Fortnightly, 14 December 2016

Fortnightly, 14 December 2016

December 14, 2016


14 December 2016
14 Kislev 5777
15 Rabi Al-Awwal 1438




1.1  Israel, Greece & Cyprus Agree on European Gas Pipeline
1.2  Bank of Israel’s Karnit Flug Says Israel’s Economy is in Good Shape
1.3  Knesset Votes On Extensive Banking Sector Reforms


2.1  OurCrowd’s Global Investor Summit: World’s Largest Equity Crowdfunding Conference
2.2  Secdo Raises $10 Million to Grow Its Incident Response Platform
2.3  NantHealth Inks Exclusive Reseller Agreement for GPS Cancer with Oncotest-Teva in Israel
2.4  Beamr Announces New Funding from Verizon Ventures
2.5  Acquisition of Karish and Tanin Natural Gas Fields by Energean Approved by Israeli Petroleum Council
2.6  Avery Dennison to Acquire Hanita Coatings


3.1  1776 Dubai to Support Lebanese Tech Start-Ups
3.2  KASOTC & PepperBall Form Strategic Partnership for Customized Non-Lethal Training Course
3.3  Slim Chickens & Alghanim Launch International Partnership for Middle Eastern Presence
3.4  The Cheesecake Factory Opens in Doha, Qatar
3.5  SeaWorld Announces Partnership With Miral To Develop SeaWorld Abu Dhabi


4.1  Plastic Bags to Cost NIS 0.10 in Israel from 1 January
4.2  ENGIE Group Leverages Ecoppia to Deliver Higher Output in Indian Solar Park Bid
4.3  Donors Pledge Approximately $400 Million for Red – Dead Project


5.1  Lebanon’s Trade Deficit Up by 7.92% to $13.16 Billion in October
5.2  Lebanon’s Gross Public Debt Rose to $74.51 Billion by October 2016
5.3  World Bank Tries to Revive Jordan’s Slowing Economy
5.4  World Bank & Jordan Sign Agreement for $250 Million in Concessional Finance
5.5  Jordan Remains Among Most Economically Free Nations
5.6  Amman & USAID Launch Tourism Training Program

♦♦Arabian Gulf

5.7  Some 16,000 Gulf Nationals Relocated Within the GCC to Find Work in 2015
5.8  Oman Said to be Looking at Spending Cuts in 2017 Budget
5.9  Saudi Unemployment Rises 12% in Third Quarter to Four-Year High
5.10  Saudi Arabia to Enter Recession in 2017, Says New BMI Research

♦♦North Africa

5.11  Egypt’s November Inflation Hits Highest Level in 7 Years on Pound Float
5.12  Egypt Sharply Increases Customs Duties as it Seeks to Curb Imports
5.13  Egypt Ranks 116th in 2016 Global Enabling Trade Report
5.14  Egypt Announces New Investments In Oil And Gas Exploration Worth $200 Million
5.15  American-Moroccan Program to Teach Drâa-Tafilalet Region’s Students English


6.1  Turkish Economy Shrinks for First Time Since 2009
6.2  Turkey’s Leading Arms Firms See Sales Rise by 10%
6.3  Turkey Plummets on PISA, the OECD-Wide Education Test
6.4  Greek Unemployment Eases to 23.1% in September – Still Eurozone’s Highest
6.5  Greek Students Score Below OECD Average



7.1  Chanukah Celebrated in Israel & the World Over
7.2  Why Do Men Live So Long in Israel?
7.3  Knesset Bans Miniskirts
7.4  Health Ministry Says Gay Men & Ethiopian-Born Israelis Can Donate Blood


7.5  Egypt’s Population Increases by 1 Million in 6 Months
7.6  Morocco is Second-Most Prolific Reader in Arab League


8.1  Biological Industries’ NutriStem hPSC XF Medium Awarded FDA Drug Master File Acceptance
8.2  LDS Wins Medical Cannabis Marketing Deal
8.3  Successful First Transplantation of Second-Generation Injectable Live Human Bone Graft
8.4  Gordian Surgical Raises $2.25 Million and Receives FDA Clearance for TroClose1200
8.5  Neurim’s Prolonged-Release Melatonin to be Marketed by Kuhnil in South Korea


9.1  VocalZoom Transforms Voiceprint for Biometrics Authentication Using Optical Sensors
9.2  Mellanox Stateful Packet Processes at 400Gb/s with the NPS-400 Network Processor
9.3  Deloitte Ranks INNITEL 9th Fastest Growing Israeli Technology Company
9.4  Altair First to Complete Interoperability Testing for Lightweight M2M
9.5  Rootclaim Launches Open Analysis Platform That Surpasses Human Reasoning
9.6  Sol Chip Autonomous Wireless Solar Tag for Improving Precision Agriculture & Smart Irrigation
9.7  PayPal & Israel’s Ben-Gurion University to Collaborate on R&D
9.8  Transmit Security Wins FT Future of FinTech Innovation Award
9.9  Giraffic AVA Unlocks Seamless Virtual Reality Streaming for Apps and Mobile Devices
9.10  Stratoscale Enables Enterprises’ Cloud Adoption with an On-Prem AWS Region
9.11  Mellanox 25G/100G Ethernet Solutions Enables Artificial Intelligence Speech Recognition
9.12  L7 Defense & Check Point Software Partner to Protect Against Application DDoS Attacks
9.13  Deloitte Ranks Adgorithms 7th Fastest Growing Company in Israel


10.1  Israel’s Trade Deficit Widens by 600%
10.2  Number of Israelis Traveling Abroad Reaches New Record in 2016
10.3  Latet Claims 29% of Israelis Live in Poverty
10.4  Inbound Tourism Up 38% in November Hitting Record High


11.1  JORDAN: Jordan-Israel Relations: Normalization in the Shadow of Political Deadlock
11.2  JORDAN: How Jordan Survives, Part 2
11.3  IRAQ: IMF Executive Board Completes First Review of Iraq’s Stand-By Arrangement
11.4  KUWAIT: Kuwait’s Snap Parliamentary Elections Bring Return of the Opposition
11.5  EGYPT: Why Can’t Egyptians Get The Medicines They Need?
11.6  TUNISIA: EU Providing €213.5 million to Tunisia for Reforms & Funding Social Infrastructure
11.7  TURKEY: How the Turkish Lira Entered Free Fall


1.1  Israel, Greece & Cyprus Agree on European Gas Pipeline

On 8 December at a meeting in Jerusalem, government ministers from Israel, Greece and Cyprus agreed to continue their promotion of a natural gas pipeline from Israel to Europe.  Senior ministry officials also attended the meeting, including from the Israel Ministry of National Infrastructure, Energy, and Water Resources, the Greek Minister of Economy, Development and Tourism and the Cypriot Minister of Energy, Commerce, Industry and Tourism.

The current working assumption is that the cost of a pipeline to northwestern Greece and from there to Italy and Bulgaria will be $5.7 billion; it will be economically worthwhile at prices of $7 – 9 per BTU.  Energy sources believe that this estimate of the cost is at least $2 billion lower than the true cost, and that this per BTU price is likely to be non-competitive within a few years, and certainly at a time when Russia is selling 175 BCM a year to Europe, amounting to 43% of all the gas consumed there in 2015, at an average price of $4.40 per BTU.  (Globes 08.12)

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1.2  Bank of Israel’s Karnit Flug Says Israel’s Economy is in Good Shape

On 11 December, the Governor of the Bank of Israel told the Globes Israel Business Conference that Israel must focus on the longer term.  Flug described the state of the Israeli economy as “good” in comparison with the rest of the world.  “Growth in Israel is moderate, but the economy is growing,” Flug declared.  “There is improvement in employment, wages are rising, and the general macroeconomic situation is good.  We have to focus on the longer term.”

”Essentially, we’re not looking at what other central banks are doing about the interest rate; we are interested in how their decisions affect us.  We’re now close to full employment.  Wages are rising and all the indications are that the economy is close to full employment.”  Flug added, “The central bank cannot do much directly about inequality; it acts as an advisor to the government on economic matters.”  She said she was working “very closely with the minister of finance (Moshe Kahlon) to promote reforms that will encourage competition, but which will also maintain stability in the financial system.

”The challenge is to persuade (the politicians) to address the long-term issues, and because the macroeconomic situation is good, we have a reason to talk about the coming generations.  We can talk about differential taxation for poor working people.  The government supports the entry of people into the labor force, and that is excellent, but these people lack the right capabilities, and this is something that we have to address now.”

Concerning the banking system, Flug said, “The banks in Israel are stable and well-supervised.  They are conservative, and were a stabilizing factor during the economic crisis.  We want to encourage competition only in places where it is inadequate.  We certainly need to keep in mind the significance of a crisis in the financial market. We are therefore in favor of a very balanced reform.”  (Globes 11.12)

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1.3  Knesset Votes On Extensive Banking Sector Reforms

On 13 December, Israeli parliamentarians were expected to finalize the language of a banking reform bill aimed at increasing competition, paving the way for its second and third readings in the Knesset on 14 December.  The chief provision of the bill will prevent banks from issuing credit cards.  Israel’s three credit card companies are currently owned by four banks: Bank Hapoalim owns 98% of Isracard, Leumi Card is controlled by Bank Leumi (80%), and Visa Cal-Israel is held by Discount Bank (72%) and the First International Bank of Israel (28%).  Banking revenues from credit companies’ holdings average 657 million shekels ($173 million) a year.  Other provisions in the new bill seek to create a new unified authority to supervise the financial system, licensing a cooperative bank, and advancing internet banking.

