaque of governments — to step in to one of the world's murkiest geopolitical sub-regions.
Let the tail not wag the dog and let geopolitics get in the way. Many analysts overdo it with regional tensions analysis and maritime border delineation while looking into Lebanon's development of oil and gas. Lebanon’s challenges, however, begin with smaller hurdles.
Many have misread the fervor of the UK's ambassador to Lebanon and the visit by the British foreign minister as a pure lobbying effort on behalf of British companies and geopolitical posturing to secure guaranteed oil reserves. In fact, however, all but one of the interested companies under the UK category of companies is merely stock-listed companies with negative operating incomes vying for non-operating roles. One cannot but wonder, why the world’s foremost, technically enabled and experienced deep water operator, BP, would not be interested given such a frenzy of diplomatic activity.
Of course, the issue remains of the other international oil companies (IOCs), including Shell, Total, ExxonMobil and Chevron. The IOCs will bring to Lebanon a combination of established expertise, enabled financing and resource mobilization and polished foreign policy machinery to ensure smooth operations. But the dichotomy between the IOCs interested in Lebanon and only independent companies performing exploration in Israel and Cyprus is an odd one. Are these companies willing to risk now-guaranteed reserves in Israel and Cyprus for an uncertain escapade in Lebanon?
The bottom line for Lebanon is to balance the potential promise of hydrocarbon finds with the need for good governance and transparency. The two have not necessarily gone hand in hand, especially in the Middle East, given the demands and constraints of the region's crises and challenges.
Hadi Fathallah is a policy adviser at the Middle East Prospects Forum, a think tank based in Beirut, Lebanon. Hadi is a fellow of the Cornell Institute for Public Affairs at Cornell University. This article is part of a policy research series conducted by the O&G Working Group at the Middle East Prospects Forum (MEPF). (Al Monitor 13.06)
11.2 JORDAN: Pipeline to Boost Kingdom’s Energy Flows
A double pipeline that will channel oil to Jordan from Iraq is expected to play a key role in the Kingdom’s efforts to diversify and strengthen its energy sources. An agreement signed between the two countries on 15 April has paved the way for construction work on the $18b project to begin, with Iraqi officials estimating that the pipeline should be operational by 2017. The 1,680 km. link will connect the Iraqi city of Basra with the Jordanian port city of Aqaba. Once completed, it will pump 1m bpd of oil and 258m cu feet (mcf) of natural gas each day from Iraq to Jordan.
The pipeline will mark a major upgrade for the Kingdom, which currently receives its 15,000 bpd oil imports from Iraq by truck. An additional sub-line will be connected to the Kingdom’s refinery in Zarqa, where the Jordan Petroleum Refinery Company will process 150,000 bpd, together with 100 mcf of natural gas, for the domestic market. The remaining oil and gas will be channeled through Aqaba to the international market, generating annual transit fees of $3b for Jordan.
Project financing for the pipeline will be divided into two segments, with the Iraqi government bankrolling the engineering, procurement and construction of the pipeline from Basra to Haditha, a city in Iraq’s Al Anbar province. Funding for the second phase of the pipeline from Haditha to Aqaba will be finalized at a later date on a build-operate-transfer basis.
Nihad Mossa, director-general of the State Company for Oil Projects at Iraq’s Ministry of Oil, said companies will initially be given the opportunity to bid for the first pipeline segment from Basra to Haditha. A tender for the Haditha to Aqaba segment is then expected to be issued in the first quarter of 2014.
Iraq’s oil ministry has already awarded the Canadian SNC-Lavalin Group a contract to develop front-end engineering designs for the pipeline, which are expected to be completed within the next few months.
At present, about 80% of Iraq’s hydrocarbons exports, which total 2.2m bpd, are shipped through the Strait of Hormuz. Jordan, meanwhile, relies almost entirely on oil imports from the Gulf region, alongside gas from Egypt for most of its electricity generation.
This situation leaves both countries vulnerable to energy shocks sparked by ongoing political instability in Iran and Egypt. Flow through the Arish-Aqaba section of the Arab Gas Pipeline, which supplies gas from Egypt to Jordan, was brought to a halt on a number of occasions between February 2011 and mid-2012 due to sabotage. Gulf exporters, meanwhile, remain concerned about sporadic threats from Iran to obstruct the Strait of Hormuz.
The Basra-Aqaba pipeline will reduce Jordan’s exposure to the impact from energy transport chokeholds, complementing the government’s drive to boost its energy sources. These include plans to extract the Kingdom’s extensive oil shale reserves, while site selection for its first nuclear power plant is expected this year.
However, the planned pipeline will not be risk-free. Forced to circumvent the shortest distance between source and destination to remain within the territory of both countries, the pipeline will have to loop through the restive Al Anbar province of Western Iraq. The region is also vulnerable to any spillover of violence from Syria. (OBG 07.05)
11.3 JORDAN: Amman Facing More Problems Than Ever
An Al-Hayat article of 4 June cited in Al Monitor ( http://www.al-monitor.com) says that to avoid the collapse of the economy, Jordanian Prime Minister Abdullah Ensour is likely to take harsh decisions in the coming period, starting by raising electricity prices, which would surely go beyond the gradual cancelation of subsidies on bread and other commodities. This is seen as an attempt to obtain a financial loan worth $2 billion from the International Monetary Fund (IMF).
However, these decisions that have yet to be announced reflect the deep trouble Ensour is likely to face in the coming period. Ensour has an economic mindset. He was educated in the United States and France and his reputation has yet to be tarnished with accusations of corruption.
The biggest challenge facing the government — mired in economic and political complexities — is the bloody violence that gripped the city of Maan in southern Jordan lately. Protesters set fire to the government headquarters as well as public and private cars, in protest of the death of two wanted men, who were shot dead by the police, according to official statements. This has prompted the government to send extensive reinforcements to the desert city.
Ensour has previously made several decisions to raise fuel prices, sparking violent disturbances lasting for days in rural areas, which have been [most] affected by the cancelation of subsidies.
Ensour said that shifting from the extensive support system to the monetary support system is aimed at helping the poor, as it will provide more effective forms of aid. He added that this is the only option to avoid a financial crisis.
While the Jordanian prime minister continues to raise prices, many have raised their voices accusing him of undermining the critical situation in the enraged southern city. Work has stopped, and schools, bakeries and pharmacies have closed, after angry citizens declared open civil disobedience, and demanded the resignation of the ministry.
The Public Security Directorate in Jordan said the dead “were two dangerous wanted men, who were killed in the clashes with police after having broken into quarries in the southern province of Aqaba.” However, the videos posted by activists on social networking sites show that these two men were killed by normal people for revenge reasons.
In Al-Hussein bin Talal University, a public university in Maan, violent acts erupted a month ago, resulting in the deaths of four young men and injuring dozens of others, following a bloody conflict between students affiliated with Maan clans and others hailing from the southern desert.
There is no doubt what is happening in Maan reflects the accumulated crisis between the state and society, fueled by unprecedented tension due to the deteriorating political and economic conditions. Yasser Abu Hilala, a journalist from the same city, told Al-Hayat that aggravating violence and the increasing number of casualties “will lead to a different turn of events and will not jeopardize the fate of the government alone but also the state and its future.” He said that Maan has seen heated protests “in response to the death of the two citizens, whose bodies were mutilated, amidst the confusion of the authorities and security service, which have been issuing contradicting statements about the matter.”
“Over the past years, the southern city has seen bloody incidents in which citizens were killed at the hands of police. Perpetrators were not properly held accountable for their acts in the eyes of the public,” he added. He also said that “there is an unhealthy relationship between the state and society, which is due to the fact that the security apparatus does not take the people’s rights into account. This is not to mention the well-organized gangs that trade in arms and sell drugs inside and outside the city, while authorities fail to deter them.”
On 3 June, the government said that it “will not tolerate any criminal act.” It added that it has received orders from the monarchy to change the situation as the status quo is “unacceptable,” and that the state must “preserve its prestige.”
Maan is considered a tribal stronghold, home to 60,000 people. It is located at about 250 km [155 miles] south of Amman, and is known for its defiance of the central authorities. The impoverished city has been a battlefield between tribes, and marred by violence over the past years. Its residents are extremist Islamist militants armed with weapons and resisting the authorities.
According to analysts, due to the economic recession the government has failed to the meet the demands of the city’s residents, who are seeking governmental posts, not to mention the lack of foreign aid and tax revenue. Over the past few weeks, Ensour has been stressing the decision to raise electricity prices, saying that it will come into effect next month. However, leaders within the government stressed the seriousness of such a decision, and proposed postponing its implementation until after the month of Ramadan, according to government associates speaking to Al-Hayat. These leaders stressed that there have been efforts to stabilize the prices of electricity for the poor, in an attempt to absorb the expected heated reaction from the street.
The IMF issued an important document in late May, demanding the government deal with the tax evasion (amounting to around $1.4 billion) and to cut military spending in order to reduce the budget draining.
There have been indicators confirming that the head of the government, who just turned 70, has been abandoned by powerful decision-makers, especially within the security institution. The prime minister has been exchanging undeclared severe accusations with powerful decision-makers, especially after making a press statement saying that he clings to his right to choose ministers, although official institutions did not impose upon him any ministers to be appointed.
