Fortnightly, 27 November 2019

Fortnightly, 27 November 2019

November 27, 2019
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FortnightlyReport

THE FORTNIGHTLY
A Review of Middle East Regional Economic & Cultural News & Developments
27 November 2019
29 Cheshvan 5780
30 Rabi ul Awal 1441

Written & Edited by Seth J. Vogelman*

TABLE OF CONTENTS:

1:  ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Innovation Authority & Securities Authority Team to Aid Fintech Companies
1.2 Michigan Governor Signs Memorandum of Understanding During Israel Mission
1.3 Competition on Electricity Prices Faces a 6 to12 Month Delay

2:  ISRAEL MARKET & BUSINESS NEWS

2.1 Track160 Closes $5 Million Series A Funding to Revolutionize Analytics in Sports
2.2 Pcysys Announces Completion of a $10 Million Funding Round
2.3 Amadeus Leads a $9.8 Million Investment Round for Refundit
2.4 Gett Announces Closure of Juno and Strategic Partnership With Lyft
2.5 Viisights Announces $10 Million in Series-A Funding
2.6 Baring Private Equity Asia Agrees to Acquire Lumenis
2.7 CyCognito Secures $23 Million in Funding to Address Shadow Risk with Next-Generation Platform
2.8 Vayyar Raises $109 Million to Bring its 4D Radar Imaging Tech to More Markets
2.9 Sababa Ventures Launches Technology Fund Focused on Israeli Ecosystem
2.10 Perimeter 81 $10 Million Funding Round to Expand its Network as a Service Platform
2.11 Cognata Signs Key Asian Partnerships to Accelerate Simulation Adoption in Strategic Markets
2.12 BigPanda Raises $50 Million in Series C Funding
2.13 Japan’s UMI and Yissum Establish Strategic Partnership
2.14 Pepsico to Invest in SodaStream Plant Expansion

3:  REGIONAL PRIVATE SECTOR NEWS

3.1 Repzo Raises $750,000 in Pre-Series A Round led by Jabbar
3.2 New US Retail Concept b8ta to Make Overseas Debut in Dubai
3.3 Addenda Closes Seed-Funding Round by 500 Startups, Beyond Capital and Strategic Investors
3.4 QiDZ Raises $1 Million Seed Investment
3.5 ekar Launches in Saudi Arabia Following $17.5 Million Series B Round
3.6 Okadoc Named Start-up of the Year at Annual Arabian Business Start-up Awards
3.7 Statys Secures Pre-Seed Funding Round from Dtec Ventures and Propeller
3.8 Saudi’s Sidra Signs $206 Million Deal for US Industrial Properties

4:  CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Carrefour Launches First UAE In-Store Farms to Reduce Carbon Footprint
4.2 Careem to Operate Dubai Bike Sharing Scheme Following RTA Agreement

5:  ARAB STATE DEVELOPMENTS

5.1 Lebanon’s Balance of Payments Deficit at $4.5 Billion by September 2019
5.2 Number of Lebanese Construction Permits Slumped by 17.69% in October 2019
5.3 Amman Launches an Administrative Reform Package
5.4 Jordan’s Trade Balance Deficit Shrinks 13% in Nine Months
5.5 Jordan Ranks 70th on 2019 Global Knowledge Index

♦♦Arabian Gulf

5.6 Russian Tourists Set to Generate $1.2 Billion in Revenue for GCC by 2023
5.7 Summer Surge Boosts Dubai Tourist Numbers to Over 12 Million
5.8 Dubai Targets Russia, China, Europe, Africa as It Chases Medical Tourists
5.9 Sharjah’s SRTI Park Begins Pilot Project for Autonomous Vehicle Operations
5.10 Saudi Healthcare Spending Forecast to Reach $160 Billion by 2030
5.11 Saudi Arabia Set to Begin Issuing Instant Work Visas

♦♦North Africa

5.12 Beltone Financial Forecasts Egypt’s Economy to Grow by 6.1% in 2020
5.13 Egypt & Noble Energy Sign Two $430 Million Deals
5.14 UAE & Egypt Launch a $20 Billion Joint Investment Program
5.15 Abu Dhabi Fund Offers $305 Million Loan to Cash-Starved Sudan

6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Greece Completes Repayment of Expensive IMF Loan
6.2 Bank of Greece Forecasts Growth of 2.3 – 2.5% in 2020

7: GENERAL NEWS AND INTEREST

7.1 Egyptian Parliament Rejects Draft Law Regulating Public Manners and Dress
7.2 Turkey’s AKP & MHP Defeat HDP Motion Calling for Gender-Based Violence Probe
7.3 Athens Completes Constitutional Revision Approving Nine Changes

8:  ISRAEL LIFE SCIENCE NEWS

8.1 Lavie Bio Advances in Its Product Development Pipeline for Wheat Bio-stimulants
8.2 Technion Students Win Gold Medal for Developing Artificial Honey
8.3 World’s First “Artificial Meniscus” Available in Israel
8.4 ConTIPI’s Innovative Treatment for Pelvic Organ Prolapse in Women (POP)
8.5 Nanox Introduces Digital X-ray Technology
8.6 Can-Fite Granted Patents for its Sexual Dysfunction Drug
8.7 Tarsius Pharma Receives Orphan Drug Designation for TRS by the EMA
8.8 Kadimastem Successful in Its Cell Therapy Treatment for Insulin-dependent Diabetes
8.9 ChickP Taps into the Dairy Alternative Market
8.10 Therapix Biosciences Enters Into MOU for Business Combination With Heavenly Rx
8.11 Theranica’s Nerivio Named in TIME’s List of 100 Best Inventions of 2019
8.12 CANNDOC Trials to Evaluate Pharma Grade Medicinal Cannabis for Children with Autism
8.13 Teva & Weizmann to Collaborate on Innovative Antibodies for Cancer Treatment
8.14 Teva and TAU Agree on Innovative R&D in the Fields of Cancer and Brain Studies

9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 BigID Introduces Data Discovery for Data Pipelines
9.2 Nodwin Gaming Partners with Blink for Autonomous Content Creation from Live Games
9.3 Newsight Imaging Signs MOU with Mekorot to Develop Spectral Water Monitoring Systems
9.4 WhiteSource to Provide Native Integrations for All Top Container Registries
9.5 D-Fend Solutions Assures U.S. National Security Against Rogue Drone Threats
9.6 Nuweba Unveils GPU Support on its Secure Serverless Platform
9.7 Illusive Networks Extends Cyber Protection to OT and IoT Attack Surfaces
9.8 Toppan and D-ID Sign Strategic Partnership Agreement
9.9 KPMG & nsKnox Mitigate Payment Fraud with Innovative Anti-Fraud Cyber Solution
9.10 Eyesight Technologies’ DriverSense Now Detects Phone Usage and Smoking While Driving
9.11 SCADAfence 6.0 is First OT Security Platform Uniting OT & IT Users to Prevent Cyber-Attacks
9.12 BGU Introduces Automated, Language-Independent Method for Summarizing Texts

10:  ISRAEL ECONOMIC STATISTICS

10.1 Israel’s Inflation Rate Rises by 0.4% in October
10.2 Israel’s Third Quarter Growth Surprisingly High
10.3 Israel’s Exports Forecast to Reach Record of $114 Billion In 2019
10.4 Moody’s Affirms Israel’s Rating in Upbeat Assessment
10.5 Israel’s Composite State of the Economy Index for October 2019 ‎Increased by 0.3%

11: IN DEPTH

11.1 ISRAEL: Israeli Gas Export Route to Egypt Finalized
11.2 ISRAEL: Israeli Companies Set a Six-Year Record with $2.24 Billion in Funding in a Single Quarter
11.3 MENA: Mobile Technologies Add $191 Billion a Year of Economic Value to MENA
11.4 LEBANON: The Ravages of Inequality
11.5 LEBANON: Moral Leadership and the Lebanese Military
11.6 JORDAN: IMF Staff Completes 2019 Article IV Mission to Jordan
11.7 JORDAN: Fourth Cabinet Reshuffle Raises Questions about Economic Reforms in Jordan
11.8 SAUDI ARABIA: Saudi Arabia’s Elusive Defense Reform
11.9 EGYPT: Fitch Affirms Egypt at ‘B+’; Outlook Stable
11.10 EGYPT: Egypt’s Powerful Military Companies to go Public
11.11 TURKEY: Turkish Central Bank Suffers Big Credibility Loss
11.12 TURKEY: Turkey’s Defense Industry Sees Rise of ‘The President’s Men’
11.13 GREECE: IMF Executive Board Concludes 2019 Article IV Consultation with Greece

1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS

1.1 Innovation Authority & Securities Authority Team to Aid Fintech Companies

Globes reported that in a NIS 6 million program, Israeli fintech companies will have access to the Israeli Security Authority’s databases and Tel Aviv Stock Exchange trading data. The Israel Innovation Authority previously said it would invest NIS 15 million in a program for “promoting investments by local investment institutions in Israeli technology companies” in cooperation with the Israel Securities Authority. The Innovation Authority and the Securities Authority are now launching a fintech program with a NIS 6 million investment. The two authorities regard this as a means of encouraging companies to develop fintech solutions, with an emphasis on the capital market.

The Innovation Authority and the Securities Authority will shortly launch a program providing fintech startups with access to the Securities Authority’s databases and the Tel Aviv Stock Exchange’s (TASE) trading data. The Securities Authority sees this as a way of introducing financial innovation to the Israeli capital market, while at the same time introducing technologies that will make the capital market more accessible to the Israeli consumer. The plan is designed to aid local companies in developing their products for commercialization and market penetration. The Innovation Authority and Securities Authority plan to hold a meetup in mid-December with entrepreneurs and companies interested in joining the program. (Globes 18.11)

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1.2 Michigan Governor Signs Memorandum of Understanding During Israel Mission

On 19 November, Michigan Governor Whitmer, while on a visit to Israel, signed a Memorandum of Understanding with Israel-based tech NGO Start Up-Nation Central. The NGO serves as a gateway to Israeli innovation to collaborate on technology solutions that have the potential to improve opportunities and quality of life for Michigan citizens. The state of Michigan and Start-Up Nation Central will work to connect innovative ecosystems and identify Israeli-based companies with opportunities to expand operations into Michigan to further the development and application of emerging technologies. The MOU builds on Michigan’s continued leadership in utilizing public-private partnerships to test, pilot and deploy new technologies in the state.

The MOU further strengthens on Michigan’s relationship with Start-Up Nation Central. Earlier this year, Michigan was announced as the first state in the United States to launch a free web platform poised to be a tipping point for the state’s startup ecosystem. The platform, called startupMICHIGAN.com, created by Start-Up Nation Central and powered by the Michigan Israel Business Accelerator (MIBA), features more than 300 startups, and growing – including hubs and funders.

Earlier, Governor Whitmer provided remarks at the Water Technology and Environmental Council Conference in Tel Aviv, highlighting her dedication to protecting our Great Lakes and fresh water. Following her remarks, the governor met with Dr. Yuval Steinitz, Israel’s Minister of Energy, to discuss opportunities to strengthen Michigan’s cybersecurity, attract more businesses to our state, and grow our workforce. The governor’s trip is being hosted by the Jewish Federation of Metropolitan Detroit in coordination with the MEDC. This is Governor Whitmer’s first international trip as Governor. (MEDC 19.11)

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1.3 Competition on Electricity Prices Faces a 6 to12 Month Delay

The reform in Israel’s electricity market and the switch to competition on electricity prices between the electricity producers is being delayed. The government system management company is about to ask the Minister of National Infrastructures, Energy and Water Resources and the Minister of Finance to postpone its launch date by six months, sources inform Globes.

The company, which is supposed to manage electricity trading after the electricity production market is opened to competition, was scheduled to begin operating on 3 December 2019, according to the planned electricity sector reform approved by the cabinet in June 2018. Eighteen months after the reform was approved, however, the way to establishing the company still stretches long into the future, and there has been no progress whatsoever on certain matters. The Minister of National Infrastructure, Energy and Water Resources and the Minister of Finance are expected to approve the postponement in founding the company, but power industry sources believe that even this extra time is unrealistic, and that at least a year more will be needed to put the company into operation.

The main issue yet to be resolved is the amount of working capital that the company needs, and where it will come from. Initial assessments are that the company will need hundreds of millions of shekels in initial capital, and possibly as much as NIS 1 billion, to carry out its functions. This money is designed to enable the company to make its first investments, until it begins earning money.

The Public Utilities Authority (Electricity) says that it will not allow electricity consumers to be forced to fund the costs of setting up the company. Given the dimensions of its budget deficit, the state will be in no hurry to put hundreds of millions of shekels into the company. In any case, any discussion of injecting government capital on this scale will have to wait for the formation of a new government.

The electricity sector reform, approved by the cabinet on 3 June 2018, contained a long list of measures, including organizational changes in IEC and privatization of power stations. The core of the reform is opening the electricity sector to competition. The new company is supposed to buy power from the private producers (and from IEC) in auctions held every hour, and to sell it to “suppliers,” who will market it to home and other consumers.This model, known as a single buyer model, is designed to provide certainty, lower prices, and ensure that consumers pay a lower price. (Globes 25.11)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Track160 Closes $5 Million Series A Funding to Revolutionize Analytics in Sports

Tel Aviv’s Track160 announced a $5 million Series A funding round, led by the ADvantage Sports Tech Fund. ADvantage joins a seasoned group of strategic shareholders including the Bundesliga, Germany’s premier football league, REDDS Capital, Aaron Stone, Marc Rowan, among other private investors. Following the launch of its first product, Coach160, the company is currently serving football clubs in Europe, Asia, and Latin America.

Founded in 2017, Track160 has developed a fully automated tracking solution for professional and amateur football teams. The company’s state of the art system uses simple portable cameras that can be set up at a single venue location to identify and track the players and ball in 3D throughout the match. This unique accuracy allows the company to deliver detailed insights on player fitness and a team’s tactical performance. (Track160 14.11)

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2.2 Pcysys Announces Completion of a $10 Million Funding Round

Pcysys has completed a $10 million series-A funding round led by Canadian VC, Awz Ventures, along with Blackstone. The company, which has developed a platform for Automated Penetration Testing, has raised $15 million to date.

Automating red teaming and penetration testing activities, Pcysys’ PenTera™ platform uses algorithms to scan and ethically penetrate the corporate network with the latest hacking techniques, prioritizing remediation efforts with a threat-facing perspective. The platform enables organizations to focus their remediation efforts on the vulnerabilities that take part in a damaging “kill-chain” without the need to chase down thousands of vulnerabilities that cannot be truly exploited towards data theft, encryption or service disruption.

Tel Aviv’s Pcysys delivers PenTera™, an automated penetration-testing platform that assesses and reduces corporate cybersecurity risk. By applying the hacker’s perspective, the software identifies, analyzes and prioritizes remediation of cyber defense vulnerabilities. Hundreds of security professionals and service providers around the world use PenTera to perform continuous machine-based penetration tests that improve their immunity against cyber-attacks across their organization networks. Pcysys (an acronym for “Proactive Cyber Systems”), was founded in November 2015 and has 50 employees. (Pcysys 13.11)

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2.3 Amadeus Leads a $9.8 Million Investment Round for Refundit

Amadeus Ventures announced it is leading an investment round of $9.8 million in Refundit. Additional investors include, among others, Portugal Ventures and seed round investors. The startup’s digital solution aims to allow tourists from around the world who are visiting Europe to claim their VAT refund as quickly and efficiently as possible. The solution – which is currently being piloted in Belgium – plans to eliminate the long queues and paperwork so that claiming a VAT refund becomes a fully digital process.

To reclaim VAT via the Refundit mobile app, non-EU tourists will need to take a photo of their receipts, boarding pass and passport, and then just digitally apply for their VAT refund. Tax authorities from the relevant country will review the requests digitally and send a digital confirmation to the traveler. This new process is simple, short and user-friendly. The core innovation that sets Refundit apart from its competitors is the end-to-end digitized process for both the traveler and tax authorities. Up until now, in majority of EU countries, travelers needed to fill in forms and visit the customs counter at the airport, adding unnecessary stress and extra time to the journey.

Refundit fits into Amadeus’ strategic goal of empowering the traveler and offering the smoothest possible end-to-end travel experience. As an innovation vehicle to drive collaboration with the startup ecosystem and companies like Refundit, Amadeus launched its startup investment program in 2014. (Amadeus 14.11)

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2.4 Gett Announces Closure of Juno and Strategic Partnership With Lyft

Gett announced the closure of its New York rideshare business, Juno, and a strategic partnership with Lyft to enable Gett’s corporate clients to access rides in the United States beginning next year. As a corporate transportation leader, Gett serves over 15,000 companies, including a third of the Fortune 500. Through the Lyft partnership, Gett’s corporate customers traveling in the United States will be able to request rides through the Gett app and be matched with a driver on the Lyft network. This partnership will allow Gett to expand its reach across the United States, seamlessly serving its business clients on the Lyft network, all through Gett’s SaaS platform for business travelers. Juno is shutting down in New York as a result of both Gett’s increased focus on the corporate transportation sector and the enactment of regulations in New York City earlier this year.

Tel Aviv’s Gett is the leading corporate SaaS solution for ground transportation across Europe and North America. Its cloud-based solution offers a unique ability to aggregate all ground travel needs by connecting a range of vendors on one single booking platform. Gett’s corporate solution provides a single point of entry to a global network in hundreds of cities worldwide, saving millions of dollars on ground transportation while ensuring the highest level of employees’ satisfaction. (Gett 18.11)

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2.5 Viisights Announces $10 Million in Series-A Funding

Viisights announced a $10 million Series-A fundraising round led by Canadian VC, Awz Ventures, with the participation of Firstime Ventures and additional existing investors. Viisights will use the proceeds from the fundraising to expand its sales organization, establish a global presence, continue to enhance its current products, and develop new solutions. The company offers its products through a growing network of strategic relationships with system integrators and sales channel partnerships, as well as through its direct sales force. The company reports that technology giants, NEC and Motorola Solutions, are already part of said network.

Viisights has a unique offering within the video analytics market, which is projected to reach $3.9B next year and $14.4B by 2025 (Allied Market Research). Viisights leads the “behavioral recognition” product category as listed in Nvidia’s Metropolis partner program page. Last year, the company was recognized as a Gartner Cool Vendor in AI for Computer Vision.

Viisights’ technology is based on real-time temporal and holistic video streaming analysis. Viisights uses video clips rather than discrete images for training its core AI engine, which are based on convolutional neural networks and LSTM models. These unique structures are used to create a unique event signature that includes the scene’s participants and their extracted features, such as positioning, movement, size and relationship with other objects. During runtime streaming, these signatures are being searched for and compared.

Tel Aviv’s Viisights is a leading provider of behavioral understanding systems for real-time video intelligence that leverage unique artificial intelligence (AI) technology. The company provides behavioral understanding systems for safe and smart cities, smart enterprises, banking and financial institutes critical infrastructure sites, transportation hubs, and ride sharing vehicles. (Viisights 18.11)

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2.6 Baring Private Equity Asia Agrees to Acquire Lumenis

Hong Kong’s Baring Private Equity Asia announced that its affiliated private equity funds (BPEA) have agreed to acquire Lumenis. The transaction values Lumenis at an enterprise value of over $1 billion.

Yokneam’s Lumenis is a global leader in the field of minimally-invasive clinical solutions for the aesthetic, surgical, and ophthalmology specialties. For over 50 years, Lumenis’ ground-breaking products have redefined medical treatments and have set numerous gold-standards. The company has a presence in over 100 countries and close to 1,500 employees worldwide. The Asia Pacific region is its largest market, together with a strong presence in North America and EMEA.

The transaction remains subject to the customary regulatory approval process and is expected to be completed in early 2020. (Lumenis 19.11)

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2.7 CyCognito Secures $23 Million in Funding to Address Shadow Risk with Next-Generation Platform

CyCognito has raised $18 million in Series A funding led by Lightspeed Venture Partners, with significant participation by Sorenson Ventures and a personal investment from John W. Thompson, Venture Partner at Lightspeed and Chairman of Microsoft. Investors from the $5 million seed funding round also participated in the Series A, including Sorenson Ventures, UpWest and Dan Scheinman. CyCognito also today introduced its next-generation platform.

CyCognito is using the funding to evolve its SaaS platform, which is already in use by dozens of customers, including global financial, healthcare and hospitality organizations. The platform fills a fundamental security gap representing a $50 billion total addressable market today: identifying and eliminating shadow risk, an organization’s security blind spots. The gap has widened dramatically as organizations have transformed from operating with a well-defined perimeter to building hyper-connected, fluid IT ecosystems that span on-premises, cloud, partner and subsidiary environments. CyCognito addresses this gap with a category-defining, transformative platform that automates offensive cybersecurity operations to provide reconnaissance capabilities superior to those of attackers.