The bill is based on a report issued by a special commission tasked with proposing ways to increase competition in the financial service industry.  In its report, the committee said separating credit card companies from banks could reduce the big banks’ overall market share, introduce new players, and boost credit card companies.  The commission also recommended imposing limits on the lines of credit banks can offer their clients, reducing the clearing fees for small businesses, and other measures aimed at reducing market concentration.  (Various 13.12)

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2.1  OurCrowd’s Global Investor Summit: World’s Largest Equity Crowdfunding Conference

OurCrowd, the world’s leading equity crowdfunding platform, will host the 2017 OurCrowd Global Investor Summit on 16 February 2017 in Jerusalem.  It will be the world’s largest equity crowdfunding event and the biggest investor event in the Startup Nation.  Registrations have already doubled from this time last year, with up to 5,000 people from the global tech investment community expected to attend.  Attendees will span an expected 60 countries, and will include investors, venture and corporate partners, entrepreneurs, 30 global delegations, industry leaders and members of the press.  This year, delegates will see the startup technologies changing the world, presented by a stellar lineup of senior executives from some of the largest and most innovative global companies.  The 2017 OurCrowd Global Investor Summit theme, “The Future Is Here,” will showcase how 2016’s highlighted cutting-edge technologies are being implemented in businesses now and remaking entire industries.  More than 100 startups making news are slated to participate.

Summit attendees will also hear from the venture capital professionals evolving the face of investing, as the startups they support have begun to leverage the collective intelligence and connections of the crowd to super-charge their businesses.  They will also experience the power of the crowd hands-on, by participating in onsite real-time synergizing and the Summit’s popular interactive Crowd Investing Hackathon, as well as meeting peers from the largest collaborative venture capital community in the world.

Jerusalem’s OurCrowd is the leading global equity crowdfunding platform for accredited investors. Managed by a team of seasoned investment professionals, OurCrowd vets and selects opportunities, invests its own capital and brings companies to its accredited membership of global investors.  OurCrowd provides post-investment support to its portfolio companies, assigns industry experts as mentors, and takes board seats.  The OurCrowd community of over 15,000 investors from over 110 countries has invested over $320m into 100 portfolio companies and funds.  OurCrowd has already had nine exits to date: two IPOs and seven acquisitions.  (OurCrowd 06.12)

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2.2  Secdo Raises $10 Million to Grow Its Incident Response Platform

Secdo has raised $10 million in a Series A round led by RDC and Check Point cofounder and chairman Marius Nacht, with participation from the founders of Anobit, a startup acquired by Apple back in 2011.  Founded out of Israel in 2014, Secdo promises to help security teams cut incident response times from hours to minutes.  The Secdo platform automates the process of detecting and investigating suspicious activity, thereby “lowering the skills barrier,” as the company puts it, and making security teams more effective.  It essentially provides insight and context for every endpoint to establish whether a detected “suspicious” activity indicates a real threat, such as ransomware.  The company had previously raised a $3 million seed round from the same investors, and it says its fresh cash injection will be used to expand its U.S. sales operations, customer support and research and development.  (Secdo 06.12)

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2.3  NantHealth Inks Exclusive Reseller Agreement for GPS Cancer with Oncotest-Teva in Israel

NantHealth, a leading next-generation, evidence-based, personalized healthcare company, announced that it has entered into an exclusive reseller agreement for GPS Cancer, the leading molecular test that helps guide treatment strategies including choice of standard chemotherapy for oncologists, with Oncotest-Teva, a pioneer in the field of personalized medicine and a subsidiary of Teva Pharmaceutical Industries in Israel.  This landmark agreement, which expands the GPS Cancer footprint globally, adds a key international distributor to the growing set of health plans, health systems, and Fortune 50 companies that have committed to covering or using GPS Cancer since its commercial availability in June 2016.

Under the terms of the agreement, Oncotest-Teva will have exclusive rights to distribute GPS Cancer to physicians in Israel.  GPS Cancer, which integrates quantitative proteomics with whole genome (DNA) and transcriptome (RNA) sequencing, is the only integrated comprehensive molecular test of its type conducted in CLIA-certified and CAP-accredited laboratories.

Shoham’s Oncotest-Teva is a pioneer in the field of personalized medicine in Israel.  For almost two decades, Oncotest-Teva has been focusing on identification of novel approaches to diagnosing malignant diseases and predicting the course of disease, according to the unique genetic profile of the patient and tumor cells, and more precise and more effective matching of therapeutic directions.  (NantHealth 06.12)

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2.4  Beamr Announces New Funding from Verizon Ventures

Beamr Imaging secured an additional $4 million in funding from Verizon Ventures.  Joining existing investors Eric Schmidt’s fund Innovation Endeavors, Marker and Disruptive, Verizon Ventures’ investment will support Beamr’s contribution to improved network performance and video quality.  This new funding enables Beamr to accelerate development of solutions that will feature the company’s highly regarded and patented perceptual quality measure technology.

As continuously improving display technologies boost consumers’ expectations of video quality, and with the rise of 4k, HDR, VR and 360 video formats, Beamr’s H.264 and H.265/HEVC video optimization technology and encoders are finding their place in critical video workflows such as OTT streaming services, cable and satellite systems, and managed IP networks.  Through the application of Beamr Optimization, large network operators are seeing the tangible effects of reducing video traffic and storage costs by 20% or more.

Tel Aviv’s Beamr is the leading provider of encoding, and optimization solutions for the world’s top MSOs, OTT streaming service providers, Hollywood studios, web publishers and social content publishing platforms.  Founded in 2009 by a team of leading imaging experts, Beamr’s suite of high-performance H.264 and H.265/HEVC video processing solutions are fully scalable for use in on-premise and cloud implementations.  Beamr’s flagship product, Beamr Video, represents the industry’s first content adaptive perceptual quality measure driven optimizer that significantly reduces the bitrate of video streams and files without sacrificing quality.  Beamr’s encoder product line includes broadcast quality H.265/HEVC and H.264 codec SDK’s for x86 and ARM platforms, while supporting popular operating systems like Windows, Mac OS X, and Linux.  (Beamr Imaging 06.12)

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2.5  Acquisition of Karish and Tanin Natural Gas Fields by Energean Approved by Israeli Petroleum Council

The Petroleum Council of Israel approved the acquisition of 100% of the Karish and Tanin Natural Gas Fields by Energean Oil & Gas from Delek Drilling and Avner.  The transaction, estimated to be valued at $148m, is being implemented as part of the Israeli Government’s Gas Framework Strategy.  The Karish and Tanin Fields, discovered in 2013 and 2011 respectively, have 2C gas resources of circa 2.4TCF.  Energean will now proceed towards completion of the transaction, and within six months from that date will submit to the Israeli authorities a Field Development Plan (FDP) for both fields.  The Company intends to produce first gas in 2020. The development of Karish and Tanin is expected to involve an investment of circa $1 billion over the next few years.

The Karish and Tanin FDP is the third FDP that Energean is committed to over the next few years with development programs being prepared for the Epsilon (North Aegean Sea) and West Katakolon (Western Greece/Ionian Sea) with combined 2P reserves of circa 25 million barrels.  Energean has additional exploration acreage in Western Greece, Montenegro and Egypt.  The Company anticipates an investment of around $1.3 billion in exploration and development (including Karish and Tanin) over the next 5 years.  (Energean 07.12)

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2.6  Avery Dennison to Acquire Hanita Coatings

Glendale, California’s Avery Dennison Corporation agreed to acquire Hanita Coatings, a pressure-sensitive materials manufacturer of specialty films and laminates from Kibbutz Hanita Coatings and Tene Investment Funds for the purchase price of $75 million, subject to customary adjustments.

With 2015 sales of roughly $50 million, Hanita Coatings currently employs more than 220 employees, most of whom are located at the company’s headquarters in Israel’s Western Galilee.  The 33-year-old company generates sales in more than 40 countries.  Avery Dennison expects that completion of the transaction will take up to a few months, subject to customary closing conditions and approvals.

Headquartered in Israel with sales and distribution facilities in the United States, Germany, China and Australia, Hanita Coatings develops and manufactures coated, laminated, and metallized polyester films for a range of industrial and commercial applications, all of which require high performance and superior quality.  Hanita Coatings’ window films are used in architecture and automotive aftermarkets; its top-coated polyester films are used in the manufacture of durable labels; and its ultra-high barrier films form part of insulation systems used in refrigeration, buildings and cold chain packaging.  (AVY 13.12)

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3.1  1776 Dubai to Support Lebanese Tech Start-Ups

1776, a Washington, DC-based technology incubator with a direct presence in Dubai, has signed a partnership agreement with the UK Lebanon Tech Hub (UKLTH), a joint initiative by Banque du Liban (Lebanon’s Central Bank) and the UK Government.  The partnership is aimed at supporting Lebanon’s fastest-growing tech start-ups and help them break into new international markets such as the UAE and the neighboring Gulf countries.  Start-up companies will be jointly selected by UKLTH and 1776 for an acceleration Program in Dubai based on the following criteria: a scalable business model, sectorial focus (EdTech, FinTech, digital health, and smart cities), socio-economic impact, and readiness to enter international markets.

The partnership provides UKLTH start-ups with access to 1776’s global digital platform Union, which was launched at the 2016 Global Entrepreneurship Summit and includes learning resources and a global network of mentors and investors.  In addition, they will get a branded working space at the 1776 Dubai campus alongside the Dubai Future Accelerators (DFA) in Emirates Towers and an active participation during the annual 1776 Challenge Cup global start-up competition.  The first batch of UKLHT start-ups to be based at 1776 Dubai includes Kamkalima, a web-based platform that helps teachers create engaging assignments in Arabic, Riego, a maker of smart, solar-powered irrigation devices, and Artscoops, an exclusive online auction and sale channel for art buyers worldwide.  (Various 07.12)

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3.2  KASOTC & PepperBall Form Strategic Partnership for Customized Non-Lethal Training Course

The King Abdullah II Special Operations Training Center (KASOTC) is the premier training center in the Middle East for police, military, and special operations.  In KASOTC’s continuous vision and mission to be at the forefront of integrating training and technology within the region and the world, it is pleased to announce that it has strategically partnered with Illinois’ PepperBall to create a customized non-lethal training course for the police, military and security forces worldwide.  PepperBall, a division of United Tactical Systems, LLC, is the world’s leader in non-lethal .68 OC and CS systems.

