Fortnightly, 20 February 2019

The Ministry of National Infrastructure, Energy, and Water Resources announced on 19 February that Israel’s natural gas royalties totaled NIS 860 million and are projected to exceed NIS 1 billion in 2019 as the Leviathan field comes on stream. Fees and royalties from natural gas, oil, and minerals totaled NIS 878 million in 2018, 9.3% more than in 2017, when they totaled NIS 803 million.

Most of the revenue came from royalties on natural gas and oil, which totaled NIS 860 million in 2018, including NIS 858 million in royalties from the Tamar gas reservoir, from which over 10 billion cubic meters of gas and 477,000 barrels of condensate were produced. NIS 2 million more came from the Meged license. In addition to royalties on natural gas and oil, royalties on minerals totaled NIS 12 million and fees totaled NIS 6 million.

The Ministry of National Infrastructure, Energy, and Water Resources projects a substantial rise in revenue from royalties in 2019 to a new record of over NIS 1 billion as a result of the beginning of production from the Leviathan reservoir late in the year. (Globes 19.02)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Tel Aviv Ranked 18th Best High-Tech City

A new study by the Savills real estate agency, which rated 30 technology centers according to 100 different variables, ranked rates Tel Aviv in 18th place among the world’s leading high-tech cities. New York was rated the world’s best city for high-tech companies and startups, followed by San Francisco in second place and London in third. Five Chinese cities appeared on the index for the first time.

Savills explained that the 30 rated cities are regional technology centers that attract many investments from venture capital companies, constitute a target for global technology companies, attract talent, and are considered active places to live and work in. The parameters taken into account in the rating include real estate costs and the cost of living in the city, the business environment, ease of opening a business, level of innovation, mobility, etc. (Globes 06.02)

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2.2 Israeli Startups Raised $450 Million in January

Israeli startups raised over $450 million during January, according to press releases issued by companies that have completed financing rounds. The figure may be more as some companies prefer not to publicize the investments they have received. This figure is a relatively slow start to 2019 and well below the pace for 2018, when according to IVC-ZAG, Israeli startups raised a record $6.4 billion, up from $5.24 billion in 2017. However, it beats the sluggish start to 2018, when Israeli startups only raised $260 million. As usual, most of the money raised last month, was in large financing rounds by a small number of companies. More than half of the $450 million was raised by just seven companies.

Cybersecurity company Cato Networks led with a $55 million financing round. Medical monitoring company EarlySense raised $39 million, video ad company Innovid raised $30 million, IoT semiconductor Wiliot raised $30 million, and cloud storage solutions company Pliops also raised $30 million. AI machine health solutions company Augury raised $25 million and transcription company Verbit raised $23 million. (Globes 06.02)

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2.3 New Relic Advances AIOps Strategy with Acquisition of SignifAI

San Francisco’s New Relic, a provider of real-time insights for software-driven businesses, acquired SignifAI. New Relic intends to bring SignifAI’s technology to market, offering modern software teams advanced technology to predict and address performance issues, so they can deliver exceptional customer experiences. SignifAI’s open data platform integrates with modern DevOps solutions to provide richer insight to software teams so they can detect issues early, reduce alert noise, and deliver highly available and reliable software at scale. The terms of the deal were not disclosed.

SignifAI’s open platform sits above a customer’s existing set of monitoring tools. With more than 60 integrations ranging from open source and commercial monitoring tools to popular services found in many DevOps toolchains, SignifAI automates correlation and enriches incident context so that software teams can get answers quickly during incidents and ultimately reduce mean time to resolution. This technology aligns with New Relic’s current platform offering and provides a unique advantage to solve an important problem for their customers.

Founded in 2016, SignifAI was started by a team of technologists who wanted to solve for the alert noise and fatigue that they faced in previous technical roles. With deep background and expertise in site reliability engineering (SRE), the team has been dedicated to using intelligence to drive operations excellence. The SignifAI team will continue to work from offices in Sunnyvale, California and Tel Aviv, Israel. (New Relic 06.02)

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2.4 US Army to Buy Iron Dome Air Defense Systems

The US Army plans to purchase a limited number of Iron Dome air defense system from Israel, both the Israeli MoD and the US Army announced 6 February. The decision was made as part of an agreement between the Israeli Ministry of Defense and the US Department of Defense to fill its short-term needs for an Indirect Fire Protection Capability (IFPC). According to a statement from Israel’s MoD, the systems will be purchased to meet “immediate needs of the US Army.”

The US Army will assess and experiment on Iron Dome as a system that is currently available to protect deployed US military service members against a wide variety of indirect fire threats and aerial threats. While Iron Dome has been in operational use by the Israeli Air Force since 2011 and proven effective in combat, it should be noted that the US Army will assess a variety of options for its long-term IFPC solution. No decisions have been made regarding the fielding or experimentation of Iron Dome in specific theaters.

Developed by Rafael Advanced Defense Systems as prime contractor, together with IAI/ELTA and mPrest, the system is designed to intercept and destroy short-range rockets and artillery shells. The Iron Dome is part of Israel’s multi-layered air defense layout, which also includes the David’s Sling system as well as the Arrow-2 and Arrow-3. (Israel Defense 06.02)

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2.5 Gong.io Raises $40 Million to Transform Sales with AI

Gong.io has raised $40 million in Series B funding, bringing the company’s total funding to $68 million. The latest round was led by global investment firm Battery Ventures and Battery General Partner Dharmesh Thakker. Existing investors Norwest Venture Partners, Shlomo Kramer, Wing Venture Capital, NextWorld Capital and Cisco Investments also participated in the round.

Gong uses AI to turn phone, video and text conversations into mission-critical information that companies use to coach customer-facing teams, increase win rates and improve strategic decision-making. The platform becomes smarter as it analyzes more data, ensuring learnings are refined deal after deal. The Gong platform helps sales leaders at companies ranging from enterprise to fast-growing like LinkedIn, GE, Drift and ZipRecruiter achieve success by providing a realistic look at what their best people are doing – from the specific terms they use in sales pitches, to how they structure their calls – so that those tactics and strategies can be replicated. The platform alerts sales leaders exactly when their help is needed and when they should step in to save a deal. Tens of thousands of salespeople across hundreds of sales teams currently rely on Gong.

Herzliya’s Gong.io is the #1 Conversation Intelligence platform for sales. It helps sales teams generate more revenue by having better sales conversations. Gong automatically records, transcribes, and analyzes every sales conversation so you can replicate successful sales conversations, coach your reps and ramp new hires faster. (Gong.io 07.02)

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2.6 Taiwan’s Chroma to Acquire 20.5% of Camtek at $9.50 per Share

Camtek announced that Chroma Ate, a leading Taiwanese high precision test and measurement equipment provider, has entered into a definitive agreement to acquire approximately 20.5% of the shares of Camtek, in a cash transaction. Chroma will acquire a total of 6,117,440 Camtek shares from Priortech, the controlling shareholder of Camtek, for $58.1 million, and a further 1,700,000 new shares to be issued by Camtek, for $16.2 million. The total cash consideration to be received by Camtek and Priortech amounts to $74.3 million. After the closing of the transaction, Chroma will hold approximately 20.5%, while Priortech will hold approximately 24% of the total issued and outstanding shares of Camtek.

In addition to the investment, Chroma and Camtek entered into an agreement in which Camtek will license its triangulation technology, a metrology solution, in a fee-bearing license for non-semiconductor applications to be used by Chroma. In addition, Chroma and Camtek have agreed to cooperate in potential projects for the semiconductor market based on synergies between their inspection and metrology technologies.

Migdal HaEmek’s Camtek is a leading manufacturer of metrology and inspection equipment and a provider of software solutions serving the Advanced Packaging, Memory, CMOS Image Sensors, MEMS, RF and other segments in the mid end of the semiconductor industry. Camtek provides dedicated solutions and crucial yield-enhancement data, enabling manufacturers to improve yield and drive down their production costs. (Camtek 11.02)

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2.7 C2A Security Completes $6.5 Million Series A Round

C2A Security announced the completion of a $6.5 million Series A round. The round was led by Maniv Mobility and ICV with participation from Labs/02.

C2A has developed a unique suite of solutions that protect the car’s internal systems against cyberattacks, ensuring passenger’s safety. Using a bespoke suite of solutions that communicate with one another, C2A is able to detect and mitigate any type of attack, ranging from autonomous systems hacks to chip-level vulnerabilities. C2A has already integrated a production-ready suite of solutions to leading manufacturers worldwide and plans to utilize the new funding to grow its R&D team and support its rapidly growing customer base.

Jerusalem’s C2A provides protection from life-threatening cyber-attacks for the automotive industry. Using a bespoke suite of cybersecurity solutions, C2A provides in-vehicle end-to-end cyber protection. C2A products are based on a deep knowledge of the automotive industry’s pains and requirements and have been engineered from the ground-up with automotive manufacturers’ needs in mind: cost, time-to-market and integration complexity. (C2A Security 11.02)

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2.8 DriveNets Raises $110 Million Series A Funding to Revolutionize Provider Networks

DriveNets emerged from stealth and announced a first round of financing of $110 million to accelerate its revolution of Service Provider networks. The round was led by Bessemer Venture Partners and Pitango Growth, with the participation of a number of private investors.

DriveNets addresses one of the biggest challenges facing the telecommunications industry today: demand for services is skyrocketing exponentially but customers are not paying more. Profits are shrinking and service providers need a new paradigm. Coupling technological innovation with a unique business model, DriveNets’ Network Cloud solution disrupts network economics. It disconnects network cost from capacity growth and allows communication service providers (CSPs) to handle skyrocketing demand without sacrificing profitability.

DriveNets was founded in late 2015 and has been self-funded until now. Fiercely focused on execution, the company achieved its first major contract in 2017, which brought its technology to the production network of a tier-1 North American service provider. Since then DriveNets has recorded revenues of tens of millions of dollars. The new financing will fuel DriveNets’ ambitious growth plans, as it expands its product portfolio and penetrates new markets worldwide. The company has 150 employees and plans to expand to 200 staff members by the end of the year.

Ra’anana’s DriveNets helps Communications Service Providers (CSPs) take advantage of the greatest demand surge in telco history. Disaggregating monolithic routers along with redefining CSPs’ cost structure and business models, they transform the way networks are built, managed and grown to meet this demand. Network Cloud helps CSPs re-sync costs with revenue, capture fast-moving opportunities and migrate smoothly to web-scale networking. (DriveNets 14.02)

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2.9 India’s Lohia Group Acquires Aerospace Parts Manufacturer Light & Strong

Kanpur, India’s Lohia Group marked its entry into the aerospace and defense sector with the acquisition of Israel-based Light & Strong Limited. Specializing in aerospace and military carbon fiber and glass fiber composite components production, the firm’s established pedigree in military technology manufacturing is a synergistic fit with Lohia Group’s long expertise in large scale manufacturing across sectors.

The acquisition establishes Lohia Group as a key participant in the sector as it leverages Light & Strong’s existing client base, which includes the Israeli Ministry of Defence among others, to build its own presence. The Israeli facility is a well-established aerostructures manufacturer for platforms such as Unmanned Aerial Vehicles (UAVs) and passenger and cargo aircraft. These customers will now be ably supported by Lohia Group with its facilities in Israel and India.

Founded in 2007, Kannot’s Light & Strong manufactures aircraft parts, including antennas, domes, avionics systems, and components for unmanned vehicles. The company specializes in working with carbon fiber and glass fiber composite materials. (Various 11.02)

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2.10 Axonius Raises $13 Million Series A to Automate Cybersecurity Asset Management

Axonius announced that it has raised $13 million in Series A funding. Bessemer Venture Partners led the round with participation from existing investors YL Ventures, Vertex, WTI and Emerge. The company will use the new funding to accelerate customer growth and expedite product innovations for the Axonius Cybersecurity Asset Management Platform.

The Axonius Cybersecurity Asset Management Platform is the only solution that creates a single point of view into every asset – including desktops, laptops, servers, cloud instances, mobile devices, IoT and more – on a company’s network, and automatically detects if those assets fit within an organization’s security policies. By enabling ongoing, automated security policy validation and decreasing time, money and resources spent gathering critical information, Axonius eliminates onerous cybersecurity asset management tasks for organizations while increasing the overall value and efficiency of cybersecurity investments. Unlike IT asset management or visibility tools, unified endpoint managers, NAC or CMDB, the Axonius platform does not require the deployment of an agent and can be deployed in less than an hour. By aggregating existing data from more than 100 management and security solutions such as SIEMS, agents, network switches and more, the Axonius cybersecurity asset management platform provides actionable visibility and security policy enforcement for all assets and users.

Tel Aviv’s Axonius is the only cybersecurity asset management platform providing actionable visibility and security policy enforcement for all assets and users by aggregating existing business data from 100+ management and security solutions. Axonius manages and secures millions of assets for a wide range of public and private companies, including The New York Times, AppsFlyer, Natera and more. (Axonius 12.02)

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2.11 Symantec Acquires Luminate Security to Extend the Power of Integrated Cyber Defense

Symantec Corp. announced the acquisition of Luminate Security. Luminate’s Secure Access Cloud technology further extends the power of Symantec’s Integrated Cyber Defense Platform to users as they access workloads and applications regardless of where those workloads are deployed or what infrastructure they are accessed through. Luminate’s Secure Access Cloud is natively constructed for today’s cloud-oriented, perimeter-less world. This technology allows enterprises to scale private, “no DNS” access control, granting user connections only to the specific applications and resources for which they are authorized.

The acquisition of Luminate continues Symantec’s strategy of acquiring and building best-of-breed security across its portfolio, with a particular focus on “born in the cloud, for the cloud” innovations. Symantec made first-mover acquisitions in CASB (cloud access security broker) and web isolation technologies and has delivered a broad set of cloud innovations and integrations across its entire portfolio.

Israel’s Luminate enables security and IT teams to create Zero Trust Application Access architecture without traditional VPN appliances. Its Secure Access Cloud™ securely connects any user from any device, anywhere in the world to corporate applications, on-premises and in the cloud, while all other corporate resources are cloaked without granting access to the entire network. This prevents any lateral movements to other network resources while eliminating the risk of network-based attacks. (Symantec 12.02)

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2.12 PerimeterX Secures $43 Million to Protect Web Apps from Bot Attacks

PerimeterX announced a $43 million Series C funding round. The round was led by Scale Venture Partners. New investor Adams Street Partners joined existing investors Canaan Partners, Vertex Ventures (which also invested via its new growth fund) and Data Collective in the round. This investment brings the total raised to more than $77 million, according to Crunchbase data.

To achieve this kind of identification requires massive amounts of data, and PerimeterX uses machine learning to help understand normal behavior and shut down anomalous behavior in an automated fashion.

Tel Aviv’s PerimeterX is a cyber security company that prevents automated web and mobile application attacks by detecting & protecting against malicious web behavior. To separate the actions of bots from those of normal users, PerimeterX uses artificial intelligence & machine learning to identify behaviors that are unlikely to represent human actions. This behavior based technology allows PerimeterX to detect and block the most sophisticated new forms of bot attacks in real-time with unparalleled accuracy. (PerimeterX 12.02)

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2.13 Tastewise Launches AI-powered Food Intelligence Platform

Tastewise emerged from stealth to serve real-time analytics on the constantly changing tastes and dietary needs of consumers. The Tastewise platform leverages machine learning to calculate future culinary trends, enabling restaurants to efficiently adapt, serve and market their offerings at a local and national level. The platform analyzes billions of critical food and beverage consumer touchpoints to discover people’s real-life interactions with food including over 1 billion food photos shared every month, 153K restaurant menus across the US and over 1M online recipes. Tastewise is already working with restaurants and food brands to pinpoint market opportunities, consumer likes and dislikes, new ingredients and to quickly meet trending needs.

In coordination with its launch today, Tastewise released a Consumer Food Trends Report, along with a map detailing where the biggest health food opportunities are for both brick and mortar and virtual restaurants in each state.

Conventional market research methods (i.e. focus groups and questionnaires) cannot capture the volume or depth of food insights at speed, leaving restaurants and consumer packaged goods companies (CPGs) unable to meet market demand. Leveraging machine learning, predictive analytics, computer vision and NLP processing, Tastewise’s AI-based approach now makes it possible for any food company to satisfy its customers by discovering the latest trends on both local and national levels before they go mainstream.

Tel Aviv’s Tastewise brings the power of data to the art of food and beverage intelligence. Their platform analyzes billions of food data points – including menus, home recipes and social media – to provide real-time insights for restaurants, hospitality groups, and food brands. Capturing food innovation in real time, Tastewise equips industry professionals to identify target segments and competitors, understand emerging trends, and determine which dishes or products should be served next. (Tastewise 13.02)

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2.14 Rapyd Raises $40 Million in A Round Led By General Catalyst and Stripe

Rapyd has raised $40 million in venture funding. The Series B round of funding was led by General Catalyst and Stripe, the digital payments company. With the round of fundraising, the company has raised a total of $60 million. Proceeds from the capital raise will go to add more functions to the platform, acquire new customers and increase employees.

Through Rapyd’s single API, customers get access to a set of FinTech and payment capabilities enabling them to accept alternative payment methods. It also has a tokenized identity management and compliance solution. Rapyd is bridging the gap between robust economies and an increasingly important group of stakeholders in global commerce: the unbanked and the non-credit/debit card economy.

General Catalyst said the startup has spent the past few years building out a “network of networks” through deals with local payment networks across the globe. It has a heavy focus on emerging markets and now has a global network of 1.6 million cash collection endpoints and more than 100 different e-wallets to support non-card based payments in more than 65 currencies and more than 150 countries.

Petah Tikva’s Rapyd is the mobile-first financial network that makes the world’s favorite ways to pay and be paid instantly available through a single API and SDK. Through their scalable platform and API we are bringing together local financial specialists from every corner of the world to make the 100s of ways people pay available around the world, so that eCommerce merchants, gig platforms, challenger wallets, remittance platforms, online lenders, and even traditional banks can break free of their old infrastructure and limitations and create new mobile-friendly solutions to make payments faster, smarter, accessible and convenient to all. (Rapyd 13.02)

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2.15 The Dreams and Ingenuity Behind Israel’s First Moonshot

The first Israeli spacecraft to be sent to the moon, Beresheet, will be launched in the early hours (Israel time) of 22 February 2019 from Cape Canaveral Kennedy Space Center in Florida. If all goes according to plan, the Israeli spacecraft bearing the national flag will make space history on 11 April 2019, when Beresheet is scheduled to land on the moon.

