Fortnightly, 18 April 2018

Fortnightly, 18 April 2018

April 18, 2018
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FortnightlyReport

18 April 2018
3 Iyar 5778
2 Shaban 1439

TOP STORIES

TABLE OF CONTENTS:

 1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1  Israel to Sign 5 Major Free-Trade Agreements in 2018
1.2  Economy Ministry Seeks Tax Breaks for Israeli High-Tech Companies
1.3  Ministry of Economy and Tel-Aviv Stock Exchange Launch New Index: TA-Industrials

2:  ISRAEL MARKET & BUSINESS NEWS

2.1  GetPackage Raises $2 Million
2.2  Porsche Invests in Anagog
2.3  Algatech Invests in Supreme Health
2.4  Investments in Contguard to Optimize Supply Chain Management
2.5  Armis Raises $30 Million to Secure Enterprise IoT
2.6  RSA Announces Intent to Acquire Fortscale
2.7  NIKE, Inc. Acquires Computer Vision Leader Invertex
2.8  China’s ‘Silicon Valley’ To Open Tel Aviv Liaison Office
2.9  Mahindra Defence & Aeronautics Limited Israel to Partner for Shipborne UAVs
2.10  Victory Supermarkets Open Vegan Departments
2.11  Cyient & BlueBird Aero Systems Sign Joint Venture to Offer UAV Systems to India
2.12  Elbit Systems Completes the Acquisition of Universal Avionics Systems Corporation
2.13  Palo Alto Networks Announces Intent to Acquire Secdo
2.14  OwnBackup Closes $15.5 Million Financing Round to Advance Cloud Data Protection
2.15  Axonize Wins Deutsche Telekom Investment as Part of a $6 Million Round A
2.16  Octopai One of Nine Innovative Cloud-Based Startups Selected for Microsoft ScaleUp 2018
2.17  AIX, the New Stock Exchange in Kazakhstan, and TASE Sign Cyber Security Partnership
2.18  Tel Aviv University Announces Early-Stage Venture Fund to Invest in Student Innovation
2.19  Legal SaaS AI Platform LawGeex Raises $12 Million in New Funding

 3:  REGIONAL PRIVATE SECTOR NEWS

3.1  Children’s Hospital of Philadelphia and UAE Sign Medical Services Agreement
3.2  Avidbots Bringing Robots to the Education Market in the United Arab Emirates (UAE)
3.3  Houston Methodist to Bring Successful Sepsis Reduction Program to Saudi Arabia
3.4  ReShape Lifesciences Continues Expansion with Approval in Saudi Arabia
3.5  International Expansion Continues with Six Flags-Branded Park in Saudi Arabia
3.6  Global Chain AMC First to Enter Cinema Sector in Saudi Arabia

 4:  CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1  Jordanian Hybrid Car Traders Expected to Lose JD 5,000 per Car as a Result of Zero Demand
4.2  Plan in Place to Cut Jordan’s Electricity Consumption by 20%
4.3  Amman Approves Energy Saving Project for Vulnerable Families
4.4  BERD to Assist Morocco’s Renewable Energies Plan

5:  ARAB STATE DEVELOPMENTS

5.1  Lebanon’s Trade Deficit Widened to $1.42 Billion in January 2018
5.2  Lebanon’s Fiscal Deficit Contracted to $3.76 Billion in December 2017
5.3  Number of Registered Cars in Lebanon Contracted by 7.01% in First Quarter
5.4  Car Ownership in Jordan to Soar in Upcoming Years

♦♦Arabian Gulf

5.5  Bahrain Reveals Size of Giant Oil Reserve Discovery
5.6  UAE Free Zone Exports Exceed $61 Billion in 2017
5.7  Reactor Dome Fitted to Abu Dhabi’s Final Nuclear Plant
5.8  Business Registration in One Day as Saudi Arabia Launches 12 Regulatory Reforms
5.9  US to Update Saudi Artillery in $1.31 Billion Deal

♦♦North Africa

5.10  Egypt’s Unemployment Rate Falls to 11.8% in 2017
5.11  Egypt to Revamp Railways with EGP 55 Billion Investment
5.12  Informal Economy Represents More than 20% of Morocco’s GDP
5.13  Morocco’s Trade Deficit Increases by 10.6% in March 2018
5.14  Agriculture Drives Moroccan Economic Growth
5.15  Moroccan Automotive Sector Revenues Rise to MAD 50 billion in 2017

6:  TURKISH, CYPRIOT & GREEK DEVELOPMENTS


6.1  IMF Raises 2018 Growth Forecast for Turkey but Lowers 2019 Figure
6.2  Turkish Budget Posts $5.3 Billion Deficit in First Quarter
6.3  Greece Sees €2.3 Billion Budget Surplus in First Quarter

7:  GENERAL NEWS AND INTEREST

♦♦ISRAEL

7.1  At 70, Israel’s Population Nears 9 Million
7.2  Israel to Overhaul University Campuses to Encourage Innovation

8:  ISRAEL LIFE SCIENCE NEWS

8.1  MIXiii-BIOMED 2018 – Introducing the Best of Israel’s Life Science Innovations
8.2  ElastiMed Chosen by Horizon 2020 to Receive $1.6 Million Grant
8.3  Curewize Reports Successful Clinical Trial on Revealing Acute Lymphoblastic Leukemia Treatment
8.4  ReWalk Launches Clinical Study for Its ReStore Soft Exo-Suit System
8.5  Cellect Announces a Major Milestone for Enabling Stem Cell Production
8.6  Ayala Pharmaceuticals Raises $17 Million
8.7  Genie Enterprise Raises $10 Million
8.8  Augmedics Cadaver Study Using xvision-spine (XVS) Surgical Navigation System
8.9  BioCanCell Announces $23 Million PIPE Financing
8.10  Foamix Announces $16 Million Investment by OrbiMed
8.11  Globus Pharma Signs 50 Ton Canadian Medical Cannabis Deal
8.12  Ibex Medical Analytics Deploys AI-based Digital Pathology Cancer Diagnosis System
8.13  Anlit Launches High Omega-3 Chew for Pregnant Women

9:  ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1  Beamr Accelerates HEVC Adoption with New Transcoder
9.2  ECI Releases Neptune (NPT) 1300 a Compact High-Capacity Metro Aggregation Platform
9.3  Alcide Announces General Availability of Its Cloud-Native Security Platform
9.4  Liberdy Announces New GDPR Consent Widget for Publishers
9.5  Chinese Weather Research Institute Selected Mellanox InfiniBand
9.6  BUFFERZONE & Lenovo Offer BUFFERZONE’s Virtual Container Security Solution
9.7  Global Satellite Operator Places $2.2 Million Orders for Orbit’s Maritime Satcom Solutions
9.8  Atlantic Metro Partners with PacketLight to Add 200G Capacity to Their Existing Network
9.9  Karamba Security Secures Additional $10 Million in Funding Round
9.10  Cyberbit Announces New Cybersecurity Technology Portfolio for Managed Service Providers
9.11  Votiro Launches the Zero-Day Identifier
9.12  Illusive Networks Announces Breakthrough in Attack Surface Reduction
9.13  CyberArk Expands Managed Security Service Provider Offering
9.14  WhiteSource Expands Its Open Source Security Solution for Containerized Applications
9.15  empow Announces $10 Million Series B Funding
9.16  Cameroon Telecom Deploys Friendly Technologies’ TR-069 Server
9.17  GuardiCore Enables Secure Rapid Container Deployment
9.18  JFrog Launches Xray 2.0 with High Availability to Bolster DevSecOps

10:  ISRAEL ECONOMIC STATISTICS

10.1  Israel’s March CPI Rises by 0.3% While Housing Prices Fall
10.2  Israel’s Average Monthly Salary Rises to NIS 10,200
10.3  Israel Leads Integration of Women in the Workforce

11:  IN DEPTH

11.1  JORDAN: Slowing Jordan’s Slide Into Debt
11.2  JORDAN: ‘B+/B’ Ratings Affirmed; Outlook Remains Stable
11.3  SUDAN: Sudan’s Big Business Lobbying US to Help Attract Foreign Dollars
11.4  TUNISIA: IMF Executive Board Completes Second Review under EFF Arrangement
11.5  MOROCCO: Fitch Affirms Morocco at ‘BBB-‘; Outlook Stable
11.6  MOROCCO: Morocco’s Difficult Path to ECOWAS Membership
11.7  CYPRUS: Staff Concluding Statement of the Second Post-Program Monitoring Mission

1:  ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1  Israel to Sign 5 Major Free-Trade Agreements in 2018

Israel’s Economy and Industry Ministry is currently involved in free-trade negotiations with five major economies and deals are expected to be signed this year.  The talks are being held with South Korea, Vietnam, India, China, and the Eurasian Customs Union, an economic bloc comprising Russia, Kyrgyzstan, Belarus, Kazakhstan and Armenia.  Additional free-trade talks, with Colombia, Panama and Ukraine, recently ended successfully.

Israel already has free-trade agreements with some of the world’s largest markets, including the United States, the European Union, and Mexico.  Some 70% of Israeli exports go to countries with which Israel has free-trade agreements.  Israeli officials are also working on amendments to the existing agreement with the European Free Trade Association, comprising Iceland, Liechtenstein, Norway and Switzerland.  (IH 09.04)

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1.2  Economy Ministry Seeks Tax Breaks for Israeli High-Tech Companies

Minister of Economy and Industry Cohen has asked the new Israel Tax Authority head to consider measures benefiting Israeli companies operating in the US market.  The Ministry of Economy and Industry and the Israel Innovation Authority are advocating a series of concessions and tax breaks for Israeli companies, mainly in the high-tech sector, in response to the tax reform declared by US President Trump.

Globes reported that the main recommendations that Cohen sent to the Tax Authority were reaffirmation of the existing tax convention between the US and Israel, together with the introduction of changes in it to make it possible to lower the tax rate on dividends between the countries, accelerated depreciation rates for enterprises in Israel, a tax credit for Israel companies on payment of BEAT, an increase in the beneficiary tax rate to 10% and lowering the withholding tax, and others.  The Israel Innovation Authority took part in formulating the recommendations.

The main concern of the Ministry of Economy and Industry and the Innovation Authority is that implementation of the dramatic US tax reform declared by the US president in December 2017 will detract from the Israel’s attractiveness for investments from leading companies, which will prefer to consolidate their activity within the US, while intensifying competition between groups of international companies and startups with high productivity.

In the long term, implementation of the reform in the US will cause companies to prefer opening development centers in the US instead of in Israel, because of the narrowing of the tax differences between the two countries, when the US corporate tax rate is cut from 35% to 21%.  Under the Law for the Promotion of Capital Investment, a company currently operating from a center in Israel pays 16% corporate tax, and a company operating in an outlying area pays 7% corporate tax.  According to the Manufacturers Association of Israel’s figures, 50-60 Israeli companies are liable to suffer from this plan.  (Globes 12.04)

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1.3  Ministry of Economy and Tel-Aviv Stock Exchange Launch New Index: TA-Industrials

On 29 March, the Tel-Aviv Stock Exchange (TASE) approved the launch of a new equity index in conjunction with the Ministry of Economy and Industry.  The new index – TA-Industrials Index – comprises more than 80 listed companies from various industry sectors across the board and will facilitate investment in the growth opportunities inherent in Israeli industry.  The Ministry of Economy and Industry and TASE expect the index to provide private industrial companies with a further incentive to consider non-banking and non-governmental financing channels in order to attract investors through IPO on the Israeli stock exchange.

As mentioned, the new index is composed of the shares of more than 80 companies, having an overall market value in excess of a quarter of a trillion shekels from a broad range of industrial sectors, including: pharmaceuticals, electronics and optics, metals and metal products, defense, fashion and clothing.  In order to increase exposure to small and medium industrial companies and in order to achieve a broad diversification, a maximum weight cap of 3% has been set for a single share.

The new index faithfully reflects the image of the State of Israel as a nation of technology and innovation, and is characterized by the prevalence of high-tech companies, which also includes manufacturing companies from the technology and biomed sectors.  The weight in the index of shares from the general “high-tech” sector is close to 50% (28% technology companies and 20% biomed companies – total weight 48%).  The weight of traditional industrial companies is 52%.  The TA-Industrials Index will be launched at a joint conference of the Ministry of Economy and Industry and TASE to be held on 25 April.

Tel Aviv Stock Exchange (TASE – https://www.tase.co.il), which was established in 1953, fulfills an important function in Israel’s growth and development and constitutes an integral and significant component of the Israeli economy.  It serves as a major growth engine for businesses, in that it enables Israeli companies to raise equity and debt from the public.  TASE is the “home base” of the Israeli investing public, allowing trading to be conducted conveniently and in local currency, under one roof, in a diverse range of investment products that align with investors’ needs.  (TASE 02.04)

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2:  ISRAEL MARKET & BUSINESS NEWS

2.1  GetPackage Raises $2 Million

Israeli concerns Mayer Group, importers of Volvo and Honda vehicles, and Bar Marketing and Distribution Holding Company are investing $2 million in startup GetPackage, which applies the principle of sharing economy to a national delivery and courier service.  GetPackage has raised NIS 16 million to date.  Mayer Group and Bar Marketing will each get a 13% stake in the company for their investments.

The platform, which operates according to the ideal of a sharing economy, enables any driver to register as a deliveryman.  It was founded under the assumption that the delivery sector was undergoing changes as a result of the boom in online shopping.  At this stage, 2,500 registered deliverymen are making thousands of deliveries monthly.  The question of the drivers’ reliability is examined for each registered deliveryman.  The drivers are paid 75% of the delivery price through their credit cards.  The price is determined according to the size of the package and the length of the journey.

Rishon LeZion’s GetPackage began operations in June 2017 and currently has 25 employees.  The company offers immediate delivery services through any vehicle; delivery is made within 15 minutes after the order is made.  The company monitors every deliveryman and the route he or she takes.  The company is now completing the process of setting up infrastructure on the US East Coast, with a database of 7,000 registered deliverymen.  (Various 09.04)

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2.2  Porsche Invests in Anagog

Porsche has bought a minority stake in start-up Anagog to expand its expertise in digital technology.  Porsche Digital GmbH is a unit of Volkswagen’s Porsche business.  Porsche did not say how large the stake was that it bought, nor did it disclose financial details.  Anagog has developed software that analyses user behavior directly in the mobile phone, using sensors, and then predicts future scenarios on the basis of artificial intelligence.  In February, German carmaker Daimler and U.S. venture capital firm MizMaa Ventures took part in a round of financing for up Anagog.

Tel Aviv’s Anagog’s technology is implemented in over 20 million handsets globally, through 100 mobile services in different domains.  (Reuters 04.04)

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2.3  Algatech Invests in Supreme Health

Algatechnologies has become the major shareholder in Supreme Health, New Zealand, to supply China and Asia-Pacific with astaxanthin and other algae-based products.  The Asia-Pacific market for such products is currently valued at several hundred million dollars, and forecast to experience rapid growth.  Supreme Health identified and cultivated a unique strain of the microalgae Haematococcus pluvialis in Nelson Lakes, northern New Zealand, for the production of natural astaxanthin.  Algatech, a global leader in the microalgae industry, will provide its know-how, innovative science, and advanced microalgae cultivation technologies to leverage the capabilities of the New Zealand-based company.

Kibbutz Ketura’s Algatechnologies is a rapidly growing biotechnology company, specializing in the commercial cultivation of microalgae.  Founded in 1998, Algatech is a world leader in the production and supply of AstaPure, a premium natural astaxanthin – one of the world’s most powerful antioxidants – sourced from the microalga Haematococcus pluvialis.  (Algatechnologies 03.04)

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2.4  Investments in Contguard to Optimize Supply Chain Management

Contguard announced an investment from Citi Ventures and Canaan Partners Israel.  The new funds will enable the company to build and scale its technology to continue to reinvent how the international trade industry gathers insights into product shipments.  Contguard estimates that more than $0.5 trillion of manufactured goods are in transit and out of supply-chain oversight and control, based on data from the WTO, and International Maritime Organization.  The resulting inefficiencies and losses, both direct and indirect, cost hundreds of billions of dollars annually.  Contguard provides IoT-enabled shipment monitoring, data and business intelligence to manufacturers and suppliers that ship materials, components and products globally.  The company’s service delivers actionable insights about goods in transit, which optimizes the supply chain.

Tel Aviv’s Contguard is active in over 100 countries and serves Fortune 500 customers, including international most well-known names in the pharmaceutical, food, and automotive industries. Contguard will use these funds to accelerate technology and product development, expand its sales and global support activities and develop its partnerships with banks and insurance companies.  (Contguard 04.04)

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2.5  Armis Raises $30 Million to Secure Enterprise IoT

Armis has raised $30 million in Series B funding.  Red Dot Capital Partners, a Temasek-backed Venture Capital fund based in Israel focused on growth-stage tech companies, led the round with Bain Capital Ventures joining.  Sequoia Capital and Tenaya Capital also participated as return investors.  Armis will use the investment to meet demand for advanced security technologies that allow enterprises to secure IoT-related digital transformation efforts, expand sales and marketing, and further develop its device knowledgebase and security platform.  This investment brings the company’s total funding to $47 million.

Armis eliminates the enterprise IoT security blind spot, letting enterprises safely embrace IoT as a part of their digital transformation strategies.  Its agentless security solution delivers comprehensive visibility of every device in their environment, analyzes and classifies devices and their behavior in order to identify risks or attacks, and protects critical information and systems.  Armis does not require any hardware and integrates seamlessly into any environment or existing infrastructure.

Armis was founded in late 2015 and is headquartered in Palo Alto with offices in Tel Aviv.  The Armis team is comprised of top engineering talent from Israel and seasoned Silicon Valley technology leaders.  Since launching out of stealth in June 2017, Armis has signed on leading customers including numerous customers in the Fortune 100.  In September 2017, Armis announced the discovery of BlueBorne, the largest exposure of devices to date.  The discovery focused U.S. organizations, congressional leaders and the news media on IoT related security issues.  (Armis 09.04)

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2.6  RSA Announces Intent to Acquire Fortscale

Bedford, Massachusetts’ RSA, a global cybersecurity leader delivering Business-Driven Security solutions to help manage digital risk, announced its intent to acquire Fortscale, a pioneer in embedded behavioral analytics.  Terms of the deal were not disclosed and are subject to customary closing conditions.  RSA’s acquisition of Fortscale is designed to provide customers with new user and entity behavioral analytics (UEBA) capabilities through the RSA NetWitness Platform.

RSA is also unveiling the newest version of RSA NetWitness Platform that helps security teams detect and respond to modern threats, as well as two new offerings, RSA NetWitness UEBA and RSA NetWitness Orchestrator to strengthen the evolved SIEM and threat defense platform, a revolutionary centerpiece of security operations teams.

In an era of ever-expanding attack surface, protecting against threat actors – from commodity malware and insider threats, to state sponsored exploits and hacktivists – has become increasingly complex. Disconnected silos of prevention, monitoring, and investigation technologies are failing to provide the true end-to-end visibility, detection and automated response needed in a modern digital enterprise.

Tel Aviv’s Fortscale facilitates the automatic identification of deviations from normal user behaviors, to uncover risky and previously hard to detect threats.  By understanding behavior, Fortscale can highlight potential risks such as shared user credentials, privileged user account abuse, geolocation and remote access anomalies.  Organizations are able to find unknown threats that hide among the huge volume of security data that is typical in today’s complex IT environments without heavy installation, maintenance or analyst oversight.  (RSA 05.04)

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2.7  NIKE, Inc. Acquires Computer Vision Leader Invertex

Beaverton, Oregon’s NIKE, Inc. announced it has acquired Invertex, a leading computer vision firm based in Tel Aviv, Israel, as it continues to strengthen its digital technology and talent as part of its Consumer Direct Offense.  The team will focus on building groundbreaking innovations to help Nike serve millions of members around the globe.

NIKE is the world’s leading designer, marketer and distributor of authentic athletic footwear, apparel, equipment and accessories for a wide variety of sports and fitness activities.  Wholly owned NIKE, Inc. subsidiaries include Converse Inc., which designs, markets and distributes athletic lifestyle footwear, apparel and accessories; and Hurley International LLC, which designs, markets and distributes surf and youth lifestyle footwear, apparel and accessories.

Tel Aviv’s Invertex leverages 3D scanning to allow a customer specific e-commerce experience and create mass customization product lines.  Invertex is a pioneer in the revolution of online fitting and mass product customization.  Their mobile applications instantly capture and analyze a person’s anatomy in detailed three dimensions.  This provides their clients with the capacity to tailor their existing products to their customers’ specific needs or create new, fully-customized product lines.  (Nike 09.04)

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2.8  China’s ‘Silicon Valley’ To Open Tel Aviv Liaison Office

Beijing’s Zhongguancun Science Park (Z-Park), dubbed “China’s Silicon Valley,” is set to open a liaison office in Tel Aviv, in an effort to strengthen channels of communication and tap into business opportunities in both countries.  The announcement was made in early April during a meeting between Tel Aviv Deputy Mayor Doron Sapir and Beijing Vice Mayor Yin Hejun leading a delegation included high-level executives of Z-Park.  This will be Z-Park’s 11th liaison office across the world, according to the report.  The tech hub is home to tech giants like Lenovo and caters to some 20,000 tech enterprises.  (NoCamels 10.04)

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2.9  Mahindra Defence & Aeronautics Limited Israel to Partner for Shipborne UAVs

Mahindra Defence and Aeronautics of Israel signed a Memorandum of Understanding to partner for Naval Shipborne UAVs.  Aeronautics and Mahindra will offer a UAV system which can be launched and recovered from Indian warships.

Mahindra Defence and Aeronautics have entered into this partnership to offer the maritime version of Orbiter 4 for the Indian Navy.  The UAV will carry state of the art sensor payloads as required by Indian Navy.  The UAV will be capable of being launched and recovered from small warships that do not have a helicopter deck including small warships which are around 50 m in length.  This UAV will be a force multiplier for the Indian Navy.