Tel Aviv’s CyCognito was founded by veterans of national intelligence agencies who understand how attackers exploit blind spots that legacy approaches help create, and who recognized the need for a radical new approach to risk assessment. Its mission is to help organizations eliminate their most critical security risks, which are often unknown to them: assets and attack vectors that are part of the organization’s IT ecosystem but may not be managed by IT and security teams because they are in cloud, partner and subsidiary environments. Sophisticated attackers actively seek these assets, which create “shadow risk.” (CyCognito 19.11)

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2.8 Vayyar Raises $109 Million to Bring its 4D Radar Imaging Tech to More Markets

Vayyar Imaging has raised $109 million in a series D round of funding led by Koch Disruptive Technologies (KDT), an investment subsidiary of U.S. multinational Koch Industries. Battery Ventures, Bessemer Ventures, ICV, ITI, WRVI Capital, Claltech, and Regal Four also participated in the round. The company didn’t reveal a valuation.

Founded in 2011, Yehud’s Vayyar started with 3D radar imaging technology targeted at the medical industry as an alternative to mammograms in the detection of breast cancer. Since the company’s global launch in 2015, it has expanded to apply its technology to other sectors, including retail, robotics, automotive and the smart home, with the ability to see through objects, map environments, and track movements. Today, Vayyar refers to its technology as “4D” radar imaging, with the additional dimension reflecting its ability to capture motion.

Vayyar’s sensors can be used in all manner of scenarios: to track and count people in a room, detect if someone is lying unconscious on a factory floor, find pipes hidden inside walls, track consumers as they traverse supermarkets, help carmakers map the internal and external environment, and even enhance smart home applications. Although Vayyar mostly works through industrial partnerships, it has its own line of consumer products that it sells under the Walabot brand, including a fall detection device designed to help family members or caregivers keep tabs on elderly people.

Vayyar had previously raised $79 million, and with another $109 million in the bank it plans to grow its global footprint and expand its existing offerings in key industries. (Vayyar 20.11)

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2.9 Sababa Ventures Launches Technology Fund Focused on Israeli Ecosystem

Sababa Ventures is raising a $35 million fund dedicated to investing in Israeli entrepreneurs aiming to disrupt the media, entertainment, sports and commerce industries. By combining successful Israeli investors and key industry experts, Sababa Ventures was established to bridge Israeli innovation and the American market. Sababa Ventures will focus on early-stage technology companies where the team will invest expertise alongside capital.

Anchored in New York, Los Angeles and Tel Aviv, Sababa Ventures is well positioned to bring these ecosystems together for the mutual benefit of Israeli entrepreneurs, investors, and the global market. The team’s extensive experience in operating media and entertainment giants such as MGM, New Line Cinema, Sony Pictures, Time Warner and WPP, enables Sababa Ventures to deliver strategic insights to their portfolio, and provide access to the most relevant executives, entrepreneurs, and investors. (Sababa Ventures 21.11)

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2.10 Perimeter 81 $10 Million Funding Round to Expand its Network as a Service Platform

Perimeter 81 announced a $10 million Series A investment round led by SonicWall, a Francisco Partners portfolio company, together with Spring Ventures, and existing investors. Perimeter 81 provides enterprises and organizations with a secure cloud-based network solution. SonicWall equips users with next-generation firewall & Cyber Security solutions. As a result, each company will provide a unified network & security platform that will be a one-stop-shop for network and security offerings as a service.

The companies will integrate SonicWall’s advanced security solutions and Perimeter 81’s matured and innovative Zero Trust Network as a Service solution. Both company’s platforms will offer an easy-to-use “Secure Network as a Service” solution that provides Zero Trust access to internal resources, user and branch internet security, branch interconnectivity and endpoint security in one place.

This funding round is the latest move in a year of exponential growth for Perimeter 81. Launched in February 2018, the company has already seen 400% year over year revenue growth, expanding from 180 businesses using Perimeter 81 to 500 in the past eleven months alone. More than 81% of Perimeter 81’s customers use it as their secure corporate network and not only as Zero Trust Access, replacing the need for a VPN.

Tel Aviv’s Perimeter 81 is a Zero Trust Secure Network as a Service that is simplifying network security for the modern and distributed workforce. Perimeter 81 was founded by two IDF elite intelligence unit alumni, and the team of security as a service experts comes together every day to deliver a truly innovative, world-class network security service. Perimeter 81’s clients range from SMB to include Fortune 500 businesses and industry leaders across a wide range of sectors, and its partners are among the world’s foremost integrators, managed service providers and channel resellers. (Perimeter 81 21.11)

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2.11 Cognata Signs Key Asian Partnerships to Accelerate Simulation Adoption in Strategic Markets

Cognata announced a series of key agreements in China, Japan and Korea that will increase simulation adoption in key automotive markets. Cognata partnered with HiRain Technologies, a leading Tier 1 solution provider for the automotive market in China as well as Innotech Corporation, an established Japanese advanced technology solution company. Additionally, Cognata is collaborating with K-Innotech, to bring Cognata’s cutting-edge technology to Korean automakers through K-Innotech’s strategic partnerships.

Cognata is a leading global supplier of large-scale automotive simulation for the Advanced Driver Assistance System (ADAS) and autonomous vehicle markets. Working with leading automotive technology companies around the world, Cognata’s end-to-end platform accelerates time to market by delivering simulation solutions for the entire automated driving product lifecycle, from training to testing to deployment.

Rehovot’s Cognata provides the fast lane to autonomous driving with its testing and evaluation solution for self-driving vehicles – a realistic automotive simulation platform where virtual cars travel virtual roads in virtual cities, all remarkably true to real-world conditions. Working with some of the largest vehicle makers in the world, Cognata brings the disruptive power of artificial intelligence and computer vision to the ADAS and autonomous driving simulation world and shaves years off the verification and validation process. (Cognata 20.11)

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2.12 BigPanda Raises $50 Million in Series C Funding

BigPanda has raised a $50 million Series C round of funding to help enterprises successfully adopt AIOps in their IT Operations, Network Operations Center (NOC), and DevOps teams. The round was led by Insight Partners, with participation from existing investors Sequoia, Battery Ventures, and Mayfield. This investment brings BigPanda’s total funding to more than $120 million. This Series C investment validates BigPanda’s approach to solving these issues, and will help enterprises adopt AIOps and intelligently automate and scale their IT operations.

Tel Aviv’s BigPanda helps IT Ops, NOC and DevOps teams detect, investigate, and resolve IT incidents and outages, faster and more easily than ever before. Powered by Open Box Machine Learning, BigPanda captures alerts, changes and topology data from all your disparate tools and uses machine learning to reduce IT noise, detect incidents and outages, and surface their probable root cause, in real time. (BigPanda 21.11)

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2.13 Japan’s UMI and Yissum Establish Strategic Partnership

Yissum, the Technology Transfer Company of the Hebrew University of Jerusalem, announced a strategic partnership with Universal Materials Incubator (UMI), a JPY 16.5B Investment Fund from Japan. The partnership will focus on commercialization of cutting-edge technologies from Hebrew University (HU) to Japanese corporations. As specialists in materials and chemical industries, UMI has also invested in Yissum’s Racah Nano Venture Fund, an investment vehicle founded this year to focus on Hebrew University innovations in advanced materials and nanotechnology. The strategic partnership allows Yissum and UMI to grow their international presence and facilitate the adaptation of HU technologies to the Japanese market as well as create joint investment opportunities.

Yissum is the technology transfer company of The Hebrew University of Jerusalem. Founded in 1964, it is the third company of its kind to be established and serves as a bridge between cutting-edge academic research and a global community of entrepreneurs, investors, and industry. Yissum’s mission is to benefit society by converting extraordinary innovations and transformational technologies into commercial solutions that address our most urgent global challenges. Yissum has registered over 10,000 patents covering 2,800 inventions; licensed over 900 technologies and has spun out more than 135 companies. Yissum’s business partners span the globe and include companies such as Boston Scientific, Google, ICL, Intel, Johnson & Johnson, Merck, Microsoft, Novartis and many more.

Racah Nano Venture Fund is The Hebrew University of Jerusalem’s venture fund focused on smart materials and nanotechnology. The nanotech fund was established in 2019 as a unique blend of academia and entrepreneurism to commercially asses and develop the best ideas within the University’s walls. Racah Nano Venture Fund is a pro-active initiative which offers funding to university projects, allowing academic researchers to focus on perfecting their research, while also providing industry with high quality innovations that offer sufficient validation to provide initial de-risking of early-stage investments. (Yissum 25.11)

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2.14 Pepsico to Invest in SodaStream Plant Expansion

Pepsico, which acquired Israeli company SodaStream over a year ago, is planning expansion of SodaStream’s plant in the Idan Hanegev Industrial Park near Rahat at an investment of NIS 320 million. SodaStream currently has 1,500 employees at the plant, and will hire 1,000 more for the expanded plant.

SodaStream has applied for aid for its investment under the Law for the Encouragement of Capital Investment, as an exporting company with activity in outlying areas. SodaStream could receive an NIS 80 million grant, 20% of the investment, plus tax benefits in the form of reduced corporate taxes, as US chip giant Intel, which has a fab in Kiryat Gat, is already receiving. Under the Law for Encouragement of Capital Investments, the corporate tax rate for exporting companies operating in outlying areas is 7.5%, but SodaStream will probably pay less than that.

The tax benefit requires approval from the Ministry of Economy and Industry, the Ministry of Finance, and the Israel Tax Authority. The Ministry of Economy and Industry Investment Center is scheduled to hold a meeting next month to discuss the company’s request for a grant for its investment. The Investment Center is expected to approve the request. (Globes 24.11)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Repzo Raises $750,000 in Pre-Series A Round led by Jabbar

Amman’s Repzo, a pioneering mobile CRM SaaS platform, has just completed its Pre-Series A funding round of $750,000. This round, led by Jabbar Internet Group, included Arzan VC, Adam Tech Ventures, Shorooq Partners and a group of angel investors, is a step forward in further expanding Repzo’s offering, which already serves clients in seven different countries, to reach other MENA markets and to open new offices in KSA, UAE and Egypt.

The company was founded in 2017 as a sales force automation solution with advanced CRM capabilities. The idea of the start-up came up as a solution to solve problems of a family business which specialized in manufacturing and distributing cosmetic products. Since then, Repzo has become an indispensable solution for major companies in FMCG & Pharmaceuticals sectors to track and monitor their field employees. By using the Repzo’s iOS and Android app, employees can enter their Geo-Tagged activities, enabling managers to monitor & measure their performance from any smartphone, tablet or laptop. Additional important features range from taking notes and photos to filling predefined forms and sending purchase orders.

Having successfully captured a healthy share of CRM market, Repzo has now set its sights on aggressive geographic expansion using the new funds, as well as further enhancing its live tracking features, AI capabilities and Image Recognition technologies. (Repzo 11.11)

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3.2 New US Retail Concept b8ta to Make Overseas Debut in Dubai

Dubai will be the first international store added to b8ta’s chain of 16 flagship locations across the US. Founded in 2015, with offices in San Francisco and New York, b8ta is a software-powered retailer designed to make physical retail accessible for product makers and exciting for consumers. Retailers in Dubai are soon to experience a new concept, as b8ta, a retail-as-a-service company from Palo Alto, is set to open its first outlet in the city. The b8ta retail outlet, which will be located in Dubai Mall, is launching in partnership with Chalhoub Group. There are plans to expand b8ta’s presence across the Middle East in the future. b8ta said its mission is to make retail accessible for all by building a new type of retail store. The business model, called retail-as-a-service, lets brands market, manage and measure offline experiences. (AB 16.11)

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3.3 Addenda Closes Seed-Funding Round by 500 Startups, Beyond Capital and Strategic Investors

Dubai’s Addenda, the first and only insurance blockchain consortium in the Middle East, has closed its fundraising seed round for an undisclosed amount led by 500 Startups, with the participation of Beyond Capital and several other angel investors. The additional investments will help Addenda to aggressively expand its sales and marketing efforts, expand its operations to other GCC countries as well as broaden and accelerate product development.

In mid-October, Addenda launched the first ever blockchain reconciliation platform between insurance companies. In a matter of a few weeks, eight insurance companies have filed more than AED 700,000 worth of motor insurance claims against each other using the Addenda platform. Addenda is a powerful solution for the insurance industry and they are excited to collaborate with and support them as they work to build a great company in an exciting category. (Addenda 17.11)

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3.4 QiDZ Raises $1 Million Seed Investment

Sharjah’s , QiDZ, a one-stop destination for kids-related fun, education and entertainment in the UAE, announced that it has raised $1 million in seed funding. The round was led by several regional and international institutional investors, which included the Oman Technology Fund, 500 Startups, Vision Ventures, Seedstars, Mindshift Capital, Delta Partners Ventures and support from the OQAL Angel Investor Network, UAE Business Angels and Misk Innovation. The company will use the funds to further enhance its product offering, grow its team and expand its footprint into other GCC markets.

Launched in the UAE in November 2017, QiDZ was founded by five women. QiDZ is the first mobile app in the region to bring a unique platform that consolidates all the family-related entertainment and kids’ activities of all ages in one place. The app enables users to discover more than 3,000 hand-picked fun and educational activities, deals and restaurants and book online instantly. (QiDZ 26.11)

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3.5 ekar Launches in Saudi Arabia Following $17.5 Million Series B Round

UAE based ekar, the Middle East’s first and largest carshare operator, will now launch operations in Riyadh following the company’s successful Series B totaling $17.5 million in June of this year. Dubai-based venture capital firm Polymath Ventures led the round which includes Al Yemni Group and Audacia Capital. Today, ekar UAE services 50,000 bookings per month, a number which they expect to quadruple over the next twelve months as the firm launchs services across cities in Saudi Arabia and other Gulf countries. ekar has 1,000 ekars in its fleet and over 75,000 members and envision surpassing 10,000 ekars and over a million members by 2021.

ekar is entering an inflection point as it arrives Saudi Arabia, where a young population of 20 million smartphone users are by-passing traditional car ownership in favor for alternative mobility solutions. ekar is a natural extension of the transportation vertical in KSA and is perfectly suited to address a growing demand for cost-effective transportation on the back of ekar’s four years of experience building a world-class carsharing business. In addition, more than 70,000 women in the Kingdom have been issued driving licenses, and ekar is well-positioned to be the ‘first-car solution’ for these drivers. ekar is launching in Riyadh with 600 ekars and will launch in other cities throughout Saudi including Dammam, Jeddah, Mecca, Medina and KAEC.

ekar’s pricing model is simple, based per minute depending on car models, which range from economy to business class vehicles. The average ekar ride is 60 minutes that can cost as little as 24 Riyals, a price which includes fuel and insurance and no monthly membership fees and is a fraction of the cost of ride-hailing services, traditional car rentals or taxis. What’s more, with ekars spread across hotspot areas in Riyadh, including the airport, ekar allows for the benefits of self-drive without the associated high costs of car ownership. (ekar 17.11)

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3.6 Okadoc Named Start-up of the Year at Annual Arabian Business Start-up Awards

Dubai’s Okadoc has been named Start-up of the Year at the annual Arabian Business Start-up Awards in the Waldorf Astoria on Palm Jumeirah. The company, which connects healthcare providers and doctors with their patients, beat off strong competition from over 75 nominations to claim the prestigious accolade. Patients can use okadoc.com to find doctors across more than 130 specialties based on location, language spoken, insurance and availability. It also helps practitioners, clinics and hospitals reduce ‘no-shows’ by up to 75%, optimize their bookings, attract and engage new patients. (AB 24.11)

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3.7 Statys Secures Pre-Seed Funding Round from Dtec Ventures and Propeller

Statys has successfully closed the pre-seed funding round for its credit assessment solution, powered by artificial intelligence. The company will use the capital to grow their team, particularly on the engineering and data science side. The funding came from Dtec Ventures, the venture capital unit of Dubai Silicon Oasis Authority (DSOA) and part Dubai technology entrepreneur campus, the largest hub for technology startups in the Middle East, and Propeller, a VC fund with an acceleration arm focusing on cutting edge product and technologies.

Dubai’s Statys develops a business platform to power the future of financial services. The company offers a solution that uses deep learning to reduce defaults, shorten time to decision and provide ongoing monitoring for predictive management of risk, enabling financial institutions and fintechs to get access to a real-time credit assessment while reducing the need for time-consuming and laborious processes. The approach is not to replace existing risk management practices and system, but to combine traditional credit scoring models with machine learning techniques and data analysis. Thereby enabling lenders to extend credit to more end-consumers and SMEs and reduce default rate from borrowers. Statys customers will get performance, compliance, and the transparency need to satisfy lending regulations. Statys are the winners of the AWS MENA startup challenge, Seamless FinTech competition and AI Everything Supernova Competition. (Statys 17.11)

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3.8 Saudi’s Sidra Signs $206 Million Deal for US Industrial Properties

Saudi-based Sidra Capital, a Sharia-compliant asset manager, has completed its second US industrial real estate acquisition with a deal worth $206 million. The portfolio is comprised of 30 fully occupied single tenant net leased assets spread across 15 key states. It added that the portfolio benefits from a roster of strong mid-market and large companies which have occupied their respective assets for an average of 27 years.

The purchase of the portfolio follows the aggregation of a portfolio of six US student accommodation assets and the acquisition of a site occupied by Sainsbury’s in the United Kingdom earlier in the year. These acquisitions have increased Sidra Capital’s total assets under management to $2 billion, of which over $800 million is in the United States. (AB 23.11)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Carrefour Launches First UAE In-Store Farms to Reduce Carbon Footprint

Carrefour has launched the region’s first hydroponic in-store farms at Carrefour in Abu Dhabi which aim to supply locally grown agricultural products across all Carrefour stores in the UAE. The UAE’s Minister of Climate Change and Environment (MOCCAE) inaugurated the hydroponic in-store farms which are located at Carrefour’s stores in Abu Dhabi’s My City Centre Masdar and Yas Mall. The hydroponic farms are part of the company’s net positive strategy that aims to overcompensate its water and carbon footprint by 2040.

Carrefour’s hydroponic farms are the result of a recently renewed memorandum of understanding between MOCCAE and Majid Al Futtaim Retail to sell locally grown agricultural products across all Carrefour stores in the UAE and enhance the use of innovative farming methods. The two farms are the first of their kind to be installed in the region. They use 90% less water and less space than traditional farms to deliver around 25kg of fresh herbs and microgreens a day. The isolated and temperature-controlled glass farming chambers were designed in line with the highest standards of hydroponics. While not accessible, the farms are visible to consumers at the stores, significantly enhancing their shopping experience. With virtually no food miles involved, customers are free to choose from a select range of herbs and microgreens, once fully grown, at the store, it added. (AB 25.11)

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4.2 Careem to Operate Dubai Bike Sharing Scheme Following RTA Agreement

On 16 November, Dubai’s transport authority announced that it signed a contract for ride-hailing app Careem to operate 3,500 bicycles across 350 smart docking stations in the emirate. The Roads and Transport Authority (RTA) said the service marks the first bicycle-pool phased program of its kind in the region. Under the deal, Careem will operate 1,750 bikes and install 175 stations during the first two years of the contract, which runs for 15 years. In the following five years, the operation will grow to 3,500 bikes and 350 docking stations.

Careem will use a smart system to track bicycles, predict high occupancy areas, and connect all bicycles through GPS. It will operate solar-powered bicycle racks while customers can hire and pay for bike rides through Careem Bike app. The service covers several Dubai hotspots such as the Marina, Jumeirah, Dubai Water Canal, Deira, Al Khawaneej and Al Qudra. It will also be available at safe roads of four districts namely Al Qusais, Al Mankhoul, Al Karama, and Al Barsha. The speed limit on dedicated cycling lanes or safe roads is fixed at 40 kph. The RTA has constructed cycling tracks extending 274km in Dubai while the total length of cycling tracks in Dubai is expected to reach about 631.7km by 2023. (AB 16.11)

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5: ARAB STATE DEVELOPMENTS

5.1 Lebanon’s Balance of Payments Deficit at $4.5 Billion by September 2019

According to Banque du Liban (BDL), Lebanon’s Balance of Payments (BoP) registered a deficit of $4.5 billion in Q3/19, compared to a deficit of $1.3B deficit recorded during the same period in 2018. Specifically, BDL’s Net Foreign Assets (NFA) dropped by $1.2B while NFAs of commercial banks fell by $3.3B by September 2019. On a monthly basis, the BoP recorded a $58.5M deficit in September 2019, compared to a deficit of $146.1M in September last year. In fact, NFAs of BDL decreased by $160.1M, while those of commercial banks added $101.6M in September 2019. (BdL 14.11)

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5.2 Number of Lebanese Construction Permits Slumped by 17.69% in October 2019

According to the Orders of Engineers in Beirut and Tripoli, the total number of construction permits dropped by an annual 17.69% to reach 9,708 by October 2019. It followed that the Construction Area Authorized by Permits (CAP) registered an annual drop of 30.53% to 5.38 million square meters (sqm.), which mainly indicates investors’ growing interest in smaller construction areas for their projects. In a regional breakdown, Mount Lebanon grasped the largest share of the issued permits or 33.9% of total. In fact, the construction permits issued within the region amounted to 3,291 permits by October, down by a yearly 26.13%. Meanwhile, the south of Lebanon (constituting 21.31% of total) accounted for 2,069 construction permits, down by a yearly 11.43%. In turn, the North ranked 3rd grasping a 15.79% of the total construction permits issued, equivalent to 1,533 permits in the first 10 months of 2019. Nabatiye (13.29% of total) and the Bekaa (9.60% of total) followed, with the number of construction permits falling by a yearly 17.47% and 16.26%, to settle at 1,290 and 932 permits, respectively. Nonetheless, in Beirut (6.11% of total), the number of construction permits grew by 5.14% year-on-year to stand at 593 permits by October 2019. (OEBT 25.11)

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5.3 Amman Launches an Administrative Reform Package

On 18 November, the Jordanian government launched a second stimulus package focusing on administrative reform almost three weeks after the introduction of a wide-scale economic package designed to propel growth and rejuvenate the business ecosystem. Launching the package, Prime Minister Razzaz announced that his government will cancel and merge 8 independent government institutions to eliminate administrative slack, duplication and overlapping of mandates in the government sector.