When Beresheet touches down on the moon, Israel will become only the fourth country to achieve a soft landing on the lunar landscape, after the US, the former Soviet Union and China. While the other missions cost billions of dollars, the SpaceIL project cost $100 million, mostly privately funded and with minimal input from the state.

Indeed, the SpaceIL initiative is a proud moment for Israeli space sciences and highlights Israel’s trademark of making the seemingly impossible possible. The unmanned spacecraft, packed with Israel technologies, is making many firsts. When it launches, it will mark the first time a spacecraft piggybacks to enter Earth’s orbit as SpaceIL will ride on a SpaceX Falcon rocket. Beresheet is also the first lunar lander that is a private initiative, rather than a governmental project. It is the smallest spacecraft by weight at just 600 kilograms with full fuel tanks and upon landing weigh approximately 180 kilograms. Its measurements run two meters in diameter and 1.5 meters tall when standing on its four folding legs. Because of its small size, the spacecraft will log the longest journey – 6.5 million kilometers – as it orbits around Earth until landing on the moon. The craft’s fuel tanks are tiny in order to keep its size compact and thus must use orbits to reach the moon instead of flying in a more direct path. (NoCamels 18.02)

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2.16 China Approves KLA Tencor’s Orbotech Acquisition

The sale of Orbotech to KLA-Tencor will be completed on 20 February following the receipt of approval from the authorities in China. The deal, which was first reported 11 months ago, was originally to be closed in late 2018, but was postponed due to delay in obtaining Chinese approval. The delay resulted from the trade war between China and the US, which caused other deals to be called off last year. More than 30% of Orbotech’s trade is with China. The companies announced that they had obtained approval from Chinese regulator SAMR, which handles antitrust matters.

KLA-Tencor’s acquisition of Orbotech is a cash and shares deal. It will pay $38.86 cash and 0.25 of its shares for each share of Orbotech. At the time that the deal was originally reported, the consideration was worth $69.02 for each Orbotech share, and $3.4 billion in total. As of now, following a drop in KLA-Tencor’s share price and its subsequent recovery, the proceeds for each Orbotech shares stand at $65.88, amounting to $3.26 billion, fully diluted.

Yavne’s Orbotech provides technologies for use in advanced electronics production processes. The company has three primary markets: flat panel displays (FPDs), printed circuit boards (PCBs) and semiconductor devices (SDs). KLA, a US company, is one of the world’s largest manufacturers of chip industry equipment with a current market cap of $16.4 billion. (Globes 18.02)

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2.17 Redis Labs Raises $60 Million Series E Financing to Bring Instant Experiences Everywhere

Redis Labs has raised $60 million in Series E financing led by a new investor, Francisco Partners, a leading global technology-focused private equity firm. The round included participation by the company’s existing investors, Goldman Sachs Private Capital Investing, Bain Capital Ventures, Viola Ventures, and Dell Technologies Capital.

Redis Labs was founded in 2011 around the promise of open source Redis, to deliver instant experience to modern applications at any scale, by building their datasets with native data structures and serving their applications requests directly from memory. The company has now raised $146 million in total funding to-date. With these funds, the company plans to accelerate its global go-to-market execution, invest further in the enthusiastic Redis community, and continue its leadership in delivering the highest performing, most efficient database platform for modern applications.

Redis Labs’ commercial product, Redis Enterprise, is the world’s fastest database, leveraging modern in-memory technologies such as NVMe and Persistent Memory to offer cost-effective deployment over multiple public clouds and on-premise data centers. Besides its native data structures, it features a variety of data modeling techniques, such as Streams, Graph, Document and Machine Learning, with a real-time search engine. The performance and flexibility of Redis has made it consistently one of the fastest-growing and most popular databases, including becoming the first to be launched more than one billion times on Docker Hub in 2018.

Tel Aviv’s Redis Labs, ranked as a leader in top analyst reports on NoSQL, in-memory databases, operational databases, and database-as-a-service, is trusted by seven Fortune 10 companies, three of the four credit card issuers, three of the top five communication companies, three of the top five healthcare companies, six of the top eight technology companies, and four of the top seven retailers. (Redis Labs 19.02)

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2.18 Nuweba Emerges and Unveils Ultra Fast, Highly Secure Platform

Nuweba emerged from stealth, opened its beta program and announced a seed funding round of $4.8 million dollars led by Magma Partners and Target Global among other investors. Nuweba redesigned serverless from the kernel up with solutions to all three problems baked in. Compatible with all major serverless providers, users can move their functions to Nuweba with just one-click. It is 10 times faster and more scalable than existing solutions, giving serverless functions improved performance with 8-40ms invocation latency without container reuse. Nuweba can support tens of thousands of concurrent executions. It also offers developers enterprise-grade, application level security and all-around deep visibility of how their application is running in real-time. A completely managed solution, users don’t need to configure monitoring metrics or define security policies; Nuweba is auto-configured and uses self-generated rules.

Tel Aviv’s Nuweba rearchitected serverless from the kernel up to enable companies to use serverless for applications that require scalability, high performance, advanced application security and deep visibility in real-time. Their fast and secure FaaS platform is compatible with leading serverless platforms, so you can start using Nuweba with only one click and without any changes to your code or configuration. (Nuweba 19.02)

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2.19 KFC Hiring Staff Ahead of Reopening in Israel

Seven years after leaving Israel, US fast food chain KFC (Kentucky Fried Chicken) will soon recommence operating in the country, and has begun hiring staff. Since departing Israel in 2012, KFC has repeatedly spoken about its plans to return, which until now have not been fulfilled. Sources inform Globes that KFC is now in the process of recruiting employees and setting up an Israel headquarters.

This will be the fourth time that KFC has entered the Israel market, after failing on its three previous attempts. The first attempt was in the 1980s, the second in the 1990s and the third was between 2003 and 2012. Despite its previous failures, KFC’s last entry into Israel in 2003 under the franchise of Udi Shamai was greeted warmly. Eight branches were opened but soon closed down after Shamai said he was unable to make a profit. At the time, Shamai said that KFC only has a future in Israel if the chain was not kosher. (Globes 19.02)

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2.20 Exclusive Group Further Advances Global VAD Reach with Acquisition of SecureWave

Paris, France’s Exclusive Group, the value-added services and technologies (VAST) group, announced it is acquiring SecureWave, one of Israel’s leading independent cybersecurity VADs. The move adds another advanced economy to the worldwide market penetration of the Exclusive Group, establishes an in-country presence within one of the world’s most significant innovation hubs, and expands the Group’s service reach to the benefit of its global customers and partners.

Hod HaSharon’s SecureWave is a distribution company operating based on the Value Added Distribution method, specializing in the field of data security and IT infrastructure. SecureWave brings unique added value to the supply chain, specialized in the commercial aspects of retail distribution, yet with proven technical know-how and experience in the field. SecureWave was founded with the goal of providing solutions for the marketing channels in Israel, of identifying advanced vendors and technologies throughout the world, and representing them in Israel while tailoring them to the unique demands of the IT market in Israel. (Exclusive Group 19.02)

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2.21 Palo Alto Networks Announces Intent to Acquire Demisto

Santa Clara, California’s Palo Alto Networks, the global cybersecurity leader, has entered into a definitive agreement to acquire Demisto, a leading security company in the security orchestration, automation and response (SOAR) space. Under the terms of the agreement, Palo Alto Networks will acquire Demisto for a total purchase price of $560 million, subject to adjustment, to be paid in cash and stock. The proposed acquisition is expected to close during Palo Alto Networks fiscal third quarter, subject to the satisfaction of regulatory approvals and other customary closing conditions.

The addition of Demisto’s orchestration and automation technologies will accelerate Palo Alto Networks Application Framework strategy and serve as a critical step forward in the company’s aim to deliver immediate threat prevention and response for security teams. Demisto’s automated playbooks have helped reduce alerts that require human review by as much as 95%, allowing security teams to focus on the most complex threats. This well-developed approach will bring Palo Alto Networks closer to using AI and machine learning to help further automate significant parts of the company’s customers’ security operations.

Tel Aviv’s Demisto has developed a highly effective go-to-market strategy that has enabled it to attract more than 150 customers, a quarter of which are in the Fortune 500 and include large organizations in healthcare, high technology, financial services and other industry verticals. Demisto’s Security Orchestration, Automation and Response (SOAR) Platform combines orchestration, incident management and interactive investigation into a seamless experience. Demisto’s orchestration engine automates security product tasks and weaves in human analyst tasks and workflows. Demisto Enterprise, powered by its machine learning technology, acquires knowledge from the real-life analyst interactions and past investigations to help SOC teams with analyst assignment suggestions, playbook enhancements, and best next steps for investigations. (Palo Alto Networks 19.02)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 COFE App Secures $3.2 Million in ‘Pre Series A’ Funding

Kuwait-based COFE App, a coffee-centric marketplace app, has secured $3.2 million in their Pre-Series A funding, attracting a multi-national cross-sector base of entrepreneurs and venture capital (VC) funds from the Middle East and Silicon Valley. The round was led by KISP ventures, a fund established by KFH Capital (Kuwait) and Cedar Mundi (Lebanon), Towell Holding International (Oman), Takamul Capital and Dividend Gate Capital (Bahrain), Nizar AlNusif Sons Holding and Arab Investment Company (Kuwait). The investment was facilitated by FTL Legal Services.

Conceptualized in Kuwait and developed in Silicon Valley, COFE App connects coffee house chains and independent coffee roasters with coffee lovers via a seamless, easy, and efficient user-interface. COFE App was founded in the summer of 2017 by Mr. Ali Al Ebrahim. Early funding for the app was generated by him and other investors who are coffee enthusiasts. The app was beta launched in February 2018. Since then, the app has been featured in Forbes Middle East annual list of “Top 50 startups to watch for in the Arab world” and was chosen among the most promising 100 Arab Start Ups by The Arab Youth Centre in Dubai, UAE. (COFE App 14.02)

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3.2 Medicus AI Closes the 1st Tranche of Its Series A Funding Round

Medicus AI announced the completion of the 1st tranche of its Series A funding round at €2.75M (just over AED 11.5M), with the purview to close the 2nd tranche of over €2.25M (just over AED 9.5M) over the coming months. The Series A funding round will further fuel the company’s global expansion, as well as the development of the Medicus diagnostic lab and insurance products, across core markets and in new languages. To date, Medicus supports Arabic, German, French and English, with Italian, Chinese, Portuguese and Spanish in the pipeline for 2019. The diagnostic lab space, which makes up Medicus’ current core client base, generates an estimated 20B reports annually worldwide. However, the industry operates in highly consolidated markets and struggle to differentiate themselves, maintain growth, and introduce future-proof business models.

Medicus is an AI-based platform that explains and interprets medical reports and health data, turning numbers into meaningful insights. Medicus works with diagnostic labs to deliver smart features and insights to both doctors, in terms of smart testing and diagnosis support, and to patients in the form of visual and interactive reports, powering continuous healthcare and coaching across all digital platforms.

Founded in Dubai in 2015, Medicus benefitted from the experience and support provided by the regional ecosystem, which served as a robust launching pad for its global expansion. While its global footprint has expanded, with offices in Vienna, Berlin, Paris and Beirut, its Dubai beginnings set the tone for the company’s global ambitions. (ArabNet 04.02)

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3.3 Middle East Launch for Nestle’s First Starbucks Products in Third Quarter

Nestle’s first Starbucks-branded coffee products – launched in the UK, Spain, Belgium and Brazil last week – will hit store shelves in the Middle East in Q3/19. The two companies developed two dozen new products, 16 of which are capsules compatible with the Nespresso and Nescafe Dolce Gusto systems, Nestle said. Prices for capsules will be on par with Nespresso, and the Middle East and US markets will come later this year.

Nestle paid $7.15 billion for the right to market Starbucks Corp. products last year as it seeks ways to rejuvenate the Nespresso capsule business, which used to be its biggest growth motor. Starbucks, which has been making capsules and other products for supermarkets, will keep doing so in North America, but elsewhere production will be handled by Nestle. (AB 17.02)

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3.4 Dubai Sees Near-10% Growth in Restaurants and Cafes in 2018

The total number of restaurants and cafes in Dubai reached 11,813 at the end of 2018, according to the Department of Economic Development (DED). The report by the DED’s Business Registration & Licensing (BRL) sector showed that 1,109 new restaurants and cafes opened in 2018, up from 1,011 in the previous year. In 2018, the number of newly opened restaurants reached 641, while the number of cafes stood at 468, compared to 601 and 410 respectively in 2017.

The report said Bur Dubai accounted for the largest share (7,312) followed by Deira (4,457) and Hatta (44). The top ten sub-regions were Burj Khalifa (590), Ayal Nasser (405), Al Marar (363), Jumeirah 1 (356), Al Karama (349), Al Barsha 1 (310), Hor Al Anz (256), Al Muraqabat (205), Naif (200) and Al Garhoud (169).

There is a growing variety of foreign and local concepts in the sector, raising the level of competition and in turn standards. The report also showed that the top ten nationalities investing in this sector was led by Indians, followed by Pakistanis, Egyptians, Britons and Kuwaitis. The total number of workers in active restaurants and cafes in Dubai reached 151,127, with an average of 13 workers per restaurant/coffee shop. (AB 06.02)

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3.5 Boeing Forecasts Middle East Aviation Services Market at $745 Billion

Boeing projects the Middle East will require $745 billion in aviation services through 2037 to keep pace with growing passenger and freight traffic in the region, according to a new report released at MRO Middle East in Dubai. The high value services market is largely driven by the demand for nearly 3,000 new commercial airplanes in the Middle East over the next twenty years, more than tripling the existing fleet. The growing fleet requires aviation services, including supply chain support (parts and parts logistics), maintenance and engineering services, and aircraft modification.

Boeing’s Services Market Outlook (SMO) 2018-2037 – Middle East Perspective forecasts growing need for services that increase fleet productivity and reduce operating costs. Among the report’s findings is that the Middle East will drive more than 8% of global demand for aviation services, representing $745 billion, and growing at a projected 4.6% annually. Nearly 218,000 new personnel – 60,000 pilots, 63,000 technicians, and 95,000 cabin crew – will be needed in the Middle East over the next 20 years.

Boeing Global Services continues to outpace the aerospace services market growth rate of 3.5% as it broadens its portfolio of solutions to meet customer needs. Operating as one of Boeing’s three business units, Global Services is headquartered in the Dallas area. (Boeing 11.02)

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3.6 New Dubai Coffee Hub Aims to See $100 Million in Annual Trade

The Dubai Multi Commodities Centre (DMCC), a leading free zone on commodities trade and enterprise, inaugurated the DMCC Coffee Centre on 18 February. The 7,500 square meter temperature-controlled facility is the first of its kind in the Middle East.

From crop to cup, the center offers logistical support and services that connect producers to buyers. Core services include warehousing, logistics, green coffee cleaning, contract roasting and packing, as well as more specialized offerings for re-bagging of green coffee, sample evaluation and training. The center houses a coffee quality laboratory, cupping labs and a Specialty Coffee Association training campus, in addition to a range of commercial office space.

Projected to handle up to 20,000 tonnes of green coffee bean annually – with an estimated annual trade value of around AED367 million ($100 million) – the center is set to attract new trade flows to Dubai and boost the national economy. Dubai’s strategic geographic location offers connectivity between the fast growing and high value consumer markets in the Middle East and Europe, to some of the world’s major coffee producing nations such as Ethiopia, India, Indonesia, Uganda and Vietnam. The global coffee industry is worth an estimated AED367.3 billion, with the industry in the Middle East expected to climb to AED16.2 billion by 2021, according to Euromonitor. (AB 19.02)

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3.7 GoodsMart Secures Additional Funding from Algebra Ventures

GoodsMart, the Egyptian household shopping app, has secured additional funding from Algebra Ventures, Egypt’s venture capital fund, ahead of its upcoming Series B round. GoodsMart has grown its business three-fold in the last 6 months and plans to use the acquired investment to further scale its business, upgrade its warehouse facilities, and bolster its operational capabilities.

GoodsMart offers clients an effortless and hassle-free shopping experience using the GoodsMart box, an interactive app, a wallet system for easy payment, and an efficient delivery model. The innovative service has proven itself indispensable to clients, engaging customers and fostering brand loyalty and advocacy. The opportunity has continued to excite their initial investors, Algebra Ventures, who invested $750,000 in GoodsMart’s Series A round in April 2017. (ArabNet Team 18.02)

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3.8 Cairo Enters Into a $500 Million Supermarket Deal With Lulu Group International

The Egyptian government, represented in the Ministry of Supply and Internal Trade, signed an agreement with LuLu Group International, which is specialized in retail trade. Under the agreement, the LuLu Group International will inject investments of $500 million to establish four branches of Lulu Hypermarkets in the areas of New Cairo, the 6th of October and Obour. The move comes in line with President Abdel Fattah El Sisi’s directives to regulate markets and provide food commodities at low prices.

The first Lulu Hypermarket branch in Egypt was inaugurated in 2016 and the retail chain plans to pump further EGP 15 billion to establish new outlets across the country. The LuLu Group said the group’s decision to construct four Hypermarkets will contribute to securing 40,000 direct and indirect jobs. The four Hypermarkets, to be built in two years, are expected to flourish the retail sector in Egypt, by providing food commodities at low and competitive prices. (SIS 08.02)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Israel Launches $4 Million Environmental Tech Innovation Lab

Israel is launching a new initiative to support environmental protection and sustainability, establishing a NIS 14 million ($3.8 million) environmental technological innovation lab with the support and cooperation of the Israel Innovation Authority, the Israeli Ministry of Environmental Protection and the Israeli Ministry of Economy and Industry. The Israel Innovation Authority said that corporations will submit proposals as part of a tender process for the establishment and operation of the lab.

The lab will scout for startups in the fields of environmental protection and sustainability and support their proof of concept projects, and will support the startups with access to technological infrastructure, assisting them in determining their product’s commercial viability, supporting project execution, opening marketing channels, exposing them to know-how and expertise, and creating connections with investors, partners, and corporate clients. The Israeli Innovation Authority said that priority will be given to initiatives that provide solutions for processing and manufacturing industries with high pollution rates and in proximity to population centers.