The Aeronautics Orbiter 4 is an advanced multi-mission platform with an ability to carry and operate two different payloads simultaneously.  With an open architecture, the Orbiter 4 can be specially adjusted to the needs of each mission.  Among the different payloads the Orbiter 4 can carry are Maritime patrol radar (MPR), Cellular interception sensor, Satellite communication, Synthetic Aperture Radar (SAR), Automatic Identification System (AIS) and advanced electro-optic payload.  Orbiter 4 capabilities include maximum endurance of up to 24 hours, maximum take-off weight of 50 Kgs, and maximum flight altitude of 18,000 feet while operating different payloads.

Yavne’s Aeronautics, a leading manufacturer of Unmanned Aerial Vehicle (UAV), is an Israeli public listed company, and is a key player in the defense domain. Aeronautics is the OEM of Orbiter series of UAVs which has been sold in many countries globally.  With its UAS’s deployed by over 75 defense, military, and homeland security forces in more than 50 different countries around the world, Aeronautics group provides unmanned aerial solutions for the most advanced Defense Para-military and HLS missions.  (Mahindra Defence 11.04)

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2.10  Victory Supermarkets Open Vegan Departments

Israel’s Victory Supermarket Chain is establishing vegan departments in its branches throughout Israel.  Victory began selling vegan products in 10 branches as a pilot in central Israel and the pilot’s success led the chain to expand this activity to most of its branches.  The Victory chain already has a department that features gluten-free products appealing to celiac diseases patients who must avoid products containing this ingredient and other customers seeking to reduce their gluten consumption for various other reasons.

Israeli supermarket chains are striving to increase their sales and customer loyalty, and are making efforts to reach more segmented and focused markets for this purpose.  Victory recently established a customer loyalty club for vegan consumers with 4,000 members and a club for customers who do not consume gluten with 3,000 members.  Members of these clubs enjoy special individual bargains from special coupons.

Victory is joining the vegan trend that picked up speed in 2017.  The trend towards consumption of vegan and vegetarian products extended to the entire food market in 2017.  Sales of vegetarian and vegan products grew 17.7% in 2017, and 2017 sales exceeded the previous year’s sales by NIS 34 million.  Sources in the market predicted that this market will continue growing, and will spill over from specialty stores to the general market.  Victory ended 2017 on a positive note, with sales up 15% to NIS 1.6 billion and net profit rising 14% to NIS 32 million.  Victory added four branches to its activity during the year, and increased its floor space by nearly 11%.  The chain currently has 2,500 employees in 46 branches nationwide and a 3.8% market share.  (Globes 10.04)

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2.11  Cyient & BlueBird Aero Systems Sign Joint Venture to Offer UAV Systems to India

India’s Cyient, a provider of engineering design, manufacturing, geospatial, networks, and operations management services to global industry leaders and Israel-based BlueBird Aero Systems, a leader in design, development, and production of micro, mini, and small tactical Unmanned Aerial Systems (UAS) have entered into a joint venture to offer field-proven UAV systems to Indian defense, paramilitary, security, and police forces.  The joint venture, named Cyient Solutions & Systems Private Limited, has 51% and 49% shareholding by Cyient and BlueBird respectively.

Cyient Solutions & Systems will manufacture, assemble, integrate, and test advanced UAV systems at its production facilities in Hyderabad by leveraging BlueBird’s technology and manufacturing know-how.  Cyient Solutions & Systems, supported by BlueBird, will also provide comprehensive aftermarket services, including spares, repairs, maintenance, and support to end users across India.  The joint venture’s portfolio includes the SpyLite, ThunderB and MicroB systems that offer highly-innovative UAS technology designed to fulfill covert, real-time intelligence, and tactical mapping-on-demand missions across open areas or crowded urban environments.  Cyient Solutions & Systems recently conducted field trials in India that successfully demonstrated the SpyLite’s outstanding performance in a tactical surveillance role at high altitude and in extreme weather conditions.

Kadima’s BlueBird Aero Systems is a dominant player in the Tactical Unmanned Aerial Systems (UAS) industry.  BlueBird specializes in design, development and production of micro, mini and tactical UAS and peripheral equipment and delivers exceptional, field-proven solutions to meet the challenges of the Military, HLS, and civilian markets.  BlueBird’s advanced UAV systems, operational in Israel and worldwide since 2006, have accumulated over 16,000 operational sorties and support open area as well as urban scenarios and Tactical Mapping on Demand (TMOD) for military, HLS, peace-keeping, low intensity conflict, security, disaster management, law enforcement, search & rescue and commercial applications.  (Cyient 11.04)

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2.12  Elbit Systems Completes the Acquisition of Universal Avionics Systems Corporation

Elbit Systems has completed the acquisition of the assets and operations of the privately-owned U.S. company Universal Avionics Systems Corporation for a purchase price of approximately $120 million.  Headquartered in Tucson Arizona, and operating in several facilities across the U.S., Universal Avionics is a developer and manufacturer of commercial avionics systems for the retrofit and forward-fit market, for a wide range of fixed and rotary aircraft types.  Universal Avionics’ solutions include Flight Management Systems (FMS), displays, communication systems, complete cockpit solutions and additional advanced commercial avionics systems, which are complementary to Elbit Systems’ internationally successful commercial avionics systems, Enhanced Flight Vision Systems (EFVS) and Head-Up Display (HUD) product line.  This acquisition will enable Elbit to offer a broad portfolio of advanced end-to-end cockpit solutions for commercial OEMs and After Market customers.

Following the acquisition, Universal Avionics’ business will continue to operate, with the same management and workforce and under the same name, as a wholly-owned U.S. subsidiary of Elbit Systems.

Haifa’s Elbit Systems is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world.  Elbit, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios and cyber-based systems.  The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial applications and providing a range of support services, including training and simulation systems.  (Elbit Systems 11.04)

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2.13  Palo Alto Networks Announces Intent to Acquire Secdo

Palo Alto Networks announced that it has entered into a definitive agreement to acquire Israel-based Secdo.  The acquisition brings sophisticated endpoint detection and response, or EDR, capabilities – including unique data collection and visualization – to Palo Alto Networks Traps advanced endpoint protection and the Application Framework in order to enhance their ability to rapidly detect and stop even the stealthiest attacks.

Secdo’s team of elite engineers will complement the deep security expertise and innovation inside the Palo Alto Networks research and development organization.  The company’s thread-level approach to data collection and visualization goes far beyond traditional EDR methods, which only collect general event data, hamstringing security operations teams as they try to reconstruct each step of an attack and distinguish malicious activity from normal.  Once integrated with Traps and the Palo Alto Networks platform, this rich data will feed into the Logging Service and give applications running in the Palo Alto Networks Application Framework greater precision to visualize, detect and stop cyberattacks.

Ra’anana’s Secdo combines Next-generation Endpoint Detection and Response with Security Automation to provide the only purpose-built solution that force multiplies the productivity of security operations teams’ day-to-day, allowing them to get ahead and be proactive in defense.  Secdo makes this possible with a patented technology that uses assisted learning combined with the only thread-level visibility to automatically investigate and respond to every alert from any security technology, increasing ROI of current technology investments, resolving staff shortage issues and providing quantifiable risk reduction by cutting the security alert triage, response and remediation process down to seconds.

Tel Aviv’s Palo Alto Networks is the next-generation security company, leading a new era in cybersecurity by safely enabling applications and preventing cyber breaches for tens of thousands of organizations worldwide.  Built with an innovative approach and highly differentiated cyber-threat prevention capabilities, our game-changing security platform delivers security far superior to legacy or point products, safely enables daily business operations, and protects an organization’s most valuable assets.  (Palo Alto 10.04)

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2.14  OwnBackup Closes $15.5 Million Financing Round to Advance Cloud Data Protection

OwnBackup announced the close of a $15.5 million round of financing co-led by new investor Vertex Ventures and existing investor Insight Venture Partners. Existing investors Innovation Endeavors, Oryzn Capital and Salesforce Ventures also participated in the round.  Since announcing its last round in July 2017, the company has driven exponential growth by expanding its market reach, continuing its technology innovation, deepening its investment in the Salesforce community, and adding strategic partnerships with Sage and Veeva.  Already serving hundreds of mid-sized companies and large enterprises across every major industry, OwnBackup helps customers protect critical cloud data—securing trillions of SaaS/PaaS records every day, preventing data corruption, ensuring business continuity, minimizing operational disruptions and meeting compliance mandates.

A pioneer in cloud-to-cloud backup, recovery and replication, OwnBackup’s award-winning technology is built on the Salesforce Platform and available on the Salesforce AppExchange.  Advanced features in the latest version of the OwnBackup platform tighten SaaS data backup and recovery security, support regulatory compliance, offer greater control and access, and improve backup and recovery performance—making data protection easier, faster and better integrated with existing security systems.

Tel Aviv’s OwnBackup, a leading cloud-to-cloud backup and restore vendor, provides secure, automated, daily backups of SaaS and PaaS data, as well as sophisticated data compare and restore tools for disaster recovery.  OwnBackup covers data loss and corruption caused by human errors, malicious intent, integration errors and rogue applications.  (OwnBackup 12.04)

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2.15  Axonize Wins Deutsche Telekom Investment as Part of a $6 Million Round A

Axonize has secured a substantial investment from Deutsche Telekom.  The $6 million Round A was led by Israeli Venture Capital firm Meron Capital and included existing investors StageOne Ventures and U.S.-based Cornerstone Venture Partners.  Axonize and its IoT orchestration platform were chosen for this strategic investment following a rigorous selection process, due to its unique service provider capabilities that include cross-application orchestration and management, and very fast development times per application.

Axonize is purpose-built for IoT service providers. Among its unique capabilities is the ability to orchestrate, connect, and manage multiple IoT applications, granting service providers management capabilities across all applications.  The company has a unique architecture based on a pre-built, highly flexible AnyAPP application layer that resides on a robust and secure Microsoft Azure cloud.  Instead of developing an entire application for every customer, its pre-built application can be customized to specific customer needs.  This reduces IoT build time to a handful of days, rather than months, enabling IoT service providers to offer their customers a much higher ROI on IoT projects.  Another benefit of the architecture is that Axonize is completely open to any sensor, hardware, protocol, or system from any industry.  Axonize will use the funding from this round to invest in further enhancement of its platform and accelerate the ramp-up of its sales team.

Tel Aviv’s Axonize offers an IoT orchestration platform purpose-built to provide speed and scale for service providers developing and managing IoT applications. Based on a unique multi-application architecture that requires configuration rather than development, launching a full-fledged IoT project on Axonize requires only days, not months, and yields high ROI.  (Axonize 12.04)

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2.16  Octopai One of Nine Innovative Cloud-Based Startups Selected for Microsoft ScaleUp 2018

Octopai was selected, along with nine other startups, to participate in the globally recognized Microsoft Scale Up program.  Microsoft ScaleUp is a four-month program built to empower startups around the world on their journey to build great companies.  The program aims to help startups with unique technology and value propositions to scale the business by providing the tools, resources, connections, knowledge and expertise needed to become successful companies.  Octopai’s cloud-based metadata management platform was a natural choice for the accelerator.

Octopai’s technology automatically creates complete data lineage by retrieving metadata directly from the multi-vendor BI systems and placing it on a centralized, cloud platform for metadata analysis.  In a single view, BI groups can easily discover, navigate and understand the data journey in seconds.  Unlike other traditional vendor-specific tools that are limited, costly and cumbersome, Octopai is extremely simple to use and can be up and running in a day.

Rosh HaAyin’s Octopai has made great strides since its launch in 2017.  Inbound demand is growing steadily with leading companies worldwide partnering with Octopai and paying customers using the cloud-based solution to boost their businesses on a daily basis.  ScaleUp has developed a tailor-made program for Octopai that includes distribution channel building with global Fortune 500 companies, working alongside top Microsoft executives, as well as access to some of the greatest resources available to startups today.  (Octopai 12.04)

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2.17  AIX, the New Stock Exchange in Kazakhstan, and TASE Sign Cyber Security Partnership

The Tel-Aviv Stock Exchange (TASE) and new stock exchange in Kazakhstan – the Astana International Exchange (AIX), established as part of the Astana International Financial Centre (AIFC), signed an agreement of Cyber Security Consultancy.  Since its inception AIX focuses on cybersecurity and cooperates with the several professional consultants and partners in respect of this issue.  This will be the first time that TASE is to provide professional consultant cyber security services to another stock exchange.  The agreement has been signed based on the high level of professionalism and the many years of experience of TASE’s professional personnel in the field of cyber security – one of the major challenges currently confronting stock exchanges and financial institutions throughout the world.

TASE, The Tel Aviv Stock Exchange, is subject to the supervision of the Israeli Cyber Authority, which operates within the framework of the Israeli Prime-Minister Office.  (TASE 08.04)

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2.18  Tel Aviv University Announces Early-Stage Venture Fund to Invest in Student Innovation

Tel Aviv University (TAU) has established an early-stage venture capital fund, TAU Ventures, to invest initial pre-seed funding into startups founded by students and alumni within the TAU network and to further boost entrepreneurship on campus.  This is the first time this business model is being established in Israel and is similar to venture capital funds at leading universities such as MIT, University of California Berkeley and Stanford.

Among the fund’s investors are the Singapore-based investment fund Charter High Tech, which syndicates leading Japanese businesspeople as well as investors from across the United States and Canada, including TAU Ventures co-founder and lead investor Behzad Kianmahd, a Los Angeles business leader, philanthropist, and chairman and CEO of Maxim Commercial Capital.

TAU has played a key role in Israel’s rise as a tech hotbed and world leader in research across all faculties. It is Israel’s largest university and boasts the best alumni entrepreneurial record among universities outside the United States.  Approximately 25% of all Israeli entrepreneurs are alumni of TAU.  TAU is currently ranked ninth globally, and first in Israel, for producing the most VC-backed entrepreneurs.  TAU Ventures is open to all students and alumni from Tel Aviv University.  (TAU 16.04)

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2.19  Legal SaaS AI Platform LawGeex Raises $12 Million in New Funding

LawGeex closed a $12 million funding round led by venture capital fund, Aleph.  The investment brings LawGeex total funding to date to $21.5 million.  Previous investors, including Lool Ventures, also participated in this round.  The LawGeex SaaS platform is disrupting the $700 billion legal services market by using AI to remove the legal bottleneck of reviewing and approving everyday business contracts before signing.

In February, LawGeex revealed that its AI bested top US lawyers for the first time in accurately spotting risks in everyday business contracts.  The study, carried out in collaboration with top academics at leading universities, saw the LawGeex AI achieve an accuracy of 94%, while the lawyers achieved an average of 85%.  It took 92 minutes for the lawyer participants to complete all five NDAs compared to only 26 seconds for the LawGeex AI.

Tel Aviv’s LawGeex is transforming legal operations.  The LawGeex Artificial Intelligence solution helps in-house legal teams automate the review and approval of everyday contracts.  Founded in 2014, LawGeex enables businesses to remove the contract bottleneck, helping them focus on high value tasks instead of getting lost in paperwork.  LawGeex ensures the simple question ‘Can I sign this?’ doesn’t slow down businesses, while improving accuracy, consistency and efficiency.  Suitable for legal teams of any size, LawGeex has customers in over 15 countries, including eBay, Farmers Insurance, Natixis and Lifetime Fitness.  (LawGeex 17.04)

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3:  REGIONAL PRIVATE SECTOR NEWS

3.1  Children’s Hospital of Philadelphia and UAE Sign Medical Services Agreement

Children’s Hospital of Philadelphia and the United Arab Emirates (UAE) entered into a Medical Services Agreement to provide expert medical care for children in the UAE, formally documenting their long-standing alliance.  The Agreement expands a long-standing alliance between CHOP and the UAE.  In January 2018, the Hospital signed a Memorandum of Understanding (MOU) with Al Jalila Children’s, the UAE’s only children’s hospital, to establish a dedicated neurology outreach program grounded in telemedicine.  In October 2017, CHOP and The Ministry of Health and Prevention of the United Arab Emirates (MOHAP) entered into an MOU regarding a pediatric specialty consultation program to provide clinical and educational services to MOHAP hospitals.  CHOP’s Visiting Physician Program serves the northern Emirates, with nine licensed CHOP specialists seeing patients for evaluations and working side by side with Emirati clinicians.  (CHOP 16.04)

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3.2  Avidbots Bringing Robots to the Education Market in the United Arab Emirates (UAE)

Kitchener, Ontario’s Avidbots Corp. announced that United Arab Emirates University (UAEU) will be deploying the Avidbots Neo floor cleaning robot to improve the productivity of their cleaning teams, reduce costs, and promote robotics and innovation throughout the UAE.  The Avidbots Neo is a purpose-built floor scrubbing robot that integrates state-of-the-art navigation technology with hardware that is designed for ease of use, longevity, serviceability, safety, and high productivity.  The Neo is being supplied by the University’s facilities management partner, Berkeley Services Group, through Avidbots’ exclusive distributor in the United Arab Emirates (UAE), Al Yousuf Robotics.

The Avidbots Neo is currently deployed on 4 continents, servicing some of the world’s leading shopping malls, airports, education facilities, healthcare centers, manufacturing sites, and other commercial spaces.  (Avidbots 17.04)

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3.3  Houston Methodist to Bring Successful Sepsis Reduction Program to Saudi Arabia

Houston Methodist Global Health Services is working with the Kingdom of Saudi Arabia and the Ministry of Health to decrease sepsis across the entire area.  Following a Houston visit by the Saudi Crown Prince Mohammed bin Salman, Houston Methodist Global Health Services, the international arm of Houston Methodist, will be the first U.S. health care-based entity to undertake such an effort, as part of the Kingdom’s ambitious program of social and economic renewal.  The Saudi Patient Safety Center, in partnership with the Ministry of Health and Houston Methodist, will launch the first national sepsis reduction campaign in the Kingdom, using a successful sepsis prevention and reduction program created at Houston Methodist Hospital.  (Houston Methodist 12.04)

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3.4  ReShape Lifesciences Continues Expansion with Approval in Saudi Arabia

San Clemente, California’s ReShape Lifesciences, a developer of minimally invasive medical devices to treat obesity and metabolic diseases, announced approval of the company’s ReShape Balloon by the Saudi Arabian Food and Drug Authority.  Congruent with this approval, the Company received an initial stocking order from Dar Al Zahrawi Medical Co.

Saudi Arabia has one of the highest obesity and overweight prevalence rates in the world, as reported in an October 2016 article published by the Journal of Obesity and Eating Disorders.  While close to 30% of the global population is estimated to be obese, current obesity in 2017 in Saudi Arabia was estimated at 53% in 2017 and is projected to grow to 60% by 2022 according to World Atlas.

ReShape Lifesciences is a medical device company focused on technologies to treat obesity and metabolic diseases.  The FDA-approved ReShape Balloon™ System involves a non-surgical weight loss procedure that uses advanced balloon technology designed to take up room in the stomach to help people with a 30-40 kg/m2 Body Mass Index (BMI) and at least one co-morbidity lose weight.  (ReShape 03.04)

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3.5  International Expansion Continues with Six Flags-Branded Park in Saudi Arabia

Grand Prairie, Texas’ Six Flags Entertainment Corporation and the Public Investment Fund (PIF), Saudi Arabia’s sovereign wealth fund, announced plans to develop a Six Flags-branded theme park in Riyadh.  Six Flags has entered into an arrangement with the PIF to develop, design and license the Six Flags brand for Qiddiya – Saudi Arabia’s first entertainment, sports and cultural destination – which is expected to open in 2022.  Located 40 km. from downtown Riyadh, Qiddiya will provide an unprecedented leisure option for the seven million plus residents of the Saudi capital.  Terms of the arrangement were not disclosed.

The Public Investment Fund (PIF) seeks to become one of the largest and most impactful sovereign wealth funds in the world, enabling the creation of new sectors and opportunities that will shape the future global economy, while driving the economic transformation of Saudi Arabia.  To achieve this, the PIF is building a world-class, diversified portfolio through investments in attractive, long-term opportunities across sectors and asset classes at both the domestic and international level.

The vision of Qiddiya is to be the iconic entertainment destination of the Kingdom, the home of activity, discovery and engagement.  Backed by the Saudi Arabian Public Investment Fund, visitors will have access to ground breaking recreational and educational facilities across six innovatively designed clusters.  Groundbreaking will be in 2018, and the first phase of the development will be launched in 2022.  (SIX 05.04)

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3.6  Global Chain AMC First to Enter Cinema Sector in Saudi Arabia

Saudi Arabia’s Ministry of Culture and Information has granted the first cinema operating license so that U.S. industry leader AMC, the largest theatrical exhibitor in the world, can operate cinemas in Saudi Arabia.  AMC plans to open the Kingdom’s first cinema theater, in Riyadh, on 18 April.  This follows the signing of a memorandum of understanding (MoU) between AMC and the Public Investment Fund (PIF) in December 2017 to explore potential trade cooperation opportunities.

In a landmark decision in December, the Ministry of Culture and Information announced that commercial cinemas would be allowed to operate in the Kingdom from early 2018, for the first time in more than 35 years.  The decision is part of Saudi Arabia’s social and economic reform program under Vision 2030, spearheaded by Crown Prince Mohammed bin Salman.  The Kingdom is set to have nearly 350 cinemas, with over 2,500 screens, by 2030.