The KASOTC Non-Lethal PepperBall course consists of a three day weapons, tactics and armorers’ training course.  The course features training on the most advanced pneumatic launchers, including PepperBall’s VKS (Variable Kinetic System).  The VKS launcher is unique in that its velocity can be adjusted to shoot projectiles from 280fps to 400fps, a single system that can be used for multiple missions.  It also offers the ability to fire PepperBall’s round projectiles, as well as its VXR shaped projectiles, which doubles the system’s accurate effective distance.

Illinois’ PepperBall is the world’s premier manufacturer of .68 launchers and OC/PAVA projectiles, supplying high-technology non-lethal products to over 5000 agencies in 45 countries around the world.  PepperBall-branded products are developed, manufactured and distributed by United Tactical Systems, LLC (UTS), a privately held company that provides less-lethal weapons for military, government, law enforcement, corrections, private security and consumer markets.  (KASOTC 02.12)

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3.3  Slim Chickens & Alghanim Launch International Partnership for Middle Eastern Presence

Fayetteville, Arkansas’ Slim Chickens, a leader in the “better chicken” segment of fast-casual restaurants, will continue expansion of its fresh chicken concept for the first time outside of the United States through a partnership with Alghanim Industries, one of the largest privately owned companies in the Middle East and North Africa (MENA).  The two companies announced today that they have entered into a master franchise agreement that will enable Alghanim Industries to introduce the Slim Chickens brand and dining experience across the MENA region.

Alghanim Industries, based in Kuwait City, Kuwait, owns and operates more than 30 businesses in 40 countries across the MENA, Turkey, India and South East Asia.  Since its founding more than a century ago, consumer-oriented businesses have grounded the company.  Today, its growing portfolio of 300 brands includes a number of US partners, including General Motors, Ford, Mars, Whirlpool, Wendy’s and American Express.  The first MENA-region Slim Chickens restaurant is expected to open in Kuwait in March 2017. This will be followed by a rapid brand rollout across the entire region.  (Alghanim Industries 06.12)

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3.4  The Cheesecake Factory Opens in Doha, Qatar

The Cheesecake Factory, known for its extensive menu, generous portions and legendary desserts, announced that the first The Cheesecake Factory restaurant in Qatar opened on 10 December 2016 under a licensing agreement.  With more than 250 menu selections including nearly 50 lower calorie SkinnyLicious dishes and a new “Super” Foods section – handmade, in-house with fresh ingredients – and more than 40 signature cheesecakes and desserts, The Cheesecake Factory’s opening provides exciting new choices for shoppers and area residents.  Featuring imported limestone floors and custom wood columns, hand painted murals and modern lighting, the new restaurant includes the distinctive and contemporary decor that is as creative and imaginative as The Cheesecake Factory’s extensive menu.  This is the eleventh licensed The Cheesecake Factory restaurant in the Middle East.  (The Cheesecake Factory 12.12)

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3.5  SeaWorld Announces Partnership With Miral To Develop SeaWorld Abu Dhabi

Miral and Florida’s SeaWorld Entertainment announced their partnership to develop SeaWorld Abu Dhabi, a first-of-its-kind marine life themed park on Yas Island.  This next generation SeaWorld Abu Dhabi will also include the United Arab Emirates’ first dedicated marine life research, rescue, rehabilitation and return center with world-class facilities and resources for the care and conservation of local marine life.  SeaWorld Abu Dhabi will be the first new SeaWorld without orcas, and will integrate up-close animal experiences, mega attractions and a world class aquarium, bringing the latest technology in visitor engagement.  The partnership brings together Miral’s expertise in developing Yas Island’s portfolio of destinations with SeaWorld’s 50-plus years of theme park, veterinary medicine, marine science and zoological practice and experience.

SeaWorld Abu Dhabi’s research, rescue, rehabilitation and return center on Yas Island will be the first of its kind in the country, providing a state-of-the-art environment for local and global researchers, scientists and marine conservationists to assist them to better understand and learn from the region’s marine life habitats and conditions.  Planned to open ahead of the marine life themed park, the facility will provide an important resource for UAE nationals and residents looking to develop or enhance expertise in marine life sciences and will serve as a hub for collaboration with local and international environmental organizations and projects.  The addition of SeaWorld Abu Dhabi expands Miral’s destination portfolio on Yas Island, which is set to double visitor numbers to 48 million by 2022.  The growth plans are part of Abu Dhabi’s vision to establish the emirate as a global tourism hub with unique attractions and world-class tourism infrastructure.  (SeaWorld 13.12)

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4.1  Plastic Bags to Cost NIS 0.10 in Israel from 1 January

Starting on 1 January 2017, consumers in Israel will pay NIS 0.10 for a plastic food bag at supermarkets.  The measure is designed to reduce the use of environmentally damaging plastic bags.  The law is intended to foster reusable shopping bags.  In Europe, consumers have learned that plastic bags cost money and many of them pay far more than the price stipulated by the new law in Israel.  The figures show that 2.2 billion disposable plastic bags are used annually in Israel, amounting to 350-400 bags per capita.  These bags eventually become polluting waste.  The average in Europe is 200 bags per capita.  The European Union’s goal is to reduce per capita consumption of disposable plastic bags to 90 by 2019 and 40 by 2025.

The Ministry of Environmental Protection is conducting a NIS 29 million campaign offering the large supermarket chains monetary support for distributing reusable bags even before the law goes into effect.  The subsidy will total NIS 1.50 for each bag distributed and NIS 1.60 for each bag purchased from an Israeli company.  Distribution will be according to amount of a customer’s purchase.  The law in question exempts the pharmacy chains; it applies to the 20 largest supermarket chains, as these are defined in the Food Law.  (Globes 04.12)

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4.2  ENGIE Group Leverages Ecoppia to Deliver Higher Output in Indian Solar Park Bid

Ecoppia announced an agreement with Solairedirect India, subsidiary of energy multinational ENGIE Group, to deploy its automated system in the 10,000-hectare, 2,255 MW Bhadla Solar Park in Jodhpur, Rajasthan India.  Continuing Ecoppia’s commitment to cooperation with large multinational energy conglomerates and its specific focus on the Indian market, the company’s solution will be deployed on a production capacity of 168MWp out of the total 190MWp capacity.

Located in a vast desert area, Bhadla Solar Park is prone to frequent dust storms, which can reduce energy generation by as much as 40% in a matter of minutes.  Traditional labor-intensive, water-based panel cleaning solutions are neither cost-effective nor timely when immediate recovery from sandstorms is mission-critical to maintain LCOE.  To alleviate the production loss associated with soiling and maintain panels at peak performance year-round, Engie’s site in Bhadla will be cleaned nightly by Ecoppia robots.  With the deployment of Ecoppia across its site, ENGIE is expected to save over 1.5 billion of liters of water, and reduce its operating expenses drastically.

Herzliya’s Ecoppia designs and produces innovative photovoltaic panel cleaning solutions to cost-effectively maximize the performance of utility-scale installations. The company’s water-free, automated technology removes dust from panels on a daily basis to ensure peak output, even in the toughest desert conditions. Privately held organization backed by prominent and experienced international investment funds, Ecoppia works with the largest energy companies globally, cleaning millions of solar panels every month.  (Ecoppia 07.12)

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4.3  Donors Pledge Approximately $400 Million for Red – Dead Project

Amman has raised approximately $400 million from donor countries and agencies to finance the first phase of the Red Sea-Dead Sea Water Conveyance Project (Red-Dead).  The funds were contributed in the form of grants, very easy loans and in-kind assistance, the Ministry of Water and Irrigation said.  The US intends to contribute $100 million to the Red-Dead project.  In addition, the EU has pledged a grant worth €40 million and a very easy loan of €120 million through the European Investment Bank and the French Development Agency.  Also during the donor conference, Japan has announced that it will provide the project with pumps and equipment worth $20 million, while Italy announced that it will extend a grant worth €2 million and a very easy loan worth €50 million and Spain will support the project with an easy loan worth €50 million.

The ministry indicated that construction on the project’s first phase, which costs $1.1 billion, is slated for early 2018 and is scheduled to end in 2020.  Authorities have already shortlisted five consortiums out of 17 that have shown interest in implementing the first stage on a build, operate and transfer basis.  A total of 85-100mcm of water will be desalinated every year, while the seawater will be pumped out from an intake located in the north of the Gulf of Aqaba.  In addition, a conveyor will be extended to transfer desalinated water as well as a pipeline to dump the brine into the Dead Sea to stop its constant decline, estimated at one meter every year.  The Kingdom will receive an additional 50mcm of water from the Lake Tiberias Reservoir annually to be added to its share from the desalination station to provide Aqaba with water.  (JT 03.12)

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5.1  Lebanon’s Trade Deficit Up by 7.92% to $13.16 Billion in October

According to the Lebanese Customs, Lebanon’s trade deficit broadened by 7.92 % to $13.16B by October 2016, as exports increased by a yearly 2.75% to $2.56B, while imports added 7.04% y-o-y to $15.72B.  On the imports’ side, as average oil prices registered a fall from $57.09/barrel by October 2015 to $49.02/barrel by October 2016, mineral products, which constituted 21.10% of the total import value, witnessed a 17.93% y-o-y rise in volume.  However, this rise in volume was accompanied with an increase in total value, which surged by 32.11% y-o-y to $3.32B.  As for products of the chemical or allied industries, which grasped 10.81% of the total value of imported goods, they rose by a yearly 4.70% to $1.70B.  However, machinery and electrical instruments (9.83% of the total value) declined by 8.05% from 2015 to stand at $1.55B by October 2016.