The project is part of an Environmental Protection Ministry program started in 2018, when the ministry and the Israel Innovation Authority joined forces to create pilot programs to support Israeli environmental technologies ripe for commercial application on an industrial scale. (NoCamels 11.02)

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4.2 Dubai to Build Solar-Powered Desalination Plant

Dubai will seek partners this year to build its first solar-powered desalination plant as the emirate tries to diversify away from burning fossil fuels to increase its water supply, the head of the Dubai Electricity and Water Authority said. The plant, using reverse osmosis technology, will have capacity to produce 120 million gallons a day of drinkable water by 2024. DEWA is also developing a reservoir to hold as much as 6 billion gallons of water reserves, and the utility currently stores about 700 million gallons.

Dubai, which is building facilities to generate 6,000 Megawatts of power, is diversifying away from relying mostly on natural gas to produce electricity by adding solar- and coal-fired plants. Gulf states like the UAE, in which Dubai is the biggest city, must desalinate seawater to supply drinking water to their burgeoning populations. Regional utilities have traditionally linked gas-fired power stations to large desalination plants along coastlines. Utilities are seeking new methods for desalination as they try to reduce power use and improve efficiency. The solar facility will be able to store energy that it produces, allowing the desalination plant to operate at night. DEWA’s projects are mostly partnerships with private companies, which have contributed AED 40 billion in financing. The utility’s generating capacity is 10,927 MW, with desalination capacity of 470 million imperial gallons a day. (AB 11.02)

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4.3 UAE Solar Firm Yellow Door Energy Secures $65 Million in Investments

The Arab Petroleum Investments Corporation (APICORP) announced its investment towards the Series A shares of Yellow Door Energy, a UAE-based solar power developer. The funds, as part of a consortium of international and regional banks and amounting to a total of $65 million, will enable Yellow Door Energy to scale its investments in solar energy and efficiency solutions in emerging markets, and generate 300 megawatts of solar energy over the next two years.

The investment in Yellow Door Energy represents APICORP’s first investment in renewables and distributed solar power generation. Other investors in the deal include the International Finance Corporation, Mitsui & Co Ltd, Equinor Energy Ventures and UAE-based Adenium Energy Capital, the founding investor of Yellow Door Energy since 2015. According to APICORP’s research, the planned investments in the power sector in MENA is estimated at $187 billion for the next five years, of which renewables account for $83 billion. (AB 16.02)

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5: ARAB STATE DEVELOPMENTS

5.1 Lebanon’s Trade Deficit Ended 2018 with a 1.73% Increase to $17.03B

The Lebanese economy continues to suffer from the high trade deficit that is the main cause behind the current account deficit. Lebanon’s trade deficit registered an increase of 1.73% year-on-year (y-o-y) to reach $17.03B by the end of 2018.

The value of imports rose by an annual 2.03%to $19.98B. Also, the value of exports rose by 3.83% to stand at $2.95B by the end of the year. In December alone, the total deficit dropped by 4.34% and stood at $1.32B. 2018’s most imported product was Mineral products (grasping 20.86% of the total value of imports), followed by 11.62% for machinery and electrical instruments and 11.07% for products of the chemical and allied industries. By end of 2018, the value of imported mineral products dropped by 3.08% to $4.17B. This can be linked to the decrease in their imported volume by 23.64% from 10.46B tons in 2017 to 7.98B tons in 2018.

As well, the value of machinery and electrical instruments climbed from $1.93B in 2017 to $2.32B in 2018. The value of the chemical and allied industries rose by 3.63% to $2.21B when compared to the same period last year.

In 2018, Lebanon had mainly imported goods from China which accounted for 10.25% of total imports, followed by Greece, Italy, Germany, and Turkey with respective shares of 8.55%, 7.96%, 5.85% and 4.75% of the total value of imported goods. As for exports, the top exported products were pearls precious stones and metals acquiring a share of 21.95% of the total, followed by base metal and articles of base metal and products of the chemical or allied industries with respective shares of 12.88% and 12.28 %. In details, the value of Pearls, precious stones and metals surged by 10.59% in 2018 to stand at $648M, compared to $586M in 2017. In turn, the value of base metals and articles of base metal rose by 11.75% to $380.26M, and the value of products of the chemical or allied industries also registered a yearly increase of 13.30% to $362.67M. As for the top destinations in terms of exports, UAE held the first place with 15.49%, followed by Saudi Arabia, Syria, South Africa and Iraq with 7.19%, 6.96%, 5.89% and 4.99% respectively. (Blom 15.02)

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5.2 Lebanon’s Balance of Payments Deficit in 2018 was $4.82 Billion

According to the Central Bank of Lebanon, Lebanon’s Balance of Payments (BoP) ended 2018 with a $4.82 billion deficit compared to a $155.7 million deficit during the same period last year. The external balance was affected by the political uncertainties and difficult economic situation.

Specifically, the NFAs of the Central Bank and commercial banks dropped by $2.29 billion and $2.53B respectively, over the same period. In 2018, the Balance was mostly affected by the swap operation engineered in May 2018 between the Ministry of Finance (MoF), Banque du Liban (BDL), and commercial banks which sent the Lebanese Balance of payments (BOP) into a surplus totaling $448.7 million by the end of May. The surplus was partly driven by the central bank’s new classification of its Eurobonds under “foreign assets” for the computation of the BOP. As a result, the $2.48 billion rise in the stock of Eurobonds at BDL led to a $2.16 billion increase in the central bank’s net foreign assets in May. It is worthy to note that the largest deficits recorded in Lebanon’s BOP this year were in October and November 2018, whereby the BOP deficits stood at $1.81 billion and 959.9 million, respectively. In December alone, the BOP recorded a deficit of 745.5 million compared to a surplus of $853.8 million in December 2017. In details, Central Bank’s NFAs dropped by $1.21 billion in 2018 while the commercial banks’ NFAs rose by $465.1 million. It should be noted that if the IMF’s way of computing the Balance of Payments (BOP) is used, by not including the Lebanese government Eurobonds held by BDL into its foreign assets, the BOP deficit becomes $7.32 billion by the end of 2018. The Net Foreign Assets (NFA) of BDL and those of commercial banks would have slipped by $4.79 billion and $2.53 billion respectively. (CBE 06.02)

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5.3 Total Number of Registered New Lebanese Cars Drops by 26% in January 2019

According to the Association of Lebanese Car Importers, the total number of newly registered commercial and passenger cars fell by 26.1% year-on-year (y-o-y) to 1,948 cars in January 2019. The number of registered commercial cars dropped by 24.5% y-o-y, from 147 in Jan 2018 to 111 in Jan 2019. Following the same trend, the number of registered passenger vehicles went down by 26.20% to reach 1,837 in January 2019. In terms of car brands, Kia maintained its top rank, with the largest share of 13.45% of newly registered passenger cars, Nissan came in the second position with 12.63% of total shares, followed by Toyota and Hyundai with shares of 11.59% and 7.24% respectively. As for sales per importer, RYMCO acquired the largest stake of newly registered cars with 16.89% of the total, followed by Natco with 12.68%, BUMC and Century Motors with 12.37% and 6.98%, respectively. (ALCI 11.02)

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5.4 WEF to Convene in Jordan in April

The World Economic Forum (WEF), the International Organization for Public-Private Cooperation, will host its regional meeting on the Middle East and North Africa at the Dead Sea in Jordan on 6-7 April 2019. The gathering, held in partnership with the King Abdullah II Fund for Development (KAFD), will be the 10th meeting in Jordan and 17th in the region. More than 1,000 government, business and civil society leaders from over 50 countries will convene to discuss the impact of new technologies on the Arab world, how to strengthen entrepreneurship, peace and reconciliation efforts across the region, and the effects of climate change and other environmental challenges.

Building on the Forum’s Annual Meeting in January in Davos and its theme of Globalization 4.0, the World Economic Forum on the Middle East and North Africa will take place under the theme Charting New Systems of Cooperation, added the statement. With the full support and presence of King Abdullah II and Queen Rania Al Abdullah, the meeting will convene leaders from Gulf Cooperation Council countries, the Levant and North Africa and key international stakeholders from East Africa, Europe and the United States. (Petra 18.02)

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5.5 Saudi Arabia & Jordan to Invest $705 Million in Aqaba Railway Project

Saudi Arabia is bolstering efforts to shore up the economy of a fellow Arab monarchy with a JOD 500 ($705 million) joint investment in Jordan. The Saudi Jordanian Investment Fund and the Aqaba Special Economic Zone Authority signed a memorandum of understanding to establish, develop and manage a railway connecting Aqaba, on the Red Sea across from the Israeli city of Eilat, to a future dry port in the Ma’an governorate.

Saudi Arabia and other Gulf states have used their financial muscle to keep friendly Arab governments in their orbit or to lure away those allied with their adversaries. The Saudi fund’s first major investment in Jordan follows pledges of $2.5 billion from wealthy allies to support the monarchy in the face of large-scale protests last year. Jordan, which shares a border with Saudi Arabia, has for decades relied on aid from the US and oil-rich Gulf nations to prop up its economy, but has struggled after the influx of 1.5 million Iraqi and Syrian refugees further strained the country’s finances.

Upon completion, the railway will operate along a 195 kilometer track, transporting cargo containers to and from Aqaba, Jordan’s only outlet to the sea, as well as phosphate from the mines in Shidiya for export. The Jordan-Saudi fund was formed in 2016 as a partnership between the Saudi Public Investment Fund, which holds a 90% stake and 16 Jordanian banks that own the rest. (AB 11.02)

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5.6 Iraq’s Improving Economy Boosts Zain’s Results

In its consolidated financial results for the full-year 2018, telecommunications group Zain reports that the improving socio-economic situation sweeping Iraq is providing the much-needed stimulus to support Zain Iraq’s turnaround efforts. The operation performed exceptionally well when compared to the previous year. Revenues and net profit are consistently growing on a quarter-on-quarter basis, with full-year revenues reaching $1.1 billion, a 3% increase Y-o-Y and EBITDA reached $423 million, up 11%.

The expansion of 3.9G services across Iraq and restoration of sites in the West and North (97% of all sites restored to date), combined with numerous customer acquisition initiatives, especially in core regions, resulted in an impressive addition of 1.3 million customers (9% increase) to reach 16 million. Another contributing factor to the operation’s financial revival included cost optimization initiatives in areas such as repair and maintenance, as well as the significant growth of data revenues, robust growth in the Enterprise (B2B) segment and the revamping of Zain Iraq’s call centers, which significantly improved customer service. (Zain 14.02)

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►►Arabian Gulf

5.7 Raytheon Wins $1.5 Billion Deal for UAE Missile Launching System

On 18 February, the UAE awarded Raytheon a $1.55 billion contract to supply its air force with platform systems to launch missiles. The agreement was signed at the IDEX military exhibition in Abu Dhabi and followed the award on 17 February of an AED1.3 billion contract to Raytheon to supply the UAE with patriot missiles.

The UAE armed forces signed a total of AED7.2 billion in contracts on 18 February, including AED5.8 billion with international companies. The UAE has signed a total of AED12 billion dirhams in contracts since the IDEX exhibition started. (AB 19.02)

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5.8 Saudi Wealth Fund Plans San Francisco Office in Technology Push

Saudi Arabia’s sovereign wealth fund is following its peers in Abu Dhabi by opening an office the US tech hub of San Francisco. The Public Investment Fund is looking to open offices in San Francisco, as well as New York and London, its Managing Director said at a conference in Abu Dhabi.

Sovereign wealth funds in Gulf Arab states are seeking to plow some of their oil and natural gas billions into technology and communications to lessen their reliance on volatile crude markets and to bring home the businesses and skills that will help transform their economies. Abu Dhabi’s Mubadala Investment Co in recent years opened an office in Silicon Valley to focus on the technology industry. The PIF is looking to bring vertical-farming start-up Plenty to Saudi Arabia. The start-up is backed by Masayoshi Son’s Vision Fund, in which PIF is an investor. (AB 13.02)

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5.9 Saudi King Approves $3.1 Billion for Companies Struggling with Expat Fees

Saudi Arabia will set aside over $3 billion for companies in the kingdom who have struggled to pay expat fees in 2017 and 2018, according to the Labor Minister. The private sector stimulus plan, approved by King Salman, will also waive the increases in fees for companies that haven’t be able to pay. Labor Minister Ahmed bin Suleiman al-Rajhi said that this initiative will support private sector companies and help them expand employment of Saudi citizens.

Reuters reported that the government has approved $3.1 billion for reimbursements under the scheme, which only applies to companies that have had a higher or equal number of Saudi employees than expats. Companies can avail of the scheme if they recruit more Saudis, according to the decree.

The fees were introduced in 2017 as part of a drive to increase non-oil government revenue – a key goal of Crown Prince Mohammed bin Salman’s economic transformation plan – but have drawn fire from business owners in a country accustomed to cheap foreign labor. This has contributed to the exit of hundreds of thousands of foreigners from the Saudi kingdom, hitting the already-struggling economy without making much of a dent in local unemployment. (AB 09.02)

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►►North Africa

5.10 Egypt’s Urban Inflation Rises to 12.7% in January

Egypt’s annual urban consumer price inflation increased to 12.7% in January from 12.0% in December, CAPMAS announced on 10 February. Inflation had fallen in December after an increase in fuel, electricity and transportation prices last year had sent the rate up to a high of 17.7% in October. Egypt has implemented a series of tough austerity measures, including deep cuts to energy subsidies, to help meet the terms of a $12 billion IMF loan program it signed in late 2016.

The rise in inflation is attributed to food and nonalcoholic beverages, wherein month-on-month inflation came in at 0.9% versus -6.7% in December. It should be noted that manufacturers’ profit margins fell from 1 July with the reduction of subsidies and some did not raise prices then, fearing a decline in sales.

Egypt’s last round of fuel and electricity subsidy cuts in June, as well as an increase in metro fares in May, led to a surge in inflation. Continuous increases in fruit and vegetable prices had prompted the interior ministry and the military to sell some basic foods at below-market prices, in a bid to ease citizens’ suffering.

Millions of people in Egypt, the Arab world’s most populous country, live below the poverty line. They are struggling to meet basic needs after successive increases in the prices of vegetables, fruit, fuel and medicine. Annual core inflation, which removes volatile items like food, increased to 8.6% in January from 8.3% in December, Egypt’s central bank said. (Various 09.02)

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5.11 Egypt Unemployment Drops to 8.9% in Q4/18 Versus 10% in Q4/17

Egypt’s unemployment rate dropped to 8.9% in the last quarter of 2018, compared to 10% in the same period the previous year, a statement by the office of Prime Minister Madbouly said. The statement highlighted that the rate was 9.9% for 2018 and 11.3% in 2017.

The PM’s statement came on the same day as the International Monetary Fund (IMF) said that by the end of this fiscal year, Egypt is expected to see a drop in unemployment of down to 8.3%. According to CAPMAS, about 3 million Egyptians are currently unemployed, 75.2% of whom are 15 to 29 years old.

President Abdel-Fattah El-Sisi has pledged to reduce unemployment during his tenure by attracting private sector and foreign investments to boost the economy. In recent years, the government has spent billions of dollars on mega projects such as the new electric power stations, new Suez Canal, massive highways and a new administrative capital, which provided employment to tens of thousands of Egyptians.

Since 2014, the government has been implementing a set of economic reforms to lower budget deficits, including floating the local currency, cutting energy subsidies and putting in place a Value-Added Tax. The IMF has lauded Egypt’s reform program, making available on Monday the fifth tranche of a $12 billion loan signed in 2016. (Ahram Online 06.02)

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5.12 Egypt Seeks to Finance Healthcare for All Egyptians

Early February saw the first meeting of the board of the new Universal Healthcare Authority (UHA) headed by Minister of Finance Maait, created to oversee the implementation of the new universal health insurance system whose first phase will go into effect in July 2019. The new system aims to overcome glitches in the current one and to offer better medical services to the public. This meeting discussed funding for the system, and Khaled Nouri, chair of the board of the General Authority for Healthcare, told Al-Ahram Weekly that it had aimed to lay out a mechanism to make available the necessary funds for the project. He revealed that the funding would be primarily obtained through enrolment in the medical insurance system.

People subject to the social insurance law, people working in the private sector and Egyptians abroad will pay 5% of their insured salary, or of their total salary stated on their tax returns, to gain coverage under the new system. Unemployed housewives and women with unfixed incomes will pay 1% of any income for each of their children, to a maximum of two, and 1.5% for a third child. Funding for the project will also be collected through fees added to products such as cigarettes, in addition to fees collected at toll stations and during the issuance and renewal of driving and vehicle licenses. Fees added to a packet of cigarettes, currently LE0.75, will gradually increase to LE2.5.

The total sums collected would be enough to launch and sustain the system, even if many people are not able to pay the premiums, estimated at 30% of the total by the Ministry of Social Solidarity. Such people’s subscriptions will be provided for in the new budget to ensure good quality healthcare for all social strata.

The new system will be implemented in six phases, the first including the governorates of Port Said, Suez, South Sinai, North Sinai and Ismailia. It will be launched in Port Said in early July. An online system will connect each governorate’s hospitals and clinical units with patient data, while insurance cards will be issued to specify units available for treatment and check-ups. The new system is being overseen by the UHA, the General Authority for Healthcare, and the General Authority for Accreditation and Supervision. (Al-Ahram 07.02)

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5.13 Morocco’s Urban Unemployment Rate Four Times as High as Rural Unemployment

Unemployment in Morocco dropped from 10.2% to 9.8% between 2017 and 2018, according to a High Commission for Planning (HCP) briefing note published on 5 February. In 2018, the economy created 112,000 jobs, 91,000 in urban areas and 21,000 in rural areas. The figure is up from 86,000 new jobs in 2017. The services sector created the most new jobs at 65,000; followed by agriculture, forestry, and fisheries (19,000); construction (15,000); and industry and crafts (13,000).

Rural youth unemployment dropped from 11.4% to 10.4%. Unemployment in urban youth aged 15 to 24 increased 0.4%. The gap between men and women’s employment rates persisted in 2018. Women’s unemployment rate was 14%, compared to 8.4% among men. The unemployment rate was significantly higher among women with vocational training (34.2%) than men (19.1%). Despite the male-female job disparity, unemployment in women dropped 0.7% between 2017 and 2018.