Vision 2030 has established a goal of increasing annual Saudi spending on cultural and entertainment activities from the current 2.9% of total household expenditure to 6% by 2030.  AMC’s entry into the Kingdom of Saudi Arabia is occurring in partnership with the Public Investment Fund through its subsidiary, the Development and Investment Entertainment Company.  The move to allow movie theaters opens up a big domestic market, which could approach up to $1 billion in annual box office sales, which leading cinema chains are keen to break into as it is the largest market in the Arabian Gulf region.  (AMC 04.04)

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4:  CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1  Jordanian Hybrid Car Traders Expected to Lose JD 5,000 per Car as a Result of Zero Demand

Jordanian car dealers are expected to incur losses of between JD4,000 and JD5,000 for each hybrid vehicle that arrived in the Hashemite Kingdom in the first two months of 2018.  Hybrid car buyers used to pay a reduced special sales tax of 25% of the car’s price instead of 55% for regular fuel vehicles.  The government decided to cancel the exemptions in 2012, but the decision kept getting postponed until this year, when the government announced the cancellation of the exemptions and an additional tax on all types of cars ranging between JD500 and JD1,500, calculated on the basis of the car’s weight,.  The traders have no choice but to suffer the loss incurred by liquidating the vehicles as there is no demand for hybrid cars.

Some traders had already bought vehicles in November 2017 and received them in January and February 2018, but if traders had known about the decision, they would not have made the purchases.  Traders used to import hybrid cars from the US and have them shipped to Jordan, which usually took around 60 days.  No revenue will be created following the recent decision, which completely deters residents from buying this type of cars.  (JT 05.04)

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4.2  Plan in Place to Cut Jordan’s Electricity Consumption by 20%

On 4 April, Jordanian Energy Minister Kharabsheh launched the second national plan to rationalize energy, which aims at lowering electricity consumption by 2,000 gigawatts between 2018 and 2020, with a cost of JD700 million.  Kharabsheh highlighted the importance of the plan in addressing energy challenges, at the top of which is the heavy oil bill that has constituted in some years 18 to 20% of the gross domestic product, five times higher than the international average.  The minister added that such difficulties forced Jordan to seek solutions, including this plan he announced, whose success requires joint efforts slash energy consumption.  He added that the project aims to annually reduce greenhouse gas emissions by some 962 kilo metric tons of carbon dioxide, which will help the Kingdom achieve targeted goals of its commitments towards climate change and relevant international agreements.

The plan is part of the ministry’s efforts to realize strategic goals of the energy sector to improve energy efficiency and lower consumption by 20% by 2020.  The minister described the plan as a “national roadmap”, which entails all programs, projects and measures necessary to be implemented to reach all targeted indicators in cooperation with stakeholders.  He said that the plan includes 26 procedures covering the household, commercial, service, industrial, water pumping, street lighting and transport fields, in addition to other eight procedures shared among these fields.  The procedures included endorsing the Renewable Energy and Energy Efficiency Law and a bylaw on the criteria for exempting renewable energy resources and their devices, and devices of energy rationalization from customs fees and, wholly or partly, the sales tax.  The Energy Ministry implemented the first national plan on energy efficiency in 2014, under which it has lowered electric power consumption by 7.6%, equivalent to 806 gigawatts.  (JT 05.040

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4.3  Amman Approves Energy Saving Project for Vulnerable Families

The Jordanian Cabinet on 9 April approved financing a project for energy rationalization for underprivileged families to be covered by the 2018 budget of the Planning and International Cooperation Ministry and disbursed to the Jordan Renewable Energy and Energy Efficiency Fund.  The project aims at alleviating financial burdens of underprivileged families’ energy bills by using alternative energy sources.  It also seeks to contribute to national efforts to reduce power consumption and raise awareness on the benefits of solar energy.  The project will be implemented in cooperation between the ministries of planning and international cooperation, social development and energy, and will target 8,232 families across the Kingdom.  The Planning and International Cooperation Ministry will help families cover 50% of the cost of solar cells provided by JREEEF.

The scheme will be implemented through charity organizations, which will be picked by the Social Development Ministry, while beneficiary families will be chosen focusing on households that receive assistance from the National Aid Fund.  Other mechanisms will be adopted to guarantee targeting various areas in all governorates.

Earlier this month, the government launched the second national plan to rationalize energy, which aims at lowering electricity consumption by 2,000 gigawatts between 2018 and 2020, with a cost of JD700 million.  The Energy Ministry implemented the first national plan on energy efficiency in 2014, under which it has lowered electric power consumption by 7.6%, equivalent to 806 gigawatts.  (JT 09.04)

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4.4  BERD to Assist Morocco’s Renewable Energies Plan

The European Bank for Reconstruction and Development (BERD) is assisting Morocco’s National Office of Electricity and Drinking Water (ONEE) in evaluating its network capacity to absorb more power from renewable energies.  BERD is currently selecting consultants who will assist the country’s grid operator, ONEE, in accessing the capacity of the very high voltage (VH) and high voltage (HV) networks, as well as that of the medium voltage (MV) and low voltage (LV) grids, in order to absorb increasing volumes of power supply from renewables.

BERD’s assessment is part of the country’s plan to increase the share of renewable energies, in its total installed power generation capacity, to 42% by 2020, and 52% by 2030.  Morocco’s total primary energy consumption has increased by 5% since 2004, with an increase of 3.6 increase per capita.  About one third of this consumption is devoted to electricity generation, which amounted to 36,500 gigawatt hours in 2015.  The North African country produces 28,000 gigawatt hours of electricity, while the rest is imported from Spain.  Morocco seeks to boost its production capacities, which currently stands at 6,500 megawatts, to 14,500 megawatts by 2020, with solar and wind energies each representing 2 megawatts.  (MWN 13.04)

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5:  ARAB STATE DEVELOPMENTS

5.1  Lebanon’s Trade Deficit Widened to $1.42 Billion in January 2018

Lebanon’s trade deficit for the first month of 2018 stood at $1.42B, widening from the $1.37B registered in the same month last year.  Total imports grew by 6.3% year-on-year (y-o-y) to $1.71B and exports rose by 23.3% y-o-y to $283.41M.  The top imported goods to Lebanon were Mineral products with a share of 16.21%, followed by 14.23% for machinery and electrical instruments and 11.36% for products of the chemical and allied industries.  The value of imported mineral products dropped by 23.73% y-o-y to $276.34M as a result of the 36.95% drop in their imported volume in January 2018.  Meanwhile, the value of machinery and electrical instruments surged to $242.55M and that of the chemical and allied industries rose by 10.41% to $193.67M.  In January, the top three import destinations were China, Italy and Greece with shares of 14%, 9% and 8%, respectively.  As for exports, the top exported products from Lebanon were pearls precious stones and metals with a share of 39.05% of the total followed by shares of 13.57% for base metals and articles of base metal and 9.70% for products of the chemical or allied industries.  In details, the value of Pearls, precious stones and metals more surged in January 2018 to stand at $110.67M, compared to $71.61M in January 2017.  The value of base metals and articles of base metal rose by 47.81% to $38.45M, and the value of products of the chemical or allied industries registered a yearly increase of 42% to $27.50M.  In January, the top three export destinations were Switzerland with 17%, South Africa with 16%, followed by the UAE with a share of 9%.  (Blum 15.04)

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5.2 Lebanon’s Fiscal Deficit Contracted to $3.76 Billion in December 2017

Lebanon’s fiscal deficit narrowed by 24% year-on-year (y-o-y) to $3.76B by December 2017.  This was attributed to the 17.15% yearly increase in fiscal revenues, to $11.62B, outpacing the 3.45% annual rise, to $15.38B, in government expenditures.  During the same period, the total primary balance displayed a surplus of $1.43B by the end of 2017 compared to a lower primary surplus of $20.61M by December 2016.  Total budget revenues stood at $10.78B by December 2017, compared to a lower level of $9.28B by December 2016.  Tax revenues, constituting the largest share of total public revenues, increased by a yearly 16.83% to $8.21B. In details, miscellaneous tax revenues, constituting the lion’s shares of total tax receipts (54.46%) rose by a yearly 28.5% to $4.47B.  Moreover, VAT revenues (grasping a 28.07% share of tax receipts) rose by 7.47% y-o-y to $2.31B, and custom revenues (17.47% of tax receipts) added 2.18% to $1.43B, over the same period.  As for telecom revenues (11.92% of total government revenues), they grew by 1.51% y-o-y to $1.28B, by December 2017.

Concerning expenditures, total budget expenditures rose by a yearly 8.74% to $14.08B by December 2017.  Regarding transfers to Electricite du Liban, they surged by 43.25% annually to $1.33B, as a result of the increasing oil prices.  Similarly, interest payments on government’s debt went up 4.67% y-o-y to $4.99B, due to the 5.58% rise in interest payments on domestic debt to $3.23B, and the 3.05% annual rise in the interest payments on foreign debt to $1.76B.  (Blom 05.04)

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5.3  Number of Registered Cars in Lebanon Contracted by 7.01% in First Quarter

According to the Association of Lebanese Car Importers (AIA), the number of newly registered commercial and passenger cars fell in the first quarter of 2018 by 7.01% year-on-year (y-o-y) to 8,136 cars.  This was triggered by a 5.83% annual drop in the number of newly registered passenger cars to 7,645, which was outpaced by a 22.19% yearly contraction in the number of newly registered commercial vehicles to 491.  The AIA emphasizes that this situation is due to the dramatic economic, political and safety situation prevailing in the country. 90% of the registered cars are small cars with low selling prices (less than $15,000) due to the absence of an adapted and structured public transport.  In terms of brands, Kia maintained its grip on the market, as it held the largest share of the total newly registered cars (18.01%), followed by a 13.26% stake for Hyundai.  Toyota followed, grasping 13.11% of the newly registered cars, while Nissan came next with 9.76% of the total.  In terms of sales per importer, NATCO acquired the biggest bulk with a 17.04% stake of the total, followed by BUMC (13.35%), and Century Motors (12.81%).  (AIA 16.04)

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5.4  Car Ownership in Jordan to Soar in Upcoming Years

Car ownership in Jordan is expected to witness a significant increase in the upcoming years, a research paper issued by the Jordan Strategy Forum (JSF) said.  Based on information available from EuroStat, the study showed that, during the period from 2009 to 2016, Jordan came second regionally in terms of the annual growth rate in the number of owned vehicles, which stood at 6.54%, right after Turkey.  Despite the sustained growth, the number of owned cars in Jordan still appeared small when compared to the ratio per capita, with one vehicle for every five persons.

The JSF research paper determined that “if the Jordanian experience in the near future reflects what has happened in countries such as Finland, Germany, France or even Slovakia, one can only predict the number of owned vehicles per capita to increase in Jordan”, adding that “the growth might be even faster given the lack of good public transportation in the Kingdom”.

Many have noted that the unorganized transport scheme and the inability of the government to install a top notch transport system made many Jordanians prefer to own a car, which has made the traffic in Amman unbearable and costly.  The JSF paper pointed out that “all stakeholders must realize the critical importance of investing sufficiently and efficiently in our infrastructure in general, and in our road network in particular”, adding that “the fact that more than half of the Jordanians live in Amman makes this argument much more critical”.  A previous report by the World Bank assessing the quality of roads in 140 countries highlighted a deterioration of the roads across the Kingdom, with a score falling from 4.85 in 2006 to 3.87 in 2015.  (Various 09.04)

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►►Arabian Gulf

5.5  Bahrain Reveals Size of Giant Oil Reserve Discovery

On 4 April, Bahrain announced its newly discovered shale oil reserve was estimated to contain more than 80 billion barrels, making the once-marginal oil producer potentially a major player in the market.  The amount of recoverable oil – or oil that can be extracted – is still under study, Oil Minister Sheikh Mohammed bin Khalifa Al-Khalifa told a press conference in Manama.  The new field dwarfs the Bahrain Field, the country’s only other oil field, which contains several hundred million barrels.

The small Gulf state currently produces some 50,000 barrels per day of crude oil from the Bahrain Field, discovered in 1932.  Manama also gets another 150,000 barrels daily from the Abu Saafa offshore field it shares equally with Saudi Arabia.  Sheikh Mohammed said that natural gas estimated at between 10 trillion cubic feet and 20 trillion cubic feet has also been discovered.

The minister said that appraisal studies are underway with the help of international oil companies to assess the quantities that can be extracted of both oil and gas.  The national oil company Bahrain Petroleum Co. said that pumping of oil from the field is not expected for at least five years.  (AB 05.04)

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5.6  UAE Free Zone Exports Exceed $61 Billion in 2017

UAE free zone exports amounted to AED225.5 billion ($61.2 billion) in 2017, a growth of 6.6% from the previous year, according to the UAE Central Bank.  Its annual report said the free zone exports accounted for 19.5% of the country’s total exports last year, and comprised 16% of the trade balance.  UAE free zones now represent a robust catalyst for economic growth following significant investments in them over the past decades.  The past three years saw some discrepancy in the free zone export volume, which fell to AED211.4 billion in 2016 before rebounding last year.  There are 37 free zones operating in the UAE that leverage the country’s positioning as a key regional trade and financial hub.  (AB 07.04)

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5.7  Reactor Dome Fitted to Abu Dhabi’s Final Nuclear Plant

The Emirates Nuclear Energy Corporation (ENEC) has announced the completion of the reactor containment building dome for Unit 4, the final unit of the Barakah Nuclear Energy Plant, located in the Al Dhafrah region of Abu Dhabi.  The unit’s reactor coolant loop pipe welding, and the setting of key equipment have also been completed.  Built of concrete and heavily reinforced steel, reactor containment buildings are ranked among the strongest structures in the world.

Overall, the Barakah Nuclear Energy Plant is more than 87% complete.  Unit 4 alone is more than 67 percent complete, while Units 3 and 2 are 81 percent and 92 percent respectively.  The construction of the plant’s first unit has been completed and is currently undergoing a comprehensive review in preparation for operations.  All four units are expected to save up to 21 million tons of carbon emissions each year, equivalent to removing 3.2 million cars from the roads.  (AB 10.04)

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5.8  Business Registration in One Day as Saudi Arabia Launches 12 Regulatory Reforms

As part of the government’s objective in making Saudi Arabia a more business-friendly country, a new initiative has been launched to make it possible for businesses to be registered within a day.  The 12 reform initiatives are aimed at modernizing the process of the Kingdom’s administrative procedures enabling both investors and business owners to start a business within one day.

The Ministry of Commerce and Investment has announced these reform initiatives are within the framework of the on-going modernization and improvements of the trade services, through process re-engineering and integrated electronic systems.  The new changes have been implemented to ease processes to help facilitate registration of businesses via an online system.

Twelve reform initiatives for starting a business are now integrated and can be done simultaneously in one step.  The new online service allows investors to search and book his or her trade name, fill in company Articles of Association details, add partners and shares without the need of attestation by a Notary Public using electronic authentication.

The Kingdom’s online service is a new technology in facilitating the delivery of a range of business start-up services for a more expeditious and legally sound incorporation.  The government has developed these new initiatives by linking all procedures through a single online interface.  The requirement of a company seal has also been removed.  (AETOSWire 09.04)

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5.9  US to Update Saudi Artillery in $1.31 Billion Deal

On 5 April, the United States approved a contract to sell Saudi Arabia 180 self-propelled artillery systems for $1.31 billion, in the latest stage of perhaps the world’s biggest arms deal.  When US President Donald Trump visited Riyadh last year he boasted that the desert kingdom would spend $110 billion on US equipment and the howitzer contract is one more step towards that goal.  The latest deal will see Saudi Arabia buy 180 M109A5/A6 medium self-propelled howitzers and equipment to convert these into the M109A6 Paladin artillery system.  Saudi Arabia has led a large-scale but so far unsuccessful Arab intervention in Yemen’s civil war and has imposed a diplomatic and trade embargo on a fellow US ally in the Gulf, Qatar.  (AB 06.04)

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►►North Africa

5.10  Egypt’s Unemployment Rate Falls to 11.8% in 2017

Egypt’s unemployment rate fell to 11.8% in 2017, from 12.5% in 2016, CAPMAS announced on 16 April.  Cairo has been leading a policy of prioritizing labor-intensive industries, in a bid to provide job opportunities.  Unemployment in 2017 was at 14.5% in rural areas, versus 9.8% in rural areas.  Unemployment among males recorded 8.2% in 2017, down from 8.9% in 2016.  The gender gap results in a 23.1% unemployment rate for females in 2017, down from 23.6% in 2016.  Among young people (aged 15-29 years old), the unemployment rate was 24.8% in 2017.  Within this age group, 20% of males and 36.5% of females were unemployed.  A rate of 31.8% of youth who are degree-holders are unemployed.

According to CAPMAS, the labor force in 2017 consisted of 29.474 million Egyptians – including people who work and those who are seeking work – up from 28.934 million in 2016.  Some 45% of the population above 15 years old contributed to the workforce in 2017, compared with 46.6% in 2017.  Among those, employees constituted 26.006 million people in 2017 (20.620 million of which were males), compared with 25.331 million in 2016 (including 19.986 million males).  The difference between the labor force and those who are employed constitutes the 3.468 million unemployed in 2017, down from 3.603 million unemployed in 2016.

A quarter of Egyptian employees work in agriculture and fishing, 12.9% in building and construction, 12.6% in wholesale and retail trade, and 12% in transformative industries.  Only 3,600 work in international institutions and authorities, embassies, and foreign consulates.  (CAPMAS 16.04)

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5.11  Egypt to Revamp Railways with EGP 55 Billion Investment

Egypt’s Minister of Transport Hisham Arafat has announced a project to revamp the national railway network, with EGP 55 billion to be invested up to 2022.  Arafat told reporters that Egypt has “a clear and comprehensive plan to develop all aspects of the railway system, whether in infrastructure, tractors, train carriages and signals.”  He said Egypt has signed deals with US company General Electric for the supply of 100 tractors and the refurbishing of 81 others, as well as access to funding for another 100 tractors.  He added his ministry will also sign deals for 1,300 passenger carriages and 300 others for cargo, emphasizing that citizens will see an upgrade in the ailing system next year.

The minister’s statements come nearly a month after Egypt’s parliament finally approved several government-drafted amendments to the 1980 law that regulates the performance of the debt-laden Egyptian Railway Authority (ERA), with a view to rescuing the vital railways sector.  Egypt’s railway system has a poor safety record, with frequent deadly collisions often blamed on lack of maintenance and poor management.  In 2017, President El-Sisi highlighted the need to upgrade the railway network to prevent deadly accidents, stating that the system needs EGP 180 billion (about $10 billion) to be modernized.  (Ahram Online 09.04)

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5.12  Informal Economy Represents More than 20% of Morocco’s GDP

The General Confederation of Enterprises of Morocco (CGEM) released the findings of its joint-study on the informal economy and its impact on the competitiveness of companies, conducted with the firm Roland Berger in 2014.  According to the report, the informal sector, which includes all non-agricultural economic activities conducted underground without the authorization of the relevant authorities, sees the highest proportion of job creation, with 2.4 million informal employees, representing nearly half of the working population.  This shadow economy constitutes 54% in textiles and clothing, 32% in road freight transport, 31% in construction, and 26% in the food and tobacco industry.

The report, which only includes entities engaged in legal but informal activity, highlights that informal economic operations generate almost MAD 170 billion in untaxed revenues, although it is difficult to obtain a precise estimate.  The study notes that this hidden part of economy creates a shortfall for the state in terms of tax and social contributions.  The study also points out that Moroccan companies are losing profitability by limiting investment and innovation, while end-consumers are also suffering from non-compliance with hygiene rules and usage of substandard goods, adding that employment in this sector is associated with “insecurity, instability, lack of social benefits, and low average wages.”

The government has already taken some steps towards formalizing the economy after introducing a new bill in 2016 that requires contracts for domestic workers and includes efforts to expand social security benefits to more workers.  Morocco’s attempts to shift more employees to formal payroll systems, will likely help boost government fiscal receipts, fight against corruption, and improve worker protections.  (Various 07.04)

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5.13  Morocco’s Trade Deficit Increases by 10.6% in March 2018

According to the monthly external trade indicators for March 2018, issued by the Moroccan Foreign Exchange Office of External Trading, Morocco’s trade deficit increased by 10.6%, a rise of MAD 48.7 billion in March 2018, compared to MAD 44 billion registered during the same period of the previous year.  The Foreign Exchange Office numbers showed that Morocco’s imports reached MAD 117.14 billion at the end of March 2018, against MAD 108.21 billion in March 2017, marking an increase of 8.2%, which they largely attributed to the increase in purchases of capital goods (+ 12.4%), finished consumer products (+ 7.8%) and food products (+ 14.3%), especially wheat (+ 29.2%).

Meanwhile, exports rose by 6.6%, MAD 68.45 billion instead of MAD 64.19 billion one year earlier, which was mainly due to the increase in sales in all other sectors, especially in the automotive sector (+ 16.5%), agriculture and agri-food (+ 3%), and aeronautics (+ 18.8%), as well as Textile and Leather (+ 2.4%).  Thus, the coverage rate of imports by the exports, stood at 58.4% in March 2018, against 59.3% one year earlier.  (MWN 16.04)

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5.14  Agriculture Drives Moroccan Economic Growth

Morocco’s national economic growth is mainly driven by agricultural activity, which stood at 4.1% Q4/17, compared to only 1% during the same period of 2016, according the High Commissioner for Planning (HCP) report.  After a sharp decline of 12.5% in Q4/16, the added value of the primary sector (extraction of raw materials), increased by 10.9% during the same period of 2017.  The secondary sector (manufacturing) has achieved an increase of 3.9%, up from 2.2% in the same quarter of 2016, says HCP, linking this situation to the improvements made in the mining industry, with an increase of 17.8% from 3.7%; the processing industries, with an increase of 2.7% against of 2.1%; and electricity and water with an increase of 5% against 4.5%.  The added value of the tertiary sector (services) is up by 3.1% in the fourth quarter of 2017, against 2.8% in the previous year, says the same source, noting that “all the components of the sector have witnessed a positive growth, to a certain extent strong compared to the levels recorded during the same period last year.”