The Confidence of the MPs
Al-Hayat learned that ministerial amendment adopted by Ensour has been postponed until further notice, as the government’s future is precarious given the swift domestic and external changes. Al-Hayat also learned that some statesmen have demanded the royal palace to declare a war government, headed by a prominent military figure to face the developments in the Syrian situation.
Ensour is a pillar of the small ruling elite and is affiliated with the conservative movement, which is close to the royal palace. Many official sources do not rule out the possibility of toppling the government by Parliament, should the prime minister continue to insist on raising prices. However, the state is far more concerned about a more serious scenario, which is the reaction of the street that would undermine the future and legitimacy of the government and its institutions, according to sources close to decision-makers.
Ensour is facing a bigger challenge from the MPs, who gave him confidence in anticipation of ministerial positions, an option which was rejected by the Jordanian monarch, fearing the collapse of Parliament. Parliament has not been established based on partisan participation or platforms, as the Islamic opposition boycotted the elections in protest against the nature of the provided reforms. The biggest concern of Parliament is how to quell the anger of the street, which will not rest, should the government raise prices.
Fahed Khaitan, a writer and political commentator, told Al-Hayat that the fate of Ensour’s government depends on its decision to raise electricity prices, and its ability to convince the parliamentary committees of the need to pass the resolution.
Khaitan believed that traditional pressures exerted on MPs “will be limited this time ... as the Parliament will not risk facing street protests and will not be the scapegoat, as was the case with former parliaments.” Moreover, Ensour faces an additional challenge imposed by the Muslim Brotherhood, Jordan's largest opposition group, in addition to the latter’s allies within the National Front for Reform. These include tribal and secular leaders, led by former Prime Minister Ahmad Obeidat, who was previously the director of the General Intelligence Department. Obeidat asserted days ago that the popular movement’s withdrawal is “illogical,” threatening to launch a new wave of protests.
The government’s fate is also linked to the developments in the Syrian situation, since according to internal undeclared scenarios, Jordan fears a world war that would significantly affect it. It also fears that the number of Syrian refugees on its territory might reach 3 million, if the situation were to completely collapse in its northern neighbor.
Official circles revealed to Al-Hayat that the Syrian file’s successive developments “urged powerful leading figures within the state to demand the current government’s dismissal and the declaration of the war cabinet as soon as possible in order to counter the repercussions of the Syrian disaster, [as] anticipated by the Hashemite Kingdom.”
Maher Abu Tair, who worked as a consultant to the Jordanian government and is considered one of the most prominent decision makers, said that talks held in closed official rooms “reveal the need to assign a prominent military figure to manage the country affairs,” adding that the prospects for this option will be clarified within the next few days. (Al Monitor 04.06)
11.4 JORDAN: Web Policy Mistake
David Schenker wrote in the Los Angeles Times on 14 June that Jordan's King Abdullah II has a lot on his plate. Not only is the kingdom hosting nearly 500,000 Syrian refugees, the economy is deteriorating, there's serious unrest in the southern town of Maan, plus persistent protests related to a widespread perception of officially sanctioned corruption and burgeoning domestic opposition to the U.S. deployment of troops and F-16s to protect Jordan from violent spillover from Syria.
The palace has pursued some savvy initiatives to insulate the nation from these challenges, including seeking U.S. loan guarantees to float a Eurobond, securing a $2-billion IMF loan and taking very public preliminary measures to fight corruption. But not all of the king's stabilization efforts have been well conceived. This month, Jordan blocked local access to about 300 domestic websites.
Ironically, this action coincided with the rollout of Abdullah's "democratic empowerment" project. Putting aside the incongruous timing, the assault on Internet freedom had been legislated months ago.
Still, not surprisingly, publishers of these websites accused the palace of implementing the law now to silence dissent. After all, many of the blocked sites are critical of the government and focus reportage and commentary on anti-government demonstrations, news of the tribal opposition movement known as the Hirak and alleged corruption.
During a protest outside the journalists union headquarters 3 June, Basil Okoor, the publisher of jo24.net -- whose site is among those blocked -- described the government measures as "political and not legal," and warned that "tomorrow, the state will extend its powers over print journalism."
Since 2009, Freedom House has characterized Jordan as "not free," and traditional newspapers in the kingdom have long faced pressures. Indeed, editors of Jordan's nongovernmental papers say the palace weighs in routinely when it disapproves of stories. Until last September, however, online publications had by and large avoided these constraints. But then Parliament passed highly restrictive amendments to the "press and publications" law requiring online publications to pay a $1,400 registration fee and apply for a license within 90 days.
Although many websites at the time registered, several opposition sites refused on principle to submit to a licensing process overseen by a judiciary widely perceived as not independent. Non-licensed websites were originally slated to be blocked before parliamentary elections in January. The reprieve ended this month.
Responding to the government's actions, several banned sites have coalesced to issue statements and conduct sit-ins. Jordan's Islamists -- whose websites ikhwanjo.com and albosala.com were also blocked, although access to ikhwanjo.com has since been restored -- have not joined the protests. But the Muslim Brotherhood issued a statement condemning the step as "a continuation of the harsh authoritarian procedures" of the government. Meanwhile, the banner headline on albosala.com encourages users to "participate in the national campaign to break the blocking of news sites" by clicking on a link to a proxy server.
Apparently, many in Jordan -- where internet penetration reportedly is more than 50% -- are doing just that. According to Okoor of jo24.net, in recent days traffic to his site has spiked, increasing from 25,000 to more than 40,000 visitors a day.
While the size of the protests has not been large, the message appears to be resonating. So far, 85 of 150 Jordanian parliamentarians have signed a petition asking for a review of the controversial law. Mohammad Momani, the minister of state for media affairs and communications, has since announced that the government might be willing to reconsider it.
Of course, the government maintains that Jordanian websites should be regulated to help curb slander, defamation and other forms of what it considers irresponsible reporting -- on matters such as corruption -- that incite citizens. These are legitimate concerns, but as in other states, publishers can be held accountable in civil courts.
Notably, the Obama administration has not commented on the blocking. No doubt Washington is not pleased. But given the broad range of threats to Jordanian stability, the curtailing of civil liberties ranks fairly low. However, it is all but certain that the administration is quietly conveying its concerns to the palace.
Given the ongoing turmoil in the region, it would be unwise to press for radical political reform in Jordan now. Indeed, the majority of Jordanians are not clamoring for such change. But rolling back the nation's already limited freedoms is not a recipe for enhanced stability. As Abdullah works to insulate Jordan from domestic and foreign threats, the last thing he needs -- at home and abroad -- is to associate his benign and traditionally enlightened monarchy with the region's most repressive regimes. (TWI 14.06)
11.5 QATAR: Expanding Energy Horizons
The world’s largest exporter of liquefied natural gas (LNG) is spreading its wings into energy ventures far from the vast reserves on its own doorstep. Qatar is investing in shale-related projects in North America and elsewhere to help maintain its position as one of the top players in the global gas market.
On May 9 state-owned Qatar Petroleum International (QPI) and ExxonMobil unveiled plans to develop a $10b export terminal at Golden Pass in Texas. The facility was originally designed as an import and regasification facility to land some of the take from Qatar’s fields, but events have overtaken its initial purpose.
To ensure the Golden Pass terminal has ample supplies of raw material on tap, QPI and ExxonMobil announced in mid-April they had signed a memorandum of understanding to work together on projects to explore and develop unconventional gas resources in North America and to cooperate on other LNG opportunities around the world. Qatar brings to the partnership immense experience of LNG production. One of the main markets for exports from Golden Pass will be the UK, with the two partners already having a regasification facility at Milford Haven in southern Wales. Domestic reserves from Britain’s North Sea fields are dwindling, with the country becoming increasingly reliant on imports to make up for the shortfall.
However, a large amount of US LNG exports are expected to head to Asia. The Panama Canal is undergoing a $5.25b expansion that will treble the waterway’s capacity and allow the largest gas tankers currently operating to make the passage, shortening the route between US processing plants on the Gulf of Mexico and Pacific rim markets. Already, some of Qatar’s Asian clients, including Osaka Gas and Chubu Electric Power Company of Japan and South Korea’s Korea Gas Corporation, have inked import agreements with US producers.
The QPI-ExxonMobil exploration tie-up came hard on the heels of the Qatari firm’s announcement of a partnership with British company Centrica to acquire the conventional natural gas assets of Canada’s Suncor Energy in a $1b deal. The agreement, which is expected to be closed in the second half of the year pending approval of the Canadian energy sector regulator, would give QPI and Centrica access to just under 27.75b cu meters of reserves from fields in three provinces.
In a research note issued on April 15, Andrew Potter, an analyst at CIBC World Markets, said the deal was another step in Qatar’s program of broadening its energy horizons: “For Qatar, the motivation is a diversification strategy outside of its traditional core region.”
According to Noel Tomnay, the head of global gas research at Scottish consultancy Wood Mackenzie, buying into the US and Canadian gas sectors would allow Qatar to play a greater role in the international gas industry along the entirety of the production chain, as well as maximize the benefits on its existing investments, such as its underutilized regasification plant in the UK.