In some cases, holding a more advanced degree translated to a higher likelihood of employment. For example, the unemployment rate among holders of a vocational training diploma was 23.3%, higher than that of general education graduates (15.4%) and that of all graduates aged 15 and over (17.1%). In contrast, unemployment among diploma-holders was 17.1% compared to 3.5% among non-diploma holders. For young people aged 15 to 24, the rate was 26%, compared to 7.2% among people aged 25 and over, says the HCP. (HCP 05.02)

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6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Turkey’s Energy Import Bill Rises by 15.6% in 2018

Turkey’s energy import bill in 2018 increased by nearly 15.6% compared to 2017, according to Turkish Statistical Institute’s (TÜİK) data released on 6 February. The institute’s annual data for 2018 showed that the country paid $43 billion for its energy imports last year compared to $37.2 billion in 2017. Turkey’s total import bill in 2018 showed a 4.6% decrease and amounted to $223 billion, out of which energy accounted for 19.2%.

On 3 October 2018, the international benchmark Brent crude hit a yearly high of $86.74 per barrel. During the period from May to December, oil prices were highly influenced by the U.S. decision to impose sanctions on Iran, along with OPEC’s move to rebalance the market and with escalating trade tensions between the U.S. and China. On 6 November 2017, Brent crude’s highest rate for 2017 amounted to $64.27 per barrel

Turkey’s energy import bill was $60.1 billion in 2012, and gradually decreased in the following years. The bill was $55.91 billion in 2013, $54.90 billion in 2014, $37.84 billion in 2015, and $27.15 billion in 2016, according to the official data. (TÜİK 06.02)

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6.2 Cyprus’ GDP Expected to Grow by Over 3% in 2019

Cyprus’ GDP growth is expected to reach 3.8% in 2018 following 4.2% in 2017, according to the winter interim economic forecast issued by the European Commission. According to the forecast, GDP growth is expected to reach 3.3% in 2019 and 2.7% in 2020. Meanwhile inflation is expected to be 0.8% for 2018, 0.7% for 2019 and 1.2% for 2020. In 2019 and 2020, growth is projected to slow down to 3.3% and 2.7%, due to the less favorable external environment.

According to the Commission, “Cyprus’ economy grew strongly in the first three quarters of 2018, although real GDP growth in the third quarter (3.7% y-o-y) was the lowest of the year” and “economic sentiment rebounded in the fourth quarter after a soft patch in the second and third”. “The labor market continues to perform strongly,” the forecast reads, as employment increased by 3.7% (y-o-y) in Q3/18 and compensation per employee by 1.9% (compared to 0.7% in 2017). Survey data signaled that the construction sector continued hiring in the fourth quarter.

According to the Commission, “employment gains and higher wages are expected to boost disposable income and to support private consumption”. Public consumption is also expected to grow “amid rising wages and employment in the public sector”. Investment should make a “positive contribution in 2019 on the back of strong construction activity.”

Finally, inflationary pressures remain very weak. Consumer price inflation stood at 0.8% in 2018, only marginally higher than a year before. Inflation accelerated in the second half of the year, driven by energy and unprocessed food prices. Core inflation throughout 2018 fluctuated around zero, as moderately higher prices of services were offset by falling prices of non-energy industrial goods.

Over the coming quarters, two opposing forces will be at play: rising disposable income, which will fuel price pressures; and lower oil prices, which will dampen them. Overall, headline inflation is expected to ease to 0.7% in 2019. As the impact of lower oil prices fades, inflation should pick up moderately in 2020 to 1.2%. (CNA 07.02)

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6.3 Cyprus Issues €1 Billion in Bonds to Pay its Russian Loan

Nicosia is to issue a 15-year maturity bond of €1 billion to pay off part of a €2.5 billion loan obtained from Russia back in the torrid financial landscape of 2011. The yield of the bond has yet to be announced. The latest debt issue of the Republic of Cyprus took place after the country’s creditworthiness was reinstated to investment grade by S&P in September. Cyprus had issued a 10-year bond of €1.5 billion with a yield of 2.4% (a 2.37% coupon), the lowest ever offered by Cypriot bonds.

This bond will be used to repay installments of the Russian loan and the Euro Medium Term Note (EMTN). During 2019, Cyprus will have to pay two equal installments of € 312.5 million each to repay Moscow. Cyprus will have to pay back Russia the same amount each year until 2021.

The Republic of Cyprus aims to have stable and continuous access to international markets, with the country appealing to the international market once a year, over a period of 5-10 years with bonds maturity of 10 to 15 years. The Finance Ministry is very optimistic that the bond will attract investors who were present at roadshows in London, Paris, Munich, Milan and Amsterdam earlier this month. Meanwhile the state has to pay off foreign debt of a total of €1.19 billion in 2019, with the €700 million expected to be covered by the fiscal surplus.

The Russian loan was obtained when the financial crisis first started to bite in 2011, with the then Demetris Christofias administration turning to Russia in an attempt to fend off the IMF-EU intervention which led to the bailout in 2013. Cash-strapped Cyprus had secured a €2.5 billion financial loan with a 4.5% return from Russia, a country with serious financial interests on the island. (FM 18.02)

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6.4 Cyprus’ Tourist Arrivals Rise by 8% in January

Tourist arrivals in Cyprus for January were the highest ever recorded over a 12–month period and spiked 8% on last year. Arrivals of tourists reached 81,970 in January compared to 75,867 in the same month of 2018, recording an increase of 8%.

Tourist arrivals from the United Kingdom (23,447) jumped 17.6% in January from 2018 while an increase of 5.4% was also recorded in tourists from Israel (8,684). On the downside, there was a 2% decrease in tourists from Greece and 27.3% dip from Russia.

The United Kingdom constituted the main source of tourism for Cyprus for January with a 28.6% share of arrivals followed by Greece 13.7%, Israel 10.6% and Russia fourth with 9.6%. The tourism boom has helped Cyprus return to growth following a €10 billion bailout to rescue its crumbling economy and insolvent banks in March 2013. Income from tourism now accounts for about 15% of the country’s gross domestic product and is credited with underpinning a quick recovery. A record 3.93 million tourists enjoyed a Cyprus holiday last year. (Cystat 18.02)

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6.5 Cyprus Legalizes Medical Cannabis

On 15 February, Cyprus’ House of Representatives passed a law which regulates the production, use and import of medicinal cannabis. The legislation regulates the import of cannabis and cannabis seeds into the Republic of Cyprus, as well as licensing fees and administrative penalties, in the event of breach of regulations. Cultivation will be conducted by 3 licensed producers for the first 15 years with reports saying that the aim is to attract large foreign firms with experience in the sector. The fee for the license was set at half a million euros, in addition to €30,000 in annual fees. Based on the provisions of the law only medical doctors are allowed to prescribe the drug. While 34 Parliamentarians voted in favor of the bill, 18 voted against (AKEL, ELAM). (FM 15.02)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 CannaTech Tel Aviv 2019 Israel’s Premier Summit for Accelerating Cannabis Innovation

Israel’s famed CannaTech conference is back in Tel Aviv, the global capital of medical cannabis, the place where innovative Israeli researchers and scientists, high tech experts and “Start-Up Nation” entrepreneurs have fused their knowledge and skills with other world leaders in the industry to develop cutting edge expertise that will be on display in the best known international gathering of its kind. The main events will take place at Trask, in the Tel Aviv Port on the Mediterranean Sea from 1 -3 April 2019.

Companies, entrepreneurs, researchers, investors and other stakeholders will meet at the CannaTech Innovation Summit to connect and learn about the latest opportunities in the booming medical cannabis market as well as the newest cutting-edge technologies and research in the field. At CannaTech attendees will hear from and meet the industry’s most serious thought leaders and market disrupters from around the world. Topics will include Ag-Tech, Regulation, Medical Research, Investment, Media/New Cannabis Communication, Innovation, Hemp and Sustainability.

CannaTech is the only Medical Cannabis event of its kind with a global focus that offers senior industry leaders, medical and scientific experts, and new ventures the platform to come together, drive innovation, form partnerships and promote knowledge exchange. (CannaTech 19.02)

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*REGIONAL:

7.2 Cypriot Bill Aims to Ban Tattoos for Teens

A bill sponsored by the Cypriot Health Ministry was submitted to parliament on 18 February aimed to regulate the registration of tattoo artists and body piercers by offering new guidelines and penalties for violators. The new law would require written parental consent for young people aged between 16 and under 18 who may want a tattoo or body piercing, although it was not clear from the draft whether this included the more traditional ear piercings. People who get a tattoo or have their body pierced would also have a nine month waiting period if they are blood donors. Tattoo artists and body piercers would also need to be at least 21 years old and have a clean bill of health in order to be registered professionals.

The new law would also ban professionals if they have a prior conviction, while all registered tattoo artists and body piercers must have first aid certification as well as have a diploma directly in their line of work. The new legislation would also provide for the formation of a disciplinary council that would oversee all registered professionals, while possible violations could carry up to three years in prison and up to €5000 penalty. The draft was originally submitted to the Legal Services back in 2012, asking for legal input before being put to a vote in the House. (Phileleftheros 19.02)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Vessi Medical’s Surface Cryoablation Therapy for Bladder Cancer Successful in Animal Trials

Vessi Medical announced a successful animal study demonstrating the use of its surface cryoablation therapy inside the urinary bladder. Vessi’s minimally invasive solution introduces an alternative for the treatment of non-muscle invasive bladder cancer (NMIBC). Vessi’s bladder-specific cryoablation technology seeks to eliminate problems often reported with Transurethral Resection of Bladder Tumor (TURBT), today’s first line of treatment.

TURBT, a costly, highly invasive surgical procedure performed under general anesthesia, is often an inadequate treatment option: In up to 80% of cases the cancer returns; increased complications occur with multiple procedures that further reduce patients’ quality of life. Vessi’s minimally invasive cryoablation solution for NMIBC addresses an initial market estimated at $1.2 billion. Categorized as surface cancer on the inside lining of the bladder, NMIBC affects 2 million people globally, with 300,000 new cases reported annually.

The patent-pending Vessi system – inserted transurethrally into the bladder – includes a cryo-spray designed for the bladder’s unique environment. The system balances the ideal cooling temperature and pressure for targeted cell destruction, while protecting the untargeted bladder tissue. The procedure, aimed to be administrable in an office or outpatient setting, is designed as an intuitive “same-style” TURBT procedure for efficient user adoption.

Misgav’s Vessi Medical takes a new approach in the treatment of superficial bladder cancer. The Company uses surface cryotherapy, a treatment that utilizes extreme cold, to freeze and destroy abnormal tissue. Its minimally invasive solution for non-muscle-invasive bladder cancer (NMIBC) provides an office-based therapeutic alternative to surgery.

Currently, surface cryotherapy is used extensively in many applications, and it has been known to be highly effective in destroying surface lesions. The Vessi Medical system consists of a standalone console and a disposable catheter that is inserted into the bladder similar to existing intravesical (inside the bladder) techniques. (Vessi Medical 22.01)

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8.2 New Biomarker Links Cancer Progression to Genome Instability

A new Tel Aviv University study identifies elevated levels of a protein called ubiquilin-4 as a new biomarker for genome instability. The study finds that ubiquilin-4 takes part in defending the genome from DNA damage, but too much ubiquilin-4 is harmful. When the amount of ubiquilin-4 rises in tumor cells, the cells become more prone to genome instability, accelerating the tumor’s progression and making it resistant to commonly used cancer treatments.

This novel biomarker provides new, critical information about the tumor stage and grade, as well as the patient’s chances of responding to treatment. Tumors with high levels of ubiquilin-4 may be more resistant to radiation and some chemotherapies than those with normal levels of this protein. But the good news is that they may also respond better to other types of cancer therapy. Obviously, this is vital information for clinicians and patients.

According to the new research, the body’s DNA damage response is key to maintaining genome stability in the face of the constant onslaught of damaging agents. The response is composed of a broad, fine-tuned signaling network involving a standing army of proteins fully dedicated to this mission, as well as reserve proteins recruited temporarily to help resolve genome integrity.

In 1995, the Shiloh lab discovered the gene encoding of one of the major sentries at the gate of genome stability — the protein ataxia-telangiectasia mutated (ATM). The finding was met with great fanfare. It concluded a long effort to identify the gene mutated in a severe genome instability syndrome, ataxia-telangiectasia (A-T). But ATM also plays a critical role in the body’s DNA damage response, mobilizing an extensive signaling network in response to tears in the long DNA molecule. It causes subtle chemical modifications in many proteins, which temporarily render them reserve proteins and recruits them away from their regular duties to carry out damage control. (AFTAU 10.01)

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8.3 Teva Announces U.S. Launch of a Generic Version of Sabril (Vigabatrin)

Teva Pharmaceutical Industries announced the launch of a generic version of Sabril®1 (vigabatrin) tablets, 500 mg in the US, the first generic version of Sabril® (vigabatrin) tablets to enter the US market. Vigabatrin oral tablets are indicated as adjunctive therapy for adults and children (10 years of age or older) with refractory complex partial seizures (CPS) who have inadequately responded to several alternative treatments and for whom the potential benefits outweigh the risk of vision loss. Vigabatrin tablets are not indicated as a first line treatment for CPS.

With over 550 generic medicines available, Teva has the largest portfolio of FDA-approved generic products on the market and holds the leading position in first-to-file opportunities, with over 100 pending first-to-files in the U.S. Currently, one in seven generic prescriptions dispensed in the U.S. is filled with a Teva generic product.

Teva Pharmaceutical Industries is a global leader in generic medicines, with innovative treatments in select areas, including CNS, pain and respiratory. They deliver high-quality generic products and medicines in nearly every therapeutic area to address unmet patient needs. Teva has an established presence in generics, specialty, OTC and API, building on more than a century-old legacy, with a fully integrated R&D function, strong operational base and global infrastructure and scale. Headquartered in Israel, with production and research facilities around the globe, Teva employs 45,000 professionals, committed to improving the lives of millions of patients. (Teva 06.02)

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8.4 Leviticus Cardio & Jarvik Heart Unveil Groundbreaking Wireless Heart Pump System

A groundbreaking piece of medical technology was revealed to the public at the National Research Center for Cardiac Surgery in Astana, Kazakhstan. At a press conference held at the Center, top heart failure experts from around the world announced the successful implantation of Leviticus Cardio/Jarvik Heart’s FIVAD (Fully Implanted Ventricular Assist Device) into a human.

FIVAD is based on technology created by Leviticus Cardio, a medical technology company headquartered in Israel. It uses patented Coplanar Energy Transfer (CET) to wirelessly power a heart pump – a Ventricular Assist Device (VAD). FIVAD incorporates a heart pump produced by Jarvik Heart, an established manufacturer of ventricular assist devices. FIVAD is a fully implanted VAD system, a Jarvik 2000 pump, powered wirelessly using both internal and external components designed by Leviticus Cardio, which allows patients to walk around without any physical impediments for up to 8 hours a day. FIVAD is also equipped with a back-up system (Jarvik Heart, Post Auricular driveline connection) which would allow moving to traditional wired power in case the wireless system failed. While the back-up was tested during the implant procedure, it has not been needed since that initial implant test.

Founded in 2008, Petah Tikva’s Leviticus Cardio is a medical device company dedicated to improving the clinical outcome for patients with an implanted left ventricular assist device (LVAD) for the treatment of impaired cardiac function. The Company has received funding from The Trendlines Group, Israel’s foremost seed- and early-stage investment group, a consortium of acclaimed cardiovascular physicians, private investors and Israel’s Innovation Authority (previously, the Office of the Chief Scientist of the Ministry of Economy). (Leviticus Cardio 09.02)

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8.5 Bayer, Netafim and BGU Integrate Digital Tools for Drip Irrigation Optimization

Bayer, Netafim and BGN Technologies, the technology company of Israel’s Ben-Gurion University of the Negev (BGU), announced in Berlin that they have signed a three year research collaboration. The project will combine leading soil research, digital prediction tools and state-of-the art drip technology by Netafim to develop best practices for using drip irrigation as a delivery system for the Bayer nematicide Velum Prime in Israel.

Lately, social acceptance of the use of chemical crop protection became limited, which resulted in political pressure and the loss of certain products. Since crop protection is an important measure for preserving crop yields, growers are now seeking sustainable agricultural solutions. Bayer and Netafim have addressed this challenge with a new innovative solution named DripByDrip. The concept uses Netafim’s drip irrigation systems to deliver Bayer’s chemical and biological crop protection products. DripByDrip applies the active substances precisely to the plant, resulting in higher efficacy, the need for less crop protection compound and lower environmental impact.

This joint research collaboration aims to further develop DripByDrip. Under the collaboration, comprehensive data sets will be generated experimentally to calibrate digital prediction models for optimized application of crop protection compounds via drip irrigation. This includes laboratory and field studies evaluating the behavior of the Bayer nematicide Velum in soils and plants under typical agricultural conditions in arid regions. Research activities will be carried out in Israel, at the Jacob Blaustein Institutes for Desert Research of BGU and Netafim facilities.

BGN Technologies is the technology company of Ben-Gurion University, Beer Sheva. BGN Technologies brings technological innovations from the lab to the market and fosters research collaborations and entrepreneurship among researchers and students. Ben-Gurion University of the Negev (BGU) is the fastest growing research university in Israel. With 20,000 students, 4,000 staff and faculty members, and three campuses in Beer-Sheva, Sde Boker and Eilat, BGU is an agent of change, fulfilling the vision of David Ben-Gurion, Israel’s legendary first prime minister, who envisaged the future of Israel emerging from the Negev.

Netafim is the global leader in precision irrigation for a sustainable future. With 29 subsidiaries and 17 manufacturing plants worldwide, Netafim delivers innovative, tailor-made irrigation and fertigation solutions to millions of farmers, allowing smallholders to large-scale agricultural producers, in over 110 countries to grow more with less. Founded in 1965, Netafim pioneered the drip revolution, creating a paradigm shift toward precision irrigation. In 2017, Mexichem, a leading supplier of innovative solutions in irrigation and chemicals industries acquired 80% of Netafim. Kibbutz Hatzerim holds the remaining 20%. (BGN 07.02)

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8.6 Vectorious Announces World’s First In-Heart Microcomputer for Left Atrial Pressure Monitoring

Vectorious Medical Technologies announced the initiation of the VECTOR-HF First-in-Human (FIH) clinical trial, and the successful first ‘in-human’ implantation of the V-LAPTM monitoring device. The VECTOR-HF First-in-Human (FIH) trial will enroll up to 30 patients at six European sites across Germany, Israel, Italy and the UK. It is a prospective, multicenter, single-arm, clinical trial designed to assess the safety and performance of the V-LAP system in preparation for receiving the CE Mark.