The prime minister said his government will, next month, take a set of measures to bring all government stakeholders in the transport domain under the umbrella of a single entity. This will include the Land Transport Regulatory Authority, the Jordan Maritime Authority and the Civil Aviation Regulatory Commission. Other independent government entities that will be spared from the cancellation and merger drive because of their importance will be subject to a rigorous review of the number of commissioners and directors they have as well as robust control over administrative and logistical spending, the prime minister pledged.

Regarding the energy sector, Razzaz pointed out that the government will merge all the regulators of the energy sector, including the Energy and Minerals Regulatory Commission, and the Jordanian Atomic Energy Commission in a single body. Razzaz also announced that his government is cancelling the Water Authority of Jordan and reassigning its mandate to the Ministry of Water and Irrigation, after finding that the authority is not a regulator of many actors in the public and private sectors. (Petra 18.11)

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5.4 Jordan’s Trade Balance Deficit Shrinks 13% in Nine Months

Jordan’s trade balance deficit has seen a 13.4% decrease in the in the first nine months of 2019 compared to the same period in 2018, driven by an increase in the volume of national exports by 7.8%, according to figures published by the Department of Statistics (DoS). The value of national exports during the reporting period amounted to some JOD3.7 billion, compared to around JOD3.45 billion in 2018, an increase of 7.8%. Imports during the same period amounted to JOD10.1 billion, a decrease of 13%, compared to the first nine months of 2018. (Petra 25.11)

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5.5 Jordan Ranks 70th on 2019 Global Knowledge Index

Jordan advanced six points on the 2019 Global Knowledge Index ranking at 70, coming in ninth among Arab countries. During the opening of the Knowledge Summit in Dubai, the United Nations Development Program (UNDP) and the Mohammed bin Rashid Al Maktoum Knowledge Foundation (MBRF) announced the 2019 edition of the Global Knowledge Index.

Among the most prominent sectoral indicators are pre-university education in which Jordan ranked 104, while it ranked 93 in technical education and vocational training, and 41 in higher education. The Kingdom ranked 74 in research and development and innovation, 69 in information and communications technology, 44 in economy, and 88 in enabling environments. (Petra 19.11)

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►►Arabian Gulf

5.6 Russian Tourists Set to Generate $1.2 Billion in Revenue for GCC by 2023

Russian tourists travelling to the GCC are expected to generate an estimated $1.22 billion in travel and tourism revenue by 2023, according to new research. The data revealed an increase of 19% when compared with figures from 2018. The latest Colliers research commissioned by Reed Travel Exhibitions predicts the UAE will witness the highest growth, with total tourism spend by Russian visitors projected to reach $1.153 billion by 2023 and tourism spend per trip increasing 5% from $1,600 to $1,750.

According to the report, Saudi Arabia is expected to witness the second largest increase closely followed by Oman, with total Russian tourism spend estimated to reach $28,659,600 and $21,788,000 respectively, by 2023. Following recent reforms in the kingdom, the introduction of tourism e-visas and the on-going development of Giga projects including The Red Sea Project and Amaala, Saudi Arabia is looking to capitalize on Russia’s growing tourism spend.

Russia continues to be one of the top 10 source markets for the UAE, with 578,000 Russian visitors entering the UAE in 2018 and this number is predicted to increase at a compound annual growth rate (CAGR) of 4.2% to 688,300 by 2023, according to Colliers International. Emirates and Etihad Airways have also increased their flights between both countries, with Emirates introducing a third daily flight to Moscow in 2018. The research study found that while the UAE will account for the majority of Russian arrivals in the GCC, Oman will witness the second highest comparative growth at 4% – welcoming 13,000 Russian nationals by 2023.

Saudi Arabia will closely follow with 17,100 Russian tourists expected to visit the kingdom by 2023, compared with 15,200 in 2018 – a comparative growth of 3.2%. (AB 22.11)

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5.7 Summer Surge Boosts Dubai Tourist Numbers to Over 12 Million

Dubai has recently been ranked the fourth most visited city in the world for the fifth year in a row in Mastercard’s Global Destination Cities Index 2019. A surge in arrivals over the summer months accelerated Dubai’s tourism momentum, as the city welcomed 12.08 million international overnight visitors in the first nine months of 2019, according to official figures. Dubai’s Department of Tourism & Commerce Marketing (Dubai Tourism) reported a 4.3% increase in volume growth compared to the same period last year, citing expansion of traditional and emerging markets. The positive performance, which drew over 1.23 million visitors to the city in September, an above market average increase of 7.3% over the same month in 2018.

India retained its position as Dubai’s leading source market, with over 1.39 million visitors during the first nine months of 2019, followed by Saudi Arabia which registered a 2% year-on-year growth for over 1.25 million visitors, largely driven by the its National Day holiday on 23 September.

Despite the devaluation of the pound against the dollar, and continued Brexit uncertainty, UK remained Dubai’s third largest source market with 851,000 visitors. Oman delivered 778,000 visitors for a 28% increase year-on-year, with China, one of the fastest-growing source markets, further increasing tourism volumes, taking fifth spot with a 14% increase that saw 729,000 Chinese tourists being welcomed in the first nine months of 2019. The United States, Germany and Pakistan also retained their positions in the top 10 alongside Philippines, one of the fastest-growing feeder markets, which delivered a 29% increase.

Dubai’s cruise industry continued to play a pivotal role in contributing to the emirate’s tourism sector, with its 2018/2019 cruise season witnessing a record increase of over 51% in cruise tourist inflow and a 38% increase in cruise ship calls season-on-season.

A total of 716 hospitality establishments offer a cumulative 119,779 available rooms in the emirate as of September, a 7% increase over the same period last year. Average occupancy for the hotel sector stood at 73%, one of the highest in the world, with establishments delivering a combined 23.12 million occupied room nights during the nine months of the year. (AB 23.11)

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5.8 Dubai Targets Russia, China, Europe, Africa as It Chases Medical Tourists

Dubai is targeting the GCC, Europe, Africa, Russia and China as it looks to build on record numbers of medical tourists in 2018. Dubai Health Authority’s Health Tourism Department is taking part in the World Travel Market (WTM) 2019 in London as part of its continuing efforts to promote the emirate as a leading destination for health and wellness treatments.

According to the Dubai Health Authority (DHA), the emirate attracted 337,011 medical tourists in 2018 alone, who spent a combined value of AED1.2 billion on treatments in orthopedics, sports medicine, dermatology and skin care, dentistry and fertility treatments. Total UAE medical tourism sales amounted to AED12 billion in 2018, up 5.5% year-on-year, according to recent Euromonitor International data. (AB 23.11)

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5.9 Sharjah’s SRTI Park Begins Pilot Project for Autonomous Vehicle Operations

The Sharjah Research, Technology and Innovation Park (SRTI Park) has begun the pilot phase of autonomous vehicle operations as part of its plan to develop an integrated smart transport system. The project reflects the interest of the park to develop and manage an innovation ecosystem that promotes scientific research and development. The smart transport in operation in Sharjah, produced by a Dutch company, accommodates 20 passengers, uses pre-programmed routes and is designed for short distance travel. It runs on virtual routes that can be easily programmed to make sudden transitions on demand and is equipped with all safety requirements. The sensor and intelligent transport system can handle any obstacles in its path and avoid collision. This launch translates the park’s strategy to become a regional development center for future science and innovative technologies by creating an environment suitable for research and development and through a package of accelerators in cooperation with the private, public investment sector and the academic sector. (AB 16.11)

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5.10 Saudi Healthcare Spending Forecast to Reach $160 Billion by 2030

Saudi Arabia’s healthcare spending has grown at a compound annual growth rate (CAGR) of 12.1% in the last nine years to $45.9 billion, and is expected to increase to $160 billion by 2030. According to new research by Colliers International, growth is being driven by a rising population and life expectancy and a growing prevalence of chronic/lifestyle diseases. The report added that population growth will be at a CAGR of 2.5% to 45 million by 2030. The research also forecast an increase in healthcare spending between 2011 to 2019 of $18.4 billion.

Colliers also outlined the impact the composition of the population is having on future healthcare requirements. The age group new-born to 19 is expected to increase to 13.7 million by 2030, creating demand for facilities and services relating to mother and childcare such as obstetrics, gynecology and pediatrics.

Meanwhile, population growth in the 20 to 39-year demographic is expected to increase to 13.8 million by 2030, driving a focus on preventing lifestyle diseases. The largest increase will be felt in the over 60 category which is expected to grow from 1.8 million in 2018 to five million in 2030, driving demand for geriatric services such as long-term care, rehabilitation and home care.

Across the GCC, healthcare spending has increased in line with government strategies to diversify their economies. In addition to Saudi Arabia, the UAE, Bahrain, Oman and Kuwait have all adopted national transformation plans to expand the role of the private sector in the healthcare industry and create additional capacity for their growing markets. (AB 15.11)

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5.11 Saudi Arabia Set to Begin Issuing Instant Work Visas

Saudi Arabia is planning to launch an instant work-visa service beginning in December. The service will be available through the country’s Qiwa platform, which is designed specifically to help small businesses. The move is meant to enable young Saudis to launch start-up projects, open small businesses, boost economic growth and accelerate business expansion plans, which will have a positive impact on national development. Extensive research had been carried out to establish the requirements of small businesses for migrant workers, so that the new visa service meets their needs. The Ministry of Labour and Social Development has also launched a visa service for established businesses which are in the process of expanding. (AB 20.11)

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♦♦North Africa

5.12 Beltone Financial Forecasts Egypt’s Economy to Grow by 6.1% in 2020

Beltone Financial, one of the largest investment banks in the Middle East and North Africa, forecasts that Egypt’s economy to achieve a growth rate of up to 6.1% in the next fiscal year 2020/21, compared to 5.6% in the fiscal year 2018/19. In its annual report about Egypt’s economy 2020, the bank said that the country’s economic growth will continue, driven by the noticeable increase in the revenues of tourism and natural gas. It noted that underway mega national projects will contribute to sustaining the economic growth in Egypt, as they are expected to give more space to the private sector to absorb new entrants to the labor market each year.

The bank predicted a decline in the current-account deficit to reach $7.2 billion of GDP in the current fiscal year. It forecast that the Egyptian market will see the best performance in terms of profitability of shares denominated in dollars by 15.1%, surpassing the Middle East markets and border emerging markets. As for the interest rates, the bank expected that the Central Bank of Egypt will keep lowering the interest rates in 2020 by 300 basis points, which will positively reflect in the performance of shares at the stock exchange. (Beltone Financial 18.11)

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5.13 Egypt & Noble Energy Sign Two $430 Million Deals

Egypt has signed two deals worth $430 million with Texas-based Noble Energy to pump natural gas through the East Mediterranean Gas Company’s (EMG) pipeline, and the other to manufacture petroleum products in partnership with Egypt’s Dolphinus Holdings. The agreements were signed on 23 November on the sidelines of the Investment for Africa 2019 forum, between Egyptian Minister of Investment Nasr and CEO of the U.S. International Development Finance Corporation (DFC) Boehler.

In February 2018, two 10-year agreements worth $15 billion to export Israeli natural gas to Egypt were signed. The agreements between Delek Drilling, Noble Energy, and Dolphinus Holdings will supply Egypt with 7bn cubic meters of gas annually. Also, in November, the trio announced a deal to acquire 39% stake in the natural gas pipeline connecting Egypt and Israel. Delek Drilling and Noble Energy, the operators of Israel’s largest natural gas fields Tamar and Leviathan, and the Egyptian company Dolphinus Holdings, established a joint venture under the name EMED, which will buy the stake from East Mediterranean Gas Company, the owner of the Arish–Ashkelon pipeline, in a deal worth $518 million. (DNE 24.11)

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5.14 UAE & Egypt Launch a $20 Billion Joint Investment Program

The United Arab Emirates and Egypt launched a $20 billion joint investment program to develop “economic and social projects”. Abu Dhabi Crown Prince Sheikh Mohammed Bin Zayed Al Nahyan made the announcement during a visit to the Emirati capital by Egyptian President Al Sisi.

The UAE has been a firm regional backer of the Egyptian president. The UAE and Egypt are also part of a Saudi-led alliance that cut relations with Qatar in June 2017, accusing it of bankrolling extremist groups and of being too close to regional rival Iran. Doha denied the accusations.

Cairo has been seeking investment to boost its sagging economy and create jobs. Poor and middle-class Egyptians have been bearing the brunt of harsh austerity measures since 2016 when the government secured a $12-billion bailout from the IMF in exchange for tough economic reforms. The reforms have met with some pushback, fueled by allegations of graft among the political and military elite.

Direct foreign investment has grown to record levels in recent years, but the national debt has ballooned since the pound was floated in November 2016, leading to a sharp depreciation. (AFP 14.11)

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5.15 Abu Dhabi Fund Offers $305 Million Loan to Cash-Starved Sudan

Sudan announced it was to receive a $305 million loan from an Arab fund to help tackle the country’s worsening economic crisis led by soaring food prices and foreign currency shortage. On 14 November, a delegation from the Arab Monetary Fund met Sudanese Finance Minister Ibrahim Al-Badawi. During the meeting, the delegation said the fund plans to support the Sudanese economy funding to include loans and trade facilities. Sudan will receive $110 million in November, followed by $45 million in Q1/20 and a third tranche of $80 million by the end of 2020. A separate trade facility of $70 million will also be offered as part of the overall package. The loan is the second such facility to Sudan this year from the AMF, which previously pumped $300 million into its economy in May.

The finance ministry said that in a separate agreement, the African Development Bank also gave Sudan a grant of $32.8 million to upgrade water and sanitation facilities in the conflict-hit states of North and South Kordofan. It was announced that Sudan needed $3 billion to cover immediate needs and stabilize its budget.

Since the fall of Bashir, Sudan has been getting by on aid from long-time allies Saudi Arabia and the United Arab Emirates. Growing anger over the country’s economic crisis triggered protests in December last year against Bashir’s rule. They swiftly turned into a nationwide movement that finally saw the veteran president ousted by the army on 11 April. Sudan is currently ruled by a joint civilian-military sovereign council which is overseeing the country’s transition to a civilian rule, as demanded by protesters. Sudan’s economic crisis deepened since the secession of South Sudan in 2011 which took away the bulk of oil earnings. (AB 15.11)

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6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Greece Completes Repayment of Expensive IMF Loan

On 25 November, Greece completed the early repayment of a chunk of an expensive loan owed to the International Monetary Fund (IMF), according to the Finance Ministry. The move concerns loans worth €2.7 billion and will allow Athens to reduce its debt-servicing costs. The move strengthens Greece’s credibility, borrowing costs are lowered, smaller amounts are paid, public debt sustainability is improved and the confidence of the international markets is further strengthened. The government submitted the request to the European Stability Mechanism in September to repay some of its loans to the IMF, which were worth about €9 billion and Greece’s creditors approved it on 28 October. (eKathimerini 25.11)

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6.2 Bank of Greece Forecasts Growth of 2.3 – 2.5% in 2020

Bank of Greece Governor Stournaras appeared optimistic about Greece’s continued economic recovery, predicting a robust growth rate of up to 2.5% next year. During comments at an Athens book launch, Stournaras predicted that growth would reach 1.9% this year before climbing up to 2.3 or even 2.5% in 2020. He added that the conservative government which emerged from July’s general elections has adopted business-friendly policies, putting emphasis on reforms and privatizations while making it a priority to draw foreign investment. He noted, however, that many challenges remain and warned against complacency that could lead to a backsliding in reforms, undermining the recovery that has been achieved.

Separately he described as a significant step the Hercules Asset Protection Scheme which aims to reduce the amount of bad, or non-performing, loans which are weighing on Greek banks, without distorting the market through government subsidies. However it cannot solve the problems of NPLs alone, he said. The central bank is examining solutions that would comprehensively tackle the problem of non-performing loans which account for around 40% of the total worth some €75 billion, he said. (eKathimerini 19.11)

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7: GENERAL NEWS AND INTEREST

7.1 Egyptian Parliament Rejects Draft Law Regulating Public Manners and Dress

The Egyptian parliament’s legislative and constitutional affairs committee has rejected a controversial bill aimed at regulating “public conduct” by forcing people to observe Egyptian society’s generally accepted code of conduct, morals, principles and identity. The bill, which was drafted by female MP Ghada Agami, would have banned women from wearing “indecent dress” in public places, such as tight or revealing jeans. The draft law was rejected on 19November on the grounds that it was not soundly formulated and contravenes the constitution. The law was rejected by all members of the committee at its meeting on Tuesday morning. (Al Ahram 19.11)

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7.2 Turkey’s AKP & MHP Defeat HDP Motion Calling for Gender-Based Violence Probe

On 19 November, Turkey’s ruling Justice and Development Party (AKP) and its ally Nationalist Movement Party (MHP) voted against a motion by the country’s pro-Kurdish People’s Democratic Party (HDP) calling for an investigation into violence against women, a problem that has plagued the country. The motion was inspired by 25 November – International Day for the Elimination of Violence against Women. The proposal called for an investigation against all acts of violence against women, the provision aid for victims and forming a database of such acts.

The AKP-MHP bloc, which maintains 340 seats of the total 550 in parliament, voted against the HDP’s proposed parliamentary investigation while center-right Good Party abstained from the vote.

Some 38% of women in Turkey are subject to violence from a partner in their lifetime, compared to about 25% in Europe, according to World Health Organization data. Last year men murdered 440 women in Turkey, according to unofficial data, doubling the figure from 2012 when Ankara passed a law on preventing violence against women. The brutal murder of a woman in the capital Ankara in August triggered Turkey-wide protests by women, raising pressure on Turkey’s ruling Justice and Development Party (AKP) and prompting President Erdogan to say he would approve any parliamentary move to restore the death penalty in Turkey. (Ahval 20.11)

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7.3 Athens Completes Constitutional Revision Approving Nine Changes

On 25 November, Greek lawmakers approved nine major constitutional amendments out of a total of 49 proposed by all the parties during the procedure, including allowing diaspora Greeks to vote from their country of residence, separating the president’s election from the dissolution of Parliament and amending a law granting immunity to ministers facing prosecution.

With the new amendments, lawmakers will no longer have immunity from prosecution for criminal offenses and the members of independent authorities will be elected with a three-fifth majority in the conference of presidents (the body tasked with the appointments), instead of the previous requirement for a four-fifth majority. Furthermore, in a first for the Greek Constitution, citizens will be able to submit up to two legislative proposals for discussion in Parliament, provided they garner a minimum of 500,000 signatures. These bills, however, will not relate to issues of fiscal and foreign policy, or defense.

Another approved amendment will guarantee a minimum income for families “to ensure dignified living conditions for all citizens,” according to the legislation. The revision started by the previous leftist SYRIZA administration in 2018 and included a proposal to separate the Greek state from the Church – a move that was rejected by New Democracy. On the other hand, ND wanted to change Article 16 of the Constitution which bans the operation of private universities, but the move was shot down by SYRIZA. This was the fourth attempt to make changes to the country’s Constitution after 1975 when the first Constitution of the post-dictatorship era was voted into force. (eKathimerini 25.11)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Lavie Bio Advances in Its Product Development Pipeline for Wheat Bio-stimulants

Lavie Bio announced phase advancement in its product development pipeline for wheat bio-stimulants. This follows the success of its leading wheat bio-stimulant candidate in demonstrating consistent performance across various locations and varieties at target markets. Lavie Bio is advancing its leading product candidate LAV211 into ‘development stage 2’, while continuing the development of its additional product candidates LAV212 and LAV213. The spring wheat bio-stimulants program is running in-line with the team’s expectations, and commercialization of the leading candidate is targeted for 2022.