The top countries Lebanon imported from during the first 10 months of the year were China, Italy, USA, Germany and Greece with respective shares of 11.28%, 7.40%, 6.42%, 6.14% and 5.43% of the total value of imports.  As for exports, “pearls, precious stones and metals” products, grasping the largest share of exported goods (28.31%), escalated from $379.11M by October 2015 to reach $725.48M by October 2016.  As for prepared foodstuffs, beverages and tobacco, they comprised 14.31% of exported goods’ value amounting to $366.86M by October 2016, compared to $402.78M by October 2015.  Moreover, exports of machinery and electrical instruments, that take up to 11.30% of the total exports, fell by 15.66% y-o-y to $289.52M by October 2016.  The top export destinations for the same period were South Africa, Saudi Arabia, UAE, Syria and Iraq with respective shares of 23.12%, 9.11%, 8.11%, 5.88% and 5.52% of the total value of exports.  (LC 06.12)

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5.2  Lebanon’s Gross Public Debt Rose to $74.51 Billion by October 2016

Lebanon’s gross public debt registered a yearly rise of 7.91%, to stand at $74.51b by October 2016.  The debt in Lebanese pounds made up 61% of the total gross public debt, growing by 6% y-o-y to $45.50b.  The debt in foreign currency increased by 11% y-o-y to $29b by October 2016.  BDL was the largest holder of local currency debt, with a share of 44%, while Lebanese commercial banks and other non-financial sectors held the remaining shares of 40.2% and 15.8%, respectively.  Moreover, foreign currency debt was mainly constituted of Eurobonds with a share of 92.7%, while multilateral, bilateral and Paris II loans took respective shares of 3.6%, 3.3%, and 0.1%.  (BLOM 12.12)

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5.3  World Bank Tries to Revive Jordan’s Slowing Economy

Jordan’s economic growth has been subdued in the last year as spillovers from regional instability take a toll.  Jordan has been managing spillovers from the Syrian crisis including closure of trade routes with Iraq and Syria and hosting more than 656,000 registered Syrian refugees with UNCHR with an estimated 1.3 million Syrians in Jordan as per the census.  While the Jordanian economy has held up with growth generated from a number of sectors, it has been losing momentum.  Growth of 2.1% in the first half of 2016 slightly declined compared to 2.2% in first half of 2015.  The outlook is subject to downside risks. Compared to the region, Jordan’s growth forecast of 2.3% for 2016 is in line with the average growth rate for the Middle East and North Africa.

However, higher frequency of security incidents are materializing around Jordan and could further depress consumer and investor confidence.  Containing the fiscal deficit and implementing the new IMF program will be challenging as some adjustment measures could be considered socially sensitive.  In parallel, the implementation of planned reforms to improve the functioning of the labor market, improve the investment climate and unlock access to finance which are vital to stimulate economic activity, and improve welfare.  Finally, Jordan’s external position will face further pressures if expected grants and concessional financing do not materialize and grants are not sustained and increased.  (WB 24.11)

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5.4  World Bank & Jordan Sign Agreement for $250 Million in Concessional Finance

The World Bank and Jordan have signed a $250 million financial package that aims to accelerate the Government’s quest to redress fiscal imbalances in the energy and water sectors and improve public service delivery.  The Second Programmatic Energy and Water Sector Reforms Development Policy Loan was signed on 11 December 2016, by Jordan’s Minister of Planning and International Cooperation Fakhoury, and the World Bank’s Director for the Middle East at an official ceremony in Amman.

Fakhoury lauded the Bank’s support to Jordan and said the new loan would contribute to the Government’s efforts to shore up the fiscal deficit for 2016 through 2018.  He said this support “will help to significantly reduce the debt servicing bill, provide more time for debt repayments and, consequently, lessen dependence on local market borrowing at higher interest rates.”  Fakhoury noted that the water sector was the largest consumer of electricity in the kingdom, and the Government’s planned reforms aim to make better use of surface water for drinking purposes, while treating waste water for agricultural and industrial usage.

The loan is the second extended by the World Bank to Jordan supported by the Global Concessional Financing Facility (GCFF).  The GCFF offers low-interest conditions normally reserved for the world’s poorest nations, not a middle-income country such as Jordan.  The first was approved by the Bank in September 2016, and comprised a $300 million package to help improve economic opportunities for Jordanians and Syrian refugees.  The GCFF supports countries hosting large numbers of refugees to strengthen their resilience, notably Jordan and Lebanon.

The new package consists of a $25 million contribution from the GCFF combined with a $225 million loan, repayable over 35 years with a four-and-a-half-year grace period.  The project is the second in a two-part series focusing on reforming Jordan’s energy and water sectors.  The First Programmatic Energy and Water Sector Reforms Development Policy Loan was concluded in December 2015, and amounted to $250 million.  (WB 12.12)

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5.5  Jordan Remains Among Most Economically Free Nations

The 2016 Economic Freedoms report compiled by Canada-based Fraser Institute, based on 2014 data, Jordan ranked 14th worldwide among 159 countries, with an overall rating of 7.82 out of 10 points.  In the report, the Hashemite Kingdom came in third among Arab countries, following the UAE (7.98) and Qatar (7.91).  The index measures the degree to which the policies and institutions of countries are supportive of economic freedom through five parameters.  The parameters are: size of government, legal system and security of property rights, access to sound money, freedom to trade internationally and regulation of credit, labor and business.

Jordan scored highest in the access to sound money (9.5), followed by the size of government and the freedom to trade internationally (8 points for each), 7.5 points for regulations, to finish with the lowest score for the legal system and security of property rights parameter (6.1).

In last year’s report, which drew on data from 2013, Jordan’s overall rating stood at 7.93 out of 10, which entitled the country to the seventh ranking worldwide and the second regionally, topped only by the UAE.  The report cites Jordan, Kuwait, the UAE, Oman and Saudi Arabia as the countries with the largest decreases in rankings.  (JT 12.12)

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5.6  Amman & USAID Launch Tourism Training Program

Jordan’s Ministry of Tourism and Antiquities, the U.S. Agency for International Development (USAID) and the Vocational Training Corporation (VTC) launched the “Pathways to Professionalism” program, as the first program to be implemented by the hospitality sector in order to improve the skills of workforce in Jordan.  The program, which will be applied by 21 hotels, seeks to raise the quality standards in the hotels’ sector jobs through training participants while practicing their work.  Minister of Tourism and Antiquities, Lina Annab said this program aims at meeting the hotels sector’s needs and at the same time providing workers the opportunity to progress in their careers.  She added that investing in human resources and skills is very important for developing the tourism sector, noting that the sector employs 200,000 people.  (AMMONNEWS 05.12)

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►►Arabian Gulf

5.7  Some 16,000 Gulf Nationals Relocated Within the GCC to Find Work in 2015

Statistics from the Information Department at the General Secretariat of the Gulf Cooperation Council show that a total of 16,000 Gulf citizens relocated elsewhere in the GCC for new private sector employment.  Kuwait received around 10,000 Gulf economic migrants and the UAE came second with 1,893, closely followed by Saudi Arabia, attracting 1,887, the figures showed.  Qatar’s private sector, meanwhile, attracted 959 GCC nationals, while Bahrain and Oman received 512 and 163 respectively.

The government sector in many Gulf countries awards equal treatment to Gulf citizens when it comes to employment.  The latest figures showed a 50% increase in the number of GCC nationals in this sector, from 10,000 employees in 2006 to 15,000 in 2015.  Here again, Kuwait ranked first in attracting GCC nationals to work in the state sector, with more than 10,000 GCC, non-Kuwaiti employees. The UAE came second with 5,000, while in Qatar the number stood at 1,382.

In total, the figures showed that up to 25 million Gulf nationals moved within the GCC for either work or tourism in 2015, according to a report in Arab News citing the same data.  This represents a 92% increase from 13 million in 2006.  Bahrain, Saudi Arabia and the UAE were the most attractive for GCC visitors, while Saudi saw the highest number of outbound moves, at 12 million people.  Omanis were next, at 4.4 million, followed by Kuwaitis at 3 million, Bahrainis at around 3 million, Qataris at 1.3 million and Emiratis at 1.1 million.  The statistics “positively reflect” the impact of social insurance coverage for Gulf nationals working in the GCC outside their country of origin.  (AN 06.12)

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5.8  Oman Said to be Looking at Spending Cuts in 2017 Budget

Oman’s Finance Ministry is looking at cutting expenditure again in the state budget for next year to reduce a deficit caused by low oil prices.  A draft budget for 2017 foresees a 5% cut in spending from this year’s budget, and no increase in revenues.  The draft assumes an average oil price of $45 per barrel.  The ministry declined to comment on its 2017 budget plan, which is expected to be released around the end of this year or early next.

The 2016 budget envisaged state expenditure of 11.9 billion rials – down 11% from actual spending in 2015 – and revenues of 8.6 billion rials; officials said their 2016 economic plans also assumed an average oil price of $45.  So far, however, the deficit has come in higher than projected, totaling 4.4 billion rials in the first nine months.  Financial Affairs Minister Darwish al-Balushi briefed the Shura Council, a top advisory body to the government, on the draft budget in a closed-door session last month, the sources said.

Oman cut benefits for employees of state agencies this year as part of its austerity drive.  The 2017 draft budget proposes more cuts to public sector bonuses but foresees no immediate reductions to salaries.  The government has said it aims to privatize a range of state assets to boost revenues, but Balushi did not mention specific privatization plans in his briefing.  (Reuters 06.12)

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5.9  Saudi Unemployment Rises 12% in Third Quarter to Four-Year High

Unemployment levels in Saudi Arabia rose to 12.1% in Q3/16, a four-year high, although employment growth remained positive, according to new data from Jadwa Investment.  Its latest research note on the Gulf kingdom’s labor market said the overall participation rate rose to a record high, reaching 42%, pushed up by higher participation from both Saudi males and females.  Jadwa said during the first three quarters of 2016, total net employment in the kingdom saw a significant rise of 892,000, compared with a 417,000 increase between 2014 and 2015.  However, Jadwa added that 95% of these positions went to non-Saudis, a blow to the country’s efforts to encourage more locals into the private sector workforce.  Saudi net employment reached 45,500 in the year-to-September, trending further down from a record low of 49,900 recorded between 2015 and 2014.  Jadwa’s report also said that within the Saudi labor force, female unemployment rose faster than males, while Saudi youth unemployment rose marginally as well.  (Jadwa Investment 10.12)

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5.10  Saudi Arabia to Enter Recession in 2017, Says New BMI Research

BMI Research announced on 4 December that Saudi Arabia will fall into recession next year for the first time since 1999.  The kingdom’s non-oil sector growth will continue to slow as the government implements fiscal consolidation measures to mitigate the impact of low oil prices.  As a result of the continued austerity drive, the Saudi Arabian economy is forecast to contract by 0.2% in real terms in 2017 – the first annual contraction since 1999 – compared to 0.8% growth in 2016.