Vectorious’ V-LAP sensory device is the world’s first digital, wireless, battery-less device that is able to communicate from deep within the body using high-resolution waveform morphology. Since the pressure of the heart’s left atrium is the earliest and most accurate real-time indication of heart failure exacerbation, the actionable feedback provided by the V-LAP will enable a significant improvement in ongoing management of heart failure patients. Once patients are implanted with the V-LAP, they will be able to measure left atrial pressure (LAP) daily at home via an easy, non-invasive method using a small, portable external unit.

Implantation of the device in this first “In-Human” trial was completed in just six minutes. It was fixated within the patient’s interatrial septum of the heart using a standard minimally-invasive percutaneous procedure under fluoroscopy and echocardiographic guidance, with the application of local anesthesia

Tel Aviv’s Vectorious Medical Technologies targets optimal HF treatment based on its V-LAP sensory implant. The V-LAPTM Implant Pressure Sensor is the world’s first digital, wireless, battery-less device that is able to communicate from deep within the body. It provides actionable feedback based on high resolution waveform morphology from the heart’s left atrium – the earliest and most accurate indication for heart failure exacerbation. The left atrial pressure (LAP) is measured at home by the patient using an external unit on a daily basis and is monitored remotely by the physician using its cloud-based technology. (Vectorious 04.02)

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8.7 New Israeli Study Shows Medical Cannabis Eases Autism Symptoms In Children

A new Israeli scientific study has shown that the use of medical cannabis in children under 18 diagnosed with autism spectrum disorders (ASD) can relieve common symptoms such as seizures, disruptive behaviors, depression, and restlessness. The Israeli study was conducted by researchers from Ben-Gurion University of the Negev (BGU) and the Soroka University Medical Center, among them Professor Raphael Mechoulam, the renown organic chemist who in 1964 was the first to identify cannabis’ THC compound, the chemical known for causing a “high.” Mechoulam is credited with laying the foundation for scientific research on cannabis and its use in modern medicine.

In the new study, titled “Real life Experience of Medical Cannabis Treatment in Autism: Analysis of Safety and Efficacy” and published in the scientific journal Nature, researchers found that over 80% of the parents of the children in the study reported significant or moderate improvement in their child. The treatment in the majority of the 188 child patients was based on cannabis oil containing 30% CBD (Cannabidiol, a non-psychoactive chemical produced by the cannabis plant) and 1.5% THC. All the children in the study, ranging in age from under 5 to 18, were previously diagnosed with ASD by certified neurologist or psychiatrist, as required by Ministry of Health prior to the initiation of the cannabis-based treatment. The patients were assessed before the cannabis oil treatment, after a month of treatment, and after six months of treatment.

The researchers noted that the study was observational and with no control group, and “therefore no causality between cannabis therapy and improvement in patients’ wellbeing can be established.” Furthermore, the study was based on a “subjective self-report of the patient’s parent’s observation and not by the patients themselves. These reports, with subjective variables such as quality of life, mood, and general effects, may be biased by the parent’s opinion of the treatment.” The study was funded by Tikun Olam, one of Israel’s biggest medical cannabis companies. Naama Saban of Tikun Olam’s research department also co-authored the study. (NoCamels 12.02)

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8.8 NRGene & Kayagene Breakthrough Enables Cannabis Growers to Fast-Track Breeding

NRGene and Salinas, California’s Kayagene announced the completion of the first fully-phased cannabis genome using NRGene’s DeNovoMAGIC technology. NRGene has created a full suite of tools to help breeders achieve commercial targets. By using these genomic tools, master growers are now able to make selections earlier in the breeding program, dramatically accelerating a process that usually takes years to develop and comes with substantial operating costs. Breakthroughs like this carry significant benefits for the scalability of licensed cannabis producers around the world.

Ness Ziona’s NRGene is a genomics company that provides turn-key solutions to leading breeding companies. Using advanced algorithmics and extensive proprietary databases, NRGene empowers breeders to reach their full potential by achieving stronger and more productive yields in record time. NRGene’s tools have already been implemented by some of the leading agri-biotech companies worldwide, as well as the most influential research teams in academia. (NRGene 11.02)

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8.9 MaxQ Accelerates Artificial Intelligence Performance with Intel

MaxQ AI announced that through its collaboration with Intel, it was able to triple the computational performance of its Accipio intracranial hemorrhage (ICH) and stroke detection platform, enabling clinicians to prioritize critical patients and provide faster, near real-time ICH diagnosis. MaxQ AI’s Accipio platform uses vision algorithms comprised of machine learning neural networks capable of reading all major CT OEMs’ non-contrast CT with a goal of providing speed and confidence in diagnosing suspected ICH. Accipio Ix has received both FDA clearance and CE Mark certification, and is being deployed through major OEM CT and PACS partners to the global acute healthcare space.

MaxQ is committed to harnessing the power of AI to raise the level of acute care in hospitals with expert results that can potentially save lives, improve quality and lower healthcare costs. Based on deep-learning technologies, the Accipio lx software platform is trained to automatically analyze CT images for ICH. The acute imaging AI engine leverages deep vision and cognitive analytics to compare billions of data points to identify even rare, long-tail anomalies. The platform is capable of combining the full richness of medical imaging along with other relevant patient data.

MaxQ’s Accipio Ix reduces the time needed to detect hemorrhages, enabling physicians to prioritize patient care when time is of the utmost importance. MaxQ AI’s Accipio Ix can now achieve over 300% acceleration in the computational flow of algorithms on Intel AI, without impacting detection accuracy.

Tel Aviv’s MaxQ AI is at the forefront of Medical Diagnostic AI. They are transforming healthcare by empowering physicians to provide ‘smarter care’ with artificial intelligence (AI) clinical insights. Their team of deep learning and machine vision experts develop innovative software that uses AI to interpret medical images and surrounding patient data. Working with world-class clinical and industry partners, the software enables physicians to make faster, more accurate decisions when diagnosing stroke, brain trauma and other serious conditions. (MaxQ AI 13.02)

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8.10 Seedo Corp & SYS Technologies Enter MOU for Clean Growing Systems for Commercial Use

Seedo Corp. signed a memorandum of understanding for mutual research and development with SYS Technologies to deploy next-generation containerized clean growing solutions for commercial use. The systems will be applied to technology used in hospitals and research laboratories, resulting in high-quality yield of both medical cannabis and vegetables. SYS Technologies will provide Seedo’s commercial indoor growing machines with positive air pressure clean environment technologies, resulting in pressurized growing containers that have more filtered air then the surrounding space outside the containers. The protected containers will be bacteria-free with zero environmental influence, allowing commercial operators to cost-effectively generate high yields of lab-grade, pesticide-free product. Even in the harshest environments or with limited space, cultivators can use Seedo’s intelligent systems and cloud-enabled app for secure remote monitoring and controlling to harvest the leading-edge of precision agriculture.

Or Akiva’s Seedo Corp. offers a variety of innovative solutions and breakthrough technology in the field of indoor clean environment systems as well as portable solutions. Its clean air environment systems allow the creation of a defined space that is free of contaminants such as particles, bacteria, microbes, and more. These systems have broad applications, both in the medical field such as operating rooms and isolation facilities, and in the high-tech industry such as cleanrooms that have a variety of purposes.

Yokneam Illit’s Seedo is a market leading high-tech company providing the cannabis and agriculture industries with the world’s first fully automated and controlled indoor growing machine and Commercial Containers products. Seedo provides growers with the freedom to cut costs while generating high yields of lab-grade, pesticide-free herbs and vegetables. Seedo’s AI-powered, turnkey systems enable anyone from average consumers to large-scale producers the ability to grow without prior experience or ample space. (Seedo 12.02)

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8.11 Equinom Says ‘Open Sesame’ to Local Markets

Kibbutz Givat Brenner’s Equinom, a leading-edge seed technology company, launched its unique patented sesame variety to open new markets for the cultivation of sesame. Equinom has developed, high-yield, high profile, sesame seeds, that provide advanced organoleptic characteristics plus a shatter-resistance trait that makes them suitable for mechanized harvesting.

Equinom’s technological achievement will provide local farmers with a new platform for growing sesame of a higher nutritional profile and sets the ground for the advancement of a more responsible supply chain, greater price stability and cost-effective growth. This technology also brings new hope to farmers located in desert regions where extreme weather conditions threaten crop performance. For consumers, this means food manufacturers can incorporate highly nutritious, clean and safe sesame into their products.

Equinom has been able to breed sesame with a superior nutritional profile tailor-made for a variety of innovative and commercial products, including baking, confectionary, tahini, oil and flour. Equinom’s technology and expertise helps local farmers to eliminate waste, boost oil-yield by up to 100%, improve quality, and reduce the crop’s global footprint. These innovative sesame seeds also help farmers on marginal lands secure added income, diversify output, and reduce the costs of import by up to 40%. (Equinom 12.02)

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8.12 Algatech Delivers Potent Astaxanthin in Whole-food Format

Taking the “whole food” approach Algatechnologies presented AstaPure® Arava, its clean-label, all-natural whole-algae complex. This pure, whole-food form contains all of the naturally occurring constituents of healthful Haematococcus Pluvialis algae. This species of microalgae is also the richest known source of astaxanthin.

AstaPure Arava whole-algae powder, containing the whole algae, natural Astaxanthin and the newly discovered natural complex is backed by research and addresses the needs of consumers seeking pure, whole-food, plant-based, non-GMO nutraceuticals. The results of a new study indicate that Arava algae powder is highly potent and has synergistic effects of the natural astaxanthin and the whole-algae complex. The study identified a complex found in Algatech’s unique Arava strain of Haematococcus Pluvialis, cultivated organically in the desert’s harsh conditions.

Algatech’s proprietary technology mimics the microalgae habitat and natural biological processes. The microalgae is cultivated organically and is exposed to the harsh desert climate, which stimulates the microalgae to produce high levels of active compounds. Algatech’s ESL technology ensures the whole algae components remain undamaged and in their natural form throughout production. AstaPure Arava whole-algae aligns with the market demand for clean-label, sustainable, minimally processed ingredients. During 2019 Algatech is expecting to introduce new innovative products and delivery forms based on the AstaPure Arava powder.

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, and of Fucovital – Fucoxanthin complex extracted from the microalgae Phaeodactylum. (Algatechnologies 11.02)

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8.13 Univo to Become the One-Stop Shop for Medical-Grade Cannabis Products from Seed to Market

Univo announced the development of its state-of-the-art facility and an investment by Hagag Group worth NIS 6 million. Univo is one of the few medical cannabis companies in the world to hold all four licenses for cultivation, research & development, production and distribution of their own cannabis products.

Univo has the ability to create medical-grade products to help with neurodegenerative disorders, autoimmune and inflammatory diseases, metabolic disease, and neurological disorders. Univo’s vision is to make pain management easy with proposed products that will be able to soothe children living with ADHD, relieve tooth and gum pain, reduce oral pain caused by infections and cavities, and to alleviate skin allergies and pain caused by intestinal issues. Additionally, Ido Hagag, The Hagag Group has invested NIS 6 million in Univo. After examining several investment options in the field of cannabis, Hagag acquired 11.6% of the company, citing Univo’s impressive licenses, first-class professionalism, and comprehensive infrastructure for operations in Israel and internationally.

Ashkelon’s Univo, founded in 2016, will grow high quality cannabis and develop diverse products using innovative technologies and unique genetics of medical cannabis strains. They are currently developing a highly sophisticated GAP greenhouse and a GMP state-of-the-art manufacturing facility to cultivate a wide variety of cannabis strains to meet their goal of treating a wide range of medical needs. (Univo 13.02)

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8.14 Sight Diagnostics Raises $27.8 Million in Series C Strategic Funding

Sight Diagnostics has raised $27.8 million in Series C funding led by Longliv Ventures, a member of the CK Hutchison Group – a multinational conglomerate whose portfolio includes more than 14,900 health and beauty stores across Europe and Asia. Keeping with a focus on strategic investment, other investors that joined the round also contribute to Sight’s technological and commercial expansion. Among these are Jack Nicklaus II, a healthcare philanthropist and board member of the Nicklaus Children’s Health Care Foundation, Steven Esrick, a healthcare impact investor, and an additional major medical equipment manufacturer. Also joining Sight’s Series C are existing investors OurCrowd, Go Capital and New Alliance Capital.

Sight’s mission is to improve health by providing fast, accurate, and pain-free testing when and where it is needed. The company will use the funding to continue the global expansion of its lab-grade point-of-care blood diagnostics system, OLO. Additionally, the round will support Sight’s regulatory efforts in the US and further its R&D to expand its menu of diagnostic tests. OLO allows patients to receive their blood test results within minutes at the point-of-care, rather than making them wait days to receive results, so that accurate treatment can be delivered faster. Moreover, OLO permits its blood samples to be collected from a finger-prick, thereby eliminating the pain and inconvenience of venous blood draws. Sight’s patented method of “digitizing” blood – which takes extremely detailed images of blood and then analyzes them with AI-driven computer vision algorithms – was first deployed in African countries and India in 2014, where it was used to detect malaria with exceptional accuracy and at low cost. Sight’s technology now offers Complete Blood Counts (CBCs) – the most prevalent blood test in the world.

Tel Aviv’s Sight was created to provide patients with access to accurate, convenient and pain-free diagnostic testing that delivers results in minutes instead of days, in order to transform healthcare. To do so, Sight has developed an artificial intelligence-driven platform for blood analysis and infectious disease diagnostics based on its revolutionary methods for ‘digitizing’ blood. Sight was founded by a team that includes Harvard-trained biotechnologists, experts in AI, and instrumentation engineers, many of whom hail from the world-renowned IDF technology units. (Sight 14.02)

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8.15 Zebra Granted Three Israeli Government Grants to Deploy Medical Imaging AI

Zebra Medical Vision has received government support through generous grants from the Israel Innovation Authority. Zebra Medical Vision will put its AI algorithms to use in critical emergency situations at Ichilov Hospital, and will work to detect early signs of breast cancer and osteoporosis at Macabi and Clalit HMOs. These three health providers manage over 90% of Israeli patients.

The emergency room is a bottleneck for deciphering and diagnosing medical cases, and therefore requires rapid and efficient interpretation using artificial intelligence. Zebra-Med’s technology can help radiologists prioritize by scanning their entire queue and flagging those that need immediate attention, such as acute brain bleeds in head CT scans or Pneumothorax in chest X-rays. Additionally, Zebra Medical Vision will provide its AI predictive imaging analysis in collaboration with Israel’s largest HMOs to risk stratify large populations and enable early detection of breast cancer and osteoporosis.

Zebra-Med’s data and research platform has already yielded AI imaging insights that have been deployed over millions of scans. Last year, Zebra received 7 CE marks and for its various algorithms and 510(k) FDA clearance for its Coronary Calcium Scoring algorithm allowing the company to expand its footprint in the US and EU. In addition to the Israel Innovation Authority grants, Zebra has also raised over $50 million from a range of investors over three funding rounds.

Kibbutz Shefayim’s Zebra Medical Vision uses deep learning to create and provide next generation products and services to the healthcare industry. Its Imaging Analytics Platform allows healthcare institutions to identify patients at risk of disease, and offer improved, preventative treatment pathways to improve patient care. (Zebra 15.02)

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8.16 Israel Innovation Authority Launches $1 Million Healthcare Innovation Contest

The Israel Innovation Authority announced the launch of a competition that will see four Israeli companies awarded a total $1 million toward research and development for healthcare-related technology solutions with global impact and R&D support, in partnership with Thomas Jefferson University (TJU) in Philadelphia. The project will allow Israeli companies to test their concepts in a living laboratory with access to TJU’s clinical, service line, administrative and leadership staffs across a variety of care settings, including inpatient, outpatient, ambulatory, urgent care, rehabilitation, and community, the Israel Innovation Authority said. (NoCamels 17.02)

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8.17 dayzz Selected to Join Philips Healthworks Startup Program

dayzz announced its acceptance to the Philips Healthworks Startup Program, which accelerates breakthrough innovation through internal venturing and external startup engagement. Philips Healthworks aims to develop collaboration with startups and provides access to a broad ecosystem of hospitals, investors and clinicians to help them with expertise and coaching. dayzz was selected from hundreds of applicants to participate in the 12-week program, the first startup program to combine consumer and professional health companies.

The program is customized to each participating company, each of whom will work with Philips coaches as well as external experts. dayzz will have the unique opportunity to test its solution and pitch industry leaders and decision makers in the health tech field.

Herzliya’s dayzz is an innovative corporate sleep solution, providing personalized sleep training plans to employees across the US. Based on big data analysis, dayzz offers its mobile app to US employers as a way to increase productivity for their employees, enhance performance and wellbeing, optimize usage of the healthcare system, and reduce costs by allowing for fewer accidents and days off work. The company was established in 2017 by Maabarot Products, leading Israeli nutrition and health product developer, manufacturer and marketer, and is led by an experienced team in the fields of business, technology and clinical treatment. (dayzz 14.02)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Sital Technology Announces the World’s First Secured 1553 Component

Sital Technology announced the availability of a Secured MIL-STD-1553B/1760 solution. The secured 1553 capabilities provide real-time detection and prevention against zero-day cyber-attacks. The Secured 1553 solution is available as a standalone FPGA IP core, and as a part of Sital’s MIL-STD-1553B/1760 product portfolio. The Secured 1553 solution is DO-254 DAL A compliant and suitable for all military and civil applications.

Kfar Saba’s Sital Technology is a world leader in the design and manufacture of high-reliability connectivity solutions (FPGA IP cores; Transceivers; Transformers; software; I/O boards) for aerospace, defense, space, and industrial applications. With a focus on quality, innovation, delivery, and support, Sital has served these industries as a trusted resource for more than 20 years providing proven solutions that are optimized for efficiency, reliability, safety, security and performance. (Sital 06.02)

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9.2 PagerDuty & Anodot Optimize Customer Operations With Autonomous Analytics

Anodot and San Francisco’s digital operations management platform PagerDuty announced their strategic collaboration as integration partners to ensure customers benefit from true self-service detection, providing accurate alerts of business incidents in real-time. As integration partners, PagerDuty and Anodot collaborate to bring joint value to customers, delivering an unparalleled digital experience with real-time insights and detection. With PagerDuty’s real-time operations management and Anodot’s real-time incident detection, this partnership will enable customers to constantly stay one step ahead of damaging business events, before costing companies significant ROI.

Anodot’s integrated solution with PagerDuty ensures detection of critical business incidents and root cause analysis, allowing companies to restore services and mitigating risk. Customers such as Clicktripz and Browsi depend on Anodot’s autonomous analytics solution in combination with PagerDuty’s operations management to monitor business data at a highly granular level in real-time, for faster detection and resolution of business issues.