This announcement follows a series of trials for Lavie Bio’s wheat bio-stimulants candidates, in which LAV211, which was prioritized for advancement, exhibited consistent positive results across commercial varieties in target locations, with advanced product formulation for extended shelf life. Overall, the fields treated with LAV211 showed significant yield improvement compared with controls and industry benchmarks with a ‘win rate’ in over 75% of the locations, with up to 25% yield improvement in top performing locations and an average improvement of ~6% (p value<0.05). Following these trials, which took place in North Dakota, a key target market for the company, LAV211 is advancing to ‘development stage 2’. In parallel, Lavie Bio will further advance the development of LAV 212,213 as basis for future potential new products.

In terms of the next steps, a key focus will be continuing the development of scale-up production and application protocols, while maintaining LAV211’s product attributes such as, efficacy, shelf life and stability. Additionally, improvement of application protocols will facilitate ease of use for farmers, the targeted end-customers. These improvements will be tested in broader field trials during the next crop season in North America.

Rehovot’s Lavie Bio aims to improve food quality, agricultural sustainability and productivity through the introduction of microbiome based ag-biological products. Lavie’s unique approach utilizes a proprietary computational predictive technology, leveraging big data and advanced informatics for the design of microbiome-based products. (Lavie Bio 18.11)

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8.2 Technion Students Win Gold Medal for Developing Artificial Honey

A team of Israeli students from the Technion-Israel Institute of Technology has won a gold medal at the iGEM competition (International Genetically Engineered Machine) for their development of artificial, bee-free honey. The contest was established in 2003 by MIT – The Massachusetts Institute of Technology – which gives students the opportunity to experiment with aspects of scientific and applied research in synthetic biology.

The Technion team has been working on the development of the honey for the past year, according to the university, and won a gold medal for its efforts The Israeli team – made up of 12 students in total – was among over 300 teams from universities all over the world. Their synthetic honey is made with the bacterium Bacillus subtilis, which “learns” to produce the honey following reprogramming in the lab.

The development is important within the context of the sharp decline in bee populations in many parts of the world, also known as Colony Collapse Disorder (CCD), as well as the potential future ability of manufacturers to determine the properties of the artificial honey, including how it would taste. The product would be considered vegan as no animals will have been used in the process to make the synthetic honey. (NoCamels 18.11)

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8.3 World’s First “Artificial Meniscus” Available in Israel

Memphis, Tennessee’s Active Implants, a company that develops orthopedic implant solutions, announced that two patients in Israel have undergone knee surgery for the company’s NUsurface Meniscus Implant – the first “artificial meniscus” to be marketed in the Middle East. Until now, the NUsurface Implant was only available in Israel in clinical trials. The procedures were performed by two leading surgeons who have been involved with the NUsurface Implant development since 2006.

The NUsurface Meniscus Implant is inserted into the knee joint through a small incision, and patients typically can go home soon after the operation. The implant mimics the function of the natural meniscus and redistributes loads transmitted across the knee joint. It is made from a medical grade plastic and, as a result of its unique materials and composite structure and design, does not require fixation to bone or soft tissues.

Active Implants develops orthopedic implant solutions that complement the natural biomechanics of the musculoskeletal system, allowing patients to maintain or return to an active lifestyle. Active Implants is privately held with R&D facilities in Netanya, Israel. (Active Implants 18.11)

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8.4 ConTIPI’s Innovative Treatment for Pelvic Organ Prolapse in Women (POP)

ConTIPI Medical’s current device is designed for the management of Pelvic Organ Prolapse (POP) in women and currently has 510(k) clearance for marketing in the United States, and a CE Mark for marketing in the EU. Pelvic organ prolapse (POP) occurs when the tissues and muscles of the pelvic floor no longer support the pelvic organs, including the uterus, bladder, urethra and rectum, resulting in the drop (prolapse) of these organs from their normal position into, and even outside, the vagina.

ConTIPI Medical developed the ProVate Device for POP, designed to overcome many of the downsides of existing pessaries. The most important innovative feature, besides being disposable and the small dimensions at insertion and removal, is the “shift of control” – control of POP management moves into the hands of the patient rather than the hands of the medical arena. The woman decides when, where and if, to insert or remove the device, hence there is no longer a barrier to sexual activity with such vaginal management.

Caesarea’s ConTIPI Medical provides non-surgical and disposable vaginal medical device solutions for women with various Pelvic Floor Disorders (PFD’s). Each device comes ready for use within a wrapper for the woman to use in the comfort of her own home on her schedule. The devices are inserted vaginally in small dimensions inside an applicator. Within the vagina they open and provide support to pre-defined specific sites along vaginal walls. By the end of usage, devices are removed by a pull of a string, which also causes them to considerably diminish in size, for disposal. Such devices allow women to take control over their medical problem, and use them in privacy and their preferred time. (ConTIPI 18.11)

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8.5 Nanox Introduces Digital X-ray Technology

Nano-X Imaging introduced the first commercial-grade digital X-ray technology based on a proprietary silicon MEMs semiconductor technology. This technology is introduced after 15 years of “under the radar” Japanese and Israeli development and substantial investment to overcome one of the biggest barriers to modern medical imaging. This novel digital X-ray source may enable a significant reduction in the cost of medical imaging systems, with the goal of making medical imaging more accessible and available globally.

The international teams of Israeli and Japanese engineers have achieved the digital generation of electrons without the use of heat (called a “Cold Cathode”). Nanox has built a novel “Electron Gun” based on a field emission array of a 100 million molybdenum Nano-cones (instead of the one metal filament used in legacy sources) enabling a controlled and steady generation of electrons using low voltage to achieve the same effect as the legacy X-ray source. The Company achieved operating stability of its novel X-ray source four years ago and is now moving toward commercialization of its novel X-ray source.

Neve Ilan’s Nanox is an Israeli/Japanese cooperation that has created the world’s first commercial-grade digital X-ray source for real-world medical imaging applications. Nanox promotes the use of its novel technology as the new industry standard to significantly reduce the costs of medical imaging systems and looks to develop collaborations with world-leading healthcare players, aiming to provide affordable, early detection imaging service for all. (Nano-X 19.11)

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8.6 Can-Fite Granted Patents for its Sexual Dysfunction Drug

Can-Fite BioPharma has been granted patents in Canada, South Korea and Israel for its patent titled, “A3 adenosine receptor ligands for use in treatment of a sexual dysfunction” for its drug candidate CF602. Patents were also issued in the U.S., Australia, China, Hong Kong and Japan over the past few years.

CF602 has a unique mechanism of action that makes it suitable to potentially treat sexual dysfunction safely in patients with diabetes mellitus. This is a clear and unmet need in the market today, as the leading sexual dysfunction drugs can be contraindicated for diabetics. The company is now actively looking for and evaluating potential strategic partners that may in-license and develop CF602 in this indication.

Petah Tikva’s Can-Fite BioPharma is an advanced clinical stage drug development company with a platform technology that is designed to address multi-billion dollar markets in the treatment of cancer, inflammatory disease and sexual dysfunction. The company’s lead drug candidate, Piclidenoson, is currently in Phase III trials for rheumatoid arthritis and psoriasis. CF602, the company’s third drug candidate, has shown efficacy in the treatment of erectile dysfunction in preclinical studies and the company is investigating additional compounds, targeting A3AR, for the treatment of sexual dysfunction. These drugs have an excellent safety profile with experience in over 1,000 patients in clinical studies to date. (Can-Fite 19.11)

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8.7 Tarsius Pharma Receives Orphan Drug Designation for TRS by the EMA

Tarsius Pharma announced that the European Medicines Agency (EMA), the European equivalent of the FDA, approved the designation of orphan drug for its TRS for treatment of non-infectious uveitis and has acknowledged the clinically relevant advantage for TRS in non-infectious uveitis patients with glaucoma not eligible for corticosteroid treatment. The EMA further stated in their decision that use of TRS will be of “significant benefit to those affected by the condition, which is chronically debilitating due to visual loss, leading to significant visual impairment or legal blindness in up to 35% of patients.” Orphan drug designations facilitate development of drugs for rare diseases. The TRS Platform Technology has the potential to effectively treat a broad array of autoimmune and inflammatory ocular diseases.

Zichron Yaakov’s Tarsius Pharma was established in 2016 and is focused on developing TRS, a breakthrough, bio-inspired platform technology for the treatment of blinding ocular diseases. The company’s investors include Sun Pharmaceuticals, a global pharmaceutical company, BioLight Life Sciences, as well as private investors and family offices. This project has received funding from the European Union’s Horizon 2020 research and innovation program under grant agreement No. 879598. (Tarsius Pharma 19.11)

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8.8 Kadimastem Successful in Its Cell Therapy Treatment for Insulin-dependent Diabetes

Kadimastem announced successful results of its preclinical proof-of-concept study of IsletRx, an “off-the-shelf” cell product for the treatment of Insulin Dependent Diabetes. IsletRx is comprised of highly purified functional human pancreatic islet cells integrated with a microencapsulation technology developed by the Company. Kadimastem reports that study objectives have been achieved, as study results show safe delivery of IsletRx and demonstrate efficacy manifested by prolonged normalized blood sugar levels in treated immunocompetent diabetic mice throughout the duration of the preclinical study (3 months). Furthermore, no disease or treatment related complications were observed, and all treated animals remained healthy throughout study duration. In comparison, a control group of non-treated diabetic mice presented severe hyperglycemia, leading to the death of the non-treated mice within 40 days. The unique microencapsulation technology, integrated within the IsletRx, protected the islet cells from host immune system response, without the need for potentially toxic immunosuppressive drug treatment.

Based on these results, the Company continues to advance its IsletRx development program towards the clinical stage. Kadimastem plans to engage in discussions with the U.S. FDA during H1/20. The Company estimates that additional pre-clinical studies will be required, with results expected during H1/21. These results will support further discussions with the FDA regarding an Investigational New Drug (IND) application later that year, in order to advance IsletRx to the clinical stage.

Ness Ziona’s Kadimastem is a clinical stage cell therapy company, developing and manufacturing “off-the-shelf” allogeneic proprietary cell products based on its platform technology for the expansion and differentiation of Human Embryonic Stem Cells (hESCs) into clinical grade functional cells. Kadimastem is traded on the Tel Aviv Stock Exchange. (Kadimastem 19.11)

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8.9 ChickP Taps into the Dairy Alternative Market

ChickP launched a line of next-gen chickpea isolates especially designed for plant-based dairy alternative products. This ground-breaking plant protein, developed by the faculty of Agriculture, Food and Environment of the Hebrew University of Jerusalem, uses patent-pending technology to extract up to 90% pure protein out of the chickpea seed. The new chickpea isolates offer exceptional beneficial characteristics that help alternative dairy producers overcome challenges in processing as well as boosting consumer acceptance and fulfilling the demand for highly nutritious and tasty products. Thanks to its high solubility and smooth viscosity, ChickP forms an emulsion/gel that helps contribute to a firm finished product.

While most plant-based proteins can create bitter or off flavors that require masking by addition of sugar, artificial flavors, or other masking agents in the final product, ChickP protein has a neutral flavor, mitigating the need for sugar or flavor additives in the products.

Rehovot’s ChickP was founded in 2016 on the basis of a patented technology developed after 20 years of research conducted at the Robert H. Smith Faculty of Agricultural, Food and Environment, The Hebrew University of Jerusalem. Yissum, the technology transfer company of the Hebrew University, invested in the process via the Agrinnovation Fund, and supported the establishment of ChickP as part of its activities. The company developed and manufactured its products in pilot scale in various plants. The company has begun scale-up operations and is producing several types of chickpea isolates. (ChickP 19.11)

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8.10 Therapix Biosciences Enters Into MOU for Business Combination With Heavenly Rx

Therapix Biosciences entered into a memorandum of understanding (MoU) with Ontario’s Heavenly Rx, an emerging consumer hemp CBD company, pursuant to which Therapix and Heavenly Rx have agreed to pursue a business combination. Any transaction between the parties remains subject to entry into a definitive agreement and to shareholder and regulatory approvals. Pursuant to the MOU, the parties will negotiate a definitive agreement for a business combination between Therapix and Heavenly Rx, constituting a reverse takeover of Therapix by Heavenly Rx.

Heavenly Rx is a dynamic CBD wellness company aiming to redefine the CPG marketplace through a vertically integrated “seed to shelf” approach that partners cultivation and extraction technology with innovative brand design. Led by a team of experienced and disciplined CPG professionals, Heavenly Rx has launched a broad portfolio of hemp CBD and wellness brands across several consumer verticals. Its product portfolio includes oils, tinctures, edibles, beverages, pet care and personal care products. Heavenly Rx’s growth strategy is centered around acquiring and scaling companies with differentiated brands, capabilities and proprietary technologies.

Givatayim’s Therapix Biosciences is a specialty clinical-stage pharmaceutical company led by an experienced team of senior executives and scientists. Their focus is creating and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals. With this focus, the company is currently engaged in the following drug development programs based on tetrahydrocannabinol (THC): THX-110 for the treatment of Tourette syndrome (TS), for the treatment of obstructive sleep apnea (OSA), and for the treatment of pain; and THX-160 for the treatment of pain. (Therapix Biosciences 18.11)

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8.11 Theranica’s Nerivio Named in TIME’s List of 100 Best Inventions of 2019

Theranica Bioelectronics announced that its novel smartphone-controlled prescription migraine wearable device, Nerivio, is recognized in TIME Magazine’s annual list of the 100 Best Inventions. The list highlights 100 inventions that are making the world better, smarter and more enjoyable.

Nerivio is the first smartphone-controlled wearable device for the acute treatment of migraine. Placed on the upper arm, it uses smartphone-controlled electronic pulses to wirelessly remotely stimulate a Conditioned Pain Modulation response to mitigate pain and keep track of migraine episodes. Nerivio received De Novo approval to market from the U.S. FDA in May 2019 and subsequently opened its United States subsidiary in the first phase of its global product launch. Nerivio is available in select headache and migraine clinics throughout the country and priced affordably at $99.

Netanya’s Theranica Bio-Electronics, founded in 2016, is dedicated to combining advanced neuromodulation therapy with modern wireless technology to develop proprietary electroceuticals that address prevalent medical conditions and diseases. Nerivio, Theranica’s first FDA authorized to market device, is a wearable for acute treatment of migraine. Theranica will continue to use its proprietary technology to develop additional solutions to other pain disorders. (Theranica 21.11)

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8.12 Canndoc Trials to Evaluate Pharma Grade Medicinal Cannabis for Children with Autism

InterCure announced that its wholly-owned subsidiary Canndoc initiated a phase 3 clinical trial with the Shamir Medical Center (Assaf HaRofeh) for the treatment of children with autism spectrum disorder. The program will be validating the safety and efficacy of Canndoc’s GMP pharma grade cannabis product T1/C20 for children with autism spectrum disorder. Enrolment in the study of approximately 100 patients age 8-18 is already underway, marking this study one of the most advanced pharma grade medicinal cannabis clinical trial.

Canndoc already supplies pharma grade cannabis products made to GMP standards, prescribe by physicians to patients in Israel and soon in other countries. Canndoc’s medicinal cannabis clinical pipeline includes late stage studies validating its GMP pharma-grade cannabis products for epilepsy, fibromyalgia, neuropathic pain, side effects of chemotherapy in cancer patients, Parkinson’s disease, rheumatic arthritis, radicular pain, posttraumatic stress disorder (PTSD), and lumbar radiculopathy.

Herzliya’s Canndoc has been pioneering Pharma-Grade medical cannabis for more than 11 years. Over the years, Canndoc provided more than 500,000 doses to 15,000 patients, establishing its position as a venerable player in this global industry, demonstrating significant expertise across the entire value chain from research, cultivation, and processing, to product development and advanced GMP clinical trials pipeline initiation. (InterCure 21.11)

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8.13 Teva & Weizmann to Collaborate on Innovative Antibodies for Cancer Treatment

Teva and Yeda Research and Development Company, the Weizmann Institute of Science’s commercial arm, signed a unique collaboration agreement on 25 November that includes financial support and collaborative efforts by Research and Development teams from Teva and the Weizmann Institute of Science, aimed at researching and developing – at a rapid pace – specific innovative antibodies for the treatment of various types of cancer.

This collaboration between Teva and the Weizmann Institute of Science is an important component within a long chain of collaborations with Israeli academia, which will gradually be revealed in the coming months, and comes at the end of an in-depth process conducted by Teva in order to identify and engage in strategic collaborations with leading research teams at Israeli universities. These collaborations may lead to the development of innovative drugs, which can contribute to improving the lives of cancer patients.

Teva’s international academic activity is directed from Israel by a special academic affairs team and is part of the company’s R&D division. Through this team, Teva cultivates collaborations with academia, remains an active partner in global consortia that bring together industry and academia, and supports scientific conferences, student scholarships, doctoral and postdoctoral fellowships at Teva, and joint scientific publications with academic institutions. (Teva 25.11)

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8.14 Teva and TAU Agree on Innovative R&D in the Fields of Cancer and Brain Studies

On 20 November, Teva Pharmaceutical Industries and Tel Aviv University expanded their scientific collaboration – leading Teva and Tel Aviv University (TAU) researchers will work on advancing innovative R&D research in the fields of cancer and brain studies. These teams from Teva and TAU will conduct collaborative research to test the efficacy of immunotherapy in unique models, by incorporating advanced analyses of the immune system. In addition, they are to explore ways to improve antibody production by utilizing advanced bioinformatics tools, and promote projects aimed at finding new mechanisms to understand nervous system disorders.

Additionally, the Israel Innovation Authority recently approved two grants for TAU researchers to collaborate with Teva, and is in the process of examining other similar collaborations. These agreements, which are managed through RAMOT, TAU’s Business Engagement Center, constitute a significant stepping stone in the collaborative program Teva has initiated and is promoting with academia, and will be further revealed in the coming months. Over the past year, Teva has engaged in an extensive search to locate over 400 laboratories at Israeli academic institutions, and has initiated strategic collaborations with leading research groups at Israeli universities. These joint ventures will create substantial added value for both academia and for Teva.

Teva’s specialty R&D began expanding in the 1980s as a result of fruitful cooperation with Israeli academia, leading to the development of medicines, which were central to the company’s specialty portfolio and which continue to improve the lives of many patients who suffer from debilitating diseases. (Teva 25.11)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 BigID Introduces Data Discovery for Data Pipelines

BigID announced the industry’s first data discovery solution for data pipelines. BigID’s privacy-aware Data Pipeline Discovery solution is the first solution to help organizations monitor the transmission of sensitive PII and PI, and the governance of consumer consent across high-speed data pipelines to help organizations comply with global privacy regulations such as the California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR).

BigID introduced the first privacy-aware data discovery and intelligence platform for data at rest two years ago to help organizations find, inventory and map any personal data across the enterprise ahead of GDPR and CCPA. BigID’s privacy-aware Data Pipeline Discovery solution is the latest in a line of innovations designed to help companies identify and protect sensitive personal information. With the addition of the Data Pipeline Discovery solution, BigID is now the only data privacy vendor to provide comprehensive discovery, classification and correlation of both data at rest and data in motion. The BigID Data Pipeline Discovery solution is available immediately as part of the BigID Enterprise solution edition.

Based in New York and Tel Aviv, BigID uses advanced machine learning and identity intelligence to help enterprises better protect their customer and employee data at petabyte scale. Using BigID, enterprises can better safeguard and assure the privacy of their most sensitive data, reducing breach risk and enabling compliance with emerging data protection regulations like the EU’s General Data Protection Regulation and California Consumer Privacy Act. (BigID 18.11)

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9.2 Nodwin Gaming Partners with Blink for Autonomous Content Creation from Live Games

Blink has partnered with Nodwin Gaming, the premier and most recognized Indian esports company to amp their player team and fan engagement. Blink’s AI producer cognitively selects the best action from esports teams and tournaments and automatically produces highlight clips that show the action from multiple perspectives. Clips created can be distributed in real time to drive more viewers and subscribers real time engagement. The partnership debuted their combined capabilities at the PUBG Mobile Open to great community reception.