Meanwhile, oil production is expected to decline to meet OPEC targets and the Saudi economy will slump into recession as economic activity falters.  In September, the government announced a package of fiscal measures including cutting the public wage bill and postponing several infrastructure projects.  BMI Research predicts these will not be the last such moves, and that more austerity initiatives will be announced over 2017.  (BMI 04.12)

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►►North Africa

5.11  Egypt’s November Inflation Hits Highest Level in 7 Years on Pound Float

CAPMAS announced on 8 December that Egypt’s annual headline inflation hit its highest level in at least seven years to register 20.2% in November 2016 compared to 11.8% for the same month last year.  The monthly Consumer Price Index (CPI) rose by 5%, compared to a 1.8% rise for October.  CAPMAS attributed the spikes to the Central Bank of Egypt’s (CBE) decision in early November to float the pound against the dollar and raise key interest rates, as well as to the government’s decision to reduce fuel subsidies.  According to CAPMAS, food and beverage prices registered a five-percent increase in November, while the cost of medical care and transportation rose by 5.5 and 12.6% respectively, compared to October.

Egypt embarked on a fiscal reform program in July 2014 in an attempt to curb the growing state budget deficit, now 12.2% of the GDP, by cutting subsidies and introducing new taxes including the value added tax.  In November this year, the petroleum ministry announced new raises for subsidized fuels, including octane, diesel, butane and natural gas and low-quality petroleum.  The CBE decided in early November to raise interest rates, surprising markets with a 3% rise in key rates. The bank kept rates unchanged throughout the rest of the month.  (Ahram Online 08.12)

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5.12  Egypt Sharply Increases Customs Duties as it Seeks to Curb Imports

Egypt has sharply raised customs duties on more than 300 goods, to 60% for many items, to encourage domestic production and curb a ballooning trade deficit, part of a broader government effort to reform the ailing economy.  The Finance Ministry said that the tariff increases on 320 categories of goods targeted manufactured products that are also made locally, such as carpets, ceramics and cosmetics.  Tariffs on carpets doubled to 60% from 30%.  Duties were also raised on goods that were deemed non-essential, including items such as fresh fruit, shampoo and toothbrushes.  The finance ministry said the new tariffs would boost customs revenues by EGP 6 billion ($339 million) a year, if imports remained at current volumes.  Duties on cosmetics, dairy products, air conditioners, fans, refrigerators, microwave ovens and a host other goods were increased to 60% from 40%.

The ministry said that the increases, which take immediate effect, were in compliance with World Trade Organization standards.  The tariff increases do not apply to countries or blocs with which Egypt has active free trade agreements.  They are the second tariff hikes this year in Egypt, which depends on imports of everything from wheat to luxury cars and where inflation is already in double digits.  The first round came in January, when Egypt was struggling with a shortage of dollars due to a sharp drop in foreign investment following political turmoil over the past few years.  The government also blamed the shortage of dollars partially on excessive reliance on imports.  (Reuters 04.12)

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5.13  Egypt Ranks 116th in 2016 Global Enabling Trade Report

Egypt was ranked 11th in the Middle East and North Africa and 116th internationally by the Global Enabling Trade Report 2016, which was issued by the World Economic Forum (WEF).  The United Arab Emirates (UAE) was ranked first in MENA and 23rd internationally, followed by Bahrain and Qatar which occupied ranks 42 and 43 respectively.  According to the WEF report, the UAE maintained its place in the international ranking since 2014.

Globally, the report concluded that the increase of integration between the economies of the Association of Southeast Asian Nations (ASEAN) and the rest of the world has allowed these countries to become more open to trade in goods, outperforming the European Union and the United States.

The Enabling Trade Index, the core of the Global Enabling Trade Report, measures the factors, policies, and services that facilitate the trade in goods across borders and to destination. It is made up of four sub-indices: market access, border administration, transport and communications infrastructure, and business environment.  The report is issued once every two years by the WEF, and is considered an indicator for leaders who hope to promote growth and development in their communities through trade.  (ED 01.12)

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5.14  Egypt Announces New Investments In Oil And Gas Exploration Worth $200 Million

Egypt has accepted investment offers in oil and gas drilling and exploration worth $200 million, the petroleum ministry announced.  The companies that won the bids include Shell, British Petroleum, Apache and Apex, the ministry said in a statement.  The oil and exploration deals are for Egypt’s Gulf of Suez and Western Desert.  Egypt is seeking to attract investments in the energy sector to revive an economy battered by years of political instability.  (Ahram Online 02.12)

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5.15  American-Moroccan Program to Teach Drâa-Tafilalet Region’s Students English

The regional council of Drâa-Tafilalet issued a communique last Sunday, announcing an agreement with American institution, Midwest American Development Enterprise.  The agreement aims to teach English to the students of Drâa-Tafilalet.  With the slogan of “Drâa-Tafilalet speaks English by 2030,” the project budget estimates MAD 60 million, in which Drâa-Tafilalet will allocate 51% of its budget to this project.  The region’s council said: this project follows “Morocco’s policy to foster receptivity towards foreign languages and Anglo-Saxon culture […] English is the language of economy, science, industry, tourism and international relations.  The program will include 64 beneficiaries annually, who will receive an [accredited] and qualified certificate.  Approximately 180 linguistic offices will be constructed on the campuses of the institutions and associations.  This project will also create approximately 450 job opportunities for the youth of the region, especially those with a BA in English studies, who will be trained under the supervision of distinguished American professors.  The regional council of Drâa-Tafilalet is planning to launch exchange programs for the region’s students in partnership with states of Michigan and South Carolina in order to enhance their language and cultural knowledge.  (MWN 05.12)

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6.1  Turkish Economy Shrinks for First Time Since 2009

Turkey’s gross domestic product (GDP) contracted by a bigger than expected 1.8% in the third quarter of 2016 on weak consumer spending and exports, data from the Turkish Statistical Institute (TUIK) showed on 12 December, marking the first year-on-year decline in quarterly economic growth since 2009.  On the expenditure side, household spending dropped by 3.2% in contrast to a 3.7% rise in the second quarter. Exports also plunged 7%, while imports climbed 4.3%.  The production-side breakdown of the GDP showed that the agriculture sector shrank 7.7% and industry output fell 1.4%.  In the meantime, services output dropped sharply by 8.4%.  The construction sector, however, grew 1.4%.  On the other hand, government spending surged 23.8% in the third quarter.

Turkey’s GDP contraction in the third quarter was due to the 15 July failed coup attempt, lower tourism revenues and weak external demand, but initial indicators of the last quarter gave positive signs regarding the economy.  In the meantime, Turkey revised its second-quarter growth to 4.5% from 3.1% and first-quarter growth to 4.5% from 4.7%.

TUIK said earlier that it was adjusting its methodology in calculating the GDP in order to reflect better ways of producing macroeconomic indicators.  The revision work on national accounts, in accordance with the European Union Regulations (ESA 2010), has been completed.  After the data was out, the Turkish currency extended its losses to trade against the U.S. dollar at 3.5252, compared to 3.5072 ahead of the data announcement.  (HDN 12.12)

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6.2  Turkey’s Leading Arms Firms See Sales Rise by 10%

Turkey’s leading arms companies’ sales rose by more than 10% in 2015, according to market analysis released on 5 December by the Stockholm International Peace Research Institute (SIPRI).  The analysis listed two Turkish companies, ASELSAN and Turkish Aerospace Industries (TAI), among the world’s top 100 arms firms.  Their sales climbed 10.2% over the year.  ASELSAN’s sales stood at $1 billion for the year – up from $979 million in 2014 – while TAI recorded sales of $890 million, an increase on last year’s figure of $736 million.  Both companies improved their standing on last year’s figures, with ASELSAN rising from 69th to 74th position and TAI climbing to 78th from 91st.  The report cited strong domestic demand and improving exports for their improved performance.

The U.S. remained the world’s largest weapons seller and sold arms worth $209.7 billion, a 2.9% drop on 2014.  Lockheed Martin remained the largest arms producer.  French arms sales were behind a recent growth in Western Europe, with six companies recording sales of $21.4 billion, a 13.1% rise.  Russian companies saw a 6.2% rise to $30.1 billion.  (AA 05.12)

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6.3  Turkey Plummets on PISA, the OECD-Wide Education Test

The number of Turkish 15-year-olds who scored below average on the triennial PISA test is three times more than the number of students who scored below average in more successful countries, according to test results.  Turkey dropped five places over the previous PISA tests in 2012, regressing from 44th to 49th place.

Some 31.2% of Turkish students below 15 years of age underperformed in mathematics, sciences and reading, according to the results of the PISA test, which is conducted by the Organisation for Economic Co-operation and Development (OECD).  In contrast, only 10% of students in countries that neared the top of the list underperformed on math, sciences and reading.

Turkey scored 420 points on the math test to place it 49th out of 72 countries. Turkey was also 52nd in science and 50th in reading.  Four years ago, Turkey was 43rd in science and 41st in reading.  Singapore was top of the PISA list in all three categories, gaining top spot over the 2012 winners, Shanghai.  Japan, Finland and Canada were among the countries which performed highly in the PISA test.

The OECD operates the triennial survey of 15-year-old students around the world as part of PISA, the Program for International Students Assessment.  PISA assesses the extent to which 15-year-old students, near the end of their compulsory education, have acquired key knowledge and skills that are essential for full participation in modern societies.  The assessment focuses on the core school subjects of science, reading and mathematics.  (HDN 07.12)

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6.4  Greek Unemployment Eases to 23.1% in September – Still Eurozone’s Highest

ELSTAT announced on 8 December that Greece’s jobless rate dropped to 23.1% in September from a downwardly revised 23.3% in the previous month as the economy expanded in the third quarter.  The number of officially unemployed reached 1.11 million people. Hardest hit were young people aged 15 to 24 years, with their jobless rate dropping to 46.1% from 49.1% in the same month a year earlier.  The September data, based on seasonally adjusted data, was the lowest since March 2012 when unemployment stood at similar levels.  The jobless rate hit a record high of 27.9% in September 2013.