Ra’anana’s Anodot empowers companies to run healthy businesses, at scale. Unlike humans, machines are built to scan big data. Anodot’s Autonomous Analytics platform leverages advanced machine learning techniques to constantly analyze and correlate every business parameter, providing real-time alerts and forecasts in their context, to lower time to detect anomalies and resolve incidents. (Anodot 06.02)

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9.3 IncrediBuild Launches a Unit Test Acceleration Product

Tel Aviv’s IncrediBuild, a leading development acceleration solution provider, announced its new Unit Test acceleration product. Today, development teams are forced to commit a fix to the SCM and are expected to compromise on a partial test for their product due to lack of time and resources. IncrediBuild transforms each developer machine into a virtual supercomputer with hundreds of aggregated cores, allowing the Dev team to run the entire test suite with no need to compromise. By using IncrediBuild, you can dramatically reduce the number of builds that fail in the continuous integration and eliminate unnecessary iterations between DevOps and developers.

IncrediBuild for Unit Test, offers a minimal configuration process, easily installed on multiple testing environments and on any machines that run assembly tests (including databases, frameworks, etc.). Once IncrediBuild is on your system, the production or any other environment required is instantly created as part of the installation. IncrediBuild for Unit Test supports all major unit test frameworks, including NUnit, Google Test, XUnit, MSTest/VSTest, and more. (IncrediBuild 06.02)

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9.4 Gilat Demonstrates Maritime Connectivity Over Telesat’s Phase 1 LEO Satellite

Gilat Satellite Networks announced the completion of a successful test with a tier-1 maritime service provider for maritime communication over Telesat’s low earth orbit Phase 1 LEO satellite. This industry-first milestone exemplified exceptionally low latency and high bit-rate essential for multiple maritime applications.

The remarkable performance with latency as low as 16 msec was achieved in the tier-1 maritime service provider’s teleport in Northern Europe. The test was performed with Gilat’s LEO modem and a one-meter small maritime Ka-band antenna, demonstrating direct real-time communication. Outstanding performance was achieved in testing video conferencing, over-the-top (OTT) video such as YouTube and massive data communication on a symmetric link.

Petah Tikva’s Gilat Satellite Networks is a leading global provider of satellite-based broadband communications. With 30 years of experience, they design and manufacture cutting-edge ground segment equipment, and provide comprehensive solutions and end-to-end services, powered by our innovative technology. Delivering high value competitive solutions, their portfolio comprises of a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid State Amplifiers (SSPA) and Block Upconverters (BUC). (Gilat 06.02)

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9.5 ArmorMe Bulletproof School Backpack for Every Family Budget

Israel’s ArmorMe has launched its first bulletproof school backpack developed with every family in mind. The backpack provides peace of mind in a light and stylish design. The bags are available at Amazon and at ArmorMe.com and will ship to global retailers soon.

The Washington Post has reported that since the Columbine shooting, nearly 187,000 students at 193 schools primary and secondary schools have been exposed to a shooting on campus during school hours. The ArmorMe backpack was developed by Israeli security experts to meet the highest safety standards and with style and comfort in mind. The packs are designed with safety in mind and for the most common attack scenarios. The Kevlar used exceeds the global standard for safety for handgun attacks.

The backpack was developed with an easy-on, easy-off design which makes speed and safety a reality. A single paneled backpack costs $160 to $190 with coverage from neck to knee when worn in front. The double-paneled backpack costs $210 to $250 and provides coverage for both sides of the torso. (ArmorMe 06.02)

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9.6 Introducing AudioCodes Voice.AI Gateway

AudioCodes announced the introduction of the AudioCodes Voice.AI Gateway, a flexible and scalable solution for integrating bots and cognitive voice services with private and public voice communications networks and solutions. Designed with an intrinsically multi-cloud approach, the AudioCodes Voice.AI Gateway offers orchestration of multiple public cloud services, including Microsoft Azure, Amazon Web Services (AWS) and Google Cloud Platform (GCP).

Enterprise IT web developers, system integrators, service providers and contact center vendors can leverage the AudioCodes Voice.AI Gateway to develop advanced bot and cognitive voice-powered business applications and make them accessible via IP PBX, Unified Communications, SIP Trunk and WebRTC communication solutions and services. The AudioCodes Voice.AI Gateway is available for controlled proof-of-concept trials, connecting SIP and WebRTC networks and users to Microsoft Azure’s bot framework.

Lod’s AudioCodes is a leading vendor of advanced voice networking and media processing solutions for the digital workplace. AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers and hosted business services. AudioCodes offers a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world. (AudioCodes 05.02)

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9.7 Eyesight Technologies Creates CabinSense – A Smart Car Cabin Software

Eyesight Technologies announced the launch of its new CabinSense™ in-car Occupancy Monitoring System (OMS). CabinSense OMS sees inside the cabin using computer vision to recognize the passengers, their ages, genders and position. The CabinSense facial recognition system identifies enrolled users. This allows carmakers to create a fully personalized in-car environment, automatically adjusting features such as the cabin’s temperature, seats, volume and media selection based on the individual and group preferences.

As cars become more autonomous, we will experience a major shift from driving experience to riding experience. The car cabin is slowly evolving into something more like a mobile lounge – a third space, following home and office. The CabinSense software enables demographic-based targeting of media, environmental preferences and even advertising, based on the detected passengers and their determined ages and genders.

Critically, the CabinSense solution can also make car rides safer for passengers. The CabinSense software allows cars to intelligently protect their passengers. The system can detect if passengers are wearing their seatbelts properly and if people are sitting safely. This information can be used to alert the driver or passenger to fix their belt, or to disable airbags when a child-seat is detected. The system also enables active safety measures.

Tel Aviv’s eyeSight Mobile Technologies is a leader in touch free Interfaces for consumer electronics. Its technology allows users to control mobile and portable devices with simple hand gestures by using the built-in camera, advanced real-time image processing and machine vision algorithms. (Eyesight Technologies 14.02)

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9.8 Ethernity Networks Introduces Affordable Programmable VPN Gateway

Ethernity Networks introduced its ENET VPN Gateway, enabling the aggregation of multiple virtual private network (VPN) tunnels. The ENET IPSec VPN solution fully offloads security functions from the CPU to the FPGA and uses Host Bypass to provide a more robust security than competitive solutions at a lower solution cost.

The ENET VPN Gateway integrates widely-used open source Libreswan security management software into Ethernity’s fully programmable FPGA-based security appliance and accelerates it to enable encrypted connectivity over the untrusted network. Libreswan offers a popular, affordable software solution that avoids vendor lock-in. Moreover, the FPGA within the ENET VPN Gateway appliance offers programmability that ensures future readiness for integration of other existing open source software as well as new flow monitoring functions, security protocols, and crypto algorithms. The new Host Bypass feature isolates the traffic, packet editing, and encryption exclusively to the FPGA, entirely bypassing the CPU, which is vulnerable to breaches. The host can be authorized to receive or monitor traffic as needed, but by default, the FPGA handles all networking, flow monitoring, and security functionalities.

Lod’s Ethernity Networks provides innovative SDN/NFV and security solutions on programmable hardware for accelerating telco/cloud networks. Ported onto any FPGA, Ethernity’s software offers complete data plane processing with a rich set of networking features, robust security, and a wide range of virtual functions to optimize your network. Their ACE-NIC smart network adapters, ENET SoCs and turnkey network appliances offer best-in-class all-programmable platforms for the telecom, cloud service provider and enterprise markets. (Ethernity Networks 19.02)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel’s Inflation Rate Falls by 0.1% in January

The Central Bureau of Statistics announced in 15 February that Israel’s Consumer Price Index (CPI) fell by 0.1% in January, less than the pundits’ predictions of -0.3% to -0.4%. The CPI has risen 1.2% in the past 12 months, towards the lower end of the Bank of Israel’s annual target range for inflation of between 1% and 3%. This was the third successive month that the CPI has been in negative territory, largely due to the fall in oil prices on world markets.

January is also traditionally a month of negative inflation for seasonal reasons and notable price falls included clothing and footwear, which fell 7%. However the price of fresh fruit and vegetables rose 3.5% and housing maintenance rose 1%. (CBS 15.02)

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10.2 Israeli Economy Grew by 2.2% During Second Half of 2018

The Central Bureau of Statistics announced that Israel’s growth slowed to 2.2% on an annualized basis from 3.4% in the first half of 2018, and 4.3% in the second half of 2017. In fixed prices and excluding seasonal factors, Israel’s GDP rose by an annualized 2.2% in H2/18, according to an initial estimate. The figure is less than the 3.4% growth reported in H1/18 and the 4.3% growth reported in H2/17. Factors having a negative impact on growth included a standstill in exports of goods and services and a decline in investments and spending on private consumption, especially vehicles.

Growth was an annualized 3.1% in Q4/18 and an annualized 2.4% in Q3/18, but only 0.9% in the second quarter. Spending on private consumption rose by an annualized 2.1% in the second half of 2018, following a 4.1% rise in the first half of the year, while per capita spending on private consumption stayed even in the second, following a 2.1% increase in the first half.

Per capita spending on durable goods dropped by an annualized 17%, following a 12.9% increase in the first half of 2018 and a 2.6% increase in the second half of 2017. Per capita purchases of vehicles fell by an annualized 35.2% in the second half of 2018, following an annualized 46.7% increase in the first half, and per capita purchases of household equipment (refrigerators, washing machines, air-conditioners, etc.) fell by 1.7% in the second half of 2018, following a 2.8% fall in the first half of the year. Per capita spending on furniture, jewelry, and watches fell by 5.5% in the second half of 2018, following a 7.3% drop in the first half of the year.

Per capita current spending rose by an annualized 1.4% in the second half of 2018, following a 0.9% increase in the first half of the year. Per capita spending rose 0.5% on miscellaneous services (transportation and communications, personal services, and education, welfare, cultural and entertainment services); 5.1% on miscellaneous industrial products for private consumption; 1.0% on fuel, water, and electricity; and 2.7% on food, beverages and tobacco. Per capita spending rose 3.4% on semi-durable goods and 2.7% on clothing and footwear in the second half of 2018.

Exports of goods and services (excluding diamonds and startups) grew by an annualized 0.6% in the second half of 2018, following a 3.0% rise in the first half of the year and an 11.6% increase in the second half of 2017. Industrial exports (excluding diamonds), were down 3.1%, while annualized exports of tourist services rose 4.8%, exports of miscellaneous services rose 4.4%, and agricultural exports were up 4.4%. Diamond exports rose by an annualized 8.0% and exports of startups increased.

Imports of goods and services (excluding defense imports, ships, airplanes, and diamonds) fell by an annualized 0.7% in fixed prices in the second half of 2018, following a 3.1% rise in the first half of 2018. Imports of civilian goods were down 1.5%, imports of miscellaneous services, excluding overseas travel, rose by 1.0% and spending on overseas travel fell 2.8%. (CBS 17.02)

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10.3 New Figures Show Israel’s January Deficit Reached a 15 Year High

Israel’s budget deficit for the period running from February 2018 through January 2019 stood at 3.3% of GDP, showing a surge in expenditures. The official target deficit for 2019 is 2.9 % of GDP, or NIS 40.2 billion ($11 billion). But according to the Finance Ministry, Israel is currently on track to see a deficit of 3.6% in 2019, or NIS 50 billion ($14 billion), the highest since 2003. The figures also show that the expenditures in January were particularly high and ended with a NIS 800 million ($219 million) deficit. This is the highest budget deficit for January in 15 years.

The State Comptroller’s Office said it would look into the figures to see whether they accurately reflect expenditures, as it does every year. But this year, the Finance Ministry is under particular scrutiny in light of suggestions that officials used accounting tricks to push certain expenditures into 2019 so that the government would meet its target deficit for 2018, 2.95% of GDP. (IH 12.02)

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10.4 Israeli Tourism Starts the Year Strongly

The Central Bureau of Statistics announced that 321,000 people from abroad visited Israel in January, including 35,000 on one day trips (including 3,000 from cruise ships). Some 250,000 tourists entered Israel by air and 35,000 over land. January tourist figures are 11% higher than 2018 and 35% up from 2018.

January is traditionally a relatively weak month for tourism with few people traveling abroad after the Christmas holidays, so Israel’s higher figures last month suggests the country could be on the way to another record breaking year in 2019. In 2018, a record 4.12 million tourists came to Israel, up 14% from 2017, which was also a record and up by 42% from 2016. (CBS 06.02)

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10.5 Israel’s Foreign Exchange Reserves Climb to New Record

The Bank of Israel announced that Israel’s foreign exchange reserves at the end of January 2019 reached a new record of $118.151 billion, up $2.872 billion from the end of December 2018. The reserves represent 32.1% of GDP.

During January the Bank of Israel only purchased $30 million in foreign currency. The increase was the result of government transfers from abroad totaling about $1.213 billion and a revaluation that increased the reserves by $1.659 billion. The increase was slightly offset by private sector transfers of about $30 million. (BoI 07.02)

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10.6 Reciprocal Procurement Garners $13.9 Billion Over Past 5 Years

Reciprocal procurement added over NIS 12 billion to GDP and 41,000 jobs in 2013-2018, the Ministry of Economy and Industry reported. Reciprocal procurement by foreign companies in Israel totaled $13.9 billion over the past five years, 2.3 times the amount required under reciprocal procurement agreements. Some 190 foreign companies made reciprocal procurement orders from 1,840 Israeli industrial companies during this period. Figures provided by the Ministry of Economy and Industry show that reciprocal procurement in 2018 was 135% the amount in 2013.

The figures come from a comprehensive study by EY and Rotem Strategy commissioned by the Industrial Cooperation Authority in the Ministry of Economy and Industry. The study examines the contribution made by reciprocal procurement to the Israeli economy in the past five years. These companies are committed under reciprocal procurement agreements to spend 35% of the amount of their deals on reciprocal procurement. The Industrial Cooperation Authority is responsible for enforcement of reciprocal procurement, subject to the Ministry of Economy and Industry foreign investments and industrial cooperation division.

The study reported that most of the required reciprocal procurement by governments is carried out in the transportation (32%) and defense (29%) sectors. Some 65% of all reciprocal procurement was in conventional industries, including the metal, electrical, vehicle, and aviation industries. 35% was in high-tech industries, including software, medicine and electro-optics. The study also showed that 484 of the Israeli companies that benefited from reciprocal procurement by foreign companies in recent years were small and medium-sized companies that signed deals ranging $1 million to $100 million. (Globes 07.02)

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10.7 Household Debt in Israel Rises by 84% in Less than a Decade

According to a new study by the Taub Center for Social Policy Studies in Israel, from 2013 to 2017, credit card debt in Israel increased by 148%, and the amount of loans issued by financial institutions increased by 140% while bank credit to private households slowed.

The study shows that in 2017, the household debt to GDP ratio in Israel – 42% – was better than many other countries, where it was as high as 100%. However, since 2017, the household debt to GDP ratio in Israel has been rising. As of the end of 2017, total household debt in Israel comprised NIS 530 billion ($152 billion at the end of 2017), 5% higher than in 2016.

Between 2008 to 2017, household debt in Israel jumped by 84%. Total mortgage debt, which is usually subtracted from the value of the home for which a mortgage was issued, increased by 70% in the same period.

Debt has hit the bottom tenth economic percentile of the population in Israel especially hard. In that percentile, 59% of the population in debt are in their prime working years (25 – 54) compared to the top tenth percentile, in which 75% of the population in debt are in their prime working years. Households in the top tenth percentile also take on loans mainly at young ages and work it off over the years, which allows them to maintain a steady level of consumption throughout their lives, the study showed.

Meanwhile, a report by the Central Bureau of Statistics reveals that the number of Israeli households who own the homes in which they live dropped from 70.2% to 66.5% in the 20-year period from 1997 to 2017. The number of households who rent their housing rose from 24.3% to 27.9%. (IH 07.02)

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10.8 New Car Deliveries to Israel Down Slightly in January

January in Israel is usually a strong month for car deliveries, because many private customers and institutions wait for a new year to buy. Sources in the sector believe that natural demand was weak this year, but was offset by strong demand in anticipation of price increases for many caused by revision of the environmental tax.

The leader in auto deliveries in January was Hyundai with 6,921, 9.9% more than in January 2018. In second place was KIA Motors with 4,997 deliveries, up 14.4%, compared with January 2018, followed by Toyota in third place with 3,647, up 13.6% from last year. Fourth place was taken by Skoda with 3,461 deliveries, 27.9% more than in January 2018, and Mitsubishi was in fifth place with 2,445 deliveries, a 10.9% increase, compared with January 2018. (Globes 07.02)

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11: IN DEPTH

11.1 JORDAN: The Jordanian Economy – A Macroeconomic Narrative

On 20 January, the Jordan Strategy Forum released a macro-economic narrative about the Hashemite Kingdom.

The population of Jordan, estimated at 10.05 million in 2017, is composed of Jordanians (6.96 million) and non-Jordanians (3.09 million). As commonly known, the Syrian civil war has resulted in a large influx of refugees. Naturally, these growth rates in the local and foreign-born population. (Figure 1) have many socio-economic implications including their impact on poverty, unemployment, per capita income growth, age dependency ratio, demand for public services, and sustainability of the environment.

The Jordanian economy has been finding it difficult to create enough jobs to reduce unemployment. The overall, male, and female unemployment rates have been rising and consistently high (Figure 2).

The 2018 (2nd quarter) figures show that these rates among the educated and young are even higher (Figure 3).

Within the context of the consistently high unemployment rates, real economic growth witnessed during the period 2000-2017 (Figure 4). This indicates that it could not reduce the extent of this challenge. Naturally, this implies that the “strong and consistent economic growth”, must be realized to make any significant impact on unemployment.

Economists have always tried to understand why some countries enjoy “strong” and “stable” economic growth. Others witness “weak and volatile” growth or “stagnate” at low levels of output.

This effort has led various stakeholders to consider a myriad of factors like human capital, innovation and research and development activities, foreign direct investment, openness to trade, institutional framework and others.