“The bolstering of Europe’s, and specifically the UK’s, energy supply security through the facilitation of LNG exports from the US, combined with Qatari energy investment in North America, would strengthen Qatar’s geopolitical hand,” Tomnay said in a statement issued to coincide with a report from Wood Mackenzie issued just days before the QPI exploration and development tie up with ExxonMobil.
The report went on to say that, by limiting new projects to increase LNG capacity at home and shifting its investment focus overseas, Qatar was moving to protect the value of existing contracts with importers, and to put itself in a position of strength when the time comes to renegotiate these agreements.
By investing in US gas extraction and processing, Qatar is helping to ensure that it plays a role in the burgeoning North American energy boom. Should that boom not rattle international markets as hard as many have predicted, Qatar will still have its own strong production and export network in place. (OBG 10.06)
11.6 QATAR: Regional Consequences of Qatar's Leadership Transition
Simon Henderson wrote in the Washington Institute ( http://www.washingtoninstitute.org) on 11 June that reports indicate that Qatar's ruler will soon step aside in favor of his thirty-three-year-old son. Although the decision is being depicted as an evolutionary change, it could prompt the state's regional rivals to challenge parts of its activist foreign policy, which has recently included assisting opposition fighters in Syria and backing the Morsi government in Egypt.
The changes involve Crown Prince Tamim becoming prime minister within the next few weeks, replacing Sheikh Hamad bin Jassim al-Thani (a.k.a. HBJ). This move will apparently be simultaneous with or closely followed by Tamim replacing his father, Hamad bin Khalifa al-Thani, as emir.
Tamim's promotion is being depicted as a desirable transition rather than a forced response to the ruler's fragile health (Emir Hamad had a kidney transplant in 1997 and reportedly requires regular dialysis). Although the emir himself controversially seized control in 1995 when his indolent father was in Switzerland, he now wants to demonstrate that "he took the power not to stay in power." The transition is said to have been planned for two or three years, with Tamim - who was named as crown prince ten years ago - being steadily groomed for his new roles. The emerging new leader was educated in Britain at the same school as Winston Churchill, and then at the British equivalent of West Point; he speaks fluent English and French.
For U.S. policymakers, the most significant change will probably be the sidelining of HBJ. Doubling as prime minister and foreign minister for many years, he has been a key interlocutor, even when Qatar's foreign policy has angered Washington (e.g., Doha's support for jihadist fighters in Syria). HBJ is reportedly staying on as chief executive of the Qatar Investment Authority, which handles the revenue from the country's giant natural gas deposits, the third largest in the world after Russia and Iran's. It is unclear who will become the new foreign minister.
Qatar's foreign policy balances the desire for good relations with Iran (which shares one of emirate's huge offshore gas fields) against reliance on U.S. military support (centered on the giant al-Udeid Air Base, which controls American air operations in the region). Tehran may be tempted to take advantage of Qatar's transition, seeking revenge on Doha for backing opponents of the Assad regime in Syria, a key Iranian ally.
Other neighbors have also been infuriated by Qatar's behavior. For example, the Doha-based Aljazeera satellite television network has at times seemed solely focused on annoying Saudi Arabia. More recently, the United Arab Emirates has been outraged by Qatar's support for the Muslim Brotherhood government in Egypt, seeing the UAE branch of the group as a challenge to domestic security. Although Western media have described Sheikh Tamim as sympathetic to the Brotherhood, a more accurate description may be that he is simply a Qatari nationalist. Given the chaos in Syria and the persistent prospect of a nuclear Iran, Tamim's perspectives and the energy with which he uses his new status could be quite important to the future of the Middle East.
Simon Henderson is the Baker fellow and director of the Gulf and Energy Policy Program at The Washington Institute. (TWI 11.06)
11.7 UAE: IMF Says Finances Strengthening But Risks in Dubai
The United Arab Emirates is succeeding in strengthening its state finances by restraining spending, and managed last year to reduce the oil price which it needs to balance its budget, the International Monetary Fund said on 13 June. But the possibility of another boom-and-bust cycle in debt-laden Dubai is a risk for the UAE economy in the medium term, the IMF warned after the emirate announced a string of huge real estate development projects. The IMF's report did indicate the UAE is doing more than other Gulf Arab oil exporters to rein in growth of government spending and reduce its vulnerability to any steep fall of the oil price.
Hit by the global financial slump, Gulf Arab countries boosted spending sharply from 2009, and increased it further in the wake of the Arab Spring uprisings of 2011. The higher spending has succeeded in keeping economies growing, but means state budgets could fall into deficit if oil prices slide.
The UAE began curbing its spending last year, more than doubling its total fiscal surplus - the combined surplus of the federal government and all of the UAE's seven emirates - to 8.8% of gross domestic product from 4.1% in 2011, the IMF calculated. This lowered the oil price which the UAE needs to balance its combined budget to $74 per barrel last year from $84 in 2011, the IMF said. Brent crude oil is now around $103.
By contrast, other Gulf Arab countries continued to increase state spending substantially last year and their budget break-even prices have been rising.
The IMF said it welcomed the UAE's plans to continue consolidating its finances: "For 2013, continued fiscal consolidation of around 2% of non-oil GDP is planned. "Fiscal consolidation is expected to be driven by a rationalization of capital spending and subsidies and transfers, while spending on goods and services, defense and security, and the wage bill are expected to increase."
The UAE's finances are difficult to analyze because oil-rich Abu Dhabi, which accounts for roughly 80% of the country's fiscal spending, does not publicly release details of its annual budgets and outcomes. In October, the federal finance ministry published 2011 consolidated fiscal data, releasing such information for the first time ever, but there has been no update on 2012 so far.
Because of lower oil prices, the IMF predicted the UAE's fiscal surplus would shrink to 8.1% of GDP this year, before narrowing gradually to 5.1% in 2018. Despite its approval of the UAE's overall policy direction, the IMF warned of risks in Dubai, which suffered a crippling corporate debt crisis in 2009 but is now recovering strongly on the back of rebounding real estate prices. "At the emirate level, a faster pace of consolidation in Dubai would be desirable to address the emirate's continued debt-related risks," the IMF said.
It also described "insufficient domestic policy reform to mitigate the risk of a renewed boom-and-bust cycle" as a risk for the UAE economy. "Renewed optimism fuelled by rising real estate prices and loose global liquidity conditions could prompt a renewed cycle of imprudent risk-taking and re-leveraging by GREs (government- related entities) and private companies, which could also affect banks' balance sheets in light of their strong interconnectedness with GREs. "In the absence of prudent policies, this could fuel short-term growth at the expense of medium-term stability."
Dubai's total debt remains substantial at $142 billion, or around 102% of its GDP and $35 billion of that amount is in government and government-guaranteed debt, the IMF said. The emirate's GREs have increased their debt to an estimated $93 billion from $84 billion in March 2012, and about $60 billion of that debt falls due in 2013-2017, it added.
In the last few months, state-linked Dubai companies have announced billions of dollars of new real estate projects. For example, last week Emaar Properties and Meraas Holding said they formed a venture to develop a huge area near Dubai's downtown; a commercial center, low- and mid-rise residences, an 18-hole golf course and other facilities would be built over 11 million square meters (2,700 acres).
"While further investment in the development of Dubai's economy is welcome, the authorities should ensure that, in line with current intentions, execution will be gradual and flexible depending on demand," the IMF said. "New investments should be structured in a way that strictly limits risk-taking by the still highly indebted GRE sector," it said, adding that availability of financial data on the health of Dubai's GREs was still inadequate.
After protests by UAE commercial banks, the central bank (CBU) has postponed introducing planned caps on mortgage lending and loans to government-related bodies. The IMF said such rules were important to ensure financial stability. "Looking ahead, the CBU should carefully monitor the interaction of mortgage lending and the real estate sector, and tighten the mortgage regulation or introduce new measures as needed," it said. (BI-ME 13.06)
11.8 SAUDI ARABIA: Saudi Arabia’s Quiet Transition
Bruce Riedel posted on Al-Monitor ( http://www.al-monitor.com) on 5 June that in the last year, the Kingdom of Saudi Arabia has transitioned its top security posts from the generation that had been in office for a half century to a younger generation of princes who are now poised to inherit the last absolute monarchy in the world. The new leaders of Saudi Arabia’s security infrastructure are neither young nor inexperienced; rather, they are well prepared for their assignments at this critical juncture in their country’s history.
Late last month, King Abdullah promoted his son, Prince Mutaib bin Abdullah, to be the first ever minister of national guard, elevating the command of the kingdom’s elite security force to the level of a ministry and placing his son in the cabinet. The Saudi Arabian National Guard, or SANG, was commanded by Abdullah from 1962 until 2010. In the course of his half century in command of the SANG, Abdullah lavished on it the best weapons and equipment money could buy and turned it into the strongest military force in the country, larger and better led than the regular army. Over 100,000 strong and equipped with armored vehicles and helicopters, the SANG has been trained by American advisers since 1975.