Greece’s jobless rate has come down from record highs but remains more than double the Eurozone’s average of 9.8% in October, a seven-year low.  The economy expanded by 0.8% in July-to-September compared to the second quarter, with Athens projecting a stronger recovery next year after a protracted recession.  The government expects unemployment will drop to 22.6% next year, based on its 2017 budget which sees the economy expanding by 2.7%.  (ELSTAT 08.12)

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6.5  Greek Students Score Below OECD Average

Greek students scored below average in science, mathematics and reading in the latest PISA test organized by the Organization for Economic Cooperation and Development (OECD).  According to the results, the performances of Greek students in science and reading have been deteriorating since 2006. It has remained relatively stable for mathematics.  Around 5,500 15 year olds from 212 public and private schools in Greece took part in the test.  They ranked 43rd in science, 43rd in math and 41st in reading.

This year’s edition of the test had a special focus on science. It found that students in Colombia, Israel, Macau, Portugal, Qatar and Romania made significant gains in the subject over the last decade.  Among the 35 mostly wealthy countries belonging to the OECD, one out of five students on average did not achieve the baseline level of proficiency in science.  (Cyprus Mail 07.12)

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7.1  Chanukah Celebrated in Israel & the World Over

Sunday evening, 24 December, the Jewish world began the observance of the eight day Chanukah holiday.  From the Hebrew word for “dedication” or “consecration”, Hanukkah marks the rededication of the Temple in Jerusalem after its desecration by the forces of Seleucid Greeks and commemorates the “miracle of the container of oil”.  The re-dedication followed the liberation of Jerusalem by the Jewish forces, or Maccabees, who were fighting to regain their independence against the Greek invaders.  There was only enough consecrated olive oil to fuel the eternal flame in the Temple for one day.  Miraculously, the oil burned for eight days, which was the length of time it took to press, prepare and consecrate fresh olive oil.  The holiday also celebrates the military victory and the restoration of Jewish independence.  The holiday lasts until 1 January.

Though business is permitted during this holiday, the week in Israel is marked by many leaving work early to be with the family at nightfall, in time to light the chanukiah or menorah, an eight branched candelabra.  The primary observance is to light a single light each night for eight nights.  As a universally practiced “beautification” of the mitzvah, the number of lights lit is increased by one each night.  There is also a custom of eating foods fried in oil as a culinary way of commemorating the Chanukah miracle after the Maccabees won the war against the Greeks, liberating Israel.  While the favored fried Chanukah treat of Israelis is the jelly doughnut, most North American Jews prefer latkes, a grated potato-and-onion pancake fried in oil and served with sour cream or apple sauce.

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7.2  Why Do Men Live So Long in Israel?

In 2013, the average life expectancy for men in Israel was 81 years, in contrast to the OECD average of 77.7 and a world average of 68.8 years. Considering other variables that influence longevity – including wealth and education levels, the health system and the country’s general demographic profile – the Israeli advantage is large and increasing.

An analysis performed by the Taub Center for Social Policy Studies, based on a sample of more than 130 countries, found that military service added more than three years to male life expectancy.  This conclusion is reinforced in data showing the differences in the average life expectancy of men and women in Israel and in the OECD.  In the 34 OECD countries, women live an average of 5.5 years longer than men, but in Israel, where military service is shorter and in most cases less physically demanding for women, and where religious women do not serve, women’s life expectancy is only three years longer.

Israel’s better-than-predicted life expectancy has been consistent for at least 20 years and has been increasing over time: the gap between predicted life expectancy and actual life expectancy for Israeli men was 3.8 years in 1990 and 5.85 years in 2000.

A second set of variables added is related to religiosity.  Many studies point to the positive relationship between religiosity and health, in both developed and developing countries.  There are no data on average levels of religiosity in many countries, so the level was judged using proxy variables that looked at the strength of the relationship between religion and state worldwide (2007 to 2012).  When these were inserted into the model, Israel’s deviation from its predicted life expectancy fell a further 1.8 years to 3.65 excess years, placing it in 4th place in the OECD ranking and 20th place among 133 countries.

According to World Health Organization (WHO) data from 2013, the 81-year life expectancy ranks Israel in second place in the world out of 170 countries, alongside Iceland, Singapore and Switzerland, with only San Marino ranking higher.  (Various 07.12)

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7.3  Knesset Bans Miniskirts

Israel’s Knesset has issued a new dress code, banning visitors and employees from wearing miniskirts and short dresses.  The rules were based on an earlier version and were “intended to clarify, as much as possible, the ambiguity that existed in the past — while expressing sensitivity and attempting not to hurt the feelings of our visitors and guests, a Knesset spokesman said.  Other banned articles of clothing include tank tops, cropped tops, shorts and three-quarter length pants, ripped pants, shirts with political slogans, flip flops and open back clogs.  The rules apply to those over the age of 14.  The main difference from previous rules is the additional regulations regarding miniskirts.  Guards have been instructed to watch out for dress code violations.  (Various 01.12)

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7.4  Health Ministry Says Gay Men & Ethiopian-Born Israelis Can Donate Blood

The controversial policy that prevented Ethiopian-born Israelis, gay men, and older Israelis from donating blood will be abolished, the Health Ministry announced on 8 December.  The decision comes 18 months after a committee of experts, led by the head of Haifa University’s School of Public Health, Professor Manfred Green, said the restrictions were no longer necessary thanks to new blood-testing technology and because leading health public health agencies in Europe and the United States, including the FDA, have revised their policies on similar groups.  Israel will soon have an upgraded ability to test for hepatitis B, hepatitis C and HIV, which will shorten the window period for detecting infections and thus reduce the risk posed by blood donations from the general public and from those particular groups.

Under the previous policy, blood donations from Ethiopian Israelis were limited to those who were born in Israel.  Under the new rules, Ethiopian-born Israelis will be allowed to donate provided that they have not been in the African country – or in any other country with a relatively high prevalence of HIV, hepatitis B, hepatitis C – for 12 consecutive months.  This condition is already in place for all other population groups in Israel.  Under the new rules, gay men will be allowed to donate blood as long as they have not had sexual relations with other men in the previous 12 months.  This recommendation is based on the guidelines issued by the FDA.  The Health Ministry will also allow Israelis who are 65 and older to donate blood under the same rules that apply to other population groups.  (Various 08.12)

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7.5  Egypt’s Population Increases by 1 Million in 6 Months

On 24 November, Egypt’s population reached 92 million people, CAPMAS said, an increase by 1 million people in just six months.  In June, CAPMAS announced that Egypt’s population reached 91 million, also a 1 million increase since December 2015.  Egypt’s population is growing at a rate five times higher than that of developed countries and twice as high as developing countries, CAPMAS said in June.  In October 2014, then-Prime-Minister Ibrahim Mehleb launched the 2015 – 2030 National Population Strategy, devised to tackle the issue of overpopulation.  Egypt has also seen a 23.7% increase in its population in the period between 2006 and early 2016, according to CAPMAS.  (CAPMAS 23.11)

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7.6  Morocco is Second-Most Prolific Reader in Arab League

On average, Moroccans read 27 books a year, spending 57 hours consuming knowledge from a variety of subject areas, according to the 2016 Arab Reading Index, which included all 22 members of the Arab League in its region-wide survey.  Of the 148,294 residents of the Arab World who responded, 60,680 were students completing various stages of their education, 87,614 others came from different professional and social backgrounds.

Egyptians logged 63.85 hours of reading time annually – highest number of hours of all Arab countries included in the United Nations Development Program sponsored study.  The country’s residents completed 27 books a year – just like Moroccans.  Lebanese respondents said they read for 59 hours a year, completing 29 books in the process – the highest number of all countries surveyed.  Somali respondents reported the weakest reading habits, with citizens diving into a book for just 7.78 hours every year.  Moroccan readers also said they diversified their reading, allocating equal amounts of time to texts related to their profession and books chosen out of sheer interest.  (MWN 06.12)

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8.1  Biological Industries’ NutriStem hPSC XF Medium awarded FDA Drug Master File Acceptance

Biological Industries announced that the US FDA has accepted the submission for its Drug Master File (DMF) for the company’s NutriStem hPSC XF Medium, a commercially defined, xeno-free, serum-free media, which is designed to support the growth of human embryonic stem cells (hESCs) and induced pluripotent stem cells (iPSCs).  A Drug Master File (DMF) is a confidential detailed document submitted to the FDA by a manufacturer that includes the Chemistry, Manufacturing and Controls (CMC) information about their product.  An active DMF enables clinical investigators to cross-reference the DMF in their own sponsored IND-application.  NutriStem hPSC XF Medium was developed and launched in 2009, and has been increasingly adopted by leading academic and commercial research labs worldwide for use in the culture of pluripotent stem cells.

Kibbutz Beit HaEmek’s Biological Industries is one of the world’s leading and trusted suppliers to the life sciences industry, with over 30 years’ experience in cell culture media development and manufacturing.  BI’s products range from classical cell culture media to supplements and reagents for stem cell research and potential cell therapy applications to serum-free media and many other products for animal cell culture and molecular biology.  (BI 30.11)

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8.2  LDS Wins Medical Cannabis Marketing Deal

Jerusalem’s LDS Biotech has signed an agreement in which its technology will be used as the basis for a medical cannabis product to be marketed in the US.  Ananda, the US distributor, estimates that its annual revenue will exceed $10 million, an (undisclosed) percentage of which will be given to LDS.  LDS’s platform makes it possible to extract the CBD component, an active ingredient with no psychoactive effect, from the cannabis plant, and to produce from that ingredient a drug that can be taken orally.  The LDS system carries the wrapped and protected ingredient into the intestine, where it attaches itself to the intestinal walls and decomposes the ingredient into the bloodstream.