Furthermore, it is argued that fiscal policy can be instrumental in generating real economic growth and development through investment in human and physical infrastructure! The following two quotations could not express the importance of fiscal policy any better. “A typical developing economy collects just 15% of GDP in taxes, compared with the 40% collected by a typical advanced economy. The ability to collect taxes is central to a country’s capacity to finance social services such as health and education, critical infrastructure such as electricity and roads, and other public goods.” (IMF)

“Better infrastructure, both in quantity and quality, improves income distribution. This result, together with the proven role of infrastructure in enhancing productivity and growth, suggests that infrastructure development can have double effects on poverty reduction and inclusive growth… Education spending to enhance human capital could increase the earning power of lower-income groups disproportionately more” (IMF).

Within the context of the role of fiscal policy, it is interesting to note that total tax revenues to GDP ratio has been relatively low. (Figure 5). Moreover, total public spending to GDP ratio has been falling.

The reason for this fall has been the consistent decrease in capital spending (Figure 6)!

Therefore, the decrease in capital spending to GDP ratio must have had negative implications to the human and physical infrastructure of Jordan. These include public health, public education, and public transport.

This is why, “His Majesty King Abdullah II entrusted Dr. Omar al-Razzaz to form a new government. In the designation letter, HM has tasked the government with a myriad of objectives. To name but a few, these include stimulating real economic growth, generating sufficient employment opportunities, launching a national dialogue whose objective is to deliver a new tax law that achieves growth and justice, and enhancing the quality of public goods and services (school and university education, healthcare, and public transport).”

In conclusion, the government must have sufficient resources to meet its’ long-run and rising responsibilities. With sufficient financial resources, the government would be able to “prioritize” and “quantify” Jordan’s needs for public goods’ investment projects (human capital and physical infrastructure) in a comprehensive manner.

Amman’s Jordan Strategy Forum is a leading think tank on economic development. Founded in 2012, JSF was formed in order to enable the private sector to engage in constructive dialogue on local economic issues and achieve comprehensive economic development. (JSF 20.01)

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11.2 JORDAN: IMF Agrees on Completion of the Second Review of Extended Fund Facility

A team from the International Monetary Fund (IMF) visited Amman during 27 January – 7 February to discuss the country’s recent economic developments; as well as the authorities’ economic policies and reforms under Jordan’s reform program supported by a three-year IMF Extended Fund Facility (EFF) arrangement. At the conclusion of the visit, the IMF issued the following statement:

“Since the completion of the first review of the EFF, Jordan has continued to implement policies and reforms to preserve macroeconomic stability and enhance the conditions for higher and more inclusive growth. Despite persistently challenging external conditions, exports have increased in 2018, supported by the re-opening of the border with Iraq, while tourism has grown strongly, and credit to the private sector has grown at solid rates for the third consecutive year. However, external financing conditions were less favorable, most notably with a significant slowdown in foreign direct investment inflows and some capital outflows. Nonetheless, economic growth remained at about 2% and inflation remained relatively steady, falling below 4% by year-end. Weak growth and investment remain insufficient to generate more jobs, with unemployment at around 18%, presenting difficult conditions for the population.

“The outlook for the Jordanian economy brings renewed momentum. The re-opening of the border with Iraq and associated trade and investment agreements; the extension and broadening of the trade agreement with the European Union; as well as other efforts to lower the cost of generating energy, all bode well for a steady recovery in investment, exports, competitiveness and growth. However, challenges still remain, particularly from tighter and more volatile global financing conditions and elevated vulnerabilities.

“To successfully confront these challenges and improve economic performance, the IMF team and the Jordanian authorities have reached agreement on policies and reforms for 2019; anchored on a gradual and steady fiscal consolidation path and the continued implementation of reforms to enhance business conditions and employment prospects. These policies and reforms will also need to be supported by a significantly greater support from the international and regional donor community. The forthcoming London Initiative at end-February 2019 provides a timely opportunity for Jordan to present an ambitious and credible reform path going forward and for the donor community to unlock much needed budget grants and concessional financing to support the reforms and Jordan’s large financing needs. Staff will continue consultations with the authorities and the donor community in the coming weeks to ensure that appropriate financing assurances for budget grants and concessional loans are in place, which are needed to present the second review under the IMF-supported program to the IMF Executive Board.

“The agreement on fiscal policy for 2019 centers on the need to firmly return the combined public deficit to a downward path. The sustained strong efforts to rein in the combined public deficit, from 3.8% of GDP in 2016 to 2.9% of GDP in 2017, proved more difficult in 2018, as the combined deficit rose to 4% of GDP. To reduce the combined deficit to 2.5% of GDP in 2019, the authorities have taken several measures, including the adoption of a new income tax law. Critical to this goal is the steadfast and unwavering implementation of the new income tax law, together with a significant strengthening of tax administration to overcome the marked revenue underperformance of 2018. The new income tax law improves the previous system – it expands the tax base in an equitable manner, by protecting the middle class and most vulnerable; closes some distortions and loopholes; and helps protect specific sectors severely affected by regional conditions and by the removal of non-World Trade Organization-compliant export subsidies. The law critically sets the stage for a greater and much-needed focus on reducing tax evasion in the years ahead. With increasing prospects for improved regional and domestic security conditions, greater efforts will also be needed to address the growth in public spending, to help partly accommodate other social needs, such as in health and education.

“The conduct of monetary policy by the Central Bank of Jordan (CBJ) has skillfully balanced the need to maintain an adequate level of reserves to support the Jordanian dinar, while also keeping a close eye on supporting domestic economic conditions. Developments in 2018 suggest the need to continue to gradually rebalance the growth of loans and deposits, reduce dollarization, and provide greater support to the balance of payments, particularly in light of tightening global and regional monetary conditions. The program aims to keep gross usable reserves at $14 billion, about 105% of the Fund’s reserve adequacy metric by end-2019.

“Discussions also focused on key reforms to enhance growth performance. Important reforms to enhance sustained and inclusive growth have now been finally implemented; including the secured transactions, bankruptcy and business-inspections laws. Also, labor market reforms, which have extended refugee work permits to important sectors of the economy, part-time employment and flexible work arrangements, enhanced access to childcare, and strengthened the link from training to work, are also important. Ongoing discussions with development partners on measures to further promote employment and stimulate growth present a critical opportunity to decisively address high unemployment – particularly for youth and women – and to enhance overall sentiment and business conditions. Staff reiterates the call for upfront reforms to reduce the taxation of formal jobs, to promote investment through public private partnerships within a sound framework, and to reduce the high cost of energy facing the corporate sector, which undermines needed investment. In this regard, future plans to restructure electricity tariffs should eliminate cross-subsidization and supported by a stronger implementation of the tariff adjustment mechanism, which has so far unduly disregarded NEPCO’s return to operational losses. With the financial situation in the water sector continuing to worsen, as the accumulation of arrears has accelerated to reach 0.5% of GDP, greater and concrete efforts are needed to arrest the insufficient progress with revenue and cost-saving measures. (IMF 07.02)

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11.3 IRAQ: Iraq’s 2019 Budget Threatens IMF Deal

Salam Zidane posted in Al-Monitor on 7 February that the Iraqi parliament randomly amended the government’s 2019 draft budget to include provisions that increase spending, a move that contravenes an agreement with the International Monetary Fund and that has led to threats of court challenges.

Iraqi President Barham Salih approved the controversial 2019 budget on 4 February. The budget passed the parliament on 23 January after long debates over allocations for the Kurdistan Region and southern provinces and amendments that ignored Iraq’s obligations under an agreement with the International Monetary Fund (IMF) mandating austerity measures until 2021.

The Iraqi parliament approved draft legislation for the 2019 budget amid objections from authorities in the southern provinces. At 133.1 trillion Iraqi dinars ($112.6 billion), the budget, if passed, would be the country’s third largest, behind those for 2013 and 2014. With a 27.8% increase in spending, it would appear to blow up the IMF agreement.

Compared to the 2018 budget, the current one estimates oil exports of 3.88 million barrels per day (bpd), a daily decrease of 8,000. It also assumes a $10 per barrel price increase, which based on the current market would be from $46 to $56. Budgeted oil revenue accounts for 88.8% of total revenues.

Meanwhile tax revenues and fees are set at 6.8 trillion dinars ($5.7 billion), compared to last year’s 9.2 trillion dinars ($7.7 billion). The decrease in taxes is evidence in and of itself of the government’s non-compliance with the IMF Stand-by Arrangement to reform the economy.

The IMF required reforms included raising personal and business taxes to increase state revenue and halting increases to the government payroll. Yet, the 2019 budget provides for a 24.7% increase in state employee salaries, for a total of 43.4 trillion dinars ($36.7 billion). In addition, the state’s domestic and foreign debt will increase by 30.87%, to 10.7 trillion dinars ($9 billion).

A source at the Ministry of Finance speaking on the condition of anonymity, told Al-Monitor, “The members of parliament did not discuss the budget bill with the Ministry of Finance.” They also did not consult with the Ministry of Planning and simply amended provisions at will. The source added, “The Iraqi government will file an appeal to the Supreme Court to reverse the amendments and articles added by the parliament.”

In Iraq’s budget process, the government prepares a draft budget and sends it to the parliament, which is allowed to offer amendments before approving it and sending it back to the government. If the government is unhappy with the legislative changes, it can approach the courts for resolution.

The Kurdistan Regional Government (KRG) should be pleased with the proposed budget, which provides it benefits not allocated since 2013. Ahmad Hama, a Kurdish representative on the Parliamentary Finance Committee, told Al-Monitor, “The Kurds have a few comments on the 2019 budget, but it is fair to them since it guarantees the salaries of [KRG] employees, increases the region’s share [of expenditures] from 12.67% to 13.93% of the total budget and gives the region $2 billion in investment loans.”

Hama also observed, “The 2019 budget resolves some issues ongoing with Baghdad over the years, announcing a fresh start for ties with Baghdad. One of those issues involves oil. “The Kurdistan Region produces 480,000 barrels of oil per day,” Hama remarked. “Baghdad’s share [from that] will be 250,000 barrels. Added to that, there are 150,000 barrels used within the region for daily consumption, so the region will benefit from exporting 80,000 barrels.” Kurdistan ships both its share of oil as well as Baghdad’s to market through a pipeline to Ceyhan, Turkey, and then disburses Baghdad its share of the revenue, as per prior agreement.

The government allocated 1 trillion dinars ($846 million) for the petrodollar project allocating a percentage of oil revenues for oil-producing provinces suffering damage from the industry. The regions suffering the most from production and refining receive a higher share of the amount set aside. For example, Basra are to receive 69.2%, Kirkuk 6.3%, and Wasit 4% in the 2019 budget. The Kurdistan Region was excluded. Local authorities can use the money at their own discretion, such as to buy power, send residents abroad for medical treatment and provide other services.

Southern province representatives were not pleased with the budget. They have criticized the draft budget because it does not allocate enough funding to complete stalled projects or quell popular dissatisfaction that erupted in protests last year over the lack of basic services, including potable water and electricity.

Ahmad al-Salayti, speaker of the Basra governorate council told Al-Monitor, “The 2019 budget confiscated the rights of Basra governorate and gave it less than its constitutional right [to petrodollars]. This is particularly crucial since Iraq’s economy greatly relies on Basra.” Salayti stated, “The main problem is that the budget bill was not yet distributed to the members of parliament, and it was not published on the parliament’s website either [before the vote].” He added, “When we asked some members of parliament, they said that they did not know what they voted on and that the amendment and addition of articles to the 2019 budget was disorganized and random.”

“This is the first time Iraq has witnessed such chaos in passing the budget, which demonstrates the parliament’s negligence toward the Iraqi people,” Salayti remarked. “Basra governorate will appeal to the Supreme Court regarding the budget [if passed], and it will approach the Iraqi courts.”

The draft budget should be sent to parliament and approved before the start of the new year, but it is usually behind schedule, meaning the government conducts public finance without a budget plan. This unaccountability is a major source of corruption. Transparency International’s Corruption Perceptions Index for 2018 gave Iraq a score of 18 out of 100, with 1 being highly corrupt and 100 very clean. Last year, Iraq did not follow its budget to the letter, only implementing 80% of the budget at the most.

Prime Minister Adel Abdul Mahdi has a background in economics and attained office based in part on an economic reform agenda. Yet, his government is repeating the mistakes of 2012 and 2013 by randomly increasing spending without investing in developing production sectors.

Iraq is currently experiencing crises in health, agriculture, industry, education and energy production. The rate of health expenditures under the current budget is only 2.4%, while agricultural allowances do not exceed 1% and education 3.6%. To be productive, the budget must be aligned with economic realities, not political goals.

It appear that the budget crisis, which began in October, might last another three months as the government makes plans to appeal to the courts over parliament’s random amendments and other changes to the draft budget.

Salam Zidane is an Iraqi journalist specializing in economics. He has written for several local and international media sources such as Al-Jazeera and The New Arab. (Al-Monitor 07.02)

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11.4 UAE: The Pope’s Visit and Emirati Soft Power

Kristin Smith Diwan posted in the Arab Gulf States Institute in Washington on 5 February that Pope Francis’ historic visit to the UAE, the first by the head of the Roman Catholic Church to the Arabian Peninsula, represents the most high-profile of a series of initiatives positioning the UAE as a champion of interfaith dialogue, moderation, and pluralism.

On 5 February, Pope Francis concluded a historic three-day visit to the United Arab Emirates, the first-ever trip of a pontiff and leader of the Roman Catholic Church to the Arabian Peninsula. This landmark event was preceded by years of preparation and represents the most high-profile of a series of initiatives positioning the UAE as a champion of interfaith dialogue, moderation, and pluralism. These stand as touchstones for Emirati soft power, tying together the UAE’s positioning as an economic hub within the global economy, its leadership in the Middle East, and its outreach to the broader international community.

Pope Francis’ activities in the UAE aimed to highlight the country’s leadership role in several distinct realms: tolerance of different faith communities at home, championing the meeting of religious leaders with the Arab world’s foremost Islamic leadership, and facilitation of interfaith dialogue globally. The pontiff’s visit was organized to coincide with the Global Conference for Human Fraternity, a dialogue among leaders of the Muslim, Christian, Jewish, Hindu, Buddhist and Sikh faiths focused on encouraging peaceful coexistence among communities. In addition to meetings with the Emirati leadership, Pope Francis met with Ahmed al-Tayeb, grand imam of Al-Azhar in Egypt and chairman of the Abu Dhabi-based Muslim Council of Elders. The pope’s program closed with a public celebration of the Holy Mass at Zayed Sports City attended by members of the Catholic community living in the UAE as well as other states in the Middle East.

The global conference is indicative of a host of interfaith dialogues that have been held over the past several years, often spearheaded by the Muslim Council of Elders and other clerical initiatives created in the wake of the Arab uprisings. The Muslim Council has worked to institutionalize cooperation between the UAE and Al-Azhar, drawing upon its standing as the pre-eminent institution of Islamic learning and Egypt’s importance as the most populous Arab country.

The Muslim Council and related Forum for Promoting Peace in Muslim Societies have promoted conversations within Islam and with other faiths. These initiatives play a leading role in advancing the ideational component of countering extremism through the implicit recognition and tolerance of difference. Their programs often engage faith communities toward this end, such as the Interfaith Alliance for Safer Communities in November 2018 in Abu Dhabi and the International Muslim Communities Congress in May 2018.

These international initiatives have been organized in tandem with domestic campaigns championing multiculturalism and the acceptance of others within Emirati society. In 2015, Emirati President Sheikh Khalifa bin Zayed al-Nahyan issued a federal decree criminalizing blasphemy toward any religion as well as hate speech. The following year, the government created a new post, the minister of state for tolerance, and approved the National Tolerance Program to strengthen the government’s role as an incubator of tolerance. These culminated in the declaration of 2019 as the “Year of Tolerance,” meant to highlight the UAE’s leadership instilling the values of co-existence and peace in local, regional, and international communities.

Understanding why the UAE would elevate multiculturalism and interfaith dialogue to such prominence, investing institutional capital and leadership bandwidth around these issues, requires understanding the UAE’s strategic position in the global economy and its ambitions within the wider region.

Multiculturalism Anchors a Global Economy

While still dependent on oil as its primary income, the UAE has gone further than any other Gulf state in diversifying its economy, in part by opening it up to non-Emirati residents and stakeholders. Indeed, the UAE cultivates foreign participation – as investors and visitors – to a degree unmatched in the Gulf. The UAE was thus the first state to open up to foreign property ownership and, more recently, to allow foreigners to fully own businesses and obtain long-term residency visas with some restrictions.

This approach has allowed the UAE striking success in becoming a hub for transportation, finance, commerce, and even tourism, building a brand recognized internationally. But it has not come without stirring some qualms at home, as Emiratis represent less than 15% of the total population. This anxiety is expressed in campaigns for the elected Federal National Council, as candidates voice their fear of losing a distinct Emirati culture and way of life. The Emirati government has countered by maintaining economic privileges for Emiratis and cultural norms such as distinctive dress. Still, Emirati nationalism has been framed in ways that encourage Emiratis to embrace these diverse investing and contributing communities, with pluralism and tolerance as leading values.

Interfaith Outreach and Emirati Soft Power

In more recent years, this progress in positioning the UAE as an important regional hub in the global economy has been matched by new political ambitions to project Emirati leadership in the region as well as globally. These same values of multiculturalism and religious tolerance have become important ideational resources deployed in countering regional rivals and winning diplomatic allies.

The Emiratis have championed the struggle against extremism, defining it in ideological as well as operational terms. This viewpoint conflates terrorist organizations such as the Islamic State in Iraq and the Levant with political movements such as the Muslim Brotherhood, whose members once advocated nativist rights within the UAE. In this ideological struggle, the interfaith dialogues and peacemaking undertaken by Emirati organizations form a useful contrast to the Islamist activist clerical associations such as the International Association of Muslim Scholars based in Qatar, whose efforts are focused on mobilizing support for Islamic communities.

Emirati officials have also voiced concern for the viability of minority communities such as Coptic Christians in Egypt and Yazidis in Iraq, seeing the elimination of regional diversity as a threat to their model. The Marrakesh Declaration on the Rights of Religious Minorities in Predominantly Muslim Majority Communities, which emerged from a conference jointly organized by Morocco and the Forum for Promoting Peace in Muslim Societies, speaks to their plight. The hosting of Pope Francis, courting the opprobrium of Islamic actors who see his presence on the Arabian Peninsula as an affront to the heartland of Islam, is further evidence of the Emirati commitment to this posture. Still, despite these initiatives, the position of Christian communities in the Middle East remains precarious, which is a primary motivator for the pontiff’s visit.