In this regard, the transport sector grew by 6.6% up from 3.4% growth in 2016; household and business services increased by 4.1% compared to 3.3% in 2016; financial services and insurance is up 1.8% against 1.6%; and services rendered by the General Public Administration and Social Security are up 1.4% from 0.8% in 2016.  Meanwhile, jobs and telecommunications decreased from 3.1% to 2.9%; education, health and social services declined from 2.1% to 0.3%; and hotels and restaurants decreased from 9.6% to 9%.  The added value of non-agricultural activities increased by 3.2% up from 2.6% in the fourth quarter of 2016.  (MWN 03.04)

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5.15  Moroccan Automotive Sector Revenues Rise to MAD 50 billion in 2017

Moroccan automotive sector revenues have continued to rise, reaching MAD 50 billion in 2017, compared to MAD 12 billion in 2009, L’Economiste reported on 4 April.  Due to an industrial acceleration plan, the automotive industry has experienced notable growth in the last few years, and the trend is expected to continue up through 2020.  The automotive sector was the first exporting sector in the Moroccan economy to earn a MAD 50 billion turnover in 2017.  The sector aims to double this figure by 2020.

The Moroccan automotive industry development strategy has succeeded in attracting international giants including Renault and PSA Peugeot, along with dozens of equipment manufacturers.  The infrastructure quality of two of Morocco’s free zones (Tangier Automotive City and Kenitra Atlantic Free Zone) is also playing a major role in stimulating the economy.  L’Economiste affirms that Renault is actually buying automotive pieces manufactured Morocco to use in both of its Moroccan and International factories.  The overall cost of the pieces is estimated currently at €1 billion per year, but estimated to reach €1.5 billion by 2023.  The report also pointed out that Renault’s local integration rate exceeds 50%, and that the ecosystem it has set up with its suppliers involves an investment of €815 million, resulting in the creation of 14,000 direct and indirect jobs.  Other industrial free zones in Tetouan, Fez, and Meknes have started to attract numerous equipment manufacturers in the hopes of following similar industrial strategies.  (MWN 04.04)

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6:  TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1  IMF Raises 2018 Growth Forecast for Turkey But Lowers 2019 Figure

The International Monetary Fund (IMF) has revised up its forecast for the 2018 Turkish economic growth to 4.4%, but its 2019 forecast was down to 4% for 2019 in its latest World Economic Outlook.  Turkey’s economy is projected to grow above potential, buoyed by improved external demand conditions and supportive policies on multiple fronts—expansionary fiscal policy, state loan guarantees, pro-cyclical macro-prudential policy, and an accommodative monetary stance.  In its January upgrades, the IMF forecasted a 4.3% growth for Turkey in 2018 and 2019 for each.

The IMF also highlighted some risks for the Turkish economy.  In Turkey, limiting balance sheet currency mismatches and the high exposure to foreign exchange risk are urgent priorities, especially with monetary policy normalization under way in the US and the UK (and the resulting possibility of a shift of capital flows away from emerging market economies), the IMF warned.  Moreover, given that sudden re-pricing of term premiums remains a distinct possibility and that portfolio shifts could occur, it is important to mitigate rollover risk by avoiding excessive reliance on short-term borrowing, it added.  (IMF 17.04)

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6.2  Turkish Budget Posts $5.3 Billion Deficit in First Quarter

The Turkish government’s budget balance saw a deficit of TL 20.4 billion ($5.34 billion) in the first quarter of 2018, the Ministry of Finance announced on 16 April.  According to an official statement, Turkey’s budget revenues amounted to TL 167.4 billion from January to March, increasing by 15.7% compared to the same period of last year.  Over the same period, the budget expenses stood at TL 187.9 billion, marking a 17.7% annual rise.  Excluding interest payments, the central government budget balance saw a surplus of nearly $500 million in the first quarter of this year.  (AA 17.04)

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6.3  Greece Sees €2.3 Billion Budget Surplus in First Quarter

Greece’s state budget primary surplus totaled €2.320 billion ($2.873 billion) in January-March this year, up from a budget target for a primary surplus of €1.096 billion and a primary surplus of €1.07 billion in the same period last year, the Greek Finance Ministry said on 16 April.  In a report on the provisional state budget execution data, on an amended cash basis, the budget showed a surplus of €408 million in the three-month period from a budget target for a deficit of €816 million and a shortfall of €1.364 billion in the same period in 2017.

State budget net revenue was €12.112 billion, up 7.9% from budget target, while regular budget net revenue was €11.052 billion, up 3.4% from targets.  Tax returns totaled €1.079 billion, up €227 million from budget targets, while Public Investment Programme revenue was €1.060 billion, up €529 million from targets.

Budget spending in the January-March period totaled €11.704 billion, down €335 million from targets, while regular budget spending was €11.356 billion, down €2.0 million from targets.  State budget spending was down €1.077 billion compared with the same period last year.  Public Investment Programme spending was €348 million in the three-month period, down €332 million from targets.  In March, the state budget showed a net revenue of €3.138 billion, down €244 million from monthly targets, while regular budget net revenue was €2.753 billion, down €315 million from targets.  Public Investment Programme revenue was €385 million, up €71 million from targets.

Tax returns were €360 million, up €117 million from monthly targets.  State budget spending was €4.271 billion in March, down €25 million from monthly targets, while regular budget spending was €4.111 billion, up €110 million from targets.  Public Investment Programme spending was €161 million, down €134 million from targets.  (AMNA 16.04)

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7:  GENERAL NEWS AND INTEREST

*ISRAEL:

7.1  At 70, Israel’s Population Nears 9 Million

The Central Bureau of Statistics has published up-to-date numbers in advance of 19 April, Israel’s Independence Day marking 70 years since the state was re-founded.  According to the Central Bureau of Statistics, Israel’s population has grown ten-fold since the foundation of the state, from 806,000 in May 1948 to 8.84 million today.  On Israel’s 100th Independence Day in 2048, the country’s population is projected to reach 15.2 million.

The Jewish population is 6.59 million (74.5% of the total); the Arab population is 1.85 million (20.9%); and others (non-Arab Christians, members of other religions and those unclassified by religion in the population registry) number 404,000 (4.6%).

Since Independence Day last year, Israel’s population has grown by 163,000 people, or 1.9%. 177,000 babies were born, and 41,000 people died. Some 28,000 immigrants arrived.

Some 3.2 million people have immigrated to Israel since the state was founded.  The two largest waves of immigration were from the re-foundation of the state until the 1950s, when the population doubled within four years (more than 700,000 immigrants) and the wave in the 1990s, when the population rose by 10% (more than 900,000 immigrants).

In 1949, there were about 500 communities in Israel and in 2016, there were no fewer than 1,214.  Today, nearly half the population (44%) is concentrated in the fifteen largest cities, numbering over 100,000 residents each.  The largest city is Jerusalem (882,000 residents).

In 1948, average life expectancy in Israel was 64 for men and 67 for women.  Today, the figures are 80.7 for men and 84.2 for women.  When the state was re-founded, just 3% of the population owned cars.  Today, 70% own at least one vehicle.  In 1948, 43% of the population owned their own homes and today, 68% own their own homes.  In 1948, Israel welcomed 33,100 tourists and visitors and in 2017, the number was 3,863,400.  While Israelis made about 30,000 trips overseas in 1948, in 2017, the number of overseas trips was 7,597,400.  (CBS 16.04)

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7.2  Israel to Overhaul University Campuses to Encourage Innovation

Israel’s Council for Higher Education is launching a new campus program to cultivate innovation and transform higher education in Israel over the next decade.  According to the plan, the campuses of the future will include innovative study spaces, not only in infrastructure but also in learning methods.  Some NIS 100 million ($28.5 million) will be invested into kick-starting the program over the next five years.  The goal is to develop students’ entrepreneurial thinking, boost collaboration between faculties and strengthen the connection between industry and academia.  One of the key objectives of the plan is to “break down barriers” between lecturers and students.  Veteran researchers representing some of Israel’s brightest minds will work alongside students to advance important projects that aim to impact Israeli society profoundly.  Students will be able to work on campus in shared workspaces with lecturers and researchers to advance groundbreaking ideas, while integrating industry and venture capital funds.  These collaborations will provide opportunities for students to gain experience in teamwork and in fleshing out initiatives, directed by professional mentors from the business world.

The Budget and Planning Committee of the Council for Higher Education has issued a public appeal for all accredited academic institutions –universities and public colleges alike – to propose programs that include both academic learning and innovation training.  The institutions will be given incentives to introduce academic courses teaching innovation and entrepreneurial skills.  In the second and more significant part of the program, academic institutions will submit proposals for innovation centers over the next six months.  The three proposals deemed the best will receive budgets of tens of millions of shekels to move ahead.  (IH 16.04)

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8:  ISRAEL LIFE SCIENCE NEWS

8.1  MIXiii-BIOMED 2018 – Introducing the Best of Israel’s Life Science Innovations

The 17th annual MIXiii-BIOMED 2018, the premier international life science conference in Israel, will take place between 15 – 17 May 2018, at the David InterContinental Hotel in Tel Aviv, Israel.  This world-class event presents an opportunity for global participants to experience Israel’s life science innovation and vibrant biomedical industry at its best.  For the 17th consecutive year, MIXiii-BIOMED is the largest and leading meeting place for healthcare professionals from Israel with their international colleagues and partners.  Previous successful conferences hosted over 6,000 industry players, scientists, engineers and investors including more than 1,000 attendees from over 45 countries.  As in previous years, hundreds of Israeli life science companies will present and exhibit their products, services and technologies.  (MIXiii-BIOMED 04.04)

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8.2  ElastiMed Chosen by Horizon 2020 to Receive $1.6 Million Grant

ElastiMed was chosen as one of the companies to receive a grant from Horizon 2020 program as a part of the European Innovation Council (EIC) pilot.  The grant is for a total of $1.6 million over two years.  The grant will be used to further product development, clinical studies, production scale-up, marketing and expanding the Company’s current intellectual property.

ElastiMed has developed a wearable medical device improving circulation in the legs for the treatment of venous and lymphatic diseases.  Based on proprietary technology and utilizing innovative smart materials, stimulated by electric pulses, ElastiMed’s device, compresses and massage the legs to increase blood circulation.  The smart sock provides patients with a comfortable, easy-to-wear, highly effective, and affordable treatment option to prevent symptoms such as swelling, blood clots, leg ulcers and reduce athletes’ recovery time.

Founded in 2015 at The Trendlines Group’s Incubator, Yokneam’s ElastiMed develops wearable medical devices to improve circulation in the legs for the treatment of venous and lymphatic diseases.  Existing investors include Pix Vine Capital, the Israel Innovation Authority, a strategic investor and private investors.  (ElastiMed 03.04)

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8.3  Curewize Reports Successful Clinical Trial on Revealing Acute Lymphoblastic Leukemia Treatment

Curewize Health successfully completed the clinical trial of its lead product ProALLBM on a cohort of acute lymphoblastic leukemia (ALL) patients from a European National Registry Study.  ProALLBM is being produced for deciding on ALL patients risk-based treatment group, varying from standard to intense.  Curewize solution reveals patients’ prognosis by use of one bone marrow sample taken at diagnosis; compared to the current gold standard lab tests, which require 1 to 3 months for results and between 2 to 4 bone marrow aspirations.  ProALLBM adds unique insight on ALL patients relapse risk, also identifying very high risk patients who succumb to cancer relapse, even with the intense treatment regimen.  Newly approved cancer drugs may be the most optimal treatment choice for these refractory patients.

Yokneam’s Curewize product portfolio is based on its platform technology for quantifying microRNA, the master regulators of gene activity.  Curewize pipeline includes a blood test, ProALLBL, for long-term and frequent monitoring of ALL patients, and a companion diagnostic lab test for deciding on the treatment of solid cancers with NAMPT and PARP inhibitors.  Their biomarker directly controls NAMPT activity, a producer of cell energy, consumed by PARP for correcting DNA breaks in rapidly growing cancer cells.  (Curewize 03.04)

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8.4  ReWalk Launches Clinical Study for Its ReStore Soft Exo-Suit System

ReWalk Robotics announced the official launch of its clinical study of the ReStore soft exo-suit system (ReStore) for the rehabilitation of individuals with lower limb disability due to stroke.  The first clinical study participant began using a ReStore recently at the Spaulding Rehabilitation Hospital in Boston, Massachusetts where the study is being led by a team of researchers from the Boston University College of Health and Rehabilitation Sciences: Sargent College.  The study seeks to enroll 40 participants at five of the top rehabilitation hospitals in the U.S.

This first of its kind device, which was unveiled in 2017, is the second product line from ReWalk and represents the Company’s next step in its efforts to develop new technologies designed to serve patients with various forms of lower limb disabilities.  The ReStore is designed to be a versatile, cost-effective gait therapy solution intended to allow therapists to deliver treatment with real time analytics and adjustability. It utilizes key features from structural exoskeleton designs without the size, structure and expense of current exoskeletons.

The ReStore transmits power to key joints of the legs with cable technologies, powered with software and mechanics that are similar to the technologies used in the ReWalk exoskeleton system for individuals with spinal cord injury.  The cables are connected to fabric-based designs that attach to the legs and foot, thus lending the name “soft suit.”  Anticipated delivery of a commercial ReStore soft suit is targeted for the first half of 2019.  ReWalk plans to commercialize use of the ReStore system in Europe and the United States subject to receiving CE and FDA clearance, respectively, to market the device.  The Company plans to apply for CE and FDA clearances once clinical and laboratory testing are completed.

Yokneam Illit’s ReWalk Robotics develops, manufactures and markets wearable robotic exoskeletons for individuals with spinal cord injury.  Their mission is to fundamentally change the quality of life for individuals with lower limb disability through the creation and development of market leading robotic technologies.  Founded in 2001, ReWalk has headquarters in the U.S., Israel and Germany.  (ReWalk 03.04)

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8.5  Cellect Announces a Major Milestone for Enabling Stem Cell Production

Cellect Biotechnology announced that it has successfully completed the proof of concept testing of its first in type new product prototype, ApoTainer using Cellect’s FasL-coated magnetic beads for maximizing efficacy and scalability of stem cell based products’ manufacturing.  The ApoTainer is designed to replace highly complex and expensive procedures currently used by laboratories (e.g. Bone marrow transplantations), with a significantly more effective process at a fraction of the time and cost.  The Company believes the ApoTainer represents a breakthrough in achieving commercial grade scalability with a solution suitable for a wide range of users from large pharma companies interested in cost effective stem cell production through hospitals and clinics to small research laboratories.

Utilizing the ApoTainer, Cellect expects blood stem cell donation to be transplantable within less than 6 hours from donation through a simple process performed at the hospital bedside instead of undergoing a lengthy laboratory procedure in a highly specialized setting.  The standard medical procedure for reaching enriched stem cells currently costs tens of thousands of dollars and produces significant adverse effects.

ApoTainer-based blood stem cell transplantation is being designed to result in improved recovery of the patient’s immune system with significant reduction of safety concerns in contrast to the significant morbidity or even death caused by the standard medical procedure.  Reducing the procedure related adverse effects is anticipated to cause a significant increase in the number of bone marrow transplantations – the only stem cell based medical procedure fully accepted by the medical community.

Kfar Saba’s Cellect Biotechnology has developed a breakthrough technology for the selection of stem cells from any given tissue that aims to improve a variety of stem cell-based therapies.  The Company’s technology is expected to provide research, hospitals and pharma companies with the tools to rapidly isolate stem cells in quantity and quality allowing stem cell-based treatments and procedures in a wide variety of applications in regenerative medicine.  The current clinical trial is aimed at bone marrow transplantations in cancer treatment.  (Cellect 09.04)

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8.6  Ayala Pharmaceuticals Raises $17 Million

Israeli oncology drug development company Ayala Pharmaceuticals has raised $17 million in a Series A financing round led by the Israel Biotech Fund and with the participation of aMoon and Harel Insurance & Finance.  The company was founded in 2017 to develop two cancer treatment candidates of Bristol Myers Squibb (BMS), which is also a shareholder in the company.  The new funds will take the company through initial results in the first Phase II study in recurrence or metastatic Adnoid Cystic Carcinoma (ACC) patients with activated Notch pathway and through conducting preclinical research to characterize additional indications for which AL101 may be effective.  ACC is a rare cancer affecting glands in the head and neck, which has no approved treatment.  Ayala Pharmaceuticals expects the results of the Phase II trial for ACC in the first half of 2019 and is also exploring use of the drug’s use in treating triple-negative breast cancer.

Rehovot’s Ayala Pharmaceuticals, a clinical-stage biopharmaceutical company, develops targeted cancer therapies for people with genetically defined cancers.  The company manufactures gamma secretase inhibitors as targeted treatments for cancers harboring specific notch alterations.  (Globes 11.04)

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8.7  Genie Enterprise Raises $10 Million

Genie Enterprise has closed a Series A financing round, which was oversubscribed at $10 million.  Carl Marks Securities LLC acted as the exclusive financial advisor on the deal and the firm and its principals are also investors in the business.  The capital raised will build Genie’s organization in the US where the company’s product is ideally suited for offices, coffee chains, hotels, hospitals and countless other places that have a need for convenient food at the touch of a button.  Genie’s food system is based on unique proprietary technology and algorithms that produce restaurant quality meals from fresh dried ingredients without any preservatives, artificial flavorings, colorings, or additives.  With prior success and experience with Israeli governmental agencies and B2B businesses such as Apple in Israel, Genie Enterprise is ready to tap the US for market opportunities.

Founded in 2014, Rishpon’s Genie Enterprise, develops and markets small-size smart ovens, leveraging proprietary technology and algorithms to cook freeze-dried and dry ingredients at the push of a button.  The company works in collaboration with top chefs to create a variety of nutritious meals that contain only real ingredients with no preservatives and come in pre-sealed individual pods.  Genie’s business model is based on its customers buying, eating and replenishing its meals.  Genie Enterprise launched commercially in Israel in 2017 and targets businesses and government entities.  The company co-owns a pod-filling facility in northern Israel that has capacity to manufacture 10 million meals per year.  (Genie 10.04)

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8.8  Augmedics Cadaver Study Using xvision-spine (XVS) Surgical Navigation System

Augmedics has successfully completed its second cadaver study using its xvision-spine system (XVS) with surgeons from Johns Hopkins Hospital, as well as two surgeons from hospitals in Israel.  During the study, the surgeons placed 120 pedicle screws in five separate cadavers with screw placement accuracy of 96.7% when employing the combined Heary-Gertzbein grading scheme.

Augmedics’ xvision-spine system (XVS) is an AR surgical navigation system designed to give surgeons “X-ray vision” during complex procedures.  With XVS, surgeons can see and navigate inside a patient’s body through skin and tissue, for easier, faster and safer surgeries.  The XVS system comprises a transparent near-eye-display headset and has all elements of traditional navigation systems.  It accurately determines the position of surgical tools, in real-time, and superimposes them on patient’s CT data.  The navigation data is then projected onto the surgeons’ retina using the transparent near-eye-display headset, allowing surgeons to simultaneously look at their patient and see the navigation data without averting their eyes to a remote screen.

XVS has the potential for use in many procedures, with its first intended use in minimally invasive or open spine surgeries. XVS uses patented see-through optics to project a 3D image of a patient’s spine, as well as axial and sagittal planes, onto a surgeon’s retina, in real-time, with surgical precision and outstanding depth perception. The technology was designed to save time during surgery, increase precision in MISS and open spine surgeries, reduce radiation exposure, and reduce the number of unnecessary repeat operations and hospitalizations.

Founded in 2014, Yokneam’s Augmedics seeks to improve healthcare by developing cutting edge technologies that will revolutionize surgical treatment.  The company’s first product, xvision-spine (XVS) system, is an augmented reality surgical navigation system designed to allow surgeons to see and navigate inside a patient’s body during complex procedures.  The XVS system, with XVS Software, has the intended use to precisely locate anatomical structures in either open or percutaneous neurosurgical and orthopedic procedures.  Their use is indicated for any medical condition in which the use of stereotactic surgery may be appropriate, and where reference to a rigid anatomical structure, such as the spine or pelvis, can be identified relative to images of the anatomy.  This can include spinal implant procedures such as pedicle screw placement, Iliosacral screw placement or interbody device placement.  (Augmedics 11.04)

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8.9  BioCanCell Announces $23 Million PIPE Financing

BioCanCell has successfully executed binding funding agreements to raise $22.8 million through a private equity investment (PIPE) in the Company.  The financing was led by Shavit Capital, one of Israel’s leading private equity funds specializing in pre-IPO funding, and was joined by new and existing U.S. and Israeli investors, including Clal Biotechnology Industries.  Net proceeds of the PIPE will be used primarily to advance the Company’s drug development programs, including the initiation of a pivotal trial of its first-in-class and first-of-its-kind gene therapy in development for treatment of bladder cancer.

The closing of the transaction is subject to the approval of a general meeting of Company shareholders, and TASE approval for the registration for trade of the shares allotted and the shares underlying the warrants.

BioCanCell is a clinical-stage biopharmaceutical company focused on the discovery and development of novel therapies to treat cancer, with offices in Cambridge, MA, and Jerusalem, Israel.  The Company’s most advanced product candidate, BC-819, is in development as a treatment for early stage, NMIBC.  (BioCanCell 13.04)

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8.10  Foamix Announces $16 Million Investment by OrbiMed

 Foamix Pharmaceuticals has raised aggregate gross proceeds of approximately $16 million through a direct registered offering of its ordinary shares to OrbiMed.  On 13 April 2018, Foamix entered into a Securities Purchase Agreement with OrbiMed pursuant to which the Company agreed to issue and sell, in a registered offering by the Company, an aggregate of 2,940,000 shares of the Company’s ordinary shares, par value New Israeli Shekels (NIS) 0.16 per share at a purchase price equivalent to $5.50 per share, representing a premium to the Company’s last closing share price, for aggregate gross proceeds of approximately $16 million, before deducting offering expenses.  The issuance and sale of the Shares is expected to close on April 16, 2018, subject to certain closing conditions.