The SANG functions as the praetorian guard of the royal family. It secures the capital, Riyadh, and the two holy cities, Mecca and Medina, and is also deployed extensively in the oil-rich Eastern province, which has a large Shiite population and suffers frequent unrest. SANG troops intervened in Bahrain in 2011 to suppress the reform movement on the island, which demands greater political rights for the Shiite majority from the Sunni royal family in Manama. By elevating SANG to the level of a ministry, Abdullah has given his son a bigger voice in the decision-making process of the kingdom on critical internal and external security issues.
Mutaib’s promotion is part of a pattern of elevating the senior sons of the kingdom’s ruling generation, all of whom are themselves the sons of the modern kingdom’s founder, Abdelaziz bin Saud or Ibn Saud, who died in 1953. As the elders have passed away in the last few years, the king has gradually replaced them with their sons. Last November, Abdullah promoted Prince Muhammad bin Nayef, known as MB, to be the minister of interior. MB’s father had been interior minister himself for over thirty years before briefly serving as crown prince until his death in June 2012. The Interior Ministry is the kingdom’s internal police force with over 130,000 paramilitary troops, police and border guards.
The Interior Ministry and SANG led the campaign in 2005-2006 to quell an al-Qaeda uprising in the kingdom and were the targets of several dozen terrorist attacks by al-Qaeda before the authorities gained the upper hand and drove the remnants of the terrorist group underground into Yemen.
Abdullah also made Prince Bandar, the former Saudi Ambassador to the United States, director-general of the Saudi intelligence service in July 2012. Bandar is a son of Prince Sultan, longtime minister of defense before he also briefly served as crown prince. Bandar’s predecessor as spy master, Prince Muqrin bin Abdulaziz, is now third in line to the crown, behind Abdullah and Crown Prince Salman. The Saudi intelligence service operates outside the kingdom, roughly like the US CIA, and is now heavily involved in fighting al-Qaeda in Yemen and in supporting the Syrian opposition to the regime of President Bashar al-Assad. Ironically, Bandar was crucial to the transition in Syria from Hafez Assad to Bashar back in 2000, assuring key Alawite generals then in the regime that Bashar was up to the job and had Saudi support. Now Bandar is trying to get arms to the Sunni rebels to oust Bashar.
The king has also been moving the next generation of princes into key governorships in the most politically sensitive provinces. One of Crown Prince Salman’s sons, Prince Faisal bin Salman, was made governor of Medina this January and another of Nayif’s sons, Saud bin Nayif, became governor of the Eastern province at the same time. Both were also made ministers. Faisal had been chairman of the kingdom’s largest publishing company, while Saud had been the ambassador to Spain and a senior official in the Interior Ministry.
The promotion of so many younger princes into senior positions is unprecedented in the kingdom’s history, and is a reflection of the passing of the generation of Ibn Saud’s sons, who dominated the country for well over a half century. The new ministers are experienced hands; many have been functionally running their aging fathers' portfolios for years. MB, for example, basically took charge of the interior ministry when the al-Qaeda rebellion began in 2005. His father had assured the rest of the royal family that al-Qaeda would never be a threat to the kingdom.
The transition to the next generation is not a sign of reform. None of the new power brokers has any record of promoting fundamental change in the kingdom. After all, they are major stake holders in the system that has finally brought them to the top tier. Nonetheless, the promotion of Mutaib, MB, Bandar and others is a major transformation in the kingdom’s leadership at a time when the last absolute monarchy in the world faces major challenges from the Arab Awakening and the sharpening sectarian Sunni-Shiite struggle across the Islamic world.
Stormy times lie ahead for the princes. How well they fair will determine the success or failure of America’s oldest ally in the Middle East. Given how slowly change comes in the royal family, if they succeed, they may be in office for decades to come.
Bruce Riedel is the director of the Intelligence Project at the Brookings Institution. His latest book is Avoiding Armageddon: America, India and Pakistan to the Brink and Back. (AL Monitor 05.06)
11.9 SAUDI ARABIA: Risk Alert - The Next Property Bubble?
The Economist Intelligence Unit observed that the Saudi economy continues to power ahead, supported by a hugely expansionary fiscal stance and continued loose monetary policy. Meanwhile, despite fast-rising retail sales, surging wages, and a program to replace expatriate workers with (more expensive) locals, inflation has remained subdued, averaging just 4% in 2012. However, fears are growing that the combination of rapid liquidity growth and a paucity of avenues to invest could result in the creation of asset bubbles, with the present boom in office construction arguably the most likely source.
The rash of building in the capital, Riyadh, and elsewhere is changing the appearance of the kingdom dramatically. The most striking example of this will be the kilometer-high, mixed-use Kingdom Tower in Jeddah, a project led by the Saudi billionaire Prince Al-Waleed bin Talal that began construction earlier this year. Meanwhile, in the capital, Riyadh, building sites pepper the sides of the two main highways - King Fahd Road and Makkah road - ranging from offices and residential blocks to massive new hospitals and universities. Overall, the Saudi-based National Commercial Bank estimates that $71.6b in construction projects are currently ongoing, and, if anything, the pace of building is set to accelerate: the Dubai-based business magazine, MEED, estimates that some $600b in construction projects will be signed in Saudi Arabia this year (out of a total of $1.35b in the Gulf Co-operation Council). Added to this, the $67b program to build 500,000 affordable homes, announced by King Abdullah bin Abdel-Aziz in March 2011, has yet to even begin.
Bottlenecks in the supply chain emerge
Such an enormous rise in construction is, unsurprisingly, resulting in bottlenecks, with projects being delayed (including the high-profile, long-standing plan to build four economic cities) and cement shortages a particular cause of concern. With this in mind, the king in April ordered the government to import 10m tonnes of cement, and offered a grant of $800m for the building of three to four new cement plants. A ban on exporting cement has also been in place since February 2012. However, it is worth noting that the shortage of cement will not necessarily result in an increase in construction costs, as the price of cement is controlled in the kingdom; similarly, despite a shortage of steel, prices here too are controlled by the Saudi Basic Industries Corporation (SABIC), and generally track international prices.
Equally, it is important to note that much of the new building is meeting general societal needs, with demand from the fast-expanding population (around a third of the population is under the age of 14) likely to ensure full usage of the 539 new schools and 19 new hospitals currently planned - although there are concerns about insufficient numbers of teachers and doctors and nurses to staff the new facilities. At the same time, the strain on the country's infrastructure is also being tackled, with the overworked port at Jeddah set to be relieved by the construction of a newer port, the King Abdullah Economic City (KAEC) SeaPort, some 100 km to the north, while a series of new rail lines across the country will also ease the movement of goods.
Liquidity floods into the sector
Despite this heavy infrastructure investment, there are insufficient investment opportunities for the economy to absorb the flood of liquidity emanating from continued high oil earnings and the maintenance of a loose fiscal and monetary policy. In particular, the Saudi public remains wary of investing in the country's stock market, with the collapse of share prices in 2006 (and again in 2009) on the Tadawul stock exchange still foremost in the public's memory. As a result, although the stock market has risen markedly in recent months, the value of shares traded is still just around a third of their peak in 2006.
In light of this, there are growing signs that the excess liquidity is being funneled into construction, which in turn could be inflating a property bubble. For example, commercial bank lending for building and construction projects in 2012 was 68.5% higher than in 2009, at $20b - a figure also substantially above the $14.5b in lending provided in 2008, before the onset of the global slowdown. At the same time, lending from state credit institutions (often provided interest free), including notably the Real Estate Development Fund, has also surged.
Although the healthy economic climate justifies some of the increase, the rash of new office building is a center for concern. As The Economist magazine noted in May, just 10% of the office space in the massive King Abdullah Financial District (KAFD), located just outside Riyadh and comprising 42 buildings and 900,000 sq. meters of office space, has thus far been leased, despite the fact that the first phase of the project is set to come online later in 2013. As a result, there are rumors that a number of government departments are being earmarked to move to the site, in order to fill some of the space.
Too much office space?
However, the problem of excess office space will probably not be confined to just the KAFD. A 3.8-sq km business district is planned at the KAEC, which includes another financial services hub, and it is thus little surprise that a US-based commercial real estate services company, CBRE, reported in late 2012 that office rentals were declining across the country (with the exception of oil-rich Eastern Province), with rents falling by as much as 20% in Jeddah. As a result, a number of developers in Saudi Arabia are now apparently converting new office projects into residential blocks, where demand is firmer.
Although it is far too early to classify Saudi Arabia as the next Dubai (whose property bubble burst spectacularly in 2009), the need to tackle the increasing evidence of surplus office supply in the kingdom is growing. With the government set to maintain its expansionary fiscal stance, the pressure is on the central bank to take pre-emptive action to deflate any possible bubbles. However, its appetite for proactive measures will be dulled by the current low rate of inflation, and, in any case, the most obvious move - raising interest rates - is largely closed off to the Saudi Arabian Monetary Agency (SAMA, the central bank), given the overarching requirement to maintain the currency peg to the dollar. Nonetheless, the Saudi authorities will need to take some action eventually, or Saudi Arabia risks the emergence of the sort of asset price bubble witnessed elsewhere in the world prior to the global recession in 2009. (EIU 05.06)
11.10 EGYPT: Securing Energy Supplies
A range of gas exploration tenders should bring Egypt billions of dollars in investment this year and help the country meet its pressing long-term energy needs.