The Emirati championing of a more pluralistic Middle East has been a potent element of the UAE’s international diplomacy. The strong ideational stance of the Emiratis against Islamic radicalism is broadly appreciated by the United States, as is the Emirati championing of minority and Christian communities in the Middle East. Initiatives in interfaith dialogue have opened up doors to key stakeholders in U.S. politics concerned with Christian communities in the Middle East and Israel’s acceptance in the region.

The Force and Contradictions of Emirati Soft Power

As with any soft power, there are inconsistencies and limits to these ideological positions. While championing liberal cultural elements, the Emirati embrace of pluralism does not extend to open political expression and democratic representation within the UAE. Faith communities experience greater openness than elsewhere in the Gulf states, but blasphemy laws remain in force and proselytizing by non-Muslims remains illegal. Elsewhere in the region, the UAE has been willing to opportunistically ally with groups antithetical to tolerance, such as the Salafi militias in Yemen deemed necessary to counter rival Muslim Brotherhood and Houthi groups. Of course, the Emiratis’ ideological confrontation with the Muslim Brotherhood has contributed to divisions within the Gulf and wider Middle East, confrontations they deem necessary to achieve the transformation they seek in the region.

Emirati interfaith initiatives focus on the power to convene and redefine discourse; some skepticism is warranted regarding the ability for this to change reality on the ground. Pope Francis himself alluded to such shortcomings in his remarks on 4 February, advocating for equal citizenship rights for Christians and noting the horrific humanitarian costs of the Yemen war.

Yet there remains an internal coherence to the Emirati posture, which aligns its economic interests with its regional competition and international diplomacy. The Emiratis have made a significant investment in constructing this narrative: building a nationalism consonant with the UAE’s global economic posture, a positive counter to Islamist rivals in the region, and a potent resource in international diplomacy. Welcoming the pope to the UAE was the latest expression of this commitment and the international attention it can bring.

Kristin Smith Diwan is a senior resident scholar at the Arab Gulf States Institute in Washington. (AGSIW 05.02)

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11.5 EGYPT: Bank Audi’s Egypt Economic Report – 2019

Bank Audi‘s Egypt Economic Report 2019 reports that real sector activity in Egypt is looking up. Egypt’s macro environment continued to improve over the past year within the context of the continuation of adjustment reforms and the amelioration of the investment framework, supporting the country’s economic prospects on the back of a relative improvement in macro and fiscal fundamentals. As a matter of fact, all indicators point to a relatively bullish economic cycle. At the real sector level, growth has been revised upwards by the IMF to 5.3% for FY 2018, the second highest in the Middle East and North Africa, up from 4.2% in the previous year.

Narrower current account deficit mainly driven by surging services balance

Exchange rate liberalization, a weaker currency and a higher domestic gas production along with an improved security environment, have helped reduce Egypt’s external imbalances in 2018, as current account receipts surged over the first nine months of 2018 mainly on the back of a strong rebound in tourism receipts, remittance inflows and Suez Canal earnings. As such, the current account deficit shrank from $ 6.1 billion in the first nine months of 2017 to $ 4.1 billion over the first nine months of 2018.

Fiscal adjustment on track, yet challenged by higher interest payments and oil prices

Egypt’s fiscal consolidation efforts have been pursued during FY 2018, resulting in a primary budget surplus (0.1% of GDP) for the first time in eighteen years, along with a fall in overall fiscal deficit from a peak of 12.5% of GDP in FY 2016 to below 10% of GDP in FY 2018, for the first time in six years. However, higher oil prices and tight monetary policy resulted in higher fuel subsidies and interest costs, which partly offset the fiscal gains during FY 2018.

Declining inflation while FX reserves reach a new historical high

Amid improved macro fundamentals, stable exchange rate and abated inflation (12% in December), the Central Bank of Egypt started easing its monetary policy in 2018 after adopting an aggressive monetary tightening since the currency floatation in November 2016. In parallel, the CBE’s foreign exchange reserves have been on an upward trend over the year 2018, hitting a new historical high of $ 42.6 billion in December amid rising remittances and touristic receipts that have triggered contractions in the current account deficit.

Strong deposit and lending growth amid a continuously expanding economic activity

Egypt’s banking sector witnessed a good year during 2018 on the back of relatively ameliorated domestic conditions and continued healthy economic activity at large. Banks benefited from increased liquidity at hand through deposits to enhance their financial intermediation role and extend new waves of loans to the economy while continuing to lend to the public sector. On the funding side, deposits at banks rose by 13.0% in local currency terms over the first 11 months of 2018 to reach the equivalent of $ 209.9 billion at end-November 2018. In parallel, credit facilities extended by banks grew by 21.0% in local currency terms over the period to reach the equivalent of $ 98.8 billion.

Relative price falls in Egyptian capital markets in 2018, tracking wide emerging market selloff

Egypt’s capital markets reversed in 2018 the upward trend that was prevailing over the past couple of years, mainly weighed down by an emerging market sell-off, US Treasuries declines amid a sustained US monetary policy tightening, and lingering fears about a global economic slowdown. The bourse main benchmark index (EGX 30) closed the year 2018 at 13,036 as compared to 15,019 in 2017, down by 13.2%, despite attractive market valuations. As to the cost of insuring debt, Egypt’s five-year CDS spreads saw expansions of 75 bps in 2018 following two consecutive years of contractions.

Promising macro prospects over next couple of years

Looking ahead, Egypt’s growth recovery is likely to be extended throughout the year to come. As several base effects fade (of which the tourism sector), the expansion of gas production and construction should drive the uptrend. Within this context, real growth is forecasted at 5.5% for 2019 and 5.9% for 2020, among top performers in the MENA region. (Bank Audi 11.02)

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11.6 TURKEY: Numbers of Turkish Universities Soar, But Quality Falls

Metin Gurcan posted in Al-Monitor of 6 February that quality in education hasn’t kept pace with the phenomenal increase in enrollment and facilities in Turkey’s university system. Undergraduate and graduate enrollment has increased spectacularly at Turkey’s universities in recent years. However, while the infrastructure has kept pace, the same can’t be said of the quality of education.

The number of students and academic capacity has grown tenfold in just the past decade. Going back, in 1979 there were only 12 universities in Turkey. There are now 203. In 1980, out of 467,000 students who participated in university entrance exams, only 42,000 (9%) were able to enter, whereas in 2018, of 1.7 million students who took the exams, 710,000 (40%) made it.

According to 2018 data, there were 455,000 undergraduate and 95,000 graduate students in Turkey. In 2018, 25,000 professors, 15,000 associate professors and 37,520 assistant professors taught in Turkish universities. When instructors and research assistants are added to these figures, some 160,000 academics are actively teaching in Turkish universities. Yet, in 2018, of 86,000 available positions for adjunct faculty in private universities, only 62,000 (72%) were filled. Two years before, these schools were able to fill 90% of the positions.

In recent years, World University Rankings have consistently included six Turkish universities among the world’s top 500, but only two made the 2019 list, showing serious deterioration in global standings.

Is there a ranking specifically of Turkish universities’ quality? Sadly, there is no reliable and objective database. The Official Council of Higher Education (YOK), which regularly collects data about Turkish universities and should therefore have the most reliable information, doesn’t share it with the public. This, of course, is a major defect. Instead of objective information about the academic performance of universities, people have to rely on TV commercials, giant billboards and marketing ploys.

However, a report by Erhan Erkut, a professor at MEF University in Istanbul, attributed declining educational quality to the government’s policy of “a university for each city,” to the attractive profit to be made from undergraduate and graduate education and to private university education becoming a full-fledged, lucrative business. In recent years, major corporations have focused on investing in “boutique” universities with enrollment capacities of 10,000-15,000 students. Many businesspeople dreamed of the prestige that comes from opening a university.

But the first danger signal of these relentless university investments came in 2018, when enrollment in private universities costing $4,000 to $10,000 annually declined significantly for the first time. While enrollment in free public universities last year fell to 85% of what it was just a few years before, private university enrollment was down to 73% of what it was previously. This shows that many students are being more selective and not applying to the most expensive private institutions.

Pinar Eldemir, a doctoral student and research fellow at Istanbul-based Episteme Academic Consultancy, said the quality issue is significant at Turkish universities. “For a young academic candidate, the biggest problem is employment. We are having serious problems in finding financial resources to support our graduate and postgraduate studies,” she told Al-Monitor. “We have to pay back the credit given by the state. Also, you need more than academic competency to find jobs as researchers. First, to get a posting you would need connections, some sort of nepotism. Second, even if you find a job, you are obliged to provide services far beyond teaching and research, sort of as a clerk.”

Another academic from Episteme Academic Consultancy said the real problem in universities is at the doctoral level. “We mostly get demands to write theses and academic articles for our superiors. To write theses and academic articles for somebody else has become a lucrative sector in Turkey. Although we firmly reject such demands, they continue to pour in,” the academic told Al-Monitor on condition of anonymity.

It also appears that many students at the doctoral level do not receive the guidance they need from academic advisers.

In short, blame for the decline in Turkey’s academic quality can be assigned to many factors. In addition to brain drain and the academic purges that have taken place since the failed coup in 2016, universities have also experienced the following: a serious lack of freedom of opinion and expression; control of universities single-handedly by the official YOK; private universities that focus on profits; inadequate training of academics; and the heavy workload of young academics. Also, sadly, when universities hire, connections often override merit.

Metin Gurcan is a columnist for Al-Monitor’s Turkey Pulse. He served in Afghanistan, Kazakhstan, Kyrgyzstan and Iraq as a Turkish military adviser from 2002 to 2008. After resigning from the military, he became an Istanbul-based independent security analyst. Gurcan obtained his PhD in 2016 with a dissertation on changes in the Turkish military over the preceding decade. (Al-Monitor 06.02)

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11.7 GREECE: Fitch Affirms Greece at ‘BB-‘; Outlook Stable

On 08 February, Fitch Ratings affirmed Greece’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘BB-‘ with a Stable Outlook.

Key Rating Drivers

Greece’s ‘BB-‘ rating is underpinned by high income per capita levels, which far exceed ‘BB’ and ‘BBB’ medians. While Greece’s financial crisis exposed shortcomings in government effectiveness and put acute pressures on political and social stability, governance is still significantly stronger than in most sub-investment-grade peers. The profile of the general government debt stock is exceptionally favorable and fiscal performance over the last three years has been stronger relative to rated peers’. These strengths are set against high stocks of general government debt and net external debt, weak medium-term growth potential and extremely high level of non-performing loans in the banking sector.

We expect the Greek economic recovery to gather further momentum in 2019. Pent-up investment demand, a declining unemployment rate, rising disposable income and moderate fiscal loosening are set to support domestic demand, which will offset the negative contribution to GDP growth of net trade. Following real GDP growth of 2% in 2018, we expect growth to accelerate to 2.3% in 2019 and 2.2% in 2020.

The short-term outlook for private consumption is favorable. Households’ disposable income rose 4% in 3Q18, the fastest pace since 2008. Wage growth is gradually picking up while HICP inflation remains moderate. The unemployment rate stood at 18.6% in October 2018 (a seven-year low) and employment growth averaged 1.8% in January-October 2018. Consumer confidence was boosted by the successful completion of the third adjustment program in August 2018.

The government has announced an increase in the minimum wage by 11% (to €650 per month) and the abolition of the “sub-minimum” wage for employees’ under-25 years old. The government has also made changes to labor market legislation. It has re-activated the sectoral wage bargaining system in specific sectors of the economy, which has resulted in wage increases in some sectors, such as tourism. Against a backdrop of rising wage growth, declining unemployment and rising consumer confidence, these measures are set to support further private consumption in the short-term.

Although it is too early to assess the full impact, these measures may have a negative impact on wage negotiations and external competitiveness over time. Deterioration in cost competitiveness could undermine the current account dynamics and lead to a weakening of the net external debt position. Over the medium-term, the behavior of the social partners in negotiating the new collective wage agreements will be a key factor to monitor.

Public finances continue to improve. We estimate Greece posted a headline budget surplus of 0.6% of GDP in 2018, down from 0.8% a year earlier, driven by higher-than-budgeted revenue and expenditure restraint. This would imply a primary surplus of 3.7% of GDP, above the ESM program target of 3.5% of GDP. We expect fiscal policy to remain sound and project primary surpluses of 3.4% of GDP in 2019 and 3.3% in 2020. Risks to the fiscal projections stem from recent court rulings against 2012 pension cuts and the pending Council of State ruling on the 2016 pension reform.

In Fitch’s view the current fiscal policy mix may not be sustainable beyond 2020. Fiscal consolidation relies heavily on tax revenue and expenditure restraint, in particular under-execution of capital spending. A policy challenge for future Greek governments will be to rebalance the policy mix without hampering the commitment to the fiscal targets. In this context, the pre-legislated reduction in the income tax free threshold (to come into force in January 2020) is set to broaden the tax base and could provide fiscal space to reduce the tax burden over time. Fitch expects this specific measure not to be reversed. We also note that there is broad cross-party consensus around the need to rebalance the fiscal policy mix.

The 2019 budget partially reverses some measures that were legislated under Greece’s bailout program, notably 2019’s pension cuts and higher social security contributions for the self-employed. It also cuts corporate and property taxes. The budget confirms our view that some partial policy reversals are possible as part of the dialogue with official creditors. We do not believe this represents a sharp change to the fiscal stance. The budget targets a primary surplus of 3.5% of GDP in 2019 (broadly in line with our projections). Falling government debt and previously agreed debt relief measures are improving the sustainability of Greece’s public finances, as reflected in our two-notch upgrade of Greece to ‘BB-‘ in August.

Although the stock of general government debt is high (181% of GDP at end-2018), there are mitigating factors that support debt dynamics. The concessional nature of Greece’s public debt implies that debt servicing costs are low; the average maturity of Greek debt (18.5 years, including T-bills and repos) is among the longest across all Fitch-rated sovereigns and is set to lengthen further after the debt relief measures agreed at the 21 June 2018 Eurogroup are implemented. Gross financing needs are low and we estimate Greece’s deposit buffer at €26 billion (14% of GDP, excluding deposits of other general government entities). The amortization schedule is very favorable.

We expect the Greek authorities to partly use the cash buffer to “buy back” more expensive portions of the debt stock (e.g. IMF). This would lower debt servicing costs further. Interest payments-to-revenue at 6.4% are well below the historical ‘BB’ and ‘BBB’ medians of 9.4% and 7.1%, respectively. The effective interest rate on Greece’s public debt stock, at 1.6% as of end-2018, is well below that of most Eurozone peers.

Greece is making progress towards the resumption of regular bond issuance. On 30 January 2019, the sovereign placed a new benchmark €2.5 billion five-year bond with a coupon of 3.45% and a yield of 3.60%. Funding costs have been volatile in 2018: 10-year bond yields reached their highest level of 5.2% in November 2018 and fell below 4% in January 2019 for the first time since August 2018. Our estimates indicate that Greece could be fully funded until 2022, providing a significant backstop against any financing risks for a prolonged period. This should support market confidence and post-program market access.

Efforts to speed up non-performing exposure (NPE) reduction by Greek banks are taking shape. NPEs account for nearly half of total exposures at four largest Greek banks: while the stock is declining, the ratio to total exposures is more stable due to on-going loan contraction. The economic recovery, increased NPE sales, greater use of electronic auctions and, to a lesser extent, out-of-court workouts should help banks meet new NPE targets submitted to the Single Supervisory Mechanism for 2021 (between 17% and 22%). However, without more substantial initiatives, it will prove challenging to accelerate NPE reduction to a pace that fully underpins confidence in the banking system, in our view.

Recent proposals by the Hellenic Financial Stability Fund (HFSF) and the Bank of Greece suggest political support for such policies. These schemes could accelerate asset quality clean-up and ease pressure on banks’ capital and profitability, potentially improving their standalone credit profiles. We believe a near-term policy initiative is likely but its overall impact is highly uncertain. Unknowns include investor appetite for Greek NPE-backed bonds, compliance with state aid rules, and the timeframe of any transfers and to what extent banks will make use of such schemes. If implemented, Fitch does not expect the impact to be visible this year but more over the medium-term.

Without full details on the functioning of either scheme, the impact on banks and the sovereign fiscal implications are unclear, including any potential impact on Greece’s deposit buffer. High government debt restricts fiscal space for banking sector support, but the buffer provides some headroom. We therefore do not factor any specific scheme into our bank or sovereign analysis. Without more dynamic and predictable NPE reduction, banking sector risks are material for Greece’s credit profile.

Funding dynamics is improving. On 13 December 2018, the ECB lowered the Emergency Liquidity Assistance ceiling for Greek banks to €4 billion from its peak of €90 billion in July 2015, reflecting positive developments in liquidity conditions. Dependence on the Eurosystem for liquidity continues to decline while depositor confidence is steadily improving. Private-sector deposits grew €8.1 billion (6.4%) in the 12 months to end-December 2018, reflecting higher consumer and business confidence following the exit from the ESM program and a strong tourism season.

Parliamentary elections are due by October 2019. In our view, the domestic political backdrop has become somewhat more stable. There is broad cross-party consensus that fiscal discipline should be maintained and the working relationship between Greece and European creditors has substantially improved. This lowers the risk of a future government sharply reversing the course of fiscal and economic policy. Nevertheless, future Greek governments are required to maintain primary budget surpluses for an exceptionally long period, which may pose political challenges.

Key Assumptions

Our long-run general government debt sustainability calculations are based on assumptions of an average primary budget surplus of 2% of GDP over 2018 – 2040, real GDP growth that averages 1.4% over the same period and GDP deflator converging towards 2%. Under these assumptions, public debt declines steadily to 124% of GDP by 2030 and 111.4% of by 2040 from 181.1% of in 2018.

Rating Sensitivities

Future developments that could, individually or collectively, result in positive rating action include:

-Track record of achieving further primary surpluses and greater confidence that the economic recovery will be sustained over time.

-Track record of economic and fiscal policy continuity after Greece’s exit from the ESM program, underpinned by an orderly working relationship with official sector creditors and a stable political environment.

-Lower risk of crystallization of banking sector risks on the sovereign balance sheet.

Future developments that could, individually or collectively, result in negative rating action include:

-A loosening of fiscal policy and/or a sharp reversal in economic and fiscal policy direction after the 2019 parliamentary elections.

-Adverse developments in the banking sector increasing risks to the real economy and the public finances.

-Re-emergence of sustained current account deficits, further weakening the net external position. (Fitch 08.02)

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Fortnightly, 20 February 2019

Fortnightly, 20 February 2019

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