Jerusalem’s Blink is the first to develop and commercialize a proprietary cognitive core that combines AI, voice and vision technology to analyze tournament games by individual lead players in real time, detects the most memorable moments and curate highly attractive, engaging and personalized clips for both broadcast and social media consumption. Blink is a leading eSports technology company. Its proprietary deep learning, voice and vision technology stack automatically detects the defining moments of eSports game-play and instantly turns them into compelling stories for any gamer to save and share. (Blink 18.11)

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9.3 Newsight Imaging Signs MOU with Mekorot to Develop Spectral Water Monitoring Systems

Newsight Imaging, a startup from Ness Ziona that develops chips for machine vision and spectral diagnostics, announced the signing of an MOU with Mekorot, Israel National Water Company, to jointly develop water monitoring systems. The system is based on a camera chip designed to constitute a precise and inexpensive spectrometer. The chip contains an array of pixels and unique filters, as well as hardware, for precise spectral diagnostics. The operating principle involves illuminating the substance, in this case water, with light and testing and analyzing the reflected light. The method is already applied in a wide variety of costly spectrometers; the Newsight chip constitutes a breakthrough in being able to provide a precise and cheap spectral solution.

Newsight is engaged in collaborations with the makers of water meters, water desalination plants and industrial plants to integrate the technology at numerous monitoring locations. The system is capable of connecting up to a wireless communications medium, standard practice today for smart water meters, and transmitting the sampling results to the cloud, where monitoring is implemented, and issue of alerts enabled. The collaboration with Mekorot was made possible after Mekorot experts were persuaded of the system’s technological feasibility, and the teams are currently conducting advanced testing in order to define what will be tested for and where the pilot will be implemented.

Mekorot Israel National Water Company is considered a leading, technologically advanced water supply company, at the cutting edge of integrating innovative technologies. Mekorot executes a broad range of activities through the technology incubator, including collaborations with entrepreneurs in Israel and worldwide, and encompassing startups, mature companies, leading academic institutions and investors. (Newsight Imaging 18.11)

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9.4 WhiteSource to Provide Native Integrations for All Top Container Registries

WhiteSource announced new and expanded support for all of the top five container registries, in addition to providing complete control over Kubernetes container orchestration. WhiteSource for Containers now provides native integrations to Docker, Amazon ECR, JFrog Artifactory, Azure Container Registry and Google Container Registry. This expanded support enables enterprises to track vulnerabilities in file systems, installed packages, image layers, and handled archive files without having to manually download and scan containers or images, saving developers valuable time and allowing them to leverage the power of container technology while continuously securing and enforcing policies in real-time. WhiteSource’s enhanced Kubernetes integration scans the entire Kubernetes cluster and displays the complete status of libraries, images, alerts, vulnerabilities, and licenses.

WhiteSource for Containers offers enterprises using containerized environments a complete solution for managing and securing their open source components throughout the container development lifecycle. It provides comprehensive visibility and control throughout the container development lifecycle with continuous automatic tracking and detection of all open source components in container images and containers, and automatic security and compliance policy enforcement during development and production.

Givatayim’s WhiteSource is the pioneer of open source security and license compliance management. Founded in 2011, its vision is to empower businesses to develop better software by harnessing the power of open source. WhiteSource is used by more than 800 customers worldwide, from all verticals, and sizes, including 23% of Fortune 100 companies, as well as industry leaders such as Microsoft, IBM, Comcast and many more. (WhiteSource 18.11)

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9.5 D-Fend Solutions Assures U.S. National Security Against Rogue Drone Threats

D-Fend Solutions has been working with the US Assistant Secretary of Defense Special Operations/Low-Intensity Conflict (ASD SO/LIC) Combating Terrorism Technical Support Office (CTTSO) to protect US troops and assure US national security against rogue commercial drones with its leading EnforceAir c-sUAS (Counter small Unmanned Aerial System) platform. Over the past eighteen months, D-Fend has been working closely with the CTTSO to co-develop D-Fend’s EnforceAir advanced C-sUAS capabilities. During the last six months, the EnforceAir has been successfully deployed by more than twenty U.S DOD, DHS, and DOJ units and agencies against the growing threat of commercial drones. Among the agencies currently operating D-Fend’s EnforceAir are the U.S. Special Operations units, U.S. Army, FBI, Department of Homeland Security, U.S. Customs and Borders Patrol (CBP), U.S Marshal service, and more.

The EnforceAir advanced autonomous system, exclusively marketed in the U.S by ELTA North America, automatically and passively detects, locates and identifies rogue drones with multiple options for mitigation, minimizing the risk to key infrastructure and personnel; by taking control, safe routing/landing threat C-sUAS safely at a pre-defined safe zone. The mitigation capability above includes drone swarms.

Founded in 2017, Ra’anana’s D-Fend Solutions is the leading provider of advanced autonomous c-UAS solutions. The company has recently secured $28 million in funding led by Claridge Israel with the participation of the current shareholder, Vertex Israel. (D Fend Solutions 18.11)

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9.6 Nuweba Unveils GPU Support on its Secure Serverless Platform

Nuweba announced its serverless platform is the first to support the use of graphics processing units (GPUs). Marking the next era in cloud computing, Nuweba is bringing serverless technology to its fullest potential, allowing businesses to work in the cloud without infrastructure at enhanced speed and security, allowing the use of serverless for AI applications for the first time. As the use of AI and serverless technologies grow, the demand for a GPU powered serverless option is soaring but has remained unmet by large players thus far.

Tel Aviv’s Nuweba re-architected 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 19.11)

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9.7 Illusive Networks Extends Cyber Protection to OT and IoT Attack Surfaces

Illusive Networks announced a series of new enhancements to the Illusive Platform that extend protection to critical attack surface elements where traditional security approaches face challenges: IoT (Internet of Things), OT (Operational Technology), and network components such as routers and switches. New functionality provides organizations with broader coverage as digital transformation initiatives and the evolution of advanced persistent threats expand attack surfaces.

Enhancements to the Illusive Platform include IoT Emulations – Customized emulations mimicking any IoT device running on any IoT protocol. IoT Emulations poison an organization’s potential attack surface by flooding its network with a scalable web of deceptive IoT devices that appear real to attackers. The emulations are indistinguishable from genuine IoT devices. Attackers are forced to reveal themselves as they interact with the deception elements. Emulations also send a high-fidelity incident record to defenders immediately upon attacker interaction, with full and detailed forensics, so organizations can monitor, counter, block, and collect intelligence about IoT threats in real time.

Tel Aviv’s Illusive Networks uses next-generation deception technology to stop cyber-attacks by detecting and disarming attackers, destroying their decision-making processes, and depriving them of the means to laterally move towards attack targets. Illusive’s inescapable deception and attack surface reduction capabilities eliminate high-risk pathways to critical systems, force attackers to reveal themselves early in the threat lifecycle, and capture real-time forensics that accelerate incident response. (Illusive Networks 19.11)

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9.8 Toppan and D-ID Sign Strategic Partnership Agreement

D-ID announced a strategic partnership with Tokyo’s Toppan Printing (Toppan), a global printing company and innovator in security solutions, to provide D-ID’s technology to customers across Japan and Asia. With this partnership, the companies expect to exceed sales of over $9 million within two years in Toppan’s focus markets of Japan and ASEAN countries. The combined offering will enhance privacy protection for customers in industry verticals such as smart cities, tourism and travel, human resources, healthcare, finance, and more.

Founded in 2017 by veterans of the Israel Defense Forces Intelligence Corps’ elite 8200 unit, D-ID created the first facial image de-identification solution that protects user privacy against facial recognition software. D-ID allows organizations to enhance security and ensure the privacy of their customers and employees with state-of-the-art technology that protects sensitive biometric information in facial images and videos. With advanced image processing and deep learning techniques, D-ID’s De-Identification solutions can resynthesize any given photo in a way that enables humans to recognize it but prevents facial recognition engines from identifying it with biometric scanning tools. D-ID also offers Smart Anonymization tools to replace facial images with AI-generated faces in videos and still images, allowing organizations to apply advanced analytics and monetize video data, while still meeting strict privacy regulations.

Built around D-ID’s solutions, Toppan’s new service prevents the identification of personal information by AI facial recognition technology. As a result, personal privacy can be protected and secure data retention and utilization can be realized in companies. Toppan intends to deploy the service in its businesses related to smart cities, travel and tourism, human resources, healthcare, finance, and revitalization of regional economies, and to develop new services focused on personal privacy protection through combination with its own diverse solutions.

Based in Tel Aviv, D-ID employs market-leading experts in deep learning, computer vision and image processing, and its solutions are being implemented in Fortune 500 companies and institutions worldwide. (D-ID 19.11)

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9.9 KPMG & nsKnox Mitigate Payment Fraud with Innovative Anti-Fraud Cyber Solution

nsKnox announced an international strategic partnership with KPMG, a leading global consulting firm. KPMG Israel will be the global distributor and service provider of the joint offering, KPMG Secure Payments. Powered by nsKnox, the KPMG-designed Secure Payments combines KPMG’s know-how and better practices in finance, compliance, controls, and cyber security consulting with nsKnox’s unique technology to detect and prevent payment fraud in real time. KPMG Secure Payments will provide organizations with an end-to-end, holistic defense against fraud in supplier payments, whether caused by cyber-attacks, internal fraud, social engineering, or data manipulation attempts. The joint solution verifies supplier and account details, safeguarding the payment process at every point of the transaction.

KPMG Secure Payments uniquely addresses the key vulnerabilities in the payment chain: payment processes and supplier verification. The solution provides access to nsKnox’s suite of services, enhancing existing payment infrastructures with sophisticated security controls that flag and block fraud attempts in real-time. KPMG Secure Payments also includes advanced payment verification and data protection, risk and policy checks, “Know Your Supplier” verification processes, and a secure Global Payee Repository. The anti-fraud, cyber security solution can be implemented with any company ERP, providing extensive verification for every transaction while eliminating overhead, fraud, and human error.

Tel Aviv’s nsKnox is a cyber security company focused on Corporate Payment Security. nsKnox solutions protect corporations and banks against cyber-fraud carried out by insiders or outsiders, preventing significant financial losses and reputational damage. Leveraging its groundbreaking Cooperative Cyber Security (CCS) technology to combine the cyber strength of multiple organizations, nsKnox solutions detect and prevent finance & ops infrastructure attacks, social engineering, business email compromise (BEC) and other Advanced Persistent Fraud attacks. (nsKnox 21.110

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9.10 Eyesight Technologies’ DriverSense Now Detects Phone Usage and Smoking While Driving

Eyesight Technologies announced new features for the company’s DriverSense and FleetSense solutions to detect driver distraction as a result of cell phone usage and smoking. The new features will be added to the company’s existing distraction and drowsiness detection capabilities to further mitigate driver distractions and prevent accidents.

Eyesight Technologies’ DriverSense driver monitoring system (DMS) analyzes the driver’s facial features, including head pose, gaze vector, blink rate and eye openness to detect signs of drowsiness and distraction. The latest update increases the scope of the driver monitoring to extend beyond physical attributes of the driver to recognize driver actions, and can now detect the smoking of a cigarette and cell phone related distractions. The new capabilities enable car manufacturers to intelligently alert the driver based on the type of distraction detected; cell phone usage may trigger one type of alert while showing signs of drowsiness can trigger a more urgent response.

In addition to road safety, Eyesight Technologies has seen that in the trucking industry detection of smoking goes beyond distraction mitigation. With hazmat shipments such as Oil & Gas, cigarette smoking is against the law and can be catastrophic. With 67% of long haul truckers in the US smoking cigarettes according to a study by the National Center for Biotechnology Information, preventing smoking in the cabin during the transport of certain materials is a top priority for fleet managers. Eyesight Technologies’ FleetSense will enable fleet managers to receive real-time updates and set alerts for the presence of cigarette smoking during the transport of sensitive materials, improving upon old protocols of random inspections and manual monitoring of driver dash cams.

Herzliya Pituah’s Eyesight Technologies is a world leader in creating intelligent sensing solutions that use edge-based computer vision and AI for safer and better driving experiences. The company focuses on the automotive in-cabin environment, offering DriverSense – driver monitoring system, CabinSense – occupancy monitoring systems and FleetSense – a driver monitoring aftermarket solution for fleets. (Eyesight Technologies 21.11)

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9.11 SCADAfence 6.0 is First OT Security Platform Uniting OT & IT Users to Prevent Cyber-Attacks

SCADAfence’s latest version 6.0 gives today’s OT and IT Security teams alike visibility into the actual exposure that their network is facing before a cyber-attack can materialize. This allows SCADAfence’s users to know what the potential ways are for a malware (or an attacker) to spread within their network, which devices, applications and protocols are vulnerable to an attack, and to what extent an attack can spread once gaining a foothold in their network.

SCADAfence Platform 6.0 introduces an innovative approach to governance and compliance. This feature enables the IT and audit departments to centrally define and monitor the organization’s adherence to company policies and to OT-related standards and regulations such as IEC 62443 and the NIST framework. Configured and managed centrally, the feature provides a cross-organizational compliance dashboard. It measures compliance and monitors the progress made over time across distributed sites, and includes support for incremental, time-based changes. The governance feature enables CISOs to plan their cyber security strategy, as well as to report and measure their organizational compliance based on the actual data derived from the networks.

SCADAfence Platform 6.0, comes with a built-in suite of tools with a proactive and preventive focus. OT security teams can now identify mission-critical systems and networks automatically, and then get a high-level view of the network exposure, evaluating the vulnerabilities of networks, devices and protocols. The combination of criticality, vulnerability and exposure allows the teams to invest their efforts into areas where they will receive the highest return-on-investment in terms of security value.

Tel Aviv’s SCADAfence is the global technology leader in OT cybersecurity. The SCADAfence platform enables organizations with complex OT networks to embrace the benefits of industrial IoT by reducing cyber risks and mitigating operational threats. The non-intrusive platform provides full coverage of large-scale networks, offering best-in-class detection accuracy, asset discovery and user experience with minimal false-positives. SCADAfence delivers security and visibility to some of the world’s most complex OT networks, including the largest manufacturing facility in Europe. (SCADAfence 25.11)

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9.12 BGU Introduces Automated, Language-Independent Method for Summarizing Texts

Beer Sheva’s BGN Technologies, the technology transfer company of Ben-Gurion University of the Negev, introduced a novel, automated and language-independent tool for summarizing text. The method is applicable for extraction of articles, magazines and databases within the media itself and by users of such media including libraries, academic research engines and general search engines.

The novel technology provides language-independent summaries of texts, based on a genetic algorithm that ranks document sentences, using statistical sentence features, which can be calculated for sentences in any language, and then extracts top–ranking sentences into a summary. The method, called MUSE – Multilingual Sentence Extractor, was tested on nine languages: English, Hebrew, Arabic, Persian, Russian, Chinese, German, French and Spanish, and its summarization quality was evaluated on four languages: English, Hebrew, Arabic and Persian showing a high level of similarity to human-generated summaries.

Experimental results show that after an initial training of the algorithms on an annotated corpus of summarized documents, where each document is accompanied by several human generated summaries, the software does not need to be retrained on a summarization corpus in each new language, and the same sentence-ranking model can be used across several languages. (BGN Technologies 25.11)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israel’s Inflation Rate Rises by 0.4% in October

Israel’s Consumer Price Index (CPI) rose 0.4% in October, the Central Bureau of Statistics announced, in line with the pundits’ forecasts. Over the past twelve months to the end of October, the index rose 0.4%, well below the government’s 1% – 3% annual inflation target range. Prices have risen by 1% since the beginning of 2019.

Fashion and footwear led the price rises last month, up 6.9% while fresh fruit and vegetable prices rose 2% and food prices rose 0.7%. Culture and entertainment prices fell 1.2%. Home prices in the August-September period rose 0.2% in comparison with July-august. Home prices have risen 1.9% over the past 12 months. (CBS 15.11)

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10.2 Israel’s Third Quarter Growth Surprisingly High

The Central Bureau of Statistics announced that Israel’s economy grew at a 4.1% annual clip in the third quarter, far in excess of the market’s 2.6 – 2.8% expectations, according to an initial estimate. The Central Bureau of Statistics’ 4.1% estimate for third-quarter growth follows a growth rate of only 0.6% in the preceding quarter (a figure later revised to 0.7%). The increase in GDP is attributable mostly to private spending for the Jewish holidays and larger gross investment in inventory. Growth would have been even higher had it not been for the US-China trade tensions, which resulted in an estimated 3.6% drop in exports of goods and services.

Private sector product was up 5% in the third quarter, public consumption (by the government and the local authorities) 4.2%, and private consumption 2.8%. Investment in fixed assets, on the other hand, plunged 6.1%, while exports of goods and services fell 3.6%. Imports of goods and services grew 1.9% in the third quarter.

Vehicle imports, which declined steeply in the second quarter, depressing the growth rate by almost 2%, contributed 0.4% to the rate of growth in the third quarter. Excluding import duties, most of which are attributable to vehicles, the growth rate was 2.7% in the second quarter and 3.7% in the third quarter. (CBS 17.11)

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10.3 Israel’s Exports Forecast to Reach Record of $114 Billion In 2019

According to the Central Bureau and Statistics and the Ministry of the Economy, Israeli goods and services exports stood at $84 billion over the first nine months of the year, up 4.6% from January-September 2018. Israel’s exports are expected to grow to a record $114 billion in 2019 from $109 billion last year. The Economy Ministry said the increase this year stems mostly from a nearly 12% rise in services exports, with growth led by the high tech sector such as software, computing, and research and development services. The gain in services has more than offset weakness in goods exports, which have been hurt this year by slowing global trade, a weak diamond market, and a strong shekel currency.

Exports comprise around 30% of Israel’s economic activity. Overall, exports to the European Union – Israel’s largest trading partner – rose 4.8% this year, led by the UK, Spain, Poland and Belgium. Exports to the United States – the largest export market by country – rose 2% while exports to India grew 9%. Exports to Asian markets including China and Japan fell this year. The gain in services has more than offset a drop in goods exports, which have been hurt this year by slowing global trade, a weak diamond market, and a strong shekel currency. (Various 24.11)

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10.4 Moody’s Affirms Israel’s Rating in Upbeat Assessment

As reported by Globes, International credit rating agency Moody’s has issued a very positive assessment of the Israeli economy, reaffirming the country’s A1 sovereign debt rating with a positive outlook. The report calls attention to the improvement in Israel’s debt to GDP ratio in the past decade, pointing out that “it is one of only a handful of advanced countries that has a lower debt-to-GDP ratio now than before the global financial crisis…Israel’s economic growth has outpaced most other advanced industrial countries over the past decade, driven by a strongly competitive high-tech export sector and a diversified economic base that now includes energy exports,” said Evan Wohlmann, a Moody’s Vice President – Senior Credit Officer and the report’s author. “The development of the Leviathan gas field is likely to further strengthen Israel’s net creditor position.”

The main risks to Israel’s credit standing, according to Moody’s, are political. One is the escalation of low-scale conflicts in the region and with the Palestinians. The other is internal political uncertainty after two elections have failed to produce a new government. “The current extended election season has prolonged political uncertainty and reform inertia, while also delaying more comprehensive efforts to address the widening budget deficit.

“An intensification of fiscal consolidation efforts following the formation of the next government that helps to broadly preserve the debt-reduction gains seen over the past decade would be credit positive. Continued development of the Leviathan gas field and increased clarity on the potential size and timing of the economic and fiscal benefits would be credit positive,” the report states, while conversely, “the outlook could be stabilized if geopolitical developments materially disrupted Israel’s economic stability, or if the government’s demonstrated commitment to fiscal discipline including a low debt burden were to wane.” (Globes 24.11)

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10.5 Israel’s Composite State of the Economy Index for October 2019 ‎Increased by 0.3%

The Bank of Israel’s Composite State of the Economy Index for October ‎increased by 0.3%. The Index’s rate of increase reflects growth at the ‎long-term pace, with a slight acceleration in the past two months. ‎ The Index for October was positively affected by increases in all components, ‎particularly a rapid increase in the import of consumer goods and in consumer ‎goods exports in October, an increase in the job vacancy rate in October ‎following a constant decline over the past year, and increases in industrial ‎production and in the retail trade and services revenue indices in September. ‎ There were no significant revisions to the overall Index for previous months.‎(BoI 26.11)

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11: IN DEPTH

11.1 ISRAEL: Israeli Gas Export Route to Egypt Finalized

Simon Henderson posted in INSS Policy Alert on 13 November that Israel and Egypt still need to resolve longer-term questions about international export options and energy contracts with Jordan, but the latest step toward reopening the pipeline is encouraging.

After months of delay, agreement has been reached to pipe Israeli natural gas from Ashkelon to al-Arish in North Sinai, for use in Egypt’s domestic market and/or re-export. The so-called EMG pipeline runs mainly offshore, skirting the Gaza Strip. It was originally built to supply Egyptian gas to Israel, but the flow was halted in 2012 following the election of a Muslim Brotherhood-led government and multiple terrorist attacks on the pipeline. Now that Israel is essentially able to meet its own gas needs – due to supplies from its offshore Tamar field and the even larger Leviathan field, which comes onstream next month – the focus has shifted to the crucial task of finding export markets.