OrbiMed is a leading investment firm dedicated exclusively to the healthcare sector, with over $14 billion in assets under management.  OrbiMed invests globally across the spectrum of healthcare companies, from venture capital start-ups to large multinational companies utilizing a range of private equity funds, public equity funds, royalty/debt funds and other investment vehicles. OrbiMed maintains its headquarters in New York City, with additional offices in San Francisco, Shanghai, Mumbai and Herzliya.

Rehovot’s Foamix is a specialty pharmaceutical company focused on the development and commercialization of proprietary, innovative and differentiated topical drugs for dermatological therapy.  Their leading clinical stage product candidates are FMX101, their novel minocycline foam for the treatment of moderate-to-severe acne and FMX103, their novel minocycline foam for the treatment of rosacea.  (Foamix 16.04)

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8.11  Globus Pharma Signs 50 Ton Canadian Medical Cannabis Deal

Together Pharma‘s subsidiary Globus Pharma, which specializes in the medical cannabis sector, has signed a Memorandum of Understanding (MoU) to sell medical cannabis or oil to a Canadian company with a license to grow, produce and import medical cannabis to Canada.  Under the terms of the agreement, the Canadian company will buy from Globus 50 tons of dried inflorescences of cannabis each year or five tons of medical cannabis oil (the equivalent amount to 50 tons of inflorescences).  The two companies will also collaborate in the field of R&D and promoting technologies in the medical cannabis sector.  As of the date of signing the agreement, the parties estimate that sales revenue will amount to between $3.17 and $4.7 per gram of inflorescence.  The parties intend contracting a detailed agreement as soon as possible, which will fix the price of the sale of the various cannabis products according to prices on the Canadian market at the time of signing.

Globus plans to provide the Canadian company with medical cannabis from farms in Israel subject to receiving an export permit for medical cannabis, or from its farm in an overseas country, which has an export agreement with Canada.  The Canadian company is currently applying for a license to market and sell medical cannabis products in Canada and abroad and according to the information given to Globus, it expects to receive the license within four to five months.

This latest agreement is in addition to Globus Pharma’s existing sales agreements for 25 tons a year with a German company and a sales agreement for three tons a year with another Canadian company.  Together also reported recently that it is working to establish up to 25 acres of greenhouses in a country outside of Israel in a project that will be self-financed.  (Globes 15.04)

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8.12  Ibex Medical Analytics Deploys AI-based Digital Pathology Cancer Diagnosis System

 Ibex Medical Analytics has deployed the first ever AI-based digital pathology diagnostic system in a live clinical setting.  Ibex’s Second Read (SR) system was deployed in the pathology institute of Maccabi Healthcare Services, one of the largest healthcare providers in Israel and Ibex’s strategic partner.  The lab is a centralized pathology institute that handles 160,000 histology accessions per year, of which approximately 700 are prostate core needle biopsies (PCNBs).  The full-scale deployment is following a pilot period, in which the Ibex SR system identified isolated major errors in retrospective PCNBs that had been diagnosed as benign.  Shortly following deployment, the system identified a suspicious PCNB that had been reported as benign by a pathologist just hours earlier.  It was subsequently re-examined and confirmed as low-grade prostate cancer (adenocarcinoma) which has clinical significance for patient management.

Ibex developed a computer software that identifies various cell types and features within whole slide images of PCNBs, including grading of cancerous glands and other clinically significant features. Ibex’s algorithm utilizes state-of-the-art Artificial Intelligence (AI) and Machine Learning techniques, and was trained on many thousands of image samples, taken from hundreds of PCNBs from multiple institutes.

Tel Aviv’s Ibex Medical Analytics develops AI-driven clinical decision support tools that help pathologists deliver more efficient, metric-driven, objective and accurate diagnosis.  It combines AI, data science, image analysis and machine learning technologies and applies them to cancer diagnostics in digital pathology, striving to improve patient outcomes and quality of life.  (Ibex Medical Analytics 16.04)

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8.13  Anlit Launches High Omega-3 Chew for Pregnant Women

Anlit, Ltd., launches a delicious high-DHA omega-3 supplement in a single fish-shaped chew to benefit women during pregnancy or breastfeeding.  Anlit’s new omega-3 chew is a fun, fish-shaped, single-serving bite containing a high concentration of DHA as well as EPA (126mg DHA, 24mg EPA), for a total of 150mg omega-3 fatty acids.  This new gluten-free supplement joins the company’s OmegaBite high DHA+EPA line that was launched last year.  OmegaBite for pregnant or breastfeeding women is trans-fat-free, nut-free, gluten-free and made from only simple ingredients.

The consumption of omega 3 supplement is challenging for everyone, anytime, but during pregnancy, the act of swallowing large softgel, coupled with a fishy aroma exacerbates this challenge and lead to an aversion that prevents pregnant or breastfeeding women from consuming this vital ingredient.  To answer this need Anlit’s expert R&D team developed the chew and fine-tuned it from a feminine point of view to be expressly designed for women.

Anlit develops, manufactures and markets a wide range of quality consumer vitamins, minerals and dietary supplements with its market targeted for children.  Anlit’s leading brands include a line of chewable gummy children’s vitamins marketed under the “Yomi Bear” brand name.  In addition, a line of chocolate flavored bear shaped products – multi vitamin plus, calcium and probiotic.  All products are suitable for vegetarians and kosher certified.  (Anlit 16.04)

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9:  ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1  Beamr Accelerates HEVC Adoption With New Transcoder

Beamr Imaging announced Beamr Transcoder VOD, a product designed to activate and accelerate video distributors looking for reliable HEVC and H.264 streaming to HLS compatible devices.  With more than five years of commercial development, and 1.5 billion devices supporting hardware-accelerated HEVC decoding, video engineers will cheer the inclusion of Unified Streaming’s Unified Packager to enable fMP4 and HLS as a delivery format for HEVC, while DRM systems that include the Apple-supported third edition of the Common Encryption scheme ‘cbcs’ are fully supported.

Beamr Transcoder VOD addresses the video distributor’s quest to reduce network traffic using HEVC by offering easy workflow integration and unrivaled encoding speed and density.  Built for the future, Beamr Transcoder VOD offers the lowest total-cost-of-ownership (TCO) in the market when operated on Intel® Xeon® Scalable processors.  Answering the industry’s call to move off monolithic black boxes, the heart of this highly efficient transcoder was developed in native C++ to run on Linux while being fully scalable across private, hybrid, and public clouds such as AWS using Docker containers.  Beamr Transcoder VOD automatically allocates the optimum number of threads to the video encoding function while reserving the minimum required for decoding, pipeline management, and network control.

Tel Aviv’s Beamr is the leading designer and developer of content-adaptive encoding and optimization solutions that enable high quality, performance, and new levels of bitrate efficiency for MSOs, OTT content distributors, broadcasters and video streaming platforms.  The company has 36 patents granted and more than 20 pending.  By expanding into full solutions Beamr Transcoder enables Beamr HEVC and H.264 codec SDKs to become complete encoding solutions.  (Beamr 04.04)

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9.2  ECI Releases Neptune (NPT) 1300 a Compact High-Capacity Metro Aggregation Platform

ECI released its new NPT-1300 multiservice packet transport platform aimed at streamlining end-to-end metro service delivery.  The NPT-1300 combines carrier grade assurance, visibility and control with packet efficiency and unparalleled multiservice support.  Moreover, it provides the scalability and the service agility needed to overcome the growing traffic demands in the metro.  The NPT-1300 is an IP/MPLS packet aggregation platform optimized to support next generation metro networks.  Its exceptional density means it can support up to 1Tbps capacity in a 3RU shelf today, and ready to support 1.6T in the future.  A large number of interfaces, including a range of coherent 100G/200G interfaces, allow the NPT-1300 to meet all of the service demands in the metro network.  Moreover, integrated optical support, OTN mapping and IPoDWDM enable more efficient transport with seamless hand off to the optical layer, when and where needed.

Petah Tikva’s ECI is a global provider of elastic network solutions to CSPs, critical infrastructures as well as data center operators.  Along with its long-standing, industry-proven packet-optical transport, ECI offers a variety of SDN/NFV applications, end-to-end network management, a comprehensive cybersecurity solution, and a range of professional services.  ECI’s elastic solutions ensure open, future-proof, and secure communications.  With ECI, customers have the luxury of choosing a network that can be tailor-made to their needs today while being flexible enough to evolve with the changing needs of tomorrow.  (ECI 04.04)

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9.3  Alcide Announces General Availability of Its Cloud-Native Security Platform

Alcide announced the general availability of its Data Center and Cloud Operations Security Platform, which protects any combination of container, serverless, Virtual Machine (VM) and bare metal in the modern data center.  Alcide unites DevOps, Security and Engineering teams with a simplified viewpoint and controls to manage and secure the evolving data center and hybrid cloud, at any scale.  Today, many enterprises find themselves operating multi-account, multi-compute data centers, with different teams that usually work in silos.  Alcide’s platform provides superior visibility, cloud-native threat protection and network policy enforcement, providing enterprises with a wide and deep perspective.  It reduces the number of tools needed and eliminates the blind spots between complex infrastructure and applications.

Tel Aviv’s Alcide works for all the stakeholders who operate and protect today’s data center – cloud architects, DevOps and Security – by giving them a single platform with a clear view of their infrastructure and apps in real time, enforce firewall policies and behavioral based anomalies, and monitors multiple accounts in multiple environments.  Alcide’s Data Center & Cloud Ops Security Platform protects any combination of container, serverless, VM and bare metal. Offering real-time, aerial visibility, threat protection and security policies enforcement, Alcide secures the cloud infrastructure, workloads and service mesh against cyber-attacks, including malicious internal activity, lateral movement and data exfiltration.  Alcide empowers DevOps, Security and Engineering teams with simplified control to manage and secure the evolving data center and hybrid cloud, at any scale.  (Alcide 03.04)

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9.4  Liberdy Announces New GDPR Consent Widget for Publishers

Liberdy released its innovative, new GDPR consent widget for publishers.  Liberdy acts in full compliance with the GDPR, the EU’s new privacy bill taking effect in May 2018, which states that the user is the rightful owner of his or her personal information, and online companies collecting the data must gain the owner’s consent to use it, and make an electronic copy available, free of charge.  Publishers now requiring consent to utilize user data must contend with the fact that many users are unwilling to provide permission.  However, Liberdy has developed the perfect widget to help publishers comply with the GDPR regulation and gain the users’ consent for sharing their data.  Liberdy leverages the advantages of blockchain technology and GDPR regulation to empower users to manage their data rights.  The Liberdy platform, a growing hub for GDPR data, enables the user to reclaim their data and profit from the use advertisers make of it, becoming equal partners in the advertising ecosystem for the first time.  Meanwhile advertisers gain access to accurate reliable first-hand data which wasn’t previously available outside of Google and Facebook.

Tel Aviv’s Liberdy has created a new and fair digital advertising economy by developing a robust data trading platform that rewards users for use of their personal information.  Detailed and accurate data is the key to any successful online marketing effort.  Their consent-based Data Management Platform (DMP) gives advertisers access to unique and reliable data.  (Liberdy 03.04)

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9.5  Chinese Weather Research Institute Selected Mellanox InfiniBand

Mellanox Technologies announced that a leading Chinese weather research institute has selected Mellanox EDR 100 gigabit InfiniBand solutions, replacing the proprietary OmniPath network in an existing data center infrastructure.  Rigid performance testing of the institute weather and climate forecasting applications demonstrated 1.9 times performance advantage with InfiniBand versus OmniPath.  As a result, the institute has requested H3C, the server and storage OEM, to replace the previously installed OmniPath proprietary network with EDR InfiniBand.  Utilizing the InfiniBand technology advantages and its smart data accelerations, the institute can dramatically improve their applications performance and maximize their data center return on investment.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet smart 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 offers a choice of fast interconnect products: adapters, switches, software and silicon that accelerate application runtime and maximize business results for a wide range of markets including high performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services.  (Mellanox 09.04)

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9.6  BUFFERZONE & Lenovo Offer BUFFERZONE’s Virtual Container Security Solution

BUFFERZONE has signed a reseller agreement with Lenovo to provide its patented virtual container security solution.  Through this partnership, Lenovo will resell BUFFERZONE’s solutions to its customers, as well as represent the product in marketing activities at relevant industry events.  Lenovo has thousands of global customers across various industries, however, the initial phase of the agreement will be focused on North America, targeting customers with at least 3,000-5,000 endpoints.

BUFFERZONE protects organizations from a wide range of threats with patented containment, bridging and intelligence technologies.  Instead of blocking these threats, BUFFERZONE isolates potentially malicious content from web browsers, email and removable storage into a virtual container that keeps the application separate from the real memory, registry, files and network resources of the computer.  BUFFERZONE maximizes user productivity with seamless, unrestricted access to information, while empowering IT with a simple, lightweight and cost-effective solution for thousands of endpoints both inside and outside the corporate network.

Tel Aviv’s BUFFERZONE endpoint security solutions protect enterprises from advanced threats including ransomware, zero-days, phishing scams and APTs.  With cutting-edge containment, bridging and intelligence, BUFFERZONE gives employees seamless access to Internet applications, mail and removable storage – while keeping the enterprise safe.  (BUFFERZONE 10.04)

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9.7  Global Satellite Operator Places $2.2 Million Orders for Orbit’s Maritime Satcom Solutions

Orbit Communications Systems announced that a global NGSO (Non-Geostationary Satellite Orbit) operator placed orders totaling approximately $2.2 million for Orbit’s multiband maritime satellite communications solutions.  Delivery of the company’s OceanTRx 7 Multiband terminals, which support both C/Ka and Ku/Ka frequency bands for continuous broadband connectivity aboard cruise ships, is expected in 2018 and 2019.

Orbit’s 2.2m (87″) OceanTRx 7 Multiband C/Ka- and Ku/Ka-band stabilized maritime satcom solutions enable the most demanding maritime vessels and platforms to enjoy fiber-like broadband communications for high-speed and cost-effective Internet services – all contained in a very simple system with relatively few moving parts.  It is a revolutionarily compact maritime VSAT system that offers industry-standard RF performance equivalent to a 2.4m (95″) dish with only 2.7m (106″) footprint.  The key to this breakthrough is an extraordinarily-small footprint with outstanding RF performance relative to its size, strict regulatory compliance and support for multiple swappable RF chains.

Netanya’s Orbit Communications Systems is wholly-focused on precision tracking-based communications – in the areas of satcom, telemetry and remote sensing – and provides an innovative solution for airborne audio management.  With certification by defense, government and commercial agencies, we deliver tailor-made, turnkey solutions on land, at sea and in the air.  (Orbit 09.04)

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9.8  Atlantic Metro Partners with PacketLight to Add 200G Capacity to Their Existing Network

PacketLight Networks announced a partnership with Atlantic Metro, to upgrade their existing dense division wavelength multiplexing (DWDM) network routes to 200G capacity.  PacketLight extended capacity using its alien wavelength solution and adding a 200G single coherent wavelength.  Atlantic Metro provides cloud hosting, nationwide network connectivity, and secure data center colocation to over 1,100 customers ranging from Fortune 500 enterprises, to healthcare organizations, legal firms, web start-ups, media, and retail.  Atlantic Metro integrated PacketLight’s PL-2000M flexible muxponder/transponder solution with a built-in optical amplifier and optical switch to provide increased capacity to their network at three different metro locations, with compatibility for 4 x 40GbE and 4 x 10GbE protocols.

PacketLight’s vendor-agnostic solution allows a simple upgrade to Atlantic Metro’s existing optical infrastructure layer without the need for a “rip and replace” of DWDM Muxes.  The 200G uplink is tunable and covers the entire ITU 50GHz and 100GHz grids, providing Atlantic Metro with a simple way to make necessary adjustments and select the required wavelength.  The PL-2000M is equipped with on-board Layer-1 (the physical layer) security, which adds the lowest amount of latency for secure data transfer across a network.

Tel Aviv’s PacketLight Networks offers a suite of leading 1U metro and long haul CWDM/DWDM and OTN solutions, as well as Layer-1 optical encryption for transport of data, storage, voice and video applications over dark fiber and WDM networks.  PacketLight provides the entire optical layer transport solution within a highly integrated compact platform, designed for maximum flexibility, easy maintenance and operation, with real pay-as-you-grow architecture, while maintaining a high level of reliability and low cost.  (PacketLight 10.04)

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9.9  Karamba Security Secures Additional $10 Million in Funding Round

Karamba Security has secured $10 million of funding from Silicon Valley-based Western Technology Investment (WTI), a leading venture debt firm.  This brings the total investment in Karamba Security to $27 million.  In the two years following its launch, Karamba Security has engaged with 17 automotive OEMs and tier-1 suppliers.  Its current portfolio of products is integrated with a variety of platforms, including ARM, Intel, PowerPC and Infineon on the chip level and QNX, Linux and various RTOS and AUTOSAR platforms on the OS/scheduler level.  Through rigorous testing engagements with its customers, Karamba has proven that its solution is capable of prevention with zero false positives, adding negligible performance overhead to the resource constrained environment of the car.

To expand on this market traction, the company is planning to use the funds for inorganic growth, including acquiring companies and technology assets to accelerate its Autonomous Security portfolio progress, as well as address the growing demand for Karamba’s solutions from automotive and IoT customers.

Hod HaSharon’s Karamba Security provides industry-leading automotive cybersecurity solutions for autonomous and connected cars.  Its autonomous security software products, including Carwall and SafeCAN, provide end-to-end in-vehicle cybersecurity for the endpoints and the internal messaging bus.  Karamba Security’s award-winning solutions prevent cyberattacks with zero false positives and secure communications, including OTA updates, with negligible performance impact.  Karamba is engaged with 17 OEM and tier-1 customers and received numerous industry awards.  (Karamba Security 10.04)

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9.10  Cyberbit Announces New Cybersecurity Technology Portfolio for Managed Service Providers

Cyberbit announced its new portfolio for managed service providers (MSPs) and managed security service providers (MSSPs).  MSSPs will now be able to manage the entire security incident from detection, through response to remediation, across IT OT and IoT environments, while MSPs can leverage the platform to jumpstart their security services offerings.  Cyberbit’s MSP/MSSP portfolio brings together four highly demanded technologies: security orchestration, automation and response (SOAR), endpoint detection and response (EDR), operational technology (OT) monitoring, and a cyber range platform for simulated training.  Available as an integrated technology stack or as standalone technologies, the new portfolio enables security service providers to increase revenues, expand their service offering, differentiate, and scale their operation.  Leveraging the new portfolio, service providers can tap into the rapidly growing OT security market and address the pains of critical infrastructure organizations by offering OT security as a service.  In addition, the new expanded portfolio enables MSPs and MSSPs to offer new services in high demand.

Ra’anana’s Cyberbit provides a consolidated detection and response platform that protects an organization’s entire attack surface across IT, OT and IoT networks. Cyberbit products have been forged in the toughest environments on the globe and include: endpoint detection and response powered by behavioral analysis, security automation, orchestration and response (SOAR), ICS/SCADA security (OT security), and the world’s leading cyber range for simulated cyber training.  Since founded in mid-2015 Cyberbit’s products were rapidly adopted by enterprises, governments, academic institutions and MSSPs around the world.  Cyberbit is a subsidiary of Elbit Systems and has offices in Israel, the US, Europe, and Asia.  (Cyberbit 11.04)

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9.11  Votiro Launches the Zero-Day Identifier

Votiro announced the launch of Version 8.0.  The new version will have the ability to analyze cyber-attacks that were prevented due to Votiro’s Disarmer Engine.  Votiro’s technology ensures safety where other solutions fail.  The Votiro Zero-Day Identifier patented technology enables system administrators to evaluate the effectiveness of other security tools.  With this tool, organizations can monitor exactly how many attacks have been prevented, providing a clear ROI for CISOs.

Votiro’s Advanced CDR technology disarms suspicious files by breaking them down into basic components, extracting from them all malicious content, and reconstructing them as a clean, safe-to-use copy of the original file – without specifically identifying which files contain malicious code and which do not.  Votiro’s solution is a signature-less technology that supports a wide range of file formats that are most commonly exploited via spear phishing, other advanced persistent threats and cyber-attacks, and continuously adds and protects new file types.

Tel Aviv’s Votiro is an award-winning cybersecurity company specialized in neutralizing files containing zero-day and undisclosed attacks.  Their next-generation patented CDR technology disarms threats that other products fail to expose, leaving their customers with a secure, fully usable data flow across all channels of incoming files.  With over 500 customers globally, Votiro has offices in US, Singapore, Australia, and Israel.  Votiro is a Gartner Cool Vendor award winner and certified by the international standard of Common Criteria for Information Technology Security Evaluation (ISO/IEC 15408).  (Votiro 11.04)

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9.12  Illusive Networks Announces Breakthrough in Attack Surface Reduction

Illusive Networks announced Attack Surface Manager (ASM), the first automated solution to continually reduce the attack surface, and proactively lower the likelihood of targeted cyberattack success.  Illusive ASM discovers hidden elements throughout the network that enable lateral movement and otherwise facilitate advanced attacks.  In today’s fast-changing business environments, it is difficult for security teams to identify and control credentials and other sensitive data elements that proliferate during normal day to day operations.  ASM automatically identifies these risks, revealing policy violations, and enabling security professionals to proactively deprive attackers of the keys they need to reach critical assets.

Illusive ASM enhances the company’s award-winning deception-based cybersecurity platform, which uses intelligent automation and machine learning to support creation, deployment, and refresh of deceptions at massive scale.  The agentless system allows swift and easy deployment of deceptions with minimal manpower required for both roll-out and daily operations.  As soon as attackers attempt to use any form of deceptive information, Illusive detects and alerts enterprise security teams and integrates real-time, contextual forensic data directly into the incident record, enabling rapid and informed incident analysis and response.