On April 16, Egyptian Natural Gas Holding Company (Egas) awarded eight licenses for gas exploration and said it would potentially be offering at least 10 more this year. The winning bidders were the UK’s BP and Petroceltic, UAE-based Dana Gas, Italy’s Edison, Sea Dragon Energy of Canada, Australia’s Pura Vida Energy and the International Egyptian Oil Company. Combined, the licensees are expected to drill a minimum of 18 wells and make investments amounting to at least $1.2b. Osama Kamal, former head of the Ministry of Petroleum, has said in the past that investments in gas and oil exploration are projected to total $8.6b this year.
The winning bidders will be allowed to sell their share of the gas produced; previously, the Egyptian state was the sole buyer, with the exception of output that was exported as liquefied natural gas (LNG) from Edku on the Mediterranean Sea. These more accommodating terms were prompted in part by the initially limited interest in the most recent round, which had to be pushed back from November 2012 to February 2013.
Investments in gas exploration over the past 20 years have paid dividends, and proven reserves totaled 2.2tn cubic meters (tcm), or 77.3trn cubic feet (tcf) at the end of 2011, according to BP’s July 2012 Statistical Energy Review, up from 0.4 tcm in 1991 and 1.6 tcm in 2001. Production reached 61.3b cubic meters (bcm), up from just 25.2 bcm a decade earlier. BP estimates that at current output levels, proven reserves will last just under 37 years. Production continued to outstrip consumption in 2011, at 44.7 bcm.
But exploration has slowed since the Egyptian Revolution of early 2011, due to the uncertain business environment that followed. Gas output has declined this year to a daily average of 5.75b cubic feet (bcf) from 6 bcf last year, according to Ayman Sakr, vice-president of the state-owned Egyptian General Petroleum Corporation.
Egypt exports a significant amount of natural gas, both as LNG and via pipelines, earning about $2.9b from sales in the 2011/12 fiscal year. But this year, the country, which has already become a net energy importer, may purchase foreign gas for the first time, as output slows at existing fields and demand continues to rise. Gas usage increased by 10% in 2011, even when economic growth fell below 2% and some industries shut down during the revolution. Shortages in fuel have led to power outages, a growing concern for business and a source of frustration for citizens. More than 90% of Egypt’s electricity comes from thermal plants, most of which burn gas and oil.
Egypt’s energy shortages have become acute enough for the government to allow private companies to import and resell gas, while the government acts as a regulator to prevent monopolistic behavior. Five companies are bidding to supply gas to Egas to feed power plants in the run-up to the summer months, when electricity consumption peaks due to heavy air conditioning usage.
Exploration to maintain production is an important facet of Egypt’s energy policy. But given the long lead times involved and the rate of demand growth, imports are likely to become an ever more important part of the gas supply. In November, QInvest, a Qatari state investment fund, signed a deal with Egyptian private equity outfit Citadel Capital for the construction of an LNG storage facility and re-gasification unit on the Red Sea coast. Citadel Capital asserts that this could supply up to 10% of Egypt’s gas needs. The large and growing Egyptian market should certainly appeal to Qatar, the world’s largest LNG producer, which has growing economic interests in the North African country.
As one of its reasons for the deal, Citadel Capital cited its expectation that Egypt’s complex and highly expensive subsidy regime would be reformed. Aside from the fact that subsidies are a large burden on the national coffers, they distort incentives and lead to inefficient fuel consumption. After the slowdown, Egypt is now moving to secure new gas supplies, but addressing these issues could prove more troublesome. (OBG 05.06)
11.11 EGYPT: Egypt Studies Implications of Ethiopian Nile Dam
On 1 June, Al Hayat ( http://www.al-monitor.com) noted that the controversy of Ethiopia’s plans to build the Renaissance Dam on the Nile sheds new light on the geopolitical implications of Egypt’s reliance on the Nile waters.
Maintaining Egypt’s acquired and historical rights to the Nile waters and preserving its right over the implementation of projects for the development of the river resources in the upstream countries are at the forefront of Egypt’s priorities to meet the requirements of the population growth and economic development plans — in light of its reliance on the Nile to fulfill its water requirements, since it is the country most dependent on the Nile water among all of the riparian countries.
Therefore, it is only natural that the Nile basin’s main headwaters — whether in the Ethiopian highlands or the tropical highlands — figure into Egyptian water security, since any act by any riparian country that may affect Egypt's annual water share of 55.5 billion cubic meters is deemed a violation of Egyptian national security.
Yet, the situation on the ground confirms that currently, Egypt's water security situation is witnessing negative developments. Upstream countries are exploiting Egypt’s political instability following the January 25 Revolution to pass the Entebbe Agreement for re-sharing Nile waters, without taking into account Egyptian concerns relating to this agreement. It should be noted that Ethiopia had announced in mid-March last year its intention to refer the agreement to the Ethiopian parliament for its ratification and entry into force. Moreover, upstream countries have strengthened their coordination relationships to face the two downstream countries (Egypt and Sudan).
On a different note, Ethiopia succeeded in convincing the Nile basin southern riparian countries to accept it as a full-fledged member among them, even if it is not in the south [part of the Nile basin] — which provides them with some kind of support for the implementation of development projects in Ethiopia. Meanwhile, it is worth mentioning that Egypt and Sudan were refused membership in this group.
The situation is further exacerbated by South Sudan’s announcement of its objection to the 1959 Nile agreement between Egypt and Sudan, while it intends to join the Framework Agreement, which was signed by Ethiopia, Rwanda, Kenya, Uganda and Tanzania in 2010 and by Burundi in 2011.
The most prominent challenge is that Ethiopia is proceeding with the implementation of the Renaissance Dam that represents the greatest threat to Egypt’s water security, in light of the available information on the dam. The Renaissance Dam is located on the Blue Nile in western Ethiopia in the Benishangul region, about 40 kilometers [25 miles] from the Sudanese border and 740 kilometers [460 miles] from the Ethiopian capital, Addis Ababa. The dam will produce approximately 6,000 megawatts of electrical energy, with a total cost of approximately $1 billion. It is estimated that the construction of the dam, which was awarded to the Italian company Salini, will take between four and five years. The main part of the dam is 145 meters [476 feet] high and 1,780 meters [5,840 feet] long, and a secondary dam will be constructed at a height of 60 meters [197 feet] and a length of 4.8 meters [15.7 feet] to increase the dam’s storage capacity to 74 billion cubic meters.
A dam with such specifications has catastrophic effects on Egypt. The dam filling process (which takes up to six years), will cause Egypt to sustain a huge water share deficit, estimated at around 10 to 20 billion cubic meters. Such a dam will also cause the cessation of agricultural expansion, a possible reduction of the currently cultivated area, an increase of salinity in the northern part of the Delta in such a way that prevents cultivation of those lands and their fallow lands, damage to potable water stations, the collapse of canals and drains, and environmental destabilization in the northern part of Egypt (Alexandria and the north coast). Furthermore, it is possible that this dam would prevent water from reaching the coastline, affect navigation on the river and cause a reduction by an estimated 20% in the electricity production generated from the High Dam [in Aswan].
On the other hand, if the Renaissance Dam were to collapse, an area of 16-20 square km. stretching from the site of the dam all the way to Khartoum would be flooded and destroyed. Furthermore, a huge influx of water would pour into Lake Nasser. This could lead to the collapse of the High Dam in southern Egypt, if the lake was already full, given that there is no mechanism for draining excess water from the lake. In that case, this would destroy all of the cities located in the vicinity of the dam and extending to Cairo, and would flood the Delta. This possibility remains weak, but if Lake Nasser is not full before the influx of the water flow, this will produce a water surplus equivalent to three times the river course water, which would put all of the facilities on the river banks underwater.
US Support
Numerous international and regional changes contributed to the escalation of the Nile water crisis, including, for example, unlimited US support for Ethiopian policies and the United States’ exploitation of Ethiopia as a tool to implement its agenda, whether in East Africa or in the Nile water crisis, while Washington shows an increased interest in this crisis.
On the other hand, the European position is more favorable to the upstream countries but excludes direct intervention in the crisis, considering the position of upstream countries on the Framework Agreement a sovereign matter that must be respected. They have asserted that Europe will only intervene to solve the crisis if a consensus is reached by the parties in this respect.
It is worth mentioning that the West is getting more and more involved in Africa in general and in the Nile Basin region in particular. Western nations consider it a vital region in terms of agricultural investments to confront food scarcity, in light of climate change. European companies, like the Italian company Salini, are seeking to acquire the right to implement major projects along the river.
Moreover, China and India, whose presence is increasing in Africa in general and in the Nile Basin region in particular, are competing against European countries over agricultural investments in the riparian countries.
Additionally, the Ethiopian role has intensified regionally. Addis Ababa succeeded in laying out the policies of the upstream countries to the detriment of Egypt’s water interests, in the sense that Ethiopia took unilateral decisions to build a significant number of dams on its land in violation of the laws on international rivers, benefitting from international support. Moreover, the majority of Gulf countries tend to invest agriculturally in the Nile basin countries to fill the food gap caused by the scarcity of water [in their own countries]. Additionally, the Israeli presence is further highlighted in the Nile basin countries.