Parallel to talks about changing the EMG pipe’s ownership, its pumping stations were reversed and the line was checked for technical integrity, with occasional hiccups. At one point, for example, an engineering inspection robot known as a “pig” became stuck and had to be dug out.

As these and other technical issues were resolved, Noble Energy, the Houston-based operator of the Tamar and Leviathan fields, joined Israeli firm Delek and other partners last year in signing a gas supply agreement with Egyptian company Dolphinus. The deal has since been revised to increase the volume of gas that will be sent to Egypt. The most obvious commercial solution is to process the gas in liquefaction plants on the Nile Delta, from where it can be sent in LNG tankers to customers across the world.

Israel is already a small-scale exporter, sending Tamar gas to two Jordanian industrial plants by the Dead Sea since 2017. Much more substantial plans are in place to supply Leviathan gas to Jordan’s main electricity generator beginning in January, though that deal presents Amman with a quandary. Currently, the kingdom’s gas demand is being met by newly revived, relatively cheap Egyptian supplies arriving via pipeline, and by expensive LNG bought on the international market (including from Qatar), and delivered to the port of Aqaba. The LNG contract was signed in 2015 in the midst of a local energy crisis and obliges Jordan to buy another twelve cargoes next year. Yet the contract for new Israeli supplies from Leviathan obliges payment even if the gas is not needed.

In strictly economic terms, the longer-term logic is that Israel, rather than Egypt, becomes the main supplier of gas to Jordan, whose power sector is also being boosted by domestic shale and solar projects coming onstream. Meanwhile, Israel’s best commercial option for surplus gas is to export it to Egypt, perhaps via a future line built undersea to prevent terrorist attacks, and extending from al-Arish to the LNG plants located between Alexandria and Port Said. A proposed seabed pipeline linking Israeli and Cypriot fields to Greece and Italy would require the discovery of much greater gas volumes than found so far.

Whatever the outcome, Israeli gas supplies remain a politically sensitive subject in both Egypt and Jordan, potentially complicating their future energy cooperation. At the same time, the current level of cooperation would have been unimaginable just a few years ago, and the latest news provides further encouragement.

Simon Henderson is the Baker Fellow and director of the Bernstein Program on Gulf and Energy Policy at The Washington Institute. (INSS 13.11)

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11.2 ISRAEL: Israeli Companies Set a Six-Year Record with $2.24 Billion in Funding in a Single Quarter

On 19 November, the IVC Research Center and the Israel office of international law firm Zysman, Aharoni, Gayer & Co. (ZAG-S&W) announced that Israel-based or linked companies raised $2.24 billion across 142 deals in the third quarter of 2019, more than in any quarter since 2013. The report shows a slight increase from the second quarter of 2019, which recorded $2.206 billion across 128 deals, and a bigger increase from the third quarter of 2018, which saw $1.63 billion across 119 deals. This is in line with the global trend.

Thirteen deals of over $50 million each accounted for 57% of the quarterly sum. There were six deals of over $100 million, though some of the capital was in secondary or debt financing. Cybersecurity company Cybereason raised $200 million from SoftBank Corp. Fintech startup Fundbox raised a $176 million series C round. Content creation app developer Lightricks raised a $135 million series C round ($80 million of it in secondary). Israel-linked car financing company Lendbuzz Funding raised $20 million in equity and $130 million in debt financing. Israel-linked insurance startup Hippo Insurance Services raised a $100 million series D round. Israel-linked Trax Image Recognition raised a $100 million round.

Venture capital-backed deals accounted for 72% of the quarter’s total capital raised, $1.6 billion across 81 deals, compared to 81%, or 72 deals, in the third quarter of 2018.

Overall, VC-backed deals raised $4.68 billion in total during the first three quarters of 2019, almost the same amount raised throughout all of 2018. Revenue growth companies led the charge, raising $2.58 billion in total during the first three quarters of 2019 across 48 deals, a 65% increase in capital and a 23% increase in deals compared to the entirety of 2018.

Israeli VC funds were involved in 56 deals during the quarter and contributed $280 million of the total $1.02 billion these deals attracted. Over the first three quarters of 2019, Israeli VCs made 267 investments, an 18% increase year-over-year.

“The proportion of total capital invested in early-stage companies relative to the total capital invested has been declining over the past year, with the lowest rate recorded this quarter,” stated Shmulik Zysman, managing partner of ZAG-S&W. “In contrast to the first three quarters of 2018, the total capital raising of early-stage companies in the first three quarters of 2019 has been relatively stable. Therefore, we have hope that this is not an unequivocal trend but only a warning sign.” There was a 30% increase in the number of early stage deals compared to the third quarter of 2018, however, according to the report.

Software companies raised the most in the third quarter of 2019, $1.4 billion across 52 deals, 10 of them larger than $50 million. Life sciences companies raised $350 million across 38 deals, up from $239 million across 29 deals in the third quarter of 2018. (IVC-ZAG 19.11)

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11.3 MENA: Mobile Technologies Add $191 Billion a Year of Economic Value to MENA

The GSMA released two new reports at the annual ‘GSMA Mobile 360 – MENA’ event happening in Dubai. These reports highlight the positive economic impact of the mobile ecosystem on markets across the Middle East and North Africa (MENA) region, as well as the transformative impact of IoT technologies on regional governments’ strategic national visions.

The two reports from GSMA Intelligence – ‘The Mobile Economy: Middle East and North Africa 2019’ and ‘Realizing the potential of IoT in MENA’ reveal that mobile technologies and services added $191 billion to the region’s economy in 2018 – equivalent to about 4.5% of regional GDP. By 2023, mobile’s economic contribution is forecast to reach more than $220 billion as countries increasingly benefit from the improvements in productivity and efficiency brought about by the increased uptake of mobile services, and 5G and IoT networks are widely deployed.

To date 12 operators have launched commercial 5G services in five Gulf Cooperation Council (GCC) Arab States. Mobile operators in these countries are aiming to be global leaders in 5G deployments, supporting the digital transformation ambitions outlined in strategic national visions such as UAE Vision 2021 and Saudi Vision 2030. Meanwhile, IoT connections in the MENA region are growing at a rate second only to Asia-Pacific. There are forecast to be 470 million IoT connections in MENA by the end of 2019, rising to 1.1 billion by 2025. The deployment of IoT across MENA is expected to add $18 billion to regional GDP by 2025.

“Backed by proactive government support, mobile operators, particularly in the GCC Arab States, have speedily deployed 5G technology,” said Mats Granryd, Director General of the GSMA. “Beyond the GCC, the wider MENA region has an opportunity to benefit from the technological developments delivered by 5G and IoT. To fully embrace those benefits the region’s governments must support regulatory frameworks and policies that ensure 5G flourishes, including making sufficient spectrum available.”

The GSMA represents the interests of mobile operators worldwide, uniting more than 750 operators with over 350 companies in the broader mobile ecosystem, including handset and device makers, software companies, equipment providers and internet companies, as well as organizations in adjacent industry sectors. The GSMA also produces the industry-leading MWC events held annually in Barcelona, Los Angeles and Shanghai, as well as the Mobile 360 Series of regional conferences. (GSMA 26.11)

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11.4 LEBANON: The Ravages of Inequality

Lydia Assouad posted on 18 November in Diwan that the Lebanese are united in revolt, but their political system is not made to calm their rage.

For the first time in recent history, the Lebanese have been united in revolt. Since 17 October, they have been protesting, but not according to their religious, social or geographical backgrounds. They are calling for an end to the corrupt political system kept in place by a political and economic elite that has for far too long denied them economic opportunities and the simple ability to make ends meet.

Their first success came on 29 October, when Prime Minister Hariri announced the resignation of his government. The widespread grievances against the elite are justified when we take a look at the data: Lebanon has one of the highest levels of inequality in the world, alongside Chile, Brazil and South Africa. In a study published by the World Inequality Lab, I was able to estimate the distribution of Lebanese national income between 2005 and 2014 thanks to newly available individual tax records. The results speak for themselves: The richest 1% of Lebanese receives 25% of national income. To put this into perspective, in the United States and France, where inequality is increasing and is at the heart of public debates, the richest 1% receives 19% and 11% of total national income, respectively.

Another striking statistic in Lebanon is that the richest 0.1% of the population, around 3,700 people, earns as much as the bottom 50%, almost 2 million people – both equivalent to one tenth of national income. The richest group, which includes members of the political class, enjoys a standard of living similar to their counterparts in high-income countries, while the poorest suffer from extreme poverty, as in low-income countries. This polarization exacerbates the disconnect between the ruling elite and “the rest.” Shi‘a from the southern city of Tyre and Sunnis from the northern city of Tripoli have finally found common ground, because the political elite extracts large rents at their expense.

This concentration of income in the hands of the few is hardly a new phenomenon. Inequality has been extreme in Lebanon since at least 2005, the first year for which we have data. Why did inequality remain absent from the public debate until now?

The lack of figures on the socioeconomic situation in the country is one reason. The last national census was held in 1932. A banking secrecy law has been in force since 1956. The last study estimating income distribution before my own analysis dates back to 1960! This lack of transparency contributed to a widespread narrative that inequality in Lebanon was not high by historical and international standards.

Another reason might be that the political system, which is based on religious patronage, creates citizens who primarily identify with their sect not their class. The political elites have strong incentives to maintain and strengthen these identities that allow them to favor financial and economic arrangements within their sect and control their respective regions. They amplify the rents extracted from the financial and real estate sectors, on which the Lebanese economy relies. In exchange, these sectarian elites provide to their communities basic public goods such as jobs, reductions in school fees, or health services. Even if the Lebanese are probably well aware of these schemes, they did not try to overthrow the system until now because in the absence of a state they preferred to have public goods provided by wealthy politicians to not having these goods at all.

Lebanon is caught in a vicious circle. Its rentier economy, coupled with the quasi-absence of a state, has caused extreme levels of inequality and poverty, which in turn have increased the public’s reliance on services provided by sectarian leaders. These enabled the latter to continue to enjoy support from the population, remain in power, and increase their wealth. Yet this, in turn, led to higher levels of inequality and a greater reliance on the system.

It took an economic and financial crisis, years of public mismanagement (in 2019 the cabinet met 20 times to finally agree on a budget last summer!) and the government’s introduction of particularly inappropriate austerity measures to finally break the cycle. This opens a historic window to undertake structural changes. These are essential to avoid the economic disaster the country faces and to allow Lebanon to exit from the political and economic deadlock in which it has been mired since the civil war’s end.

There are alternatives to austerity to tackle Lebanon’s public debt crisis. They include negotiating a form of debt relief with the country’s creditors – mostly Lebanese banks that are highly connected to the political elite. It also includes increasing fiscal revenues by creating a progressive tax on income and wealth.

With regard to taxation, there is a large avenue for improvement in Lebanon. The Lebanese state mostly relies on taxing consumption. This is notoriously regressive, as it imposes the same amount of tax on everyone, regardless of one’s income level. The state also does a very poor job of collecting revenues, with tax revenues in Lebanon representing 15% of GDP, against 35% on average in Organization for Economic Cooperation and Development countries. The personal income tax system is archaic. It taxes each source of income separately, thereby decreasing both its progressivity as well as the total amount of tax collected. The tax rates applied to the richest are quite low by international standards – on average 21% in Lebanon, as opposed to 37% in the U.S. and 45% in France. A key priority is to radically reform the tax system to make it rely mostly on direct taxation, as opposed to indirect taxation (tax on consumption), and to create a general and progressive income tax on all sources of income (labor and capital incomes).

Moving from income to wealth, one option is to implement an exceptional tax on private capital, in particular on real estate. This tax would probably apply to a large base of people – although we still do not have reliable estimates of total private capital in Lebanon. Lebanese billionaires’ wealth, the tip of the iceberg, represented on average 20% of national income between 2005 and 2016, as opposed to 2% in China, 5% in France and 10% in the U.S. This suggests that such a tax might raise a considerable amount of revenue in a short time. Wealth in Lebanon comes mostly from inefficient rents. Decreasing their sources would mean improving the welfare of the many, especially when we know that wealth inequality is a primary cause of income inequality.

The amounts collected could help to weaken sectarian patronage and to undertake needed investments in infrastructure, education, and health. These structural measures could address the most important demand of protestors: An opportunity to have a future. (Diwan 18.11)

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11.5 LEBANON: Moral Leadership and the Lebanese Military

Aram Nerguizian posted on 26 November in Diwan that as protests continue in Lebanon, the armed forces must perfect new measures to respond to their accusers.

After more than a month of protests targeting Lebanon’s sectarian postwar political order, pressure has increased on the Lebanese armed forces to maintain internal stability and civil peace. To that end, the military and its leadership have avoided engaging in major public statements or press appearances, preserving the institution’s neutrality and avoiding the politicization of the armed forces. However, both the protest movement and the sectarian political elites they oppose continue to struggle with deciphering the military’s intentions, priorities, and objectives.

The protest movement remains uncertain about the role of the military as protests enter their sixth week. Social media is littered with protestors’ comments that range from praise for the military’s efforts to uphold civil peace to acrimony over the absence or heavy-handedness of military personnel. Discussions with protest organizers often contrast the deployment in force of elite units to clear roadblocks, at times by force, and a far less aggressive posture by units when Hezbollah and Amal supporters recently destroyed the protestors’ encampments in Beirut’s central district.

In discussions, Lebanon’s sectarian political leaders show growing frustration with the military’s perceived inability or unwillingness to bring the protest movement to heel. Partisans of the predominantly Christian Lebanese Forces and Kataeb parties, which claim to support the protests, point to the vigorous lifting of roadblocks in the Metn district as proof that the military is not “on their side.” Protestors in the country’s predominantly Sunni north increasingly accuse the military of being “Aounists”—a reference to the officers promoted under President Michel Aoun when he was still commander of the armed forces. By contrast, there are persistent tensions between the leadership of the Free Patriotic Movement and the military, and the former are aghast at how the armed forces have sought to negotiate and mitigate road closures.

Meanwhile, Lebanon’s principal Shi‘a factions, Hezbollah and Amal, are increasingly interpreting the actions of the Lebanese military as complicit with the pro-Western March 14 forces, going so far as to insinuate that the military and military intelligence are siding with the protest movement.

If the military is to counteract such accusations, it must address three challenges: first, it must proactively articulate strategic guidelines to clarify its intent; second, it must adopt modern best practices tied to strategic communication; and third, it must actively track and correct instances where individual military personnel or units act out of step with the guidelines set by headquarters.

For the military to clarify its strategic and tactical objectives is arguably the most critical challenge. Early on, the military tried to make plain its mission priorities: protecting the public and key government institutions and standing for and with the protestors. However, this did little to articulate for the public at large what those priorities meant in the real world. Discussions with Lebanese military officials indicate that the military’s strategic objective is simply to buy time and maintain civil peace long enough to allow for a suitable political settlement to be found to the country’s political crisis. Allowing protests in Beirut and Tripoli to go on unabated falls under those objectives. By contrast, lifting roadblocks are meant to be limited time bound tactical actions that seek to accommodate the demands of Lebanon’s caretaker government. Contrary to the assumptions of some in the protest movement and the political class, they are not a strategic effort to deal a death blow to one manifestation of the protest movement.

The next challenge is addressing the military’s inability thus far to communicate this nuance to the public. The military’s Orientation Directorate is tasked with public engagement, the posting of official bulletins, and keeping the public informed on non-sensitive military affairs. However, the directorate has largely failed to adapt quickly or decisively enough to the realities of this age of social networks, citizen journalism and alternative and fake news. Like other militaries around the world, the Lebanese military will have to rapidly adapt its existing public diplomacy capabilities to proactively and persistently engage, educate and react to the public at large.

In the longer term, this may mean establishing a new communications directorate (a “J-9” in military parlance). However, in the short term it can mean dusting off and expanding on the strategic communication lessons learned during the 2017 Fajr al-Jurud campaign against the Islamic State and tasking a time bound strategic communications cell until the military can adapt structurally.

If the military can address its intent and how to signal it, the next challenge will be to strictly ensure that all units adhere to that intent in practice. The military will have to pay close attention to how it deploys units with varying levels of experience with public order actions in support of stabilization operations, while also working to show the public that it is acting fairly and consistently across Lebanon. This means carefully calibrating how the military uses its regular and elite units at roadblocks and in places such as Beirut’s central district to reassure protesters and deter potential aggressive elements on either side of Lebanon’s sectarian political dividing lines.

No less important are the perceived actions of non-combat units such as the Directorate of Military Intelligence, which have regular and recurring contact with both protesters and political factions on the ground. Establishing and maintaining uniformity across the force in terms of actions and intent become even more important as telltale signs of fatigue, stress, and lapses of judgment become increasingly apparent after more than a month of protests.

On 17 November, the army commander, General Joseph Aoun, publicly restated the military’s objectives and priorities, emphasizing both the protestors’ right to freedom of assembly and the tactical imperative of keeping major roads open. This first major public statement went in the right direction to try and educate the public about what the military was doing and why. Whether such public engagement was enough, or succeeded in communicating with a youth-driven protest movement, was debatable. However, the military must adapt accordingly. Be that as it may, the address communicated a fundamental belief that the Lebanese military was not, as one officer put it, a “hope killer.”

As the crisis persists and more Lebanese look to the armed forces for leadership, addressing intent, signaling it, and then ensuring it is uniform will be critical. None of this can be accomplished by a military merely reacting to events. It must seize the initiative. The military must work to ensure it is not increasingly perceived as “the military of the regime,” as one officer put it. It must also strive to remain “the military of the nation.”

To that end, how the Lebanese military engages with and channels the demands of the protest movement as well as the needs of the country’s leading sectarian forces will determine whether it can stake out a position for itself allowing it to control the moral high ground. (Diwan 26.11)

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11.6 JORDAN: IMF Staff Completes 2019 Article IV Mission to Jordan

An International Monetary Fund (IMF) mission visited Amman from 11 – 20 November to conduct the 2019 Article IV Consultation, and review progress under Jordan’s extended arrangement under the Extended Fund Facility (EFF). At the end of the mission, the IMF issued the following statement:

“The mission had productive discussions with the Jordanian authorities. They covered recent economic developments, the economic outlook, and risks to the economy. We agreed that the priorities for the coming years are to maintain economic stability, boost growth, create jobs and strengthen social protection. As these cannot be achieved fully in the space of the few remaining months of the current IMF-supported program, discussions began on a new three-year program that could be supported by the IMF. During this mission, we made good progress toward agreement on the broad objectives of such a program. In the period ahead we aim to complete these discussions and to agree on the specific policies needed. To this end, we expect to return to Amman in late January to continue discussions.

“The Jordanian government emphasized its commitment and determination to continue the reform process and to overcome current obstacles to growth. The authorities have made important progress in maintaining economic and financial stability in recent years. Inflation is low, the balance of payments has improved and international reserves have recently rebounded. Moreover, the financial system remains stable and the authorities have taken important steps to improve the business climate, placing Jordan as one of the world’s top three improvers, according to the World Bank’s Doing Business Indicators.

“Monetary and exchange-rate policies remain appropriate, and foreign reserves are comfortable. The authorities should continue to adjust interest rates as needed to maintain continued stability and confidence in the currency.

“Still, challenges remain. Real GDP growth has averaged only 2-2.5% since 2010, and unemployment remains particularly high for youth and women. Also, fiscal consolidation has been slower than envisaged. Yields from efforts to broaden the tax base and mobilize revenues to support Jordan’s fiscal and development needs have fallen short of expectations, and weaker revenues have in turn led the authorities to cut back on public investment. Slippages in 2019 were especially pronounced, and public debt remains very high. In this regard, fiscal space will be limited, suggesting that further international assistance will be critical in allowing for continued growth-enhancing reform.

“Going forward, it will be important to continue efforts to reduce vulnerabilities, increase economic resilience, and support stronger growth. To achieve this, we recommend a combination of deep structural reforms with steady and gradual fiscal consolidation that credibly places public debt on a downward path over the medium term, while also improving social protection measures

“The fiscal strategy should be supported by continued efforts to strengthen tax and customs administration, as well as measures to enhance public financial management, fiscal transparency, and governance.

“Electricity-sector reforms are vital. The energy-sector roadmap is an essential first step in placing NEPCO’s finances on a firmer footing; but should be complemented by further efforts to eliminate losses, while also reducing tariffs for commercial consumers, which are undermining the competitiveness of Jordan’s businesses.

“We encourage the authorities to continue to enhance broader private-sector growth. With the assistance of the World Bank and other partners, the authorities have outlined a concrete matrix of reforms that should, if implemented swiftly, go a long way towards improving the business climate and boosting competitiveness. In addition, pro-employment reforms will be critical for inclusive growth and stability. Recent amendments to the social security law are welcome. On the new package of employment-based cash incentives, which are designed to boost job creation and growth, it is important that such measures be implemented transparently, and that they take into account Jordan’s pressing fiscal constraints. Measures to support financial-sector development are also key in supporting inclusive growth, and continued implementation of the authorities’ financial inclusion strategy will help broaden financial access, especially for women, the poor, and small and medium enterprises (SMEs).