Tel Aviv’s Illusive Networks is a pioneer of deception technology, empowering security teams to take informed action against advanced, targeted cyberattacks by detecting and disrupting lateral movement toward critical business assets early in the attack life cycle.  Agentless and driven by intelligent automation, Illusive technology enables organizations to significantly increase proactive defense while adding almost no operational overhead.  Illusive’s Deceptions Everywhere approach was conceived by cybersecurity experts with decades of combined experience in cyber warfare and cyber intelligence.  (Illusive Networks 10.04)

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9.13  CyberArk Expands Managed Security Service Provider Offering

CyberArk unveiled an expanded offering for managed security service providers (MSSPs) that enables greater flexibility and the ability to easily add privileged access security capabilities to their portfolios.  The market-leading CyberArk Privileged Account Security Solution, which is also available as a multi-tenant offering, can expand market opportunities and create new revenue streams for global MSSPs.  Only CyberArk secures privileged accounts, credentials and secrets across cloud and DevOps environments and on the endpoint, enabling MSSPs to help their customers reduce the attack surface associated with digital transformation technologies.

Petah Tikva’s CyberArk is the global leader in privileged access security, a critical layer of IT security to protect data, infrastructure and assets across the enterprise, in the cloud and throughout the DevOps pipeline.  CyberArk delivers the industry’s most complete solution to reduce risk created by privileged credentials and secrets.  (CyberArk 12.04)

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9.14  WhiteSource Expands Its Open Source Security Solution for Containerized Applications

WhiteSource, the leader in open source security and license compliance management announced today a further enhancement of its support for containerized applications.  Supporting all versions of Windows and Linux operating systems, WhiteSource now expands its Docker container analysis tool to support full image scanning throughout all the image layers and packages within the image.  This new capability adds to the existing support for detecting open source vulnerabilities both in the container body and the installed software.  This new capability expands the visibility for software development and security teams on their containerized applications earlier in the Software Development Lifecycle. This is an important capability that becomes necessary for many organizations as they expand their usage of Docker and other container services.

Bnei Brak’s WhiteSource is the leader in continuous open source security and license compliance management.  Its vision is to empower businesses to develop better software by harnessing the power of open source. Industry leaders like Microsoft, IBM and hundreds more trust WhiteSource to secure and manage the open source components in their software.  The company has been recognized by Forrester as the best current offering in their Software Composition Analysis (SCA) Wave report in 2017.  (WhiteSource 12.04)

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9.15  empow Announces $10 Million Series B Funding

empow announced Ascent Venture Partners will be participating as a new investor in empow’s B-round of $10M, along with empow’s initial investors.  empow will use the funds to extend its leadership in next-generation SIEM and expand its global sales, marketing and finance operations in Boston – enabling it to introduce the transformative impact of the empow solution to more customers.

empow provides the first orchestration platform that uses AI and machine learning analytics to classify threats and alerts based on intent – identifies the most actionable ones – and then uses the existing security infrastructure to respond.  It is this ability that replaces conventional SIEM money pits with an ROI-positive platform.

Ramat Gan’s empow is a cybersecurity startup founded in October 2014 with the mission of helping organizations “make more of what they already have.”  Gartner recently recognized empow as a 2017 Cool Vendor in the Monitoring and Management of Threats category for its intent-based approach, and Forbes singled out empow’s technology as one of the few disruptive technologies at RSA in the “software-defined cybersecurity” arena.  empow’s solution is successfully deployed at large companies in Europe and the U.S.  (empow 12.04)

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9.16  Cameroon Telecom Deploys Friendly Technologies’ TR-069 Server

Friendly Technologies announced that Camtel, Cameroon’s national telecommunications and internet service provider, has chosen Friendly Technologies’ TR-069 ACS solution for remote management of the subscribers’ CPEs.  Camtel had been looking for a TR-069 device management solution that would improve its subscribers’ quality of experience and reduce operation costs.  The solution provided by Friendly Technologies automates the provisioning process of new subscribers’ devices, reducing call handling time to the call center, as well as simplifying the diagnostics and resolution of CPE related problems.  As part of the deployment, Camtel is adopting Friendly’s QoE Monitoring Module.  The module monitors quality of service at the subscribers’ endpoint, providing Camtel with valuable information about the quality of service provided to its subscribers, while consuming triple-play services.  An additional Friendly TR-069 module to be installed by Camtel is Friendly’s Self Support Portal, offering non-technical subscribers the ability to automatically diagnose problems and to resolve them with a click of a button.

Ramat Gan’s Friendly Technologies is a leading provider of carrier-class platforms for IoT, Smart Home, and TR-069 device management.  Friendly has been providing TR-069 device management solutions to carriers and service providers since 2007.  When IoT and the Smart Home first emerged, Friendly leveraged its experience and extended its offering to the IoT and Smart Home markets.  Today, Friendly provides a unified IoT platform for the management of LWM2M, MQTT, OMA-DM and TR-069 devices – and a full solution for the Smart Home.  Friendly’s platforms enable its customers to generate new revenue streams in the Smart Home and IoT markets, such as Utilities, Transportation, Smart cities and more.  (Friendly Technologies 16.04)

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9.17  GuardiCore Enables Secure Rapid Container Deployment

GuardiCore announced several new capabilities within the GuardiCore Centra Security Platform designed to help security architects visualize, segment, detect and remediate threats in containerized applications or workloads while maintaining development agility, application performance and scalability.

Leveraging its pedigree in data center and cloud security innovations, GuardiCore protects containerized applications, empowering DevSecOps teams with various critical capabilities without hindering speed or hampering creativity.  The GuardiCore Centra Security Platform secures the production and operational elements of containers by enabling IT security teams to see every container, pod and service, visualize their communication flows and secure them with micro-segmentation policies, while also detecting attacks and demonstrating compliance at scale in any infrastructure without any performance impact.

GuardiCore extends Centra’s real-time visibility capabilities to include containers, including the ability to fully incorporate container orchestration, metadata and the ability to leverage native pod labels.  Security and application development teams can view communication flows down to the process-level within pods and deploy granular micro-segmentation policies to protect and control communication flows against attacks and misconfigurations.  In addition, the platform provides the ability to detect threats within individual containers and, in the event a container is compromised, quarantine it and prevent the spread of the attack.  With these added capabilities, GuardiCore broadens its already extensive platform support to include Docker, OpenShift and Kubernetes containers, providing an integrated solution for all data center and cloud environments.

Tel Aviv’s GuardiCore is an innovator in data center and cloud security focused on delivering more accurate and effective ways to protect critical applications from compromise through unmatched visibility, micro-segmentation and real-time breach detection and response.  Developed by cyber security experts in their field, GuardiCore is changing the way organizations are fighting cyber-attacks.  (GuardiCore 17.04)

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9.18  JFrog Launches Xray 2.0 with High Availability to Bolster DevSecOps

JFrog is announcing Xray 2.0, to bring high-availability to the continuous security and open source license compliance market.  JFrog Xray provides DevOps engineers and developers with trust in their software releases.  Giving application development and release processes early visibility into potential problems, Xray enables organizations to trust their pipeline from development to deployment and production with confidence.  With the powerful integration with JFrog Artifactory, Xray is the only HA tool available in the DevOps domain that analyzes images and artifacts to ensure fast, reliable and secure software releases.

JFrog Xray allows integration and automation with an organization’s CI/CD pipeline.  With multilayer analysis of containers and software artifacts for vulnerabilities, license compliance, and quality assurance, Xray provides radical transparency and deep impact analysis.  Xray 2.0 continuously governs and audits all artifacts consumed and produced in the continuous delivery pipeline, offering a highly available security checkpoint that aligns with Artifactory HA solution and helps deploy artifacts to production with full resiliency.  With high availability, DevOps teams can easily upgrade and perform maintenance activities with no disruption to their CI/CD pipeline.

With more than 4,000 customers and over 2 billion downloads per month on its universal binaries hub, Netanya’s JFrog is the leading universal solution for the management and distribution of software binaries.  JFrog’s four products, JFrog Artifactory, the Universal Artifact Repository; JFrog Bintray, the Universal Distribution Platform; JFrog Mission Control, for Universal DevOps Flow Management; and JFrog Xray, Universal Component Analyzer, are used by Dev and DevOps engineers worldwide and are available as open-source, on premise and SaaS cloud solutions.  (JFrog 16.04)

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10:  ISRAEL ECONOMIC STATISTICS

10.1  Israel’s March CPI Rises by 0.3% While Housing Prices Fall

The Central Bureau of Statistics announced that the Consumer Price Index (CPI) rose by 0.3% in March.  Inflation over the past 12 months is 0.2%, well below the government target of between 1% and 3%.  Notable price rises in March were in footwear and fashion (4.9%) and notable falls were in fresh fruit and vegetables (3.2%).

The Central Bureau of Statistics also announced that the fall in Israel’s home prices continues, although more moderately than in recent months.  Home prices fell 0.2% in February 2018 after falling 1.1% and 0.7% in the preceding months.  (CBS 15.04)

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10.2  Israel’s Average Monthly Salary Rises to NIS 10,200

According to data announced by the Central Bureau of Statistics, the average gross monthly wage of a salaried worker in Israel in January was NIS 10,208 in current prices.  The findings stated that average wage per full-time job of a wage earner rose by an annualized 2.4% in current prices or 1.7% in fixed prices in November 2017-January 2018 (fixed prices exclude the effect of price increases or decreases).  Some 24,500 new wage-earners entered the labor force in January alone, a 0.6% rise.

Employees in the financial sector, including banking and insurance companies, enjoyed the steepest pay rises – an annualized 7.5% between November 2017 – January 2018, following a 10.1% increase in August – October 2017.  The increase is attributable to an increase in the minimum wage at most insurance companies and the automatic pay rises for bank workers.  The average gross monthly wage in financial companies in January was NIS 19,527, ahead of the NIS 17,638 average monthly wage at government companies.  The average gross monthly wage was NIS 10,160 in the governmental sector, in which 19% of all wage earners in Israel are employed and NIS 10,889 in the private sector, excluding the financial sector.  The number of jobs also rose in January, reaching 3.8 million. Jobs held by Israeli workers increased by 22,500, and jobs held by foreign workers by 2,000.  (CBS 08.04)

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10.3  Israel Leads Integration of Women in the Workforce

Israel is outpacing other developed countries in integrating women into its workforce, according to figures published recently by the International Monetary Fund and processed by Bank Leumi economists.  Comparing statistics from 2016 to 2008, when the global economic crisis struck, the rate of overall workforce participation in Israel increased by 1.3%, when in Germany and the Czech Republic the rate was slightly higher.  Additionally, the figures show an increased rate of women partaking in the workforce in most developed countries over that same time period, and a decreased rate of men in the workforce.

Israel showed the most significant increase of women in the workforce – around 3.2% – among developed countries, while leading countries such as Germany, Japan, Great Britain and France registered a lower rate of women joining the workforce.  Other developed countries, such as the United States, showed a negative rate of women in the workforce.  (IMF 12.04)

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11:  IN DEPTH

11.1  ISRAEL:  Fitch Affirms Israel at ‘A+’; Outlook Stable

On 17 April, Fitch Ratings affirmed Israel’s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at ‘A+’ with a Stable Outlook.

Key Rating Drivers

Israel’s IDRs balance strong external finances, robust macroeconomic performance and solid institutional strength against a government debt/GDP ratio that is high relative to peers and ongoing political and security risks.

Israel’s public finances, despite a trend of improvement, remain a weakness relative to ‘A’ category sovereigns.  The central government budget deficit remained small, at 2% of GDP in 2017, outperforming the deficit ceiling of 2.9%.  This was the fifth consecutive year when the deficit has been smaller than planned.  Government debt/GDP fell again in 2017, to 60.9%, down from 75.0% at end-2007 and 95.0% at end-2003.  Nevertheless, this remains significantly higher than the ‘A’ median of 47% in 2017 and the ‘AA’ median of 42%.  The general government budget deficit and interest spending/revenue are also weaker than the peer medians.

Other features of public debt are fairly favorable.  The share of external debt is low, at 8.4% of GDP in 2017 down from 20% of GDP in 2006.  Israel benefits from high financing flexibility. It has deep and liquid local markets, good access to international capital markets, an active diaspora bond program and US government guarantees in the event of market disruption.

While fiscal policy continues to emphasize the improving government debt/GDP ratio and falling debt service burden, recent budget planning has been somewhat pro-cyclical and has sought to respond to long-standing public complaints regarding the cost of living.  There is also more discussion of tolerating a moderate increase in the debt ratio in order to boost investment in infrastructure and education.  We forecast that the government debt/GDP ratio will edge down further in 2018, but start to increase in 2019 on the basis of a wider deficit.

We forecast the central government budget deficit to widen to 2.8% of GDP in 2018 and to 3.0% of GDP in 2019, broadly in line with the government’s budget plans.  Expenditure is likely to be fully executed again in 2018, while in the first quarter revenue was on target.  There is the potential for revenue to outperform, as in 2015-17, given momentum in the economy, the tight labor market and the possibility of other unplanned revenues arising.  There is also a risk of further tax cuts being implemented if revenue were to over-perform, given that political parties have an eye on the next election due by November 2019.  The finance minister in recent weeks has spoken of the possibility of further tax cuts.

Israel passed the budget for 2019 in mid-March, earlier than normal due to political considerations.  The budget revised the deficit ceiling for 2019 to 2.9% of GDP from 2.5% of GDP in the previous multiyear budget plan.  The budget assumes a 5% increase in revenue over the updated 2018 budget, slightly stronger than our forecast for overall nominal GDP growth in 2019.  Spending is planned to grow by 5.6%.  This includes sizeable increases for education and other social spending, as well as for defense and for infrastructure.

Israel’s macroeconomic performance has been impressive and the economy remained buoyant in 2017, with real GDP growth of 3.3%, record low unemployment, rising wage growth and yet low inflation.  Five-year average real GDP growth is stronger than rating category peers and growth volatility has been lower.

We forecast that growth will remain strong in 2018-19, albeit slowing to 3% per year.  There are a number of upside risks, for example related to the ramping up of production at the expanded Intel factory and the development of the Leviathan gas field.  The downside risks relate to any downturn in world trade, problems in the housing market or an intensification of security issues.  More generally, the economy has benefited from supportive fiscal and monetary policies and a stronger global economy.  These three factors are unlikely to all remain as supportive over the medium term.

Inflation returned to positive territory in 2017, averaging 0.2%, pushed up by higher rents and commodity prices, following negative inflation in 2015/6.  At the latest reading in March 2018, inflation was again 0.2% y-o-y.  Appreciation of the shekel, government measures to reduce the cost of living and increasing competition have prevented stronger inflation emerging.  Net of government measures, end-year inflation was higher, at 0.7%. In this context, the BOI has maintained its policy rate of 0.1%, where it has been since 2015.

Israel’s external balance sheet remains strong.  Israel has returned annual current account surpluses each year since 2003, underpinned by rapid expansion of services exports (related to the high-tech sector) and the start of gas production.  Fitch forecasts current account surpluses to persist in 2018-19, albeit at lower levels, averaging 2.6% of GDP.  There has been further accumulation of foreign exchange reserves, which reached $116 billion in March 2018 (about a year of current external payments).

Israel’s net external creditor position improved to 51.3% in 2017, up from 35.1% in 2014 and 23.0% in 2008.  This is significantly stronger than the ‘A’ median score and is also stronger than the ‘AA’ median. Fitch’s international liquidity ratio for Israel has continued to improve strongly.  Further gas sector development will lend additional support to the external balance sheet, with production from the offshore Leviathan gas field planned to start in 2020.

Israel’s ratings will continue to be constrained by political and security risks, but its credit profile has shown resilience to periodic conflict and political shocks over an extended timeframe.  Conflicts with military groups in surrounding countries and territories flare up intermittently and can lead to increased spending commitments or be damaging to economic activity (despite Israel’s improved defense capabilities).  Domestic politics can be turbulent, with coalition governments often not lasting their full term.  Prime Minister Netanyahu, remains under pressure over a number of ongoing police investigations.

The conflict in Syria remains an intractable geopolitical puzzle and presents increasing risks to Israel.  Israel is concerned by the influence of Iran in neighboring Syria and Lebanon.  Israel’s interventions in Syria have increased in recent months, with repeated and extensive air strikes to counter the presence and activities of Iran or Iranian proxies.  There is also a persistent risk of another conflict with Hezbollah, although there has not been a clash since 2006 and both sides would suffer losses.  There has been no progress towards peace between Israel and the Palestinians.  Fitch believes prospects for a realistic peace process remain bleak.

Israel’s well-developed institutions and education system have led to a diverse and advanced economy.  Human development and GDP per capita are above the peer medians, and the business environment promotes innovation, particularly among the high-tech sector.  However, Doing Business indicators, as measured by the World Bank, have slipped below peers.  The government also faces socio-economic challenges in terms of income inequality and integration of growing but less economically productive sections of the population into the labor force.

Rating Sensitivities

The main factors that could, individually or collectively, lead to positive rating action are:

– Significant further progress in reducing the government debt/GDP ratio.

– Sustained easing in political and security risks.

The main factors that could, individually or collectively, lead to negative rating action are:

– Sustained deterioration of the government debt/GDP ratio, either through widening fiscal deficits or a structural decline in GDP growth.

– Serious worsening of political and security risks.

– Worsening of Israel’s external finances, for example, due to a loss of export competitiveness.

Key Assumptions

Fitch assumes regional conflicts and tensions will continue.  The tolerance of the rating depends on the economic and fiscal implications of any conflict.  Fitch does not assume any breakthrough in the peace process with the Palestinians or a prolonged serious deterioration in domestic security conditions.  (Fitch Ratings 17.04)

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11.2  ISRAEL:  Israel’s Global Cannabis Dominance Will Help the U.S.

Hilary Bricken posted in Above The Law on 2 April that researchers in the U.S. are eager to run trials with high quality Israeli cannabis strains they cannot get anywhere else.

The strongest, most influential medical cannabis economy in the world is not where most would think.  Cue Israel, which is an agricultural superpower already and has a great green thumb for cannabis cultivation.  Why?  Mainly because Israel is leading the globe when it comes to legitimate cannabis research on medical applications for serious illnesses.  While the U.S. dabbles with adult-use cannabis markets and state specific medical cannabis enclaves, it seriously lags when it comes to cannabis research and data, especially on the medical side.  Israel, on the other hand, is leading the way in high-level studying of cannabis and its medical effects.  This has led to a large amount of foreign investment into Israeli cannabis companies and research labs, and it’s also led to Israeli cannabis companies and labs bringing their talent, knowledge, and data to the U.S. — typically via intellectual property licensing agreements and joint ventures.

Israel’s relationship with medical cannabis goes way back.  The country first allowed patients with qualifying conditions to use cannabis in the early 90s.  According to Wikipedia, “there are eight government-sanctioned cannabis growing operations in Israel, which distribute it for medical purposes to patients who have a license from the Ministry of Health and a prescription from an authorized doctor, via either a company’s store, or in a medical center.”  Perhaps most importantly, Israel does not have the same federal law prohibitions that are in the United States.  Israel’s prescient willingness to allow for medical cannabis and medical cannabis research has opened the doors to allow top scientists there to conduct research without the mountains of federal agency red tape or political blowback that comes with cannabis research here.

The Israelis are also pretty fearless about their medical cannabis know-how and getting their products to consumers in other countries.  In early 2017, after a joint committee of Israel’s health and finance ministries recommended allowing exports of medical marijuana based on predictions that such exports would likely bring in as much as $4 billion in yearly revenue, Israel moved to authorize the export of medical marijuana.  Though Israeli Prime Minister Benjamin Netanyahu suspended this reform earlier this year (pending additional reviews and economic feasibility studies of the new laws), the country’s health, finance and agricultural ministries are determined to ensure medical marijuana exports are eventually permitted.

If, as expected, Israel goes through with allowing cannabis exports, access to Israeli medical marijuana strains would be a huge boon for U.S. cannabis researchers.  For years, the only cannabis our country’s marijuana researchers can use has been controlled by the National Institute on Drug Abuse at a licensed facility at the University of Mississippi.  This has been a problem because NIDA’s Mississippi marijuana is widely viewed to be of inferior quality (would you expect the U.S. government to grow the good stuff?), and many research projects have ground to a halt because the NIDA facility simply didn’t have the type of marijuana needed.  In August of 2017, the DEA announced a new policy that would potentially expand the list of permitted facilities for cultivating cannabis for research, but at the same time used the Single Convention on Narcotics to provide it some cover for continuing to limit cannabis growing for research.  The primary limitation for those permitted by the DEA to cultivate marijuana is that they must first receive written permission from the DEA each time they distribute marijuana.

The DEA continues with these limitations for a number of reasons, but its best arguments are based on the U.S.’s obligations under Articles 23 and 28 of the Single Convention.  These provisions require countries that allow cannabis cultivation for research purposes to ensure their research marijuana is not diverted to the illegal market.  This is only a problem for the DEA when the cultivation is in the United States, though.  If the DEA licenses importers, only a limited quantity of marijuana comes into the United States, and protection against diversion from the grow operation is ultimately the problem of the exporting country.

This helps explain why the DEA sometimes authorizes importing cannabis. In December 2015, it granted a Missouri company registration to import “finished pharmaceutical products containing cannabis extracts in dosage form for clinical trial studies.”

Israel’s medical marijuana cultivators have a strong reputation around the world and researchers in the US are eager to run trials with high quality Israeli cannabis strains they cannot get anywhere else.  So don’t be surprised when U.S. cannabis researchers start applying to the DEA for import permits and start getting their medical-grade cannabis from Israel.

Hilary Bricken is an attorney at Harris Bricken, PLLC in Los Angeles and she chairs the firm’s Canna Law Group. Her practice consists of representing marijuana businesses of all sizes in multiple states on matters relating to licensing, corporate formation and contracts, commercial litigation, and intellectual property.  Named one of the 100 most influential people in the cannabis industry in 2014, Hilary is also lead editor of the Canna Law Blog.  (Above The Law 02.04)

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11.3  JORDAN:  Jordan & Turkey Mending Fences Over Trade Agreement Dispute

Pinar Tremblay wrote in Al-Monitor on 3 April that during a time of shifting alliances, Ankara views Jordan as an important potential ally — which no doubt has been a factor in Turkey’s decision to renegotiate a free trade pact that Amman says favors Turkey.