All of these developments coincide with a decline in Egypt’s leading role in Africa in general and in the Nile basin in particular. The upstream countries are aware that Egypt’s role, as well as its regional and international influence, waned during the last phase of Hosni Mubarak’s rule and in the wake of the January 25 Revolution and the transitional phase toward establishing the state, due to the political and security instability that came along.
Despite all the challenges, the Egyptian way of dealing with the developments has not matched the severity of the pending dangers. All intensive Egyptian efforts in this regard have been an exercise in futility as they failed to placate the Egyptian concerns regarding the Framework Agreement, particularly given the fact that the negotiations about it were postponed more than once, while the upstream countries are speeding toward ratifying it without taking into consideration the interests of the downstream countries. Until this point, the Egyptian efforts have been unable to halt the construction of the Renaissance Dam or at least reduce the effects. Egypt did not even receive any detailed information in regard to the structure of the Dam until Ethiopia announced its construction in April 2011.
Even the Tripartite Commission charged with studying the effects of the Renaissance Dam on Egypt and Sudan was not set up by Egypt. The late Ethiopian Prime Minister Meles Zenawi called for establishing the commission during his visit to Cairo in September 2011. In addition to that, the decisions of the commission are not binding, which gives the impression that it is merely an Ethiopian trick to procrastinate, gain time, impose the facts on the ground and to acquire the needed funding to construct the dam by giving the illusion that they have come to an agreement with the downstream countries, since the donor countries require unanimous consent over the development projects in the upstream countries.
Taking a look at the contemporary and modern history of Egypt, we note that the Nile has always been a top priority. Mohammad Ali Pasha encouraged the European voyagers to discover its riverheads in 1863, because he knew that the stability of his rule was related to the Nile. The deep interest in the river continued until the era of Ismail Pasha, who raised the Egyptian flag near the equator in 1871. Also, late President Anwar Sadat threatened to bombard any water project Ethiopia might construct on the Nile, after Addis Ababa announced its intention to construct projects on the river’s headwaters to provide around 6 billion cubic meters of water to irrigate 18,000 hectares.
In light of the importance of the Nile for Egypt, Egyptian national interests must prevail without consideration for any other matter. An aware, strong political will must come into being and take bold decisions to halt Ethiopia from constructing the Renaissance Dam according to current specifications. The storage capacity must be reduced to lessen the damage to Egypt, or at least come to an agreement with Ethiopia on operational rules, in order to spare Egypt the negative effects. Additionally, it must be rendered clear that the dam is constructed for electricity production and not agriculture purposes. Egypt should coordinate with Sudan to tackle the points of contention within the Framework Agreement, in a way that favor the interests of both countries and bridges the gap between the upstream and downstream countries. Moreover, unconventional ideas of cooperation should be set forth with the countries of the Nile basin: for example, and given the energy needs of the upstream countries, Egypt can implement energy projects in these countries while fulfilling its water needs. Additionally, projects to minimize water loss should be sought in South Sudan (the Jonglei Canal, the Bahr al-Ghazal river project and the Mashar Project), which will provide Egypt with around 9 billion cubic meters of water.
Egypt could also refer to donor countries and international circles to clarify its point of view, including Egypt’s need for the Nile’s waters and its refusal of any projects that reduce its share, especially given that Egypt is under the water poverty line. In addition, Egypt must study the possibility of obtaining a part of the Congo River water, which is wasted in the Atlantic ocean, through a canal that links the Congo River to the Nile, a project that would provide Egypt with around 60 billion cubic meters of water, as well as its share in the Nile. It is worth noting that the Congo River dumps around 1,000 billion cubic meters of freshwater in the Atlantic, to the extent that the water goes as far as 30 kilometers into the sea. (Al-Hayat 01.06)
11.12 EGYPT: Gay Egyptians Come Out of the Closet
Arab Spring, Internet encourage more openness in country where until recently homosexuality was criminal offense, writes Sherif Elhelwa for The Media Line.
Being gay in Egypt used to be a closely-guarded secret. Yet thanks to more widespread internet use by Egyptians and the demonstrations of the Arab Spring calling for freedom, many gays are more open about their sexuality. Social media groups have been created to discuss gays' problems, religious fatwas (legal pronouncements) regarding homosexuality and to engage in educational debates about the subject.
The Egyptian government used to jail gays. In 2001, for example, Egyptian police arrested 52 men for presumed homosexual behavior and sentenced 23 of them to 18 months of hard labor. However, when LGBTs celebrated 17 May, the "International Day Against Homophobia,” there was widespread Egyptian media coverage of the celebrations, aimed at increasing respect for gays and lesbians.
While there are no exact numbers on the number of homosexuals in Egypt, sexologist Heba Kotb says it could be 10 to 12% of the population. In recent years there has also been a rise in the number of bars and cafes catering to gays in Egypt. In Alexandria, for example, there is the traditional British-style pub Sheikh Ali, built in the early 1900s. It used to be famous for older in their mid-forties and above, who are regulars at the place, and visiting movie stars. Now, however, it also has a regular gay clientele.
Sheikh Ali bar manager Ashraf, who asked not to use his last name, says that gay clients are normal now and they pick a special night to meet here. "They usually come on Thursday, maybe 300 guests for the night,” he told The Media Line. “We have no problems with them. They come and drink and they're free to think whatever they think as long as there is no public indecency."
Nonetheless there is still a sense of sexual prejudice against gays in Middle East countries compared to the Western world. In Egypt's wider society homophobia is considered an issue that concerns Egyptians, but not one that is widely discussed. "They just decide not to speak about it. If we know a gay person, we usually crack a few jokes about it but we don't usually talk more about it. In this country the hardest thing to be is you. It's not easy to be yourself here in Egypt," bar customer Alaa Hassan, who is straight, told The Media Line.
"I have a few friends who are gay and they're not shy about it, but our common friends and I just don't talk about them, and we just let it go," Sylva Hagop of Cairo, who is also straight, said. "Egyptians aren't educated. The primary reason for this lack of knowledge is the unjustified fear of homosexuality and society's unwillingness to accept and understand the nature of homosexuality," she told The Media Line.
But some gays say the society still has a ways to go. "Society must forgive homosexuals. If Allah forgives all sins, and Allah is a great and merciful forgiver, then society and people should do the same," Shady Ahmed, an Egyptian gay, told The Media Line. "Egyptian society condemns homosexuals, and it's difficult to tell your family and friends that you're gay in a society that only promotes heterosexual behavior. "If I tell my family, they will disown me and probably kill me."
Lately there has more open discussion among gays and more definitions of where they stand regarding social norms and religious understandings. "Being a homosexual is not about sexual intercourse, it's about liking someone from the same sex. It's more of a natural sexual drive towards the same sex, and it doesn't have to end up in sexual intercourse. It's more about love," Egyptian homosexual Ahmed Mahmoud said.
"As for our religion, it prohibits same sex sexual relations. But nothing was mentioned in the Quran about loving another male or another woman. The Quran only spoke of illegitimate sexual relationships between the same sexes," he added.
Sexologist Kotb says that in many Arab countries where homosexuality was once considered an anomaly or taboo, it is now accepted. According to Kotb, there are no clear scientific reports saying homosexuality isn't curable. "I am of the opinion that homosexuality is a mental and social dysfunction that can be treated," she said. Perhaps the best indication of changes regarding homosexuality in Egypt are the increasing numbers of visits Kotb receives from those now unashamed to admit they are gay.
"My clinic is open to treat whoever comes for help, and not talk about their urges," she told The Media Line. She has a rule that her clinic is open to people who need or desire treatment, not just those who to want to tell her they are gay. Egyptians who are comfortable being gay don't need her services, she said. "I receive at least two cases per day, people coming to be treated, and I treat 80% of the cases that come to me," she said. (TML 10.06)
11.13 TUNISIA: IMF Approves a 24-month $1.74 Billion Stand-By Arrangement
On 7 June, the Executive Board of the International Monetary Fund (IMF) approved a 24-month Stand-By Arrangement for an amount equivalent to SDR 1.146 billion ( $1.74 billion) with Tunisia to support the country’s economic reform program during 2013-2015 aimed at strengthening fiscal and external buffers, and fostering higher inclusive growth. As a result of the Board’s decision, an amount equivalent to SDR 98.8 million (about $150.2 million) is available for immediate disbursement, and the remaining amount will be phased in over the duration of the program, subject to eight program reviews. The Stand-By Arrangement entails regular access to IMF resources, amounting to 400% of Tunisia’s quota.
Tunisia faced economic difficulties and a series of external shocks following the January 2011 revolution. Due to a challenging international economic environment, as well as regional and domestic tensions, real GDP contracted by 2% in 2011, foreign direct investment (FDI) and tourism declined by more than 30% year-on-year and unemployment rose to record levels. However, after the sharp economic decline, the Tunisian economy began a moderate recovery in 2012. The deteriorating current account deficit - caused partly by falling demand from Europe - has been financed by sustained donor financing, strengthened FDI and market access, which helped increase reserves (but to a level still below 2010). Fiscal space has been reduced to meet pressing social and investment needs, although public debt remains at sustainable levels. A fragile banking sector, widespread social and economic disparities and high youth unemployment are key challenges. Addressing these challenges in the midst of a political transition remains demanding.