“Jordan can continue to maintain economic stability and enhance growth with a well-crafted and credible strategy, and with support from the international community. The Fund remains committed to continue to support the authorities as they work to deliver stronger and more sustainable growth, reduce fiscal imbalances, strengthen the business environment, increase transparency, improve living standards, and ensure that Jordan’s most vulnerable people are protected.

“Our visit provided an opportunity to meet with a broad range of counterparts, including Prime Minister Omar Razazz, Minister of Finance Mohamad Al-Ississ, Governor Ziad Fariz, other cabinet ministers, members of Parliament, and representatives from the private sector, civil society, and the international community. We are grateful for a most constructive and candid set of talks, and for the authorities’ continued cooperation and warm hospitality.” (IMF 25.11)

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11.7 JORDAN: Fourth Cabinet Reshuffle Raises Questions about Economic Reforms in Jordan

Osama Al Sharif posted on 13 November in Al-Monitor that less than two weeks after he unveiled on 27 October what was described as “a comprehensive program” to stimulate the economy, Jordan’s Prime Minister Omar Razzaz reshuffled his Cabinet on 7 November, effectively letting go of the head of his economic team, Deputy Prime Minister Rajai Muasher, and Finance Minister Ezzeddine Kanakrieh. Muasher is believed to have been a staunch supporter of fiscal reforms backed by the International Monetary Fund (IMF) under a 2016 agreement.

The reshuffle affected other portfolios as well. But the main heading for this unexpected move — a few days before parliament was to be back in session — was the departure of both Muasher and Kanakrieh, who only a few days ago, on 27 October, went live on local television to explain the various components of the stimulus package. Former Minister of Planning Mohamad Al-Ississ, a Harvard graduate and former senior economic planner at the royal court, was given the finance portfolio. He is now believed to be in charge of implementing the new plan to revive a stalled economy.

The new economic approach may be a hybrid between continuing with fiscal reforms and a public sector overhaul, and a retreat from austerity measures by offering incentives to investors and the private sector in a bid to trigger the economy. There is widespread public rejection of what is often described as “IMF dictates” on the government that are seen as inimical to the objective of boosting economic growth.

This was the fourth time in 17 months that Razzaz had requested King Abdullah reshuffle his government — and like the last three endeavors, Jordanians were left to wonder what the move was all about.

But while Jordanians were kept guessing about the meaning of the reshuffle and how it will reflect on efforts to stimulate the economy, the media focused on nuances associated with Razzaz’s fourth attempt at trying to put up an effective Cabinet, which now stands at 28 portfolios. Between the time he was appointed as premier in June 2018 following a month-long protest that had led to the sacking of the previous government, and this latest reshuffle, Razzaz had appointed 52 ministers in 511 days, of whom 27 held the position for the first time. In this latest reshuffle, nine new ministers were appointed for the first time.

Pundits were critical of the vague way ministers are picked up and then sacked without explanation. Under the Jordanian Constitution, the king appoints the prime minister who then selects members of his Cabinet subject to the approval of the monarch. There is no set mechanism for choosing ministers, but for decades, geographic, tribal, ethnic and religious quotas were always taken into consideration when forming a Cabinet. Then the entire Cabinet has to win a vote of confidence from the Lower House of Parliament in order to do its business. The prime minister is not obliged to ask for a new mandate from lawmakers when he makes a reshuffle.

Razzaz, also a Harvard graduate and former World Bank executive, was an unlikely candidate when the king chose him to head a new government last year since he does not hail from a large Jordanian tribe. He had performed well in the Ministry of Education under the previous government. Upon his designation, Razzaz promised to introduce political and economic reforms under the slogan, a “comprehensive national renaissance.”

But while his predecessor, Hani al-Mulki, was brought down when he sought to introduce a new income tax law demanded by the IMF, Razzaz went on to push for a similarly controversial law through the Lower House last November. While he avoided dealing with political reforms, his government appeared to bow to demands by the IMF, with which the kingdom has a fiscal reform agreement in return for loans, to pass a series of unpopular regulations that raised tariffs and sales taxes on goods and services. Instead of increasing public revenues, the measures had backfired and economic indicators had either slumped or remained static at best.

But while Jordanians are yet to feel the impact of the IMF-led reforms — unemployment is nearing 20% and economic growth is just over 2%, while total public debt is close to $42 billion — the World Bank’s regional director for the Mashreq, Saroj Kumar Jha, announced on 28 October that Jordan has made “very good” progress on reforms required under a $1.45 billion financing package with the IMF. He told The Jordan Times that the kingdom is expected to receive the second tranche of the loan, amounting to $725 million, this November. He added that some reforms aimed at stimulating inclusive growth and creating jobs have already been completed.

With public discontent over economic conditions is building up, it is not surprising that public confidence in Razzaz’s government dropped. Even after he unveiled his economic stimulus program, only 44% of Jordanians believe the government can succeed in implementing the program, according to a poll carried out by the University of Jordan’s Strategic Study Center published on 4 November.

The stimulus package seeks to provide incentives that aim at stimulating the economy and the flow of investments, in addition to introducing financial reforms and improving citizens’ livelihoods and public services. Following the swearing-in of the new ministers, Razzaz announced on 7 November that the government will issue additional incentives in bundles that will have a direct effect on citizens and targeted sectors.

King Abdullah, who had chaired several economic workshops in the past few weeks, has been pushing the government to adopt a package of economic incentives. On 10 November and upon the opening of an ordinary session of parliament, the king said, “The government has launched the economic program’s first package and will announce other detailed packages, including a review of regulations and legislation related to taxes and customs, in order to facilitate business and reduce the burden on citizens.”

But experts are divided over the effect of the stimulus package with leaders in the private sector expressing their disappointment and describing the incentives as limited in their scope and effect. Deputy head of the Jordan Chamber of Commerce Mahmoud Jalees told Al-Monitor that the package is like “prescribing a sedative in order to avoid much-needed surgical intervention to save the economy.”

He added that “a real stimulus must seek to lower taxes, cancel VAT on essential goods and reduce customs fees and tariffs … but in the eyes of the government, merchants are still viewed like an ATM where it believes it can withdraw money anytime it wants.”

Commenting on the reshuffle and the economic stimulus, the editor of the business-oriented Al Maqar website, Salameh Darawi, said that the appointment of Ississ as minister of finance sends a message to international organizations and donors that the government will continue to pursue the same economic policy, especially since Ississ is a member of the negotiating team with the IMF. In a 9 November article, Darawi added that the fourth reshuffle took into consideration adherence to the quota-based system of allocating portfolios to members of tribes in an effort to appease the youth movement, some of whom have been protesting every weekend in front of the prime minister’s office, calling for major reforms.

With less than six months remaining before parliament’s term expires, necessitating the departure of the government as well, pundits wonder if Razzaz and his team have enough time to jumpstart the economy. But for now, the government faces an immediate challenge, which is to pass the 2020 state budget having failed to meet the stated financial objectives set for this year.

Osama Al Sharif is a veteran journalist and political commentator based in Amman who specializes in Middle East issues. (A-Monitor 13.11)

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11.8 SAUDI ARABIA: Saudi Arabia’s Elusive Defense Reform

Neil Patrick posted in Sada on 14 November that aside from controlling arms spending, Saudi Arabia’s defense sector reform remains stalled.

While enthusiasm for military transformation is growing, the changes that the Saudi leadership is seeking remain unachieved. The Transformation Team within the Saudi ministry of defense (SMoD) under the leadership of Khalid Al-Biyari, a relatively new assistant defense minister, is overseeing the planned integration of SMoD armed forces – land forces (army), air force, navy, air defense and the strategic missile force – to function under something akin to the UK’s joint operational command (JOC) based in its Permanent Joint Headquarters (PJHQ). Jointery – armed service branches operating in coordination under an inter-service command – is essential to modern war-fighting. Yet, the SMoD continues to exclude the Saudi Arabian National Guard (SANG) the most advanced Saudi armed force, as well as the Presidency of Public Security (the PPS) and the Ministry of Interior. SANG’s continued autonomous status reflects hesitancy about provoking its tribal base, while the PPS is shaping up to be Crown Prince Mohammed bin Salman’s praetorian guard at the expense of what’s left of the Ministry of Interior.

The Saudis are establishing their own PJHQ. Western allies see this positively, but while buildings and teaching military doctrine are welcome, many remain skeptical about the potential for any substantive change. It is not clear whether there is a serious desire to implement the widespread personnel changes needed to break down the Saudi armed forces’ silo mentality. Aside from the replacement of retirees, the appointment of 800 new military offers has yet to materialize, 18 months later. Without a major overhaul at the two-star officer level and below, SMoD’s separate armed services will continue to function as silos.

Disjointed Jointery

At present, the SMoD JOC chief – the three-star officer, General Fahad bin Turki reports directly to the minister of defense, Mohammed bin Salman. In the UK model that is influencing Saudi Arabia’s thinking, the PJHQ Head reports to the Chief of Staff (CoS), just as all of the single service chiefs do. The CoS then reports to the secretary of state for defense – both of whom sit on the UK’s National Security Council (NSC). The fact that bin Turki does not report to the Saudi CoS (General Fayyad Al-Ruwaili, a four-star and bin Turki’s superior) is a problem. Without the CoS being organizationally involved, and without a major and wholesale set of organizational and personnel changes from top to bottom, jointery will not go beyond new buildings and shiny nameplates.

The structural basis for the Saudi JOC raises an important issue. The UK CoS reports to the prime minister via the secretary of state for defense and the NSC. However, the Saudi Royal Court has not created a comparable reporting level for the JOC other than, nominally, to the MBS-chaired Council for Political & Security Affairs. Clear and meaningful chains of command are important to the organizational reform of any country’s military.

In addition to the Saudi JOC, there is a new Saudi security coordination body of a different order. Saudi Arabia’s nascent National Risk Unit reflects UK influence and (ex-military) advice and is akin to the NSC. Importantly, the latter brings together the UK’s military top brass, heads of the security services, relevant ministers, and the prime minister in consideration of domestic security threats from terrorism, cyber-attacks and more. The Saudi version is currently still in its infancy, but, regrettably, it seems unlikely that the Saudi leadership is going to sit around the table in the NSC’s collegiate fashion.

National Guard: Guarding What?

SANG is completing the establishment of its staff college with assistance from the UK. On the one hand, this is an important boost to British leverage and an aid to SANG officers’ grasp of doctrine. On the other hand, a more welcome development will be the planned Saudi national defense college, assuming it will be open to all elements of Saudi armed capability, whether inside or outside of SMoD.

The UK has provided military assistance to SANG for nearly six decades. The British Military Mission first advised a National Guard under Prince Abdullah bin Abdulaziz that transformed from a crude amalgam of tribal levies into a putative regime security force. The British Military Mission is currently a small group of officers on permanent loan to the Kingdom, training SANG officers in counterterrorism, including IEDs, hostage rescue, close protection, and hajj security. The much larger UK role in SANG is via SANG Communications, and involves both loaned UK service personnel as well as UK nationals working under a UK MoD contract. The U.S. Office of Personnel Management, or OPM, has 80 uniformed and loaned U.S. military officers in SANG.

The clichéd presentation of SANG as an elite regime protection force has long lost much meaning, as it is no longer that militarily capable. The only meaningful modern military test inside the Arabian Peninsula, Yemen, has seen SANG fare little better than the Saudi Land Forces who, likewise, have had only limited deployments in Yemen. The Royal Saudi Air Force has been much more noticeable. A sign that the Saudis might downscale their role in Yemen is that aging F5 fighter aircraft are rumored to be undergoing preparation for active service. This could mean that Saudi Arabia’s Yemeni allies would be given these Saudi cast-offs, or that Royal Saudi Air Force doesn’t want to be dependent on more high tech aircraft that are vulnerable to Western supply constraints due to controversy over Saudi air strikes that have led to Yemeni civilian deaths.

In terms of SANG’s touted traditional role as a regime security force, its lack of tanks makes this implausible. Furthermore, SANG has arguably outlived its utility as a separate force with its ministry. It has come under tighter spending control than SMoD, including the prized health service it provides its employees and their families. Major international contracts that were already firmly in place are still honored, but past grander ambitions – including new helicopter and armored vehicle purchases – are formally in the hands of General Authority for Military Industries (GAMI), which effectively means the Royal Court. The senior royal now running SANG, Prince Khaled bin Abdullah bin Bandar, has however secured a financial boost to keep its tribal base content.

SANG’s aging military leadership remains powerful, with Abdel-Mohsen Al-Twaijerie as deputy head. There have been new figures appointed to individual SANG commands like armored vehicles, communications, and training as a customary change of personnel, not a major overhaul. Like the widely touted defense changes, reforms within SANG are developmental, not transformational. SANG is neither facing substantive cost cutting nor absorption into SMoD – a necessary move for any meaningful JOC.

Controlling Spending, Not Transforming

The Saudi military transformation boils down to better cash control and a modest domestic defense industry. Controlling money as a way to deepen both political control and domestic credibility is a hallmark of the present Saudi leadership. GAMI is the formal defense face of this leadership tactic, but this does not yet have substantive meaning beyond MBS determining the procurement of major defense items.

Saudi’s Vision 2030 target means that GAMI and the Saudi Arabian Military Industries have 11 years to ensure that 50% of new defense kit is produced in country. This is unlikely. However, in-country military production deals with external defense partners like the U.S., UK and France will be increasingly demanded. A Saudi Arabian Military Industries board member with such experience, Prince Faisal bin Farhan, is now foreign minister. His appointment might be an imaginative overlap between foreign policy and defense industry development. Or it is just an affirmation of the obvious: Farhan is a leadership insider.

GAMI is supposed to be ensuring domestic defense industry capability, yet the KSA does not have many capabilities beyond producing superannuated widgets. While Saudi Arabia is getting more serious about ensuring in-country production capability and knowledge transfer as part of its offset agreements with Western defense and non-defense industry suppliers, the Kingdom has a long way to go before it even gets level with the UAE’s still limited defense industry.

The attacks on Saudi oil facilities in September 2019 took the majority of the Kingdom’s oil production and processing offline for several days. It emphasized to the Saudis the need to be more responsible for ensuring their security. U.S.-supplied air defense equipment proved inadequate to the contemporary missile threat. Saudi defense industry ambitions are unlikely to address this fundamental national security challenge.

The obstacles to the development of the Saudi defense industry are partly about capability and will, and partly about strategic relations with supplier countries guarding their technological expertise. In time, Saudi interest in greater arms supplies from Russia and China might depend on these countries assisting Saudi defense industry development more than the West. There are few signs at present that Moscow or Beijing is willing to do this.

In any case, it would be a matter of the KSA trying to run before it can walk. If broader Saudi defense transformation remains captive to the traditional differences between Gulf rhetoric, ambition, will, and practicality, then Saudi Arabia’s defense and security landscape is unlikely to change.

Neil Patrick is the editor and lead contributor to Saudi Arabian Foreign Policy: Conflict and Cooperation (Sada 14.11)

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11.9 EGYPT: Fitch Affirms Egypt at ‘B+’; Outlook Stable

On 25 November 2019, Fitch Ratings affirmed Egypt’s Long-Term Foreign-Currency (LTFC) Issuer Default Rating (IDR) at ‘B+’ with a Stable Outlook.

Key Rating Drivers

Egypt’s ratings are supported by a recent track record of economic and fiscal reforms, and improvements to macroeconomic stability and external finances, while the ratings are constrained by still large fiscal deficits, high general government debt/GDP and weak governance scores (as measured by the World Bank governance indicators), which underscore political risks.

Macroeconomic performance strengthened further in 2019, with real GDP growth firming to 5.6% and inflation falling to single digits. Prudent monetary policy, base effects, lower oil prices and currency appreciation have fostered disinflation. We forecast inflation to average 9.5% in 2019 and 8% in 2020-2021, down from 14.4% in 2018. Real interest rates remain comfortably positive, even after the Central Bank of Egypt (CBE) has cut its main policy rate by a cumulative 450bp in 2019, to 12.25%. We expect CBE will seek to maintain positive real interest rates, marking a shift from the monetary policy stance before the reforms of late 2016.

We forecast real GDP growth will remain robust at around 5.5% in FY20 (the fiscal year ending June 2020) and FY21, with balanced risks to this forecast. Investment and net exports have driven faster growth, while private consumption growth has been weak, edging above 1% y-o-y in recent quarters. Lower interest rates should lend support to private-sector investment, employment and private consumption, while strong contributions from other drivers over the last two years may start to taper. However, recent employment growth readings have been lackluster and the business environment, while improving, remains challenging (Egypt climbed eight places to 120th in the 2019 World Bank Ease of Doing Business Ranking).

We expect Egypt to remain committed to its reform program, following completion of its $12 billion three-year Extended Fund Facility with the IMF, which officially ends in November 2019. The final disbursement occurred in July. Egypt and the IMF will likely agree a new arrangement in the coming months, most likely a non-loan agreement, possibly with precautionary liquidity. This should maintain high levels of technical assistance and help anchor structural and fiscal reforms, even if benchmarks are not linked to disbursements.

The government hit its fiscal targets in FY19, with preliminary numbers indicating a budget deficit of 8.2% of GDP, down from 9.7% in FY18, and a primary surplus of 2.0% of GDP. Expenditure restraint was at the heart of the improvement, with spending on wages and subsidies and social spending both falling as a share of GDP (2.4% combined). This allowed space for a sizeable increase in capex, as well as in pensions. The government’s medium-term fiscal plan is built on maintaining primary budget surpluses of 2% of GDP, with the aim of reducing debt to 80% of GDP in FY21.

We forecast the budget deficit to narrow in FY20 to 7.6% of GDP, helped by lower interest spending in particular, but to remain slightly wider than the government target (7.2% of GDP), given lower revenue projections and weaker assumptions for real GDP growth and nominal GDP. Nonetheless, this still implies a further decline in government debt/GDP, to around 83%, an improvement of 20% from the peak of 103% in FY17. A downside risk to this forecast is if a portion of government-guaranteed debt (23% of GDP) crystallizes on the government’s balance sheet, although this currently seems a contained risk. An upside risk to our fiscal projections stems from government efforts to enhance revenue collection, including the formulation of a medium-term revenue strategy.

Egypt’s external finances have improved since the exchange rate reform of late 2016, although we forecast that the current account deficit (CAD) will widen to around 3.2% of GDP in 2021, from 2.3% in 2018, placing modest downward pressure on foreign reserves and the exchange rate. Nonetheless, we expect reserves to remain more than 4.5 months of current external payments (CXP). This assumes that Egypt continues to roll over the vast majority of maturing GCC deposits at the CBE (the outstanding stock is $17.4 billion, with $10 billion that was due to mature in 2019 being rolled over). Net external debt has risen sharply, but at 16% of GDP it remains lower than the current ‘B’ peer median of 28% of GDP. Around 60% of sovereign external debt is multilateral, bilateral or in the form of GCC deposits.

Foreign reserves were $45 billion at end-October, up from $42 billion at end-2018, helped by renewed portfolio inflows and substantial external borrowing (the government has issued $8 billion of Eurobonds in 2019). In addition, CBE reports $6.1 billion of foreign-currency deposits, which are not included in official reserves. Foreign participation in EGP T-bills was the equivalent of $15.2 billion at end-September (4%-5% of GDP; around 17% of the total stock of EGP T-bills), up from $10.7 billion at end-2018.

The Egyptian pound has strengthened around 11% against the US dollar YTD in 2019, following the cancellation of the profit repatriation mechanism in late 2018. The currency displayed minimal volatility in 2017-2018. The next test for exchange-rate flexibility will be when there is depreciation pressure. Given nominal appreciation and the ongoing positive inflation differential with trade partners, the Egyptian pound has appreciated more strongly in real effective terms (CPI-based), eroding some more of the competitiveness gains from the 2016 devaluation.

Relatively weak governance, together with security and political risks, continue to weigh on the rating. Egypt scores below the ‘B’ median on the composite World Bank governance indicator, although it registered some improvement in 2017-2018. The potential for political instability remains a risk, in Fitch’s view, given ongoing structural problems including high youth unemployment and deficiencies in governance. In mid-September rare public protests broke out in Cairo and several other Egyptian cities. Intermittent security issues have previously hit the economy via the tourism sector.

The government has sought to mitigate the risk of discontent by bolstering social safety nets (including cash transfer schemes), maintaining food subsidies, increasing the minimum wage and pensions, boosting electricity provision and implementing some structural reform measures to improve the business environment, while the space for political opposition and freedom of expression is restricted, in Fitch’s view.