CBD is an ingredient in the cannabis plant recognized as significant in the treatment of pain and inflammation.  This ingredient is also likely to prove relevant in treatment of autism and epilepsy, where it is especially important to prevent the psychoactive effect of cannabis.  The body’s response time to the ingredient with LDS’s technology is 30 minutes, compared with four hours with other cannabis compounds.  Ananda has already launched and sold the products in all US states in which marketing medical cannabis is legal. The product is sold over-the-counter in liquid form, a gel for serving with a teaspoon, or drops to be administered orally.

LDS was commercialized by Yissum Technology Transfer Company of the Hebrew University of Jerusalem.  LDS’s technology has already been used by a number of major pharmaceutical firms to develop orally administered drugs or to improve delivery for drugs unrelated to cannabis.  The company has posted $2.5 million in revenue so far from these agreements, and the products are in clinical or pre-clinical trials.  If the trials are successful, the agreements will yield LDS substantial additional revenue.  (Globes 04.12)

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8.3  Successful First Transplantation of Second-Generation Injectable Live Human Bone Graft

Bonus BioGroup announced the successful transplant for the first patient in the Company’s second clinical trial for the repair of maxillofacial bone deficiencies.  The transplantation was performed a fortnight following collection of the patient’s fat sample, and several weeks following the enrolment of the first three subjects.  The entire procedure, which lasted 40 minutes from local anesthesia through to the end of the transplantation, was performed smoothly, without complications.

The injectable bone graft is manufactured in the Company’s manufacturing facility as live autologous human bone tissue; both comprise of various cell types, and do not consist of non-living bone granules.  Bonus BioGroup estimates that its live human bone grafts demonstrate qualities superior to any other non-living bone graft. Since the manufactured grafts originate from and return to the same patients, the Company believes that they will be fully integrated and immunologically tolerated by patients.  Upon introduction of Bonus BioGroup’s grafts into patients’ bodies, the biological identity of the transplants is expected to be recognized by the patients’ immune system.  Thus the common immunological response and rejection typical of foreign donor tissue transplantation are anticipated to be prevented.

Bonus BioGroup estimates that the current clinical trial may be carried out over a time period shorter than that of its first clinical trial.  The approval by the Ministry of Health to carry out the Company’s second clinical trial for the repair of jawbone deficiencies may facilitate future approvals by the Israeli Ministry of Health of the Company’s pipeline clinical trials, including a study aimed at repairing orthopedic critical gaps in the extremities, with the second generation injectable bone graft.  (Bonus BioGroup 13.12)

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8.4  Gordian Surgical Raises $2.25 Million and Receives FDA Clearance for TroClose1200\

Braun Melsungen, the Trendlines Group and Gordian Surgical jointly announced B. Braun’s lead position in Gordian’s recent financing round of $2.25 million; Gordian Surgical is a medical portfolio company of The Trendlines Group. German medical device company, B. Braun Melsungen led the investment round with €1 million, with the remainder from current shareholders and three VC funds, two of which are Chinese funds. Funds raised in this round will be used to start marketing and distribution in U.S. and European markets.

Concurrently, with the successful fund raising round, Gordian announced it received FDA regulatory clearance for its TroClose1200, an innovative trocar with integrated closure system for the suturing of abdominal wall incisions during laparoscopic surgical procedures.  The FDA approval follows Gordian’s receipt of CE Mark certification as announced on 6 September 2016.  Gordian Surgical developed TroClose1200 to give surgeons “two-in-one” functionality: the device acts both as a trocar, through which surgical instruments enter the abdomen, and a device to close internal incisions made during surgery.  The sutures are inserted into the tissue at the beginning of the procedure and anchored to remain in place throughout the operation, allowing incisions to be closed easily and quickly upon removal of the device.

Trendlines is an innovation commercialization company that invents, discovers, invests in, and incubates innovation-based medical and agricultural technologies to fulfill its mission to improve the human condition.  As intensely hands-on investors, Trendlines is involved in all aspects of its portfolio companies from technology development to business building.  (Gordian 07.12)

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8.5  Neurim’s Prolonged-Release Melatonin to be Marketed by Kuhnil in South Korea

Neurim Pharmaceuticals signed a license agreement with Kuhnil Pharmaceutical.  The agreement grants Kuhnil exclusive marketing rights to market Neurim’s new Rx PedPRM in South Korea.  This is Neurim’s second marketing agreement for the new drug, following November’s announcement on a signed agreement with Aspen Australia to market PedPRM in Australia and New Zealand.  Neurim’s age-appropriate drug is targeted to treat sleep disorders in children with autism spectrum disorders (ASD) and neurogenetic diseases. It is expected to be the first sleep drug approved for children.  Kuhnil has been successfully marketing Neurim’s Circadin, prolonged-release melatonin 2mg indicated to treat primary insomnia in the elderly, since 2014 in South Korea.

Tel Aviv’s Neurim Pharmaceuticals is a neuroscience drug discovery and development company. Its first approved drug Circadin is commercially available in Europe, Asia-Pacific, Latin America, Africa and the Middle East.  The company has a strong and innovative product pipeline intended for insomnia, Alzheimer’s disease, dementia, glaucoma and pain.  (Neurim Pharmaceuticals 06.12)

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9.1  VocalZoom Transforms Voiceprint for Biometrics Authentication Using Optical Sensors

VocalZoom announced voice biometrics technology using its optical sensor that performs all voiceprint acquisition and embedded template matching, eliminates the microphones and noise reduction software of traditional acoustic solutions, and takes voiceprint verification out of an external processor or cloud-based server to the security of an embedded, match-in-sensor architecture.  VocalZoom’s patented VoiceMatch-in-Sensor technology for embedded speaker verification products acquires data from users during the biometric enrollment process as their facial skin vibrates during speech.  The VocalZoom optical HMC sensor converts this data into a voiceprint associated only with the person who was actually speaking, and stores it inside the sensor.  This enables the sensor to meet FIDO compliance requirements, enabling easy plug-and-play installation as compared to existing fingerprint or other biometric sensors that don’t offer secure embedded biometric acquisition and template matching.  Each time users authenticate, a voiceprint is again acquired in real time, again optically confirmed to be from a living person rather than a recording, and then securely matched inside the sensor solution against information in its embedded template to verify the user and complete the authentication process.

Yokneam Illit’s VocalZoom supplies Human-to-Machine Communication (HMC) sensors for delivering a, natural, personalized and secure voice-controlled user experience in today’s increasingly mobile and interconnected world.  The sensors enable accurate and reliable voice control and biometrics authentication in any environment, regardless of noise.  Applications including mobile secure payments, headsets and wearables, mobile phones, access control, smart home solutions and hands-free automotive voice control.  (VocalZoom 06.12)

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9.2  Mellanox Stateful Packet Processes at 400Gb/s with the NPS-400 Network Processor

Mellanox Technologies announced the availability of Deep Packet Inspection and Stateful Packet Processing software libraries showing unprecedented performance on Mellanox’s newest NPS-400 Network Processor.  These software libraries, coupled with the hardware acceleration capabilities of the NPS-400, enable Deep Packet Inspection processing for application recognition at record breaking processing rates of up to 400Gb/s, in conjunction with handling of 100 million flows with an average packet size of 400 bytes.  These processing capabilities enable Mellanox customers to build world-leading Intrusion Detection Systems and Intrusion Prevention Systems and to accelerate processing capabilities for switch routers.  The Stateful Packet Processing and the Deep Packet Inspection libraries enable developers to delve deeper into the network packets for better understanding of the network flows.  This brings to IT managers the ability to enhance security and prevent malicious access to their data centers.  It also allows cost-effective load balancing, network monitoring or any other appliances based on network flow recognition.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage.  Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability.  Mellanox offers a choice of fast interconnect products: adapters, switches, software and silicon that accelerate application runtime and maximize business results for a wide range of markets including high performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services.  (Mellanox Technologies 06.12)

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9.3  Deloitte Ranks INNITEL 9th Fastest Growing Israeli Technology Company

Deloitte has crowned INNITEL as Israel’s 9th fastest growing technology company, following their revenue growth of 737% over the last three years.  INNITEL’s placement on the Deloitte Technology Fast 50 comes days after the company was selected to participate in the London Stock Exchange’s Elite Growth program.  INNITEL technology enables small to medium sized businesses to interact with potential clients in ways that were previously only available to large enterprise level companies.  INNITEL clients in 25 countries have reported huge growth from day one, because the software enables them to minimize dial-time and maximize meaningful client interactions.

The Deloitte Technology Fast 50, one of Israel’s foremost technology award programs, ranks the country’s fastest-growing technology companies based on their growth percentage over the last four years.  The Fast 50 ranking honors business growth and technological innovation as well as Israeli entrepreneurial spirit. The “Technology Fast 50” is part of a national and international program run by Deloitte.

INNITEL is a self-funded tech Jerusalem-based startup focused on Contact Center software. INNITEL equips businesses with a full ecosystem of cloud-based software that consolidate the business process and strengthens business intelligence efforts. INNITEL communication products are built on its own proprietary communications infrastructure that provides a multi-channel integrated offering that is scalable and cost effective.  (INNITEL 06.12)

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9.4  Altair First to Complete Interoperability Testing for Lightweight M2M

Altair Semiconductor announced that its ALT1160 LTE CAT-1 Chipset has successfully completed interoperability testing with the Open Mobile Alliance’s Lightweight M2M (LwM2M) protocol.  The test took place at the recent OMA TestFest, where vendors had the opportunity to test the stability of their LwM2M implementations in a multi-vendor environment, while helping to ensure the quality of OMA specifications.  Altair’s LwM2M implementation provides a secure and standards-compliant device management solution to simplify the development of M2M applications.  Its intuitive API enables easy customization without the need for extensive knowledge of M2M protocols.  In addition, Altair’s highly efficient implementation offers out-of-the-box cloud support, and more than 10 years of battery life, for low-cost and low-power devices.