Program Summary
The authorities initiated a medium-term economic program with the overriding objective of stabilizing the economy while laying foundations to support growth and protect the vulnerable. The program combines a package of strong policy measures and structural reforms, coupled with external financing support. Together these are expected to reduce the vulnerabilities arising from the difficult international economic environment and the ongoing political transition, and to provide the foundation for a return of investor confidence.
Key elements of the Fund-supported program are to:
Strengthen fiscal and external buffers. Key measures include: (i) an appropriate fiscal policy that creates space for one-off costs (such as banking recapitalization) and investment spending while avoiding crowding out private-sector credit; (ii) a prudent monetary policy aimed at containing inflation; and (iii) greater exchange rate flexibility to preserve reserves in the face of important exogenous shocks.
Lay the building blocks for growth by first addressing critical vulnerabilities in the banking sector; second, engaging in a medium-term fiscal consolidation that allows for a better composition of expenditures—including sustained public investments; and third, implementing an ambitious structural reform agenda that helps to rebuild Tunisia’s economic model by promoting private-sector development, lowering regional disparities, and reducing pervasive state intervention.
Protect the most vulnerable by strengthening social assistance mechanisms and undertaking a systematic assessment of the social impact of the envisaged reforms. These measures, in addition to the improved composition of public expenditures, will contribute to reducing income disparities. (IMF 07.05)
11.14 ALGERIA: Home-Grown Food to Cut Costs & Maybe Subsidies
Buoyed by considerable revenues from its hydrocarbons exports, the Algerian government is embarking on a series of initiatives aimed at modernizing the agricultural sector and boosting food production. Although similar strategies are being implemented to generate activity in a number of different areas of the economy, authorities will likely pay special attention to agriculture given an historic reliance on imports and the traditional emphasis on self-sufficiency.
Food security is a sensitive issue in Algeria, as it has been throughout North Africa in recent years. With large swathes of the region’s populations sensitive to price fluctuations, governments have gone to great lengths to reduce the impact of commodity volatility. In response to January 2011 riots that were in part caused by a rise in the price of sugar and cooking oil, Algeria’s government reduced taxes and import duties on the two goods. The state has also continued to heavily subsidize the price of key foodstuffs, including flour and milk, in addition to oil and sugar.
The cost of these subsidies can be substantial, in 2013 estimated to reach 1.1% of GDP. Moreover, because Algeria is heavily dependent on food imports, it is vulnerable to shifts in global prices. Nearly 70% of the wheat consumed is purchased abroad, with imports of the cereal projected to hit 5.8m tonnes in 2012/13, largely coming from France, Canada, Germany and the US.
It is this context that the government is pursuing its Agricultural and Rural Renewal Policy (La Politique du Renouveau Agricole et Rural), which focuses on improving management in the agriculture sector, developing more effective regulations and promoting the use of more modern technology and practices.
So far, many of these efforts have been focused on reforming land access, both by consolidating farmland and by improving access to state-owned territory. Between 2000 and 2010, there was an 11% increase in the usage of previously non-exploited arable land and, since the establishment of the National Office for Agricultural Land in 2010, more than 195,000 applications for access to state land have been received. In addition to land reform, new programs to encourage public-private partnerships, provide better training to farmers and implement modern technology are all promising to boost agricultural production.
The strategy seems to be paying off, with the value of agricultural output growing 23.7% in 2011 and a further 32% in 2012. While there remain opportunities for investment in production, attention is now turning to the development of supporting infrastructure and downstream industries.
Although it is the largest country in Africa, only about 8.2m ha of its 2,381,740 sq. km. is arable, equivalent to 19.5% of agricultural land or 3.4% of total land area, according to the World Bank. Moreover, just 1.1m ha of farmland is irrigated, a figure that the government would like to see grow to 1.6m ha by 2014. The state has also committed more than €1.45b to improving existing irrigation systems.
Due to Algeria’s size and the government’s focus on underdeveloped areas, transportation infrastructure will also be key to managing agricultural growth. This will include ensuring that rail and road links are in place and creating transfer stations and storage infrastructure such as grain silos. In January 2013, the Algerian Inter-professional Office of Cereals announced plans to construct nine new silos at a cost of nearly €184m.
Furthermore, the government is working to boost dairy and meat production, which will require more refrigerated facilities, milk processing plants and slaughterhouses. The dairy industry is in its nascent stages, with Algeria still largely reliant on imported milk powder, although domestic milk production has increased in recent years, rising from 390m liters in 2010 to 688m liters in 2012. Developing better infrastructure could help bring down transport costs, reduce spoilage and make Algerian agricultural products more competitive both in the domestic and international markets.
As the state strives to boost food production, reduce unemployment and diversify the economy away from hydrocarbons, all segments of the agriculture sector should expect ongoing government attention. Indeed, considering the politically sensitive nature food prices, the sector will likely continue to receive support. (OBG 11.06)
11.15 TURKEY: The Spring of Turkey, The Fall of Erdogan
Jadaliyya ( http://www.jadaliyya.com) posted on 14 June that Turkish Prime Minister Recep Tayyip Erdogan’s insistence on demolishing Gezi Park and building a shopping mall on it was only the tip of the iceberg when it comes to the causes behind the demonstrations that have shaken Turkey. The real reason is composed of three elements: rising authoritarianism, declining secularism and stalled democratization.
On 28 December 2011 at 9:37 pm, the Turkish Air Force bombarded a group of Turkish citizens around a Kurdish village whose income draws on smuggling. Under government pressure, for almost two days the mainstream media could not report on the incident. Thirty-four civilians were killed.
Prime Minister Erdogan, who only thirty-five days ago apologized on behalf of the Turkish state for a massacre that took place seventy-three years ago, refused to apologize. He was politically responsible for the incident. Instead, Erdogan decided to change the direction of public discussion by introducing a ban on abortion. He failed to enforce his decision, but succeeded in diverting the public’s attention.
11 May 2013 was the September 11th of Turkey. For the first time in Turkish history, an entire neighborhood of a town exploded as a result of two car bombs, killing fifty-one civilians and severely injuring one hundred and forty. The town of Reyhanli is adjacent to the border with Syria. The increasing public pressure that followed focused on Erdogan’s insistence on becoming an active player in Syria’s civil war.
To divert public attention, he decided to introduce a ban on buying and selling alcoholic beverages after ten pm in the country. Despite the fact that alcohol consumption is declining and that the tax on alcoholic beverages has increased by 655% in the last ten years, Erdogan argued that the measure to ban buying and selling of alcoholic beverages for adults was aimed at keeping the young away from alcoholism.
As public criticism skyrocketed, Erdogan alluded to Atatürk and his successor Ismet Inönü by saying, “How come the decision of two drunken men could be the basis of law, but not what our faith requires?” Regardless of one’s ideology, the founding father of Turkey, Mustafa Kemal Atatürk, still remains the hero of the only national story that the people of Turkey still believe in and mobilize around.
This unfortunate allusion brought the country to its limit. Then came Erdogan’s announcement of plans to demolish Gezi Park and build a barracks on it. The barracks had been demolished in 1940. He said, “Of course we are not going to use it as a barracks. It will be a shopping mall, or could be used as a residential center.”
These last words broke a fault line in Turkish politics. People from all around Istanbul and from all ideologies began to occupy Gezi Park, the only green area of the most important center of the most important Turkish city: Istanbul.
The police attacked seven hundred protestors with tear gas, clearing the park, and burning the tents of occupiers. Calling the demonstrators “a few vagabonds,” Erdogan said, “They can do whatever they want. We've made our decision and we will do as we have decided."
The next day, seven thousand people came to the park and remained there until the dusk. A few minutes after the morning prayers, riot police attacked the sleeping demonstrators, emptying the park and fencing it with steel barricades. Seven hundred thousand people came back the next day, on 1 June 2013, marking the calendar as the first day of the new politics of Turkey. The police fled; the people occupied not only the Park, but also the largest square of the country, Taksim Square.
This was the first major defeat of Erdogan’s government since it took power eleven years ago. The police could not enter Taksim Square for eleven days and only took it back on 11 June, doing its best to gas the park to force people out. They failed.
In the meantime, Erdogan tried to contain the situation by making hyperbolic speeches about the “small size of the barracks for a large shopping mall,” signaling that the barracks would be turned into neither a mall nor a residential tower. It was too late.
After 964 separate demonstrations dotted the country, Erdogan’s solid legend evaporated as tear gas rained down upon people. Interestingly enough, he not only failed to convince his own followers, but he also failed to repress open criticism from his own party. The former minister of culture openly criticized the prime minister for his plan to demolish the park. Another AK Party MP, Erdal Kalkan, criticized Erdogan for calling mass demonstrations against Occupy Gezi movement. For Kalkan, “no one should be acting like a sultan in a democracy.”