Rating Sensitivities

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

  • Significant improvement across structural factors, such as governance standards, the business environment and income per capita, to levels closer to ‘B’ and ‘BB’ rated sovereigns’.
  • Sustained progress on fiscal consolidation leading to a further substantial reduction in the gross general government debt/GDP ratio to a level closer to rated peers’.
  • The main factors that, individually or collectively, could lead to negative rating action are:

  • Failure to narrow the fiscal deficit and keep government debt/GDP on a downward path.
  • Reversal of fiscal and/or monetary reforms, for example in the face of social unrest.
  • Renewed signs of external vulnerability, including downward pressure on international reserves or portfolio capital outflows that create financing strains.

  • Key Assumptions

    Fitch forecasts Brent crude to average $65/b in 2019, $62.5/b in 2020 and $60/b in 2021. (Fitch 25.11)

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    11.10 EGYPT: Egypt’s Powerful Military Companies to go Public

    Menna A. Farouk posted on 20 November in Al-Monitor that President Abdel Fattah al-Sisi has called for listing companies affiliated with Egypt’s armed forces on the stock exchange, allowing citizens to buy the shares in an effort to increase transparency.

    President Abdel Fattah al-Sisi has called for listing some military-owned companies in the Egyptian stock market in an effort to increase transparency and enable Egyptians to buy shares in these firms. “There must be an opportunity for the armed forces companies to be listed in the Egyptian stock market as part of the initial public offerings made for some government companies,” Sisi said in a 31 October speech broadcast from the opening of a military-owned medical gas plant in Giza governorate.

    Since the fall of former President Hosni Mubarak in 2011, a shortage of foreign exchange and the exit of some foreign investors from the country have left Egypt in a severe economic crisis. The weak economic situation has prompted the Egyptian armed forces to get heavily involved in many new projects implemented by the government in such fields as agriculture, industry, infrastructure, roads and construction.

    In 2016, Sisi denied that the military had taken control of the local economy through these projects, saying that its participation in the Egyptian economy is limited to 1.5-2%. He reiterated this stance on 31 October, saying, “When the armed forces play this role, it is not at the expense of the private or civil sector.”

    Economists have praised the move as a boost for transparency and management, but say that listing the companies in the stock market will be difficult because their operation differs from other private firms. “The Egyptian market is complicated because you have the public sector, which has its own rules; the private sector, which is not given much support; and the armed forces companies, which have their own way of doing business,” Basant Fahmi, an economist and member of the parliamentary economic affairs committee, told Al-Monitor.

    Fahmi said that in order for these companies to enter the Egyptian stock market they must change their regulations. “For example, according to the military law, if there is a dispute between any military company and another public or private company, a military court would be the authority … and this has to change,” she said. Fahmi said that the companies would have to change their corporate character to limited liability firms in order to be listed in the stock market.

    Ahmed el-Shami, an economics professor at Ain Shams University, said that the move would end the controversy over the operations of the armed forces companies and would increase investor confidence in the Egyptian economy. He said their listing will make these companies’ operations transparent to the public. “The move … is an ideal response to attacks on their role in the economy and ends the ambiguity over their activities,” Shami told Al-Monitor.

    Shami added that these companies play a growing economic role by providing millions of Egyptians with products and services at competitive prices in construction as well as cement and industrial chemicals. “These fields mainly focus on securing and meeting all the needs of the armed forces as well as overflowing products to the local market. Getting listed in the Egyptian stock exchange would raise the market value of these companies and give them a chance to grow financially,” he said.

    One of them, El Maadi Company for Engineering Industries, is owned by the Ministry of Military Production. The company is reportedly working on an electricity project worth $28 million. Another company, 51% of which the Egyptian military owns, is managing the development of the new administrative capital, into which $45 billion has been invested. A third is establishing the largest cement factory in Egypt.

    Government Holdings Will Also Open to Investors

    Prime Minister Moustafa Madbouli said in September that Egypt would offer government-owned stakes in five or six large companies on the stock exchange during the current fiscal year ending 30 June 2020. In March, the government launched the first phase of the public offering program by offering an additional 4.5% stake in Eastern Tobacco, an Egyptian company that manufactures tobacco products.

    Initially, the program involved 23 companies, including new companies and increased stakes in already listed companies. The government decided last year to postpone the first phase of the program due to the repercussions of the sell-off wave that hit the emerging markets on the Egyptian Stock Exchange. Shami said that the president’s call to list the military companies will restore investor confidence in the IPO program.

    He added that the stock market lacks valuable commodities, especially after the exit of big companies. For example, Global Telecom was delisted because its majority shareholder Veon acquired 42.3% of the company. The entry of the military companies marks “a major turnaround in the political leadership’s approach and will definitely have positive repercussions for the Egyptian economy and foreign direct investments,” said Shami.

    Menna A. Farouk, a journalist and an editor at The Egyptian Gazette, writes about social, political and cultural issues, including press freedom, immigration and religious reforms among other topics. (Al-Monitor 20.11)

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    11.11 TURKEY: Turkish Central Bank Suffers Big Credibility Loss

    Mustafa Sonmez posted in Al-Monitor on 12 November that the Turkish Central Bank’s obedience to the government, both in terms of monetary policy and interventions in the foreign exchange market, is badly damaging its credibility among foreign investors, the ultimate cost of which will be borne by the crisis-hit economy.

    Turkey’s Central Bank has seen its credibility wane both at home and abroad after coming under full government control as a result of a series of moves by President Recep Tayyip Erdogan in the past two years. The bank could hardly be described as autonomous, independent or even relatively independent any longer. Erdogan himself makes no secret of the bank’s descent into obedience, asserting publicly that its former governor was sacked because he refused to heed his demands.

    The Central Bank management is now doing what the government wants — not only in terms of monetary policy, but also by intervening in the foreign exchange market, something it is supposed to never do.

    The bank’s overt submission, however, is taking a toll on the much-needed flow of foreign capital to the country. Even investors eyeing short-term speculative profits have grown reluctant to put money in Turkey, facing an unpredictable Central Bank that is flouting market norms and using back-channel methods to manipulate hard currency prices. Many who have already invested in Turkey are looking for the right moment to flee.

    Still, the government is failing to realize — or prefers not to acknowledge — that this state of affairs is weakening further the external tailwinds that the Turkish economy needs to extricate itself from the current crisis.

    The 2001 economic crisis, arguably the worst Turkey has ever experienced, was overcome through a series of stiff measures prescribed by the International Monetary Fund that took a heavy toll on the populace. The measures included a legal amendment that clearly defined fighting inflation as the primary task of the Central Bank and entitled it to independence in choosing the tools it would employ for that purpose.

    The Central Bank did its job more or less without problems after Erdogan’s Justice and Development Party (AKP) came to power in November 2002, but government pressure mounted in time. Ultimately, the bank faced Erdogan’s wrath as Turkey plunged into crisis in 2018 and the AKP suffered big losses in the local elections earlier this year.

    Consumer inflation shot up to more than 20% in 2018, fueled by a severe currency shock in the second half of the year and supply shortages in food products as a result of a decline in the agricultural sector. Low-income groups were hit the worst by the soaring inflation, marked by increases of more than 30% in food prices.

    The solution Erdogan proposed to rein in inflation was to pull down interest rates.

    Erdogan, a practicing Muslim known to be averse to interest on Islamic grounds, has come up also with an unorthodox economic theory that high interest rates fuel inflation. “When we look at the cause and effect relationship, interest rates are the cause and inflation is the result. The lower the interest rates, the lower the inflation,” he argued in a memorable interview with Bloomberg in London in May 2018, just weeks before crucial elections that would mark Turkey’s transition to a new governance system bestowing sweeping powers to the president.

    At an AKP management meeting the month before, Erdogan had fumed at the Central Bank for defying his instructions and hiking rates while he was on a trip overseas. “Before I went abroad, we had a meeting on interest rates and we talked about lowering them. Then, the Central Bank raised the rates while I was abroad. They did it behind my back,” he was quoted as saying.

    In London, Erdogan not only insisted on his peculiar economic views but also vowed to tighten his grip over the Central Bank once the new executive presidency took effect, fueling concern among international investors. This led to a tangible flight of foreign capital from Turkey, and the Turkish lira tumbled against the dollar.

    After Erdogan’s victory in the 24 June elections that year, foreign investors tended to wait and see how he would sway monetary policies. In the meantime, however, political tensions with Washington escalated over Turkey’s detention of an American pastor, with President Donald Trump threatening Ankara and eventually slapping sanctions on two top Turkish officials. The row sent the Turkish lira nosediving to record lows. To stop the tailspin, the Central Bank raised its policy rate by a staggering 625 base points.

    By autumn 2018, the economy became even more difficult to manage. Amid the soaring inflation, the economic downturn was devolving into a recession. The construction sector, which is dominated by government cronies, was among the worst hit as sales plunged and the housing stock grew. To revive the sales and relieve the sector, interest rates had to go down. Erdogan turned up the pressure on the Central Bank and ultimately fired its governor in July. Other senior managers were sacked shortly afterward. Since the appointment of the new, docile governor, the Central Bank has thrice cut interest rates, delivering what the president wanted.

    On 5 November, a visibly pleased Erdogan said, “We dismissed the previous Central Bank governor because he did not listen to what we said. We moved forward with the new one, saying we would lower interest rates because interest rates are the greatest cruelty against the development of a country. Look, we have now brought inflation down to single digits and relatively stabilized foreign exchange rates.”

    Yet the facts on the ground do not corroborate Erdogan’s claim that inflation has fallen because of the lowered interest rates. Inflation did ease to 9.2% in September and 8.5% in October, but this had to do with the base effect — that is, the huge price increases in the same periods last year. As this base effect dissipates in November and December, consumer inflation is likely to climb back to the region of 12% to 15%. This would leave no room for further rate cuts and, moreover, create pressure to hike them anew. Given the treasury’s tight domestic debt repayment calendar, the rates would have to go up to have the banks finance the treasury.

    When it comes to hard currency prices, the Central Bank has neither the task nor the authority to intervene in foreign exchange markets. Yet as Erdogan publicly acknowledged, it has stepped into this as well. The bank has come to sell hard currency through “the back door” — swaying foreign-exchange prices and shaking confidence at the markets. Investors expect foreign exchange prices to be determined by the market, but the Central Bank has been intervening via state banks, using its reserves. Such maneuvers from outside are raising worries among investors and discouraging them from the market.

    Obviously, the inflow of foreign capital is slowing down too, as international investors lose confidence in the Turkish market and Ankara’s credibility wanes. Ultimately, this threatens to prolong the crisis gripping the Turkish economy, for credibility and trust are the most precious coin of the realm in times of turmoil. (Al-Monitor 12.11)

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    11.12 TURKEY: Turkey’s Defense Industry Sees Rise of ‘The President’s Men’

    Metin Gurcan reported on 20 November in Al-Monitor that the decision-making power in Turkey’s defense industry is shifting from the military to businessmen close to President Recep Tayyip Erdogan.

    The authoritarian normalization that continues to mark relations between Turkey’s political and military echelons since the 2016 failed coup is now affecting the policymaking process in the country’s defense industry. The industry is the new favorite of President Recep Tayyip Erdogan, as the bruising financial crisis heavily hit his former favorite sector, construction.

    Four major reasons are behind Erdogan’s piqued interest in the defense industry: First, Erdogan’s popular support drastically increased after Turkey’s 9 October incursion into Syria, known as Operation Peace Spring. Second, the defense industry is a good tool for producing success stories to divert public attention at a time of economic crisis. Third, success in the defense realm offers political gains in foreign policy. Finally, it creates profitable export opportunities to several countries including Qatar, Pakistan, Ukraine, Uzbekistan and some African nations.

    Thus, businessmen close to Erdogan — a group I call “the president’s men” — are now in a race to grab a piece of the pie. However, it’s still hard to say that Erdogan’s circle has taken full control of the defense industry’s capital and the political decision-making processes.

    Turkey’s defense industry is basically composed of three sectors, each competing for a bigger share and trying to establish a monopoly over certain branches of the industry in both domestic and foreign markets.

    The first sector is the military-controlled Turkish Armed Forces Foundation (TSKGV), run by retired generals — influential actors of the “old Turkey” before the Erdogan era. TSKGV has dominated all defense sectors for more than three decades with its many companies. For now, no private company can rival Aselsan in communications, radar and information technology; Roketsan in rocket and missile production; Havelsan in electronic warfare; Isbir in electric and power systems; and Aspilsan in military-type batteries.

    Sadik Piyade, TSKGV deputy general manager and a retired general, said in a September interview that in Turkey’s defense industry, the foundation handles some 40% of all domestic sales (around $2.3 billion) and 38% of its exports (some $840 million). TSKGV companies are pivotal in defense research and development as well, holding 62% of that market.

    In December 2017, Erdogan issued a decree placing TSKGV under his auspices. Since then, however, Erdogan hasn’t quite managed to establish full control over the institution, which mainly remains under the influence of the retired generals. Yet that seems likely to change in four to five years.

    In the second sector are joint ventures: Turkish companies collaborating with Western partners that bring in investments. Most of these joint ventures were formed by pro-Western Turkish contractors in the 1990s, mainly from the construction sector and their international partners, including Nurol Defense Industry, Turkish Aerospace Industries Corp. (TAI), MIKES and Koc Holding’s Otokar. TAI is another of TSKGV’s companies.

    These Turkish-West ventures entered the defense industry market in the early 2000s as a wannabe leading force and rivaling TSKGV — yet they seem to have lost steam in the past decade.

    The third sector — the new rising stars of the defense industry — are led by the president’s men. They and their companies are tied to Erdogan: Baykar Makina, owned by the family of Erdogan’s son-in-law, Selcuk Bayraktar; BMC, owned by the Ozturk family and Ethem Sancak, a member of Erdogan’s Justice and Development Party (AKP) and its Executive Council; and the Tumosan unit of Albayrak Group. BMC’s position in the defense industry as well as its projects and expectations provide the necessary clues to define the president’s men.

    BMC is the leading producer of buses, trucks, rail systems, Kirpi armored vehicles and Amazon mine-resistant ambush protected (MRAP) vehicles. The ambitious joint venture aspires to become Turkey’s monopoly over diesel engine production for land vehicles and jet engines. Sancak holds 25% of the venture’s shares, the Ozturks hold 25.1%, and the remaining 49.9% is owned by the Qatar Armed Forces Industry Committee.

    In 2018, BMC became Turkey’s first private defense industry company to reach the Defense News “Top 100 List,” ranking No. 85, with $554.18 million in defense revenues.

    In early 2019, Erdogan offered generous incentives to BMC, such as the opportunity to lease Turkey’s largest tank maintenance factory to produce the indigenous Altay main battle tank under a 25-year contract for only $50 million. This transfer of a tank factory in Sakarya province to BMC is still highly controversial in Turkey, with the main opposition party criticizing it at nationwide rallies because of transparency and accountability issues. Also, factory workers organized several protests against the decision. Though the debates continue, the Turkish military expects to need 1,000 Altay tanks over 20 years and Qatar plans to purchase 100.

    The deal will mark Turkey’s first export of a domestically produced tank, though Qatar hardly needs 100, given its geostrategic location and its sole, 40-mile land border. Nonetheless, such a big cooperative deal in the defense industry helps strengthen Qatar’s ties with Turkey, guarantees Turkey’s continued military-political shield against the Saudi-led bloc and blockade, and helps Doha diversify its defense sources.

    BMC went to a joint venture with Qatar’s Barzan Holdings to manufacture engine and transmission power packs for the Altay tank. The cooperation could hit serious trouble if the company fails to deliver on its pledge of developing a 100% Turkish-made power pack.

    Another joint venture was established in April 2017 by SSTEK Defense Industry Technologies, owned by Turkey’s Presidency of Defense Industries (SSB), which has 100% of the capital to carry out design and development in turbo-motor technologies in line with Turkey’s needs. SSTEK then sold 55% of its shares to BMC and 35% to TAI.

    Whether BMC’s TRMotor can deliver diesel engines for the Altay tank will be the first real test for the Turkish-Qatari military and defense partnership.

    BMC wants to penetrate jet engine production as well. After securing Erdogan’s political backing, BMC’s TRMotor went to a joint venture with TAI to develop the jet engine for Turkey’s indigenous TFX aircraft project with the help of the UK’s Rolls-Royce. In March, however, Rolls-Royce announced it was withdrawing from TRMotor because of an irreconcilable difference over intellectual property caused by Qatar’s involvement with BMC.

    In short, BMC is the biggest rival of TAI in Turkey’s aerospace sector, and of FNSS in land systems. FNSS is a joint venture owned by Nurol Holding of Turkey and BAE Systems of Arlington, Va. BMC is trying to establish a monopoly in military diesel and jet engines, and also seeks to monopolize the raw material production field of boron mining it recently entered.

    We have yet to see whether a spirit of gentlemanly competition among TSKGV, the joint ventures of the 1990s and the president’s men will result in a visionary unification, or if the race will become destructive. Joint ventures are having a rough time. TSKGV, now under the jurisdiction of the presidential palace, is struggling to evade Erdogan’s attempts to take full charge. Meanwhile, Erdogan’s favorites are rising quickly to the top. All actors are determined to use whatever bureaucratic, economic and political clout they have to protect their monopolies in various fields, kill off small businesses and repel other big companies from entering their territories.

    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 20.11)

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    11.13 GREECE: IMF Executive Board Concludes 2019 Article IV Consultation with Greece

    On 13 November 2019, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Greece.

    Growth has returned to Greece but so far has fallen below expectations. After a 1.9% expansion in 2018, growth moderated in the first half of 2019, constrained by lackluster private investment and under-execution of public investment. While the unemployment rate fell to 16.9% (seasonally adjusted) in July, structural unemployment remains high and economic activity is below potential. Despite improvements, bank balance sheets are significantly impaired, and banks continue to reduce the amount of (net) credit provided to the economy.

    Real GDP growth is projected to moderate slightly to 1.8% this year, followed by some acceleration in 2020 to 2.3%, supported by fiscal loosening and higher private investment financed mostly by foreign capital inflows. Over the medium term, growth prospects are weighed down by adverse demographics and low productivity. The external position is weaker than indicated by medium-term fundamentals. Near-term downside risks are significant, including from rising protectionism and weaker global growth, roadblocks to economic reforms, and further deterioration of bank balance sheets; the medium-term outlook is more balanced, particularly if the government’s pro-growth reforms translate more quickly into results and markets react favorably to the additional progress.

    Executive Board Assessment

    Executive Directors recognized the progress that the authorities had made in implementing reforms during the program period, as well as the Greek economy’s continued recovery, but noted that important challenges remain. In this context, they took positive note of the new government’s commitment to pursue growth-friendly and inclusive policies and welcomed their early policy actions. They stressed, however, that sustained and deeper reform implementation, deploying a full range of policy tools, and strong political resolve to tackle vested interests will be necessary to meaningfully boost investment, growth, and social inclusion.

    Directors supported the authorities’ plans to cut direct tax rates and urged more ambitious efforts to broaden tax bases and enhance tax payment compliance. They urged a shift of spending priorities toward more investment and targeted social spending, while strengthening fiscal risk management and contingency planning. A number of Directors considered that the authorities should build a consensus with European partners around a lower primary balance target to support the growth objectives. A number of other Directors, however, stressed keeping the target, which they noted was agreed taking into account European fiscal rules and the implications for Greece’s debt sustainability.

    Directors emphasized the importance of restoring the financial sector’s resilience and ability to support growth. In this regard, they welcomed the government’s more ambitious nonperforming exposure (NPE) reduction objectives, noting that the proposed state‑supported NPE securitization guarantee scheme could provide important backing. However, Directors stressed the importance of taking a more comprehensive, ambitious, and well‑coordinated strategy to clean up bank balance sheets, relying on market‑based mechanisms (with any public support subject to cost‑effectiveness assessments). These efforts should also include further improvements in the legal financial framework, including, in particular, an overhaul of the personal insolvency law to eliminate primary mortgage protection in order to strengthen payment discipline.

    Directors underscored that Greece’s success within the currency union will require policies to help boost productivity and narrow its competitiveness gap. In this context, they welcomed the government’s efforts to unblock privatization, implement business deregulation, and restore elements of the cornerstone program‑era labor market reforms. Directors stressed that realization of benefits from labor market reform would require meaningful parallel progress with other structural reforms, particularly further liberalization of product markets.

    Directors noted the importance of continued improvements in public sector efficiency and governance. They welcomed the recent progress in strengthening the AML/CFT regime and anti‑corruption institutions but underscored that important remaining shortcomings should be addressed. Specifically, they urged the authorities to strengthen public revenue administration (including strengthening tax enforcement), enhance the efficiency and quality of the judicial system (including enforcement of contracts), and speed up anti‑corruption reforms. (IMF 14.11)

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