Jordan said on 1 April that it will reconsider its decision to suspend its free trade agreement with Turkey if Ankara agrees to specific conditions.  The agreement has been in effect since early 2011.

Last month, Jordan announced it would suspend what it termed a lopsided free trade agreement beginning in September unless the two sides can iron out their differences.  The Jordanian Ministry of Industry, Trade and Supply said the decision was necessary to “avoid further negative effects on the Jordanian industrial sector in light of unequal competition.”

A senior Turkish diplomat told Al-Monitor, “There are three areas that we are working on: evening out the balance of trade between the two countries, increasing the extent of Turkish investments in Jordan and simplifying the rules of the free trade agreement.”

Turkey has said in the past that it is willing to consider those very proposals, officials in Ankara said.  There is good reason to be hopeful, as Jafar Hassan, the Jordanian deputy prime minister and state minister for economic affairs, met 20 March with Turkish members of the Jordanian-Turkish Business Council to discuss further investment opportunities in Jordan.  Ankara said then it was optimistic that the terms can be renegotiated.

According to data from the Ministry of Economy, Turkey’s exports to Jordan in 2016 stood at $710 million and Jordanian exports to Turkey at $102 million.  Jordan also has strong trade imbalances with other countries; in addition, Turkey is not among Jordan’s top five trade partners.  Jordan has repeatedly warned Turkey about the trade imbalance.

The countries became closer after the controversial decision late last year by the United States to support Israel’s claim on Jerusalem as its capital and to relocate the US Embassy there from Tel Aviv.  Given the wars in Syria and Iraq, the increasing number of refugees in the region and Turkey’s deep fears of isolation, Jordan and Turkey have also found other ways to boost relations.  For example, they announced on 21 February that they had signed a military cooperation agreement.

Al-Monitor reported on 27 February that Turkey had agreed to “exempt 500 Jordanian goods from customs duties” following several high-level visits between the two countries.  However, Ankara still faces four main challenges involving renegotiating the free trade agreement with Jordan.

-First is Turkey’s conflict with Gulf countries. Saudi Arabia and the United Arab Emirates (UAE) have not been pleased with Turkey’s support of Qatar, and also have influence over Jordan. In reaction to President Donald’s Trump decision on Jerusalem, Turkish President Erdogan called for an emergency meeting of the Organization of Islamic Cooperation, where member states condemned the US action in December.  The Jordanian king was present, but Saudi Arabia and other Gulf countries, along with Egypt, sent no high-level representatives.  The Saudi-led Gulf alliance has been on rather good terms with the Trump administration.  Because Jordan feels badly bruised by the United States over the Jerusalem decision, even while signing a five-year memorandum of understanding in February, Jordan has been inching toward Turkey; however, analysts say the Saudi bloc does not want to allow this.  Shortly after the summit, Turkey and the United Arab Emirates (UAE) argued publicly about what the latter says is Turkey’s desire to revive the Ottoman legacy on the Arabian Peninsula.  Since then, the Turkish press has not missed an opportunity to emphasize anti-Turkish sentiments emanating from the UAE, such as the call from the Emiratis for the Saudis and Egyptians to unite against Turkey and Iran, or for the UAE and Egypt to support the Kurdistan Workers Party (PKK), which Turkey considers a terrorist group.  Turkey has incessantly criticized the US backing of the People’s Protection Units, which is considered the PKK’s extension in northern Syria.

-The second obstacle is the struggle to establish a balance against predominantly Shiite Iran. The more Arab countries snub Turkey, the more Turkey is led to cooperate with Iran, and given the difficulties Turkish-Iranian relations face on multiple fronts (for example, the Syrian civil war and Iran’s expanding influence there), an alliance with Jordan could prove attractive for Ankara. Musa Ozugurlu, a seasoned journalist specializing in Middle Eastern politics, told Al-Monitor, “Trump’s decision to favor Saudi Arabia, and all the problems Turkey is going through with the United States, makes life rather challenging for Ankara.  Turkey under Erdogan’s leadership — calling for Sunni unity and leadership of the Muslim world — is a source of serious rivalry.”  On 7 March, Saudi Crown Prince Mohammed bin Salman called Turkey, along with Iran and Islamic radicals, the “triangle of evil.”

-The third hurdle is rivalry for influence in Arab countries and Africa. Saudi Arabia’s desire to be the unquestioned leader of the Sunni Arab world means that the loyalties of a small yet crucial kingdom such as Jordan are coveted. The Syrian, Iraqi and Yemeni wars, continuous unrest in many parts of the Middle East and Africa, the region’s masses of young people and an increasing availability of guns have all generated a competition for influence.  In 2009, Turkey dreamed of establishing a visa-free area between it and Syria, Lebanon and Jordan, later to include Iran and Iraq.  While that dream ended, there is now stiff rivalry when it comes to arms sales to and control of militias.  At the end of December, Turkey acquired a 99 year lease from Sudan for Suakin Island, increasing Turkey’s presence in the Red Sea.  This move has unnerved the countries that identify themselves as “the Arab Anti-Terror Quartet” (Egypt, Saudi Arabia, the UAE and Bahrain).  Turkey’s relations with African nations are flourishing. Not everyone is happy about such developments and this could cause problems for Turkish-Jordanian relations.

-The fourth challenge is financial. Turkey wants Jordanian markets but faces roadblocks posed by Gulf countries. Since March 2016, Turkey and Jordan have been trying to plan, without success, a maritime route between Turkish ports (Iskenderun) and Jordan’s port of Aqaba to reach out to Gulf markets.  Yet without political compromises, economic cooperation does not seem sustainable in the region.  Turkish Airlines restarted direct flights on 19 March between Istanbul and Aqaba.  Intriguingly, also in March, the Saudi crown prince was in Cairo discussing the proposed multibillion-dollar King Salman Bridge to link Egypt and Saudi Arabia through the entrance of the Gulf of Aqaba; some see this as a reaction to the Aqaba flights and the maritime route project.  During his visit on 12 March to Amman, the UAE foreign minister reportedly promised to help Jordan with its various economic challenges and establish stronger regional ties.  Turkey believes these developments are behind Jordan’s suspension of the free trade agreement. Jordanian businesspeople and analysts concur that the UAE and Saudi Arabia had a hand in the suspension decision.

The threat to suspend the Jordanian-Turkish free trade agreement shows how precarious agreements are in the region. Even when all seems to be in order, a crucial part of a relationship may collapse.  The development also highlights that Turkey desperately needs to diversify its opportunities in foreign policy.  Repeated mistakes and costly failures have significantly limited Turkish foreign policy options in the past.  In the past decade, Turkey’s ambitions and rhetoric have not matched its capabilities and achievements.  Yet in regard to the free trade agreement with Jordan, Ankara is not only determined but also well-organized. If Turkey can overcome the obstacles outlined, a free trade agreement revision would indeed be a win for Ankara.

Pinar Tremblay is a columnist for Al-Monitor’s Turkey Pulse and a visiting scholar of political science at California State Polytechnic University, Pomona. She is a columnist for Turkish news outlet T24.  Her articles have appeared in Time, New America, Hurriyet Daily News, Today’s Zaman, Star and Salom.  (Al-Monitor 02.04)

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11.4  BAHRAIN:  Bahrain Enters the Oil Big League

Simon Henderson posted in the TWI Policy Alert on 4 April that the kingdom’s discovery of a huge new oil field could change the economic and political fortunes of a key Gulf ally.

On 1 April, Bahrain announced a major oil find in its shallow western waters, apparently south of the causeway joining the kingdom with Saudi Arabia.  Although oil was first discovered on the island in 1932, this is the first time it has approached the quantities seen in Saudi Arabia, Iran, Iraq and Kuwait, all of which have reserves over 100 billion barrels.  If Manama’s announced figure of 80 billion barrels can be confirmed as proved reserves (i.e., capable of being recovered under existing economic and operating conditions), then its total reserves will be close to those of the United Arab Emirates, which has 97 billion barrels.

Flanked by representatives of international energy consultants, Oil Minister Muhammad bin Khalifa al-Khalifa told a news conference on 4 April that the discovery consisted of “tight oil” and “deep gas.”  This indicates that production will be more difficult and costly than other fields in the Persian Gulf region.  But the new field’s proximity to Bahrain’s existing oil and natural gas infrastructure “provides potential for significant cost optimization,” according to oil consultant Halliburton.  Some drilling has already taken place, and an agreement has been reached for two further appraisal wells this year.  Officials said the field could be “on production” within five years.

Bahrain’s current oil production stems from the Awali field in the center of the island.  A refinery in the east coast town of Sitra also processes oil from Saudi Arabia’s offshore Abu Safa field; revenues from that field are divided between the two countries, providing key economic support to Bahrain.  Current gas production fuels all of the island’s power plants, and the new finding could address the shortage of gas needed for other purposes, perhaps allowing Manama to shelve proposed plans for importing liquefied natural gas.

More broadly, if the discovery proves to be as sizable as hoped, it will change the fortunes of a country with the smallest economy in the Gulf Cooperation Council.  In financial terms, it could alter the perceptions of foreign bankers, who often regard the island as a mere appendage of Saudi Arabia.

Given the geopolitical stakes, however, it is unclear whether the discovery will affect Riyadh’s outsize political influence on Manama.  In 2011, for example, the Saudi Arabian National Guard sent troops and tanks across the causeway to reinforce Bahraini security forces coping with wide-scale disturbances.  Today, both governments remain worried about Iranian-instigated subversion by the island’s majority Shia population, who feel politically and economically marginalized.  Just last year, the pipeline carrying Saudi oil to Sitra was blown up in a significant escalation of the background unrest.

As for U.S. policy, the new discovery is unlikely to affect Washington’s excellent relations with Bahrain or the fact that the Fifth Fleet is headquartered there.  Concerns persist about the island’s human rights record, but the overt tension that damaged Manama’s ties with the Obama administration has faded.  King Hamad bin Isa al-Khalifa has promised elections for later this year and articulated a vision of friendliness to all religions – a strategy that led to a Bahraini civil-society delegation visiting Israel in 2017 despite the lack of official relations.  With the possibility of a huge increase in oil revenues, Bahrain could become a fairer society internally, and a much more significant player externally.

Simon Henderson is the Baker Fellow and director of the Gulf and Energy Policy Program at The Washington Institute.  (TWI 04.04)

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11.5  SAUDI ARABIA:  Saudi Arabia ‘A-/A-2’ Ratings Affirmed; Outlook Remains Stable

On 6 April 2018, S&P Global Ratings affirmed its ‘A-/A-2’ unsolicited long- and short-term foreign and local currency sovereign credit ratings on Saudi Arabia.  The outlook is stable.

Outlook

The stable outlook is based on our expectation that economic growth will accelerate moderately in 2018, supported by rising government investment.  At the same time, we expect that the Saudi authorities will continue to take steps to consolidate public finances over the next two years, while maintaining Saudi Arabia’s formidable stocks of liquid external assets.

We could lower our ratings if we observed a reversal in the trend of fiscal consolidation, or a sharp deterioration of the sovereign’s external position.  An unexpected materialization of contingent liabilities or a build-up of arrears could also place additional pressure on expenditures.  The ratings could also come under pressure if we observed a significant increase in domestic or regional political instability, which, in our view, would have fiscal consequences.

We could raise the ratings if Saudi Arabia’s economic growth prospects improved markedly beyond our current assumptions.

Rationale

The ratings on Saudi Arabia are supported by its strong external and fiscal stock positions, which we expect it will maintain despite large central government deficits.  The ratings are constrained by limited public-sector transparency and limited monetary policy flexibility.

While decision-making structures are centralized and, in our view, relatively opaque, we do not expect any major deviation from the stated domestic policy course of fiscal consolidation, economic diversification, and gradual socioeconomic liberalization.  We understand that authorities are concerned by the notable decline in net direct investment inflows since 2013.  In this regard, we also understand that authorities are focused on creating incentives for foreign investment in Saudi’s non-commodity sector.

Institutional and Economic Profile: An era of change brings both risks and opportunities

-Saudi Arabia has articulated an ambitious strategy to reduce the economy’s dependency on oil and on imported labor, to transform the domestic education and job market, and to consolidate the budget.

-Increasingly centralized decision-making could lead to more uncertain policy implementation, but we don’t expect any major deviation from the stated policy course.

-Saudi’s succession process is largely untested.

We expect that the key parameters of Saudi’s institutional framework will remain steady through the 2018-2021 forecast period.  Saudi Arabia will partly fund its ambitious economic reform program using the large fiscal and external buffers that it amassed during the pre-2015 era of twin balance of payments and budgetary surpluses.  The government is implementing a series of reforms that include social measures that aim to increase labor participation (particularly female), to improve educational attainment, and to raise the private sector’s role in the economy, while achieving a balanced budget by 2023 (previously 2020).  While the country’s decision-making process remains highly centralized, we do not expect any major deviation from the goal to broaden the economy beyond its traditional reliance on hydrocarbons.  What we consider more complicated to predict is whether the government’s other two objectives – to attract more foreign investment and to reduce reliance on foreign expertise including foreign labor – will succeed.

The authorities have decided to push back the target to balance the general government budget from 2020 to 2023.  This reflects the decision to increase public investment under a four-year stimulus plan aimed at stabilizing private-sector demand, even as the government moves on other fiscal consolidation measures, such as energy tariff hikes.  Overall, we think there are grounds to project a gradual economic recovery, following last year’s contraction.  Nevertheless, given that oil production makes up a significant portion of Saudi GDP, forecasting growth in Saudi Arabia continues to be highly sensitive to assumptions of OPEC production targets, not least because Saudi Arabia maintains the world’s largest installed crude oil production capacity at around 12 million barrels per day, and is the key marginal producer.  Our GDP per capita estimate is just shy of $22,000 in 2018, and we expect that, on a trend basis, growth will remain somewhat below peers’.

Long-standing tensions with Iran have increased following Saudi Arabia’s interception of a ballistic missile close to the city of Riyadh, believed to have been fired by Iranian-aligned Yemeni rebels.  Saudi Arabia’s war in Yemen – apart from the related loss of life – contributes to military and security services being the single largest spending item, at about 30% of total government expenditures.  We do not expect any of these foreign policy challenges to significantly impact the domestic economy.  Rather, we believe that they add to the government’s already heavy policy program, which could weaken its commitment to its fiscal adjustment plans.

Flexibility and Performance Profile: Strong external and fiscal positions from a stock perspective

-Despite the country’s rising fiscal expenditures, we expect continued consolidation as oil prices increase in 2018 and as other revenue-raising items come online.

-We forecast a continued current account surplus, but surpluses are likely to moderate in line with our oil price assumptions.

-Monetary policy effectiveness is limited by the fixed exchange rate, which requires Saudi Arabia to track movements in the U.S. federal funds rate, even when they may not be appropriate for Saudi Arabian economic conditions.

We expect continued fiscal consolidation through 2021, though at a slower pace than in 2017, which was boosted by higher oil prices.  We expect that oil prices will be supportive and offset planned expenditure increases in 2018, as will revenue-boosting measures linked to electricity tariff revisions and the introduction of a 5% value-added tax, which came into effect at the start of 2018.  Still, the pace of fiscal consolidation will be deliberate.  On the expenditure side, the 2018 budget is about 8% higher than last year in nominal terms.  We expect actual performance to be in line with the budget as was the case in 2017.  In addition to the budget, we understand that a separate plan focusing on domestic capital expenditure will be implemented by the Public Investment Fund and the National Development Fund in 2018, with expenditures totaling some 5% of GDP.  Compared with most rated sovereigns, the Saudi authorities spend far more on investment, and this could raise growth potential toward the end of our ratings horizon.

In the medium term, we partly base our more conservative view of the government’s fiscal consolidation prospects (versus our last review) on our oil price assumptions, which decline to $55 per barrel in 2019 (from $60 in 2018) and remain flat through 2021.  We also base our view on the government’s decision to push its balanced budget target date to 2023 from 2020.  We factor in our expectation that Saudi Arabia’s oil production will remain at around current levels of 10 million barrels per day (bpd) in 2018, in line with OPEC’s decision in late 2016.  We expect a very gradual increase in production from 2019.

We forecast an average annual increase of net general government debt of about3% of GDP over 2018-2021 (this is our preferred fiscal metric because in most cases it is more comprehensive than the reported headline deficit), and we expect that the pace of net debt growth will slow over the forecast horizon.  In Saudi Arabia’s case, the change in net general government debt is lower than the central government deficit, because we have assumed that the deficit is financed 30% by asset draw-downs and 70% by debt issuance.  This split implies that Saudi Arabia would report gross liquid financial assets of about 90% of GDP by 2021.  These fiscal assets include the central government’s deposits and reserves on the liabilities side of the balance sheet of the Saudi Arabia Monetary Authority, government institutions’ deposits, and an estimate of investment income. We also include in our calculation an estimate of government pension funds’ liquid assets.

We acknowledge both upside potential and downside risk to these forecasts.  Upside potential stems principally from oil prices.  The downside rests with the scale of the required fiscal consolidation and the broader impact it will have on the economy.

Our general government balance consolidates the central government and the social security system.  It also includes our estimate of investment income from sovereign wealth fund assets, which largely accounts for the difference between our central government and general government deficit projections.

Although Saudi Arabia’s fiscal profile has weakened on a flow basis in recent years, we believe it has remained strong on a stock basis.  We expect net general government assets (the excess of liquid fiscal financial assets over government debt) to remain at about 100% of GDP in 2018, but to fall closer to 90% by 2021.

We continue to view Saudi Arabia’s external position as a strength.  We expect that Saudi Arabia’s liquid external assets, net of external debt, will average about 180% of current account payments over 2018-2021.  Gross external financing needs are about 43% of the sum of usable reserves and current account receipts over the same period, suggesting ample external liquidity.  That said, usable reserves continue to decline, largely due to fiscal deficit financing.  We expect them to reach about $400 billion at end-2018, compared with $536 billion at end-2015.  Our calculation of usable reserves subtracts the monetary base from gross foreign currency reserves for sovereigns that have a long-standing fixed peg with another currency (because the reserve coverage of the base is critical to maintaining confidence in the exchange-rate link).

Given the Saudi riyal’s peg to the U.S. dollar, we view monetary policy flexibility as limited.  The long-standing currency peg helps to anchor the population’s inflation expectations, but binds Saudi Arabia’s monetary policy to that of the U.S. Federal Reserve.  We expect that the peg will be maintained.  (S&P 06.04)

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11.6  MOROCCO:  Morocco ‘BBB-/A-3’ Ratings Affirmed; Outlook Stable

On 6 April 2018, S&P Global Ratings affirmed its ‘BBB-/A-3’ long- and short-term foreign and local currency sovereign credit ratings on Morocco.  The outlook remains stable.

Outlook

The outlook is stable, balancing our expectation of further fiscal consolidation and gradual improvement in the current account position over the next two years, against risks to economic growth performance emanating from domestic structural shortcomings or external economic shocks, for example, due to a slowdown in world trade.

We could raise the rating if the ongoing transition toward a more-flexible exchange rate regime that targets inflation significantly bolsters Morocco’s external competitiveness and ability to withstand macroeconomic external shocks; and if the ongoing economic diversification strategy results in less volatile and more inclusive economic growth and improves GDP per capita significantly above our current expectations.

Conversely, we could lower the rating if the government deviates from the current fiscal consolidation plan, resulting in a substantial increase in government debt levels compared with our forecast; if real GDP growth rates significantly undershoot our expectations; or if external imbalances widen, resulting in a substantial increase in the economy’s gross financing needs.

Rationale

The rating on Morocco are supported by a track record of manageable fiscal deficits; ongoing fiscal consolidation; moderate government debt levels; and narrowing current account deficits, amid relatively stable policymaking.  The rating remains constrained by a relatively low level of GDP per capita compared with similarly rated sovereigns, significant economic reliance on agriculture, and high social needs.

Institutional and Economic Profile: Economic diversification ongoing

-Morocco’s GDP per capita remains one of the lowest of sovereigns rated in the ‘BBB’ category.

-We forecast real GDP growth will average close to 4% in 2018-2021, assuming the current policy direction is sustained over the projection horizon, while the external and domestic business environment remains broadly supportive of growth momentum.

-However, economic growth remains vulnerable to the volatility of agricultural output and excludes parts of the Moroccan population.

We expect real GDP growth in Morocco to decelerate somewhat in 2018, to about 3.1% from 4.6% in 2017.  2017’s growth benefitted from comparison with the relatively weak 2016 figures and stemmed from a favorable climate and a strong harvest that is unlikely to be outperformed this year.  Nonagricultural output will continue to expand moderately, in line with the past trend.  The main sources of growth are the expanding automotive and tourism sectors, combined with additional demand for phosphates and their derivatives.  We forecast real GDP growth will average close to 4% in 2018-2021, assuming the agricultural sector keeps getting more resilient, and that the business environment and external demand will remain broadly supportive of a gradual pick-up in nonagricultural output.  Unless Morocco suffers external economic shocks, for example, due to the heightened risk of global protectionism, we believe that the expansion of its export capacity and its rise up the value-added ladder will contribute positively to economic growth over our projection horizon.

The government aims to reduce the vulnerability of the Moroccan economy to weather by investing into more efficient technologies in the agricultural sector via the Green Morocco Plan.  The Moroccan authorities are also putting significant effort into industrializing the economy.  We expect Morocco to diversify its economy further by continuing to develop its automotive, aeronautics, electronics and renewable energy sectors.  Morocco has built comprehensive industry-specific clusters to develop its emerging automotive industry.  It has successfully attracted a number of foreign car manufacturers, first from France and most recently from China.  In addition, Boeing announced its intention to establish a new industrial hub in the country in September 2016 and the Chinese group HAITE invested $1 billion in a new industrial city in March 2017.  Together, car manufacturing and aeronautics-related exports accounted for almost 30% of total goods exports in 2017, compared with 13% in 2007.  We expect the industrialization plan, which enjoys broad political support, to attract further foreign direct investment, helping Morocco enhance its economic diversification and the resilience of its economic growth.