Recently, Erdogan pushed towards a way out by calling for a plebiscite on the fate of Gezi Park. The Park is still occupied by thousands on the ground. A court decision stopped the demolition in the Park. Erdogan has refused to apologize and change his decision.
As the stalemate continues, no one knows what is going to come next. The pro-Kurdish BDP is there, the anti-Kurdish MHP is in the Park and the pro- and anti-Kurdish CHP is also with them. Everyone is there: from veiled women to conservative men with prayer beads, anarchists to greens, Generation X to Generation Y, all asking a simple question: Why?
As Erdogan fails to present a convincing answer, he comes day by day closer to his own fall. The spring of Turkey has changed Turkish politics for good. (Jadaliyya 14.06)
11.16 TURKEY: The Protests - Letting off Steam or Engine of Change?
INSS Insight said on 9 June that the protests that started at Taksim Square in Istanbul and have spread to other locations throughout Turkey are among the most interesting developments to have occurred in the country since the Justice and Development Party first came to power over a decade ago. While it is still difficult to envision a scenario in which these protests might topple Prime Minister Recep Tayyip Erdogan, they could hamper his efforts to achieve constitutional reform before the direct presidential election in 2014, in which he plans to run. In fact, parts of Turkey’s population are worried about a strongman president, à la Russia’s Vladimir Putin, which is one of the underlying factors causing the protests. Pamphlets distributed during the demonstrations read: “This is not about a park. It's about not being heard. It's about the abuse of state power. It's about media being censored. It's about minorities not being protected. This is about democracy.”
Secular Turks comprise a key protest group. Among them one may discern a wide range of ideologies – liberals, communists and conservative Kemalists. Young liberals are growing more hostile towards the Justice and Development Party and feel that they have no representation in parliament. They express repugnance for the obsolete stances of the Republican People’s Party (founded by Kemal Ataturk) and do not identify with the nationalistic positions of the National Action Party.
Another interesting group participating in the demonstrations is made up of the country’s Alevi minority, estimated at 15% of the population, and possesses historic grievances against the Sunni majority. Some of its current frustration seems to be a result of the recent peace process between the government and the Kurds, a process in which the Alevis think their rights have been forgotten. A symbolic manifestation of the government’s attitude to this minority is seen in the ambitious plan to build a third bridge over the Bosporus that will be named Yavuz Sultan Suleiman Bridge, after the ninth Ottoman sultan, 'Selim the Grim', historically known for slaughtering Alevis. In addition, the Alevis are unhappy with Turkey’s policy regarding events in Syria and its tough stance against Bashar al-Assad’s regime. The Kurdish minority also has a presence at the protest, though southeast Turkey is relatively quiet.
People who identify with the Gulen movement seem to be sitting on the fence. On the one hand, they’re unhappy with Erdogan’s increasingly authoritarian tendencies, but on the other hand many of the movement’s supporters are Justice and Development Party voters. The military is also not a player in the protests, neither in the social media nor in the streets. This is hardly surprising, given the process Erdogan started and implemented in recent years of neutralizing the Turkish army as a political player. Most of the demonstrators in the Square also don’t want the military’s interference. Nonetheless, in terms of historical perspective, this could turn out to be a precedent as political instability was in the past one of the strongest motives for military intervention.
One of Turkey’s most pressing problems in recent years is the self-censorship of the media resulting from the arrests of many of the country’s journalists and the pressure exerted by the Justice and Development Party on media outlets not toeing the government line. Thus, the social media – already popular in Turkey (32 million registered Facebook users and some 10 million on Twitter in a population of almost 74 million) – have become a major factor in the spread of the protests and the gain in their momentum. There was criticism of the Turkish traditional media before the protests too, but the media’s conduct during the demonstrations (as well as that of the police) was described on the social media as 'betrayal'.
As for what led to the protest, social media discourse claimed the demonstrations were a spontaneous, emotional reaction to the regime’s violent, suppressive conduct. Tear gas, water cannons and other violent ways to disperse demonstration were only some of the means the police used to break up the civil, non-violent protest. As a result of the mismanagement of the initial protest, the chain reaction accelerated, as did the regime’s inability to contain and control the height of the flames. The situation worsened when it was clear that the official, traditional media were co-opted by the regime. When the riots erupted, all the official television stations continued with their previously scheduled programming. The social protest wasn’t covered and no official media platform was extended for it to be heard. The frustration was therefore fueled even more, and the coverage, analysis and documentation of the protest became almost exclusively the province of social media. The government’s anxiety about the effect of social media is reflected by the fact that Turkcell, the country’s leading cell phone provider, admitted that on the first day of large-scale demonstration it was told to curtail service in the Taksim Square area, and, as well, by Erdogan’s public assertion that Twitter is full of lies.
Turkish Foreign Minister Ahmet Davutoglu’s and President Abdullah Gul’s comments that the protests may tarnish Turkey's image, are notable. They should be understood in the general context of Turkey’s attempt to expand its influence in adjacent regions via soft power and the concept of the 'Turkish model'. But it would be more accurate to say that the demonstrations are not what is harming Turkey’s image but rather the manner in which they are being suppressed. More specifically, the comments of these senior Turkish representatives should be understood in the context of Istanbul’s campaign to host the 2020 Summer Olympic Games. Given that the decision on the games’ host city is supposed to be announced in September, current assessments are that Istanbul’s chances to win the coveted host role have been seriously compromised.
The possibility of the demonstrations becoming a Turkish Spring, in the sense of toppling the government, seems remote. On the social media, many stressed that Taksim is not Tahrir, and the Turkish president noted the demonstrations have more in common with Occupy Wall Street than they do with the upheavals in the Arab world. It would also be a mistake to view what is happening in Turkey as simply a struggle between secular and pious Turks. Even if the secularists are leading the protests, other members of the public also identify with some of their criticism of Erdogan’s conduct. The current protest may be seen therefore as a warning sign to the Justice and Development Party. The claim on the social media is that the popular outburst will have a strategic impact on Turkey’s political map. Many believe that what started as a spontaneous social protest must be translated into organized political activity. Even though some signs carried during the demonstrations called for Erdogan’s resignation, it is apparent that most of the protesters are primarily interested in restraining him and some of his steps, which have recently been viewed by many as undemocratic. (INSS 09.06)
11.17 GREECE: IMF Admits 'Notable Failures' In 2010 Rescue
The International Monetary Fund has admitted to significant failures in the first Greek rescue that forced a second, larger bailout and left the country in a deep recession. However, the global lender placed much of the blame on its Greek and European partners, saying they were unprepared for the crisis and the harsh choices - including a deep debt restructuring - that may have made the first bailout work better.
The IMF said on 5 June in a review of the 2010 rescue that it overestimated both Greece's debt sustainability and Athens's ability to implement structural reforms. It said there were some problems coordinating with the European Commission and the European Central Bank, its troika partners in the €110 billion ($144 billion) program and that they lacked expertise.
The European Commission was more focused on European issues than the Greek situation alone, it said. "The Fund's program experience and ability to move rapidly in formulating policy recommendations were skills that the European institutions lacked," it added.
The IMF, which has been assailed by member countries for committing huge funds to what some fear is an open-ended rescue, defended its actions as necessary to keep the Greek crisis from spreading through Europe and elsewhere. "Given the danger of contagion, the report judges the program to have been a necessity, even though the Fund had misgivings about debt sustainability," it said.
At the time there was "a tension between the need to support Greece and the concern that debt was not sustainable with high probability." That forced the Fund to lower its own standards to approve the bailout, but even then, it admitted, it used data that was too optimistic. The result was the much more drastic second rescue last year, which included the sweeping debt restructuring rejected the first time around. "There were also notable failures. Market confidence was not restored, the banking system lost 30% of its deposits, and the economy encountered a much deeper-than-expected recession with exceptionally high unemployment," the review said.
Competitiveness improved somewhat on the back of falling wages, but structural reforms stalled and productivity gains proved elusive." The IMF's mea culpa came in the wake of an earlier admission that the troika's push for tough austerity to radically reduce Athens' deficit was based on poor assumptions that have left the country in a protracted recession.
In the past several months the IMF has urged the European Commission and the European Central Bank to ease some of the austerity conditions of the second bailout to try and turn the Greek economy around. In a remarkable admission, the Fund said the troika members had significant problems harmonizing their aims and roles, in part due to the Europeans' lack of experience in sovereign rescues. "The Greek program was also subject to considerable uncertainty as the euro area policy response evolved," it said. "For example, the initial euro area position that debt restructuring was off the table was eventually reversed, although this took a considerable length of time."
There was no clarity over which troika member was responsible for what, and the European Commission was more focused on ensuring compliance with EU standards than on figuring out how to revive Greek growth, the review said. But the two sides were also understandably split on their focus, as the IMF traditionally deals only with single country economies in its rescues.
Meanwhile the European authorities, with Greece a member of the single currency union, "emphasized the extent of possible spillover effects within Europe." The IMF also pointed to the European Union's bureaucratic approach. "The EC tended to draw up policy positions by consensus, had enjoyed limited success with implementing conditionality under the Stability and Growth Pact, and had no experience with crisis management," it said. (BI-ME 06.06)
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