Hod HaSharon’s Altair Semiconductor is a leading provider of single-mode LTE chipsets.  Altair’s portfolio covers the complete spectrum of cellular 4G market needs, from supercharged video-centric applications all the way to ultra-low power, low cost IoT and M2M.  Altair has shipped millions of LTE chipsets to date, commercially deployed on the world’s most advanced LTE networks including Verizon Wireless, AT&T, Softbank and KT (Korea Telecom).  (Altair 06.12)

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9.5  Rootclaim Launches Open Analysis Platform That Surpasses Human Reasoning

Tel Aviv’s Rootclaim is a collaborative analysis platform that transforms how people understand complex issues.  Rootclaim is the first solution to combine the mathematical validity of Bayesian inference with the power of crowdsourced information.  The Rootclaim model breaks down highly complex issues into small questions that are simple enough to be answered by humans, and then uses these answers to reach mathematical conclusions.  Rootclaim allows anyone to impact an analysis by contributing evidence, rational explanations, and historical data.  Unlike polling or voting, a strong claim by one person can beat many widely supported weaker claims.  A substantial body of research has shown that the human brain is unreliable when it comes to accurately assessing complex problems.  This means the only way to navigate a sea of half-truths is to complement humanity’s fallible intuition with objective probabilistic analysis.  At a time in which the line between fact and fiction is increasingly blurred, Rootclaim cuts through the confusion and calculates the true bottom line.  (Rootclaim 06.12)

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9.6  Sol Chip Autonomous Wireless Solar Tag for Improving Precision Agriculture & Smart Irrigation

Sol Chip announced the introduction of its Sol Chip Comm autonomous, wireless, solar tag for enabling precision agriculture and smart irrigation.  The Sol Chip Comm (SCC) device is an ultra-compact, maintenance-free, solar-powered, wireless tag. SCC powers, controls and wirelessly connects a wide variety of sensors to the Cloud.  In precision agriculture and smart irrigation applications, SCC feeds real-time data readings from up to hundreds of agriculture-related sensors, including those that monitor soil moisture, soil temperature, ambient temperature, air temperature, nutrients levels and more, into a precision agriculture application server.  This essential data gathered by SCC is analyzed by a precision agriculture application in order to make data-driven adjustments for optimizing water and fertilization consumption and improving crop yields.

Sol-Chip and its new SCC device significantly lower the barrier for the adoption of precision agriculture and smart irrigation.  Based on Sol Chip’s innovative energy harvesting technology, SCC is solar-powered and designed to operate continuously for more than ten years with no maintenance requirements, removing the need to constantly replace and discard batteries.  As a wireless device, SCC eliminates the significant costs and time associated with deploying and maintaining wires to connect the deployed sensors.  SCC’s small size makes the product easy to install and move around any agriculture-related environment, while being unobtrusive and not prone to theft.  In addition, the low cost of SCC makes the deployment of wireless sensors for agriculture purposes to be financially accessible.

Haifa’s Sol Chip is an Internet of Things (IoT) systems and energy harvesting solutions provider. Sol Chip develops and manufactures maintenance-free IoT solutions based on its LightBattery Everlasting Solar Battery technology. This compact battery can supply energy for the lifetime of IoT devices with virtually no maintenance.  Sol Chip’s technology provides a disruptive platform for applications, such as home automation, smart cities, precision agriculture and many more.  (Sol Chip 06.12)

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9.7  PayPal & Israel’s Ben-Gurion University to Collaborate on R&D

Ben-Gurion University of the Negev (BGU) and PayPal, the US company that operates an online payments system, said they would partner in joint research and development in the fields of big data, machine learning and cybersecurity.  It is the first such collaboration between PayPal and an Israeli university, BGU said in a statement.  The collaboration with BGU will further enable PayPal to use machine learning and big data for cybersecurity, fraud detection and risk management that will enable its 192 million customers worldwide to make safer payment transactions.

PayPal has been intensifying its activities in Israel.  The US firm bought Israel’s Fraud Sciences in 2008 and has established a global risk and data sciences R&D center in Tel Aviv.  After PayPal acquired Israeli startup CyActive in 2015, which was part of BGU’s incubator program, the company set up a global security products center in Beersheba’s Advanced Technologies Park, adjacent to BGU.  (NoCamels 07.12)

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9.8  Transmit Security Wins FT Future of FinTech Innovation Award

Transmit Security has won the first annual Financial Times (FT) Future of Fintech Innovation Award for its ability to create lasting change in the financial services sector on a global scale.  The company was selected from more than 200 entrants spanning the fintech sector and the world.  Transmit Security will formally announce its new approach to omni-channel authentication in 2017.

Transmit Security allows organizations to implement frictionless omni-channel authentication and authorization without making any modifications to their applications. Transmit Security’s founders created Trusteer (now IBM Security) and Imperva (IMPV on NYSE).  The company’s research and development team is made up of former members of Unit 8200, the elite Israeli Intelligence Corps.  Transmit Security is self-funded, and based in Boston and Tel Aviv.  (Transmit Security 07.12)

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9.9  Giraffic AVA Unlocks Seamless Virtual Reality Streaming for Apps and Mobile Devices

Giraffic announced an extension of its AVA technology that vastly improves the quality and stability of streaming virtual reality (VR) content.  This tailored acceleration enhances VR streams, even over less than ideal Wi-Fi or cellular connections, allowing manufacturers and immersive content service providers and developers to provide flawless high-quality, untethered VR experiences, in addition to Giraffic AVA video-on-demand (VOD) and live-streaming offerings.

Giraffic AVA is a software solution that empowers content service providers, streaming platforms developers and CE device manufacturers to overcome unstable cellular connections, Wi-Fi and network congestion challenges.  The technology improves network throughput and adaptive bitrate (ABR) playback for video streaming requests up to 200% and reduces buffering pauses by up to 80%, to enable higher quality uninterrupted viewing experience without network or server-side integration.  The updated AVA offers customized multi-streaming capabilities to support VR and 360 degree video and can work across split streams for each angle of a video.  In addition, AVA customizes the number of streams open during the acceleration process to optimize consumer experience.

Tel Aviv’s Giraffic is the inventor of Adaptive Video Acceleration (AVA) – a patented client-side video experience technology that complements the existing video delivery ecosystem.  AVA network throughput optimization and video playback shaping technology enables consumer electronic (CE) devices and Content Providers’ Apps to deliver High Definition video, 4K and VR, without re-buffering pauses or streaming resolution reduction.  With 10’s of millions of devices in over 150 countries, Giraffic ground breaking AVA technology has become the de-facto standard on Smart TVs – in 1 of 3 Smart TVs that were shipped in 2015, and validated and adopted by the world’s leading manufacturers, such as LG and Samsung.  (Giraffic 07.12)

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9.10  Stratoscale Enables Enterprises’ Cloud Adoption with an On-Prem AWS Region

Stratoscale announced the availability of Stratoscale Symphony 3, the latest generation of Stratoscale’s comprehensive cloud infrastructure software.  Stratoscale Symphony 3 expands its holistic software-defined infrastructure solution and enables enterprises to transition toward a hybrid and AWS-based strategy, benefiting from the advantages of the public cloud within their data center.  Stratoscale Symphony 3 newly introduced cloud services are fueled by the business demand for agility, flexibility, mobility and short time-to-market and offer a superb cloud experience with an intuitive self-service interface.  Symphony transforms any x86 server into elastic, usable and consumable cloud capacity that is AWS compatible.  Deployed in minutes, Symphony enables IT organizations to align with an AWS cloud first strategy and offers the sought-after flexibility and simplicity in managing all workloads and resources via a single pane of glass, decoupled from any hardware vendor constraints.

Herzliya’s Stratoscale is the cloud infrastructure company, providing comprehensive cloud infrastructure software solutions for enterprise IT, development teams and service providers.  The company’s comprehensive cloud data center software, Stratoscale Symphony, can be deployed in minutes on commodity x86 servers, providing an Amazon Web Services (AWS) experience with the ability to augment aging VMware infrastructure.  (Stratoscale 12.12)

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9.11  Mellanox 25G/100G Ethernet Solutions Enables Artificial Intelligence Speech Recognition

Mellanox Technologies announced that one of China’s leading intelligent speech and language technologies’ companies, iFLYTEK, has chosen Mellanox’s end-to-end 25G and 100G Ethernet solutions based on ConnectX adapters and Spectrum switches for their next generation machine learning center.  The partnership between Mellanox and iFLYTEK will enable iFLYTEK to achieve a high speech recognition rate of 97%.  iFLYTEK is a nationally renowned software enterprise based in China and dedicated to the research of intelligent speech and language technologies, provision of speech information services, and integration of E-government systems.  To support a diverse number and growing type of applications, iFLYTEK requires a high performance and efficient data center network solution that needs to be both compatible with the company’s current infrastructure and scalable for future computing and storage requirements.

Mellanox’s Open Ethernet 25G and 100G Spectrum switches enable iFLYTEK to build a high-performance architecture that is flexible, scalable and easily managed.  The iFLYTEK machine learning systems can handle massive concurrent traffic and is capable of supporting unpredictable future business growth.  Mellanox’s intelligent networking solutions provides iFLYTEK with automatic networking provision and management, convergence network infrastructure with Quality of Service and RDMA over Ethernet (RoCE). In addition, the solution features scalability via a hyper-scale topology that offers full layer 3 BGP as routing and 8/16 ECMP.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end Ethernet and InfiniBand intelligent interconnect solutions and services for servers, storage and hyper-converged infrastructure.  Mellanox intelligent interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance.  (Mellanox 12.12)

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9.12  L7 Defense & Check Point Software Partner to Protect Against Application DDoS Attacks

L7 Defense has partnered with Check Point Software Technologies to protect customers from sophisticated denial of service (DDoS) attacks which mainly target the application Layer (“Layer 7”).  The joint solution mitigates DDoS attacks in today’s complex, fast-paced, advanced threat landscape.  Like the natural immune system, L7 Defense’s AMMUNE technology protects enterprises from yet unfamiliar DDoS attacks, automatically and quickly.  The process of attack discovery is very precise – attacking patterns are extracted from the first sign of attack and are used for immediate attack mitigation.  AMMUNE overcomes the major obstacle of “false alarming” of attacks, which are frequently generated by existing solutions in the noisy Data Center environment.