That said, in our view, the country’s significant development potential may materialize only slowly, unless the government makes progress in removing the structural impediments affecting the country’s economy, such as administrative hurdles.  Moreover, in our view, corporate sector activity would benefit from measures that would reduce the accumulation of arrears among corporate sector firms to improve their liquidity position.  The government has contributed to this by putting forward measures aimed at simplifying the existing taxation framework, including with respect to the VAT system.  If these weaknesses are tackled, it could support the country’s economic growth potential.

Further steps in reducing the economy’s dependence on external sources of energy is positive and the ongoing initiative to raise the share of domestically generated renewable energy in total energy consumption would support a further reduction in current account imbalances.  Moreover, several gas field exploration projects have been promoted.  Even though they are unlikely to come on stream over the projection horizon, if successful, they could further reduce Morocco’s energy imports.

In our view, Morocco has largely demonstrated political and social stability, especially in the context of the Arab Spring.  It has achieved this through constitutional reforms a rise in spending by the government aimed at economic development and reducing economic inequality in less developed regions and broad support for King Mohammed VI.  The king chairs the Council of Ministers, which deliberates on strategic laws and state policy orientations.  The king’s importance in policymaking was further emphasized during 2017 as he actively intervened in tackling the rise in social tensions in the regions of Rif and Jerada.  Although ethnic, tribal, religious, and regional divisions are less pronounced in Morocco than in much of the Middle East and North Africa, there are growing demands from some parts of the population for more inclusive economic growth.  In our view, this partly stems from the high level of youth unemployment and the income disparities between more and less developed parts of the country.  The government has expressed its willingness to accelerate the implementation of regional development programs to improve disparities.

Flexibility and Performance Profile: Budgetary consolidation remains on track

-We expect fiscal consolidation to continue, causing government debt-to-GDP levels to stabilize.

-Stronger export performance should enable a reduction in the current account deficit, but external liabilities will remain large.

-We anticipate that the authorities will gradually move toward a more flexible exchange rate regime over the medium term.

The government met its 2017 budget deficit target of 3.5% of GDP.  We now expect it to pursue further budgetary consolidation in 2018 and successfully bring the budget deficit down to 3.2% of GDP.  The government’s 2018 deficit target of 3% of GDP is attainable, in our view; the difference between our forecast and the government’s budget target stems from our lower economic growth forecast. As such, we expect revenue performance to remain strong and for the appropriate spending controls to be maintained.  The authorities have recently implemented a set of deficit-reducing reforms.  They cut subsidies substantially, reformed the pension system, and contained the growth in current spending.  These reforms reduced the deficit and eased long-term pressures on public finances, which were able to absorb the negative impact of lower grants from the Gulf Cooperation Council.  The reduced grants will continue to weigh on revenues and it will be tough to make further spending cuts.  Morocco provides socially sensitive subsidies on basic goods (flour, sugar and butane gas) and faces an expected increase in capital spending given its large investment projects.

We forecast that the projected fiscal consolidation will help government debt-to-GDP ratios stabilize over the medium term.  We expect net general government debt to average about 51% of GDP during 2018-2021 (net general government debt excludes from gross debt the government’s liquid assets and the holdings of central government debt by other branches of state, such as public pension funds).  The general government debt stock has risen significantly over the past eight years (it amounted to 32% at year-end 2010, before the Arab Spring) due to consistent and sizable budget deficits.  The government’s debt profile appears favorable: at year-end 2017, the average life on outstanding debt stood at six years and nine months and the average cost of debt was 4%.

The Moroccan dirham (MAD) is currently pegged to a currency basket comprising 60% euros and 40% dollars. The foreign exchange peg regime limits monetary policy flexibility, in our view.  In January 2018, the Moroccan authorities and the central bank, Bank Al Maghrib (BAM), decided to increase flexibility in the exchange rate regime by widening the band of fluctuation between the dirham and the basket of currencies to 2.5% in each direction from the previous +/- 0.3%.  In our view, the measure was implemented smoothly, especially considering earlier attempts in mid-2017, when the central bank’s foreign exchange (FX) reserves shrank by more than 15% in the two months before the reform was implemented. We attribute the decline in FX, in part, to pressure from domestic market participants on the back of a growing demand for hedging instruments.  As a result, a sizable portion of these reserves was transferred onto domestic banks’ balance sheets, leading to a substantial increase in foreign-currency assets, and the banking system as a whole did not lose its FX reserves.  After the related tensions subsided, BAM restored its reserve position–reserve coverage is now back at more than six months of current account payments, from about five months following the episode of stress.

If widening the fluctuation bands continues to go well, we would view further widening of the bands as positive for our overall monetary assessment on Morocco.  It would likely bolster Morocco’s external competitiveness and ability to withstand macroeconomic external shocks.  However, we anticipate that the authorities will first allow the current fluctuation bands to be tested by external financial developments.  Finally, although they are moving toward a more flexible exchange rate regime, we expect the Moroccan authorities will maintain restrictions on capital accounts in the near term.  Such restrictions will be eased gradually, to avoid any potential large scale capital outflows.

The banking sector appears to be appropriately capitalized and unlikely to pose a significant risk to the wider economy, given its current relatively high regulatory capital ratio of almost 14%.  Although nonperforming loans comprised a relatively high proportion of the total, at 7.5% in 2017, they appear to be well provisioned.  Nonetheless, the banking sector remains vulnerable to credit concentration risks.  The banks’ expansion into Sub-Saharan Africa has been so far highly profitable, but it opens new channels of risk transmission to Morocco’s banking system.

We expect Morocco’s current account deficit to narrow modestly to about 2.5% by 2020 as rising exports capacity materializes in higher value-added industries, such as the automotive sector.  Cars have become the country’s leading export product, accounting for almost 24% of total goods exports and more than 5% of GDP in 2017.  Car exports are expected to grow further and the export of phosphate and its derivatives seems to have bottomed out and will grow in line with external demand.  We anticipate that increased phosphate production, coupled with further growth in tourism receipts, should support exports.  Meanwhile, the development of domestic energy sources should curb growth in Morocco’s still low energy bill.  Morocco also benefits from strong remittances.  These factors should more than offset the impact of the increase in capital goods as part of Morocco’s strategy for industrialization.

The external liabilities position will remain large in the next three years and we forecast narrow net external debt as a proportion of current account receipts (CARs) to be at about 25% in 2018-2021.  We also forecast external financing requirements will remain covered by CARs and usable reserves over this period.  (S&P 06.04)

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11.7  MOROCCO:  Pentagon Sends Surplus Tanks to Morocco

Jack Detsch wrote on 2 April in Al-Monitor that the Pentagon is sending hundreds of extra tanks to Morocco to modernize the country’s aging military.

The Donald Trump administration approved the delivery of 162 Abrams tanks to Morocco last year to help the kingdom respond to regional challenges.  The delivery of the vehicles was approved in September as part of an effort to move forward with deals to outfit the North African nation with more than $115 million in US equipment the Pentagon no longer needs.  Under the Excess Defense Articles program, or EDA, surplus military equipment that hasn’t been offered to domestic police forces can be made available at reduced or no cost to foreign allies.

Deliveries of excess US military equipment to Morocco have sped up in recent years, suggesting that the Pentagon may see the program as an avenue to fast-track sales instead of relying on other programs that require extensive approval from the administration and Congress to go ahead.  The Moroccans “get $15 million a year in [regular] military aid from the US, so $100 million for one project is pretty massive,” Seth Binder, an analyst with Strategic Research and Analysis, a US-based consultancy, told Al-Monitor.  “People complain that the arms sales process is too slow. I’ve been wondering if they use EDA if that process would speed up.”

Pentagon deals with Morocco that moved ahead under the program during Trump’s first year in office account for more than a quarter of the $430 million that the EDA program implemented, authorized or delivered to the entire Middle East, according to an Al-Monitor review of Department of Defense records.  In addition to the tanks, Rabat received tracked command post vehicles, grenade launchers and howitzers as well as 419 armored personnel carriers.

The deliveries are part of US and European efforts to strengthen Morocco’s military to deal with drug-trafficking and terrorist networks that are proliferating throughout North Africa as the Islamic State collapses in Iraq and Syria.

Morocco is the largest US weapons buyer in the Pentagon’s 53-country Africa Command and “has repeatedly demonstrated the ability to operate and maintain advanced US equipment,” according to a statement made by the Africa Command commander, Marine Gen. Thomas Waldhauser, to Congress last month.  The uptick in deliveries of used weapons comes amid increasing congressional scrutiny of domestic use of US surplus military equipment by police units following the 2014 protests in Ferguson, Missouri, that denounced law enforcement violence against African-Americans.  The Barack Obama administration banned domestic deliveries of armored vehicles, .50 caliber ammunition and riot equipment to local law enforcement the following year.

The EDA program could prove helpful to the Pentagon as it leans more heavily on foreign militaries to fight Islamist extremists as US Defense Secretary James Mattis hones his focus on countering the military threat from rising powers such as China and Russia.  In the fight against the Islamic State in Iraq and Syria, for instance, the United States relies on advisers to assist partners such as the Iraqi Security Forces and Syrian Democratic Forces.  But as the Islamic State dwindles, US troops rarely accompany their Iraqi counterparts on missions, American commanders say.

More excess defense equipment also flowed to traditional American counterterrorism partners in 2017, including deliveries of M2 machine guns and artillery ammunition support vehicles to the Lebanese Armed Forces.  The Pentagon also accepted or began implementing letters of acceptance to send out seven SH-60F Seahawk helicopters for Israel and equipment to help Egypt’s fighter aircraft operate in bad weather.

Jack Detsch is Al-Monitor’s Pentagon correspondent. Based in Washington, Detsch examines US-Middle East relations through the lens of the Defense Department. Detsch previously covered cybersecurity for Passcode, the Christian Science Monitor’s project on security and privacy in the Digital Age. Detsch also served as editorial assistant at The Diplomat Magazine and worked for NPR-affiliated stations in San Francisco.  (Al-Monitor 02.04)

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11.8  TURKEY:  Turkey’s Impressive Growth Rate Has Dark Side

Mustafa Sonmez reported on 2 April in Al-Monitor that while Turkey has posted a spectacular 7.4% growth rate for 2017, but other key economic indicators suggest there is little to celebrate.

On 29 March, the Turkish Statistical Institute (TUIK) announced that the country’s gross domestic product grew 7.4% in 2017, the highest rate in the past four years.  The 7.4% rate made Turkey the second fastest-growing economy in the Organization for Economic Cooperation and Development after Ireland with 7.8% and ahead of Slovenia with 5%.  The GDP, however, shrank in terms of dollars to $851 billion from $863 billion in 2016, reflecting the dramatic depreciation of the Turkish lira.  Accordingly, GDP per capita went down to $10,597 from $10,883 in 2016.

There is another side of the coin, which shows that Turkey’s spectacular growth came thanks to government propping that is hard to sustain and at the expense of excessive borrowing and increasing fragilities.  The social leg of growth is also troubling, as low-income Turks appear to have benefited little in terms of job opportunities and income increase.

As Deputy Prime Minister Mehmet Simsek conceded, government guarantees encouraging loan expansion were the main booster of growth, coupled with tax cuts and incentives.  The economy’s growth was driven largely by domestic consumption, which brought about double-digit inflation — 12% in consumer prices at the end of 2017.

As the Turkish lira tumbled, the price of the dollar increased 21.7% last year, making Turkey’s imports more expensive.  Coupled with the rise of global energy and commodity prices, this pushed up production costs at home, resulting in a 15% annual increase in producer prices.  Hence, Turkey’s growth came at the expense of an unruly inflation.

The consumption-centered growth fueled imports, enlarging the country’s foreign-exchange gap.  As a result, the current account deficit reached $47.1 billion or as much as 5.5% of GDP — a rate unique to Turkey.

Last year’s external debt stock is an important sign of how the economy relied on foreign funds to grow.  Standing at $453.3 billion in official data, the external debt stock amounts to 53.3% of GDP and 70% of it belongs to the private sector.

So, a giant current account deficit and the hardship of sustaining external borrowing to grow are other troubling elements.  Meanwhile, the government’s tax incentives — another stimulant of the growth — widened the gap in public finances, resulting in an alarming “twin deficit” together with the current account gap.

Did the growth contribute to job creation and a fair distribution of income?  The unemployment rate remained unchanged at 10.9% from 2016 to 2017.  Non-agricultural unemployment stagnated at 13%, while youth unemployment remained above 21%.  In other words, the economic growth absorbed only the newcomers to the labor market and offered no hope to the already jobless.  Overall, the number of jobless increased by 124,000 to reach 3.45 million in 2017.

When it comes to revenue distribution between employers and employees, the TUIK data shows that the trend developed to the detriment of the latter.  Payments to labor stood at 34.5% of GDP, down from 36.5% in 2016, a clear sign that the 7.4% growth resulted in an unfair outcome for workers.

In another ironic development, the Turkish lira was in free fall in the hours when TUIK released the 7.4% growth rate, with the price of the dollar breaking the psychological barrier of four liras.  Normally, economic growth on such a scale is expected to involve an influx of foreign investment and thus an abundance of dollars, leading the lira to appreciate.  Yet, in March alone, the lira lost 5% of its value against the greenback, dissociating significantly from the currencies of other emerging economies.  This in itself is a sign that Turkey’s economic growth has come with increasing fragilities and failed to inject confidence.

No wonder that Turkey’s five-year credit default swaps (CDS), known also as credit risk premiums, have risen to 203 basis points, the highest level since mid-November.  Standing at 160 basis points in the beginning of the year, the CDS have been on the rise due to both foreign market developments and Turkey’s own economic and political risks.  The CDS increase reflects the higher pricing of Turkey’s risks and thus the rising interest rates it has to pay on its sovereign bonds. Neither the premium nor the interest rates can fall as long as the risks continue. The yield on Turkey’s 10-year bonds climbed close to 13% in March. It had hit 13.2% in November. The increase in the risk premium has owed also to a March 7 decision by credit rating agency Moody’s to cut Turkey’s sovereign rating further into junk territory, downgrading it to Ba2 from Ba1.

The depreciation of the lira appears bound to continue, chiefly because of Turkey’s external financing needs. Oil prices, meanwhile, are likely to rise during the year, which means the country’s current account deficit will continue to expand.  The debt Turkey has to roll over in the next 12 months is close to $180 billion, which means it has to borrow between $220 billion and $230 billion in external funds, a sum amounting to more than 25% of GDP.  As foreign capital flows to emerging economies decline, a burden of such a size will not be easy to manage, even though it will spread over 12 months.  Moreover, the cost of borrowing is increasing. Given that reserves are not very strong, either, the pressure on exchange rates will continue.

Political uncertainty is the main reason foreign investors hesitate to put money in Turkey.  A critical election cycle is looming in 2019, but a wait-and-see attitude prevails on financial markets because of the talk of early elections.  This reason alone could prompt the government to bring the polls forward — to fall this year, for instance — to end the uncertainty.

If the slump of the lira continues, the central bank would be expected to intervene forcefully by hiking rates and/or using other monetary policy instruments.  Absent an intervention, the rush for hard currency among domestic actors will push up foreign exchange prices even more, threatening further damage to the economy.

Mustafa Sonmez is a Turkish economist and writer.  He has worked as an economic commentator and editor for more than 30 years and authored some 30 books on the Turkish economy, media and the Kurdish question.  (Al-Monitor 02.04)

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11.9  TURKEY:  Turkey Increases Pharmaceutical Expansion

Zulfikar Dogan posted on 5 April in Al-Monitor that amid a wave of government-driven nationalism, Turkey’s latest “national” project is to develop a strong pharmaceutical sector.

Turkey wants to become an international player in the pharmaceuticals sector by locally producing medicines and molecules and subsequently exporting them.

An emphasis on the “native and national” has lately become a central theme in the political rhetoric of Turkish President Erdogan and his Justice and Development Party (AKP).  After projects for locally made tanks, warplanes and other weaponry, they are now calling for “national medicines.”

Turkey pays billions of dollars each year for imported medicines and medical devices as well as for the use of pharmaceutical patents and licenses, so the stated objective is a pharmaceutical drive in production and exports to keep all those billions at home.  One of the main priorities to that effect is to lure expatriate Turkish scientists back to Turkey.

Aziz Sancar, professor at the University of North Carolina, Chapel Hill, and co-laureate of the 2015 Nobel Prize in Chemistry, is perhaps the first name that comes to mind.  Other Turkish scientists are involved in disease research and the development of novel drugs and medical devices at a number of prestigious US institutions, including Johns Hopkins University, Harvard Medical School, BioMed X Innovation Center, Brown University and Charles River Laboratories.

According to Ugur Terzioglu and Oguz Kalafat, chair and deputy chair of the American-Turkish Business Development Council, respectively, Prime Minister Binali Yildirim is personally keeping tabs on the national medicines project.  Terzioglu and Kalafat have said that Turkey pays TL 25 billion ($6.5 billion) each year for pharmaceutical patents and licenses and estimate that at least $9 billion to $10 billion could be kept at home through the local production of drugs and molecules and subsequent exports.

Terzioglu argues that Turkey has long neglected Turkish scientists in the United States.  “They are all resentful toward Turkey because no one has knocked on their doors,” he said in an interview with Dunya.  “We need to embrace those scientists.”

The project involves a plan to establish a Turkish Health Investments Fund, which would form partnerships with US pharmaceutical companies, buy company shares and acquire representation in their management.  The fund would also support research by Turkish scientists and encourage them to register their patents and licenses in Turkey.  According to Kalafat, an initial sum of some $100 million is needed for the fund, which would involve a government contribution as well as its participation along with contributions from companies and investors. Some well-established Turkish pharmaceutical companies — Abdi Ibrahim, Eczacibasi, Ersin Erfa, Turgut Ilac and Turkuaz Medikal — have confirmed that they will join the fund.

Stressing that Turkey currently has to pay to manufacture patented drugs, Kalafat said in a Karar interview, “The target is to produce our own molecules.  We will bring leading Turkish firms together.  Currently, 13 countries produce their own molecules, including the United States, Israel, Korea and Japan.  We want to become the 14th country capable of molecule production.”

Speaking at a 14 March ceremony marking Doctors’ Day, Erdogan denounced the “squander of billions of dollars,” all to the benefit of foreign pharmaceutical giants, stressing that the government places great importance on local production.  “We will not let the drug issue become a local black hole,” he said. “I believe very important steps will be taken on this matter in the coming period.”

Meanwhile, Yildirim has proclaimed that Turkey’s target is “100% local drug production.”  Thanks to efforts to that effect thus far, the number of locally produced drugs rose to 577 in 2017, he said, pledging that Turkey will become a “global power in biotechnology.”

A standout in the effort is the Biomedicine and Genome Center in the Aegean city of Izmir.  One of its objectives is to draw up a genetic map and produce drugs “special to Turkish genes.”  The center, founded in 2015 at Dokuz Eylul University, aims to become a genome research hub on a global scale, focusing on genetic diseases and medicine production.

Another important initiative is the Turkish Biotechnological Medicines Platform, a project initiated by the Pharmaceutical Industry Employers Syndicate (IEIS) that brings together all the medicine manufacturers in the country.  According to IEIS Secretary-General Turgut Tokgoz, completed and ongoing infrastructural investments in biotechnology currently total $820 million, while another $485 million has been invested in research and development projects.  Tokgoz expects important achievements in the next five years.

In Turkey, the government is the biggest spender on drugs.  The Social Security Institution (SGK), which meets the health care expenditures of millions of people, has seen its yearly deficits increase.  The SGK paid more than TL 25 billion for drugs in 2017, and the figure is expected to rise to some TL 29.2 billion this year and to TL 38.5 billion by 2020.

According to IEIS data, Turkey’s drug imports stood at $4.97 billion in 2017, while its drug exports totaled $890 million. In short, the exports covered only 17.9% of the imports.

The Turkish drive for a spot in the global pharmaceutical sector will involve investment incentives by the government in the form of revenue guarantees, similar to the multi-billion-dollar guarantees the treasury currently provides private companies for large-scale infrastructure projects.

Yet it is unclear how the government will finance revenue guarantees for drugs that are not yet produced or are in the research stage and may take a long time to hit the market.  One of the most controversial issues is how the government will retract the revenue guarantees and the funds transferred to companies if research and clinical trials prove unsuccessful.

In the ongoing infrastructure projects, the companies enjoy revenue guarantees but have a limited operational period of 15 or 20 years, after which they hand over the facilities — airports, bridges, dams and motorways — to the state.  When it comes to medicines, however, the plan to offer purchase guarantees — for products that do not yet exist and will be subjected to processes in which success is not guaranteed —represents a major hurdle.  This is also at a time when the SGK is already running significant deficits, which the treasury has to cover through costly borrowing.

The pro-government daily Yeni Safak claims that “certain quarters,” both at home and abroad, are trying to obstruct the local production of medicines.  According to the daily, 95% of drugs manufactured in Turkey have foreign patents or licenses with hefty fees.  Among the top 20 largest selling drugs on the Turkish market, 11 are US-patented.

Zulfikar Dogan began his career in journalism in 1976 at the Yanki news magazine in Ankara. He has worked as a reporter, news editor, representative and columnist at Milliyet, Posta, Aksam, Finansal Forum, Star and Karsi newspapers, and as a TV programmer and commentator on the economy and politics for TRT-1, Star, NTV and CNBC-e. He is currently editor in chief and columnist for the Korhaber news website.  (Al-Monitor 05.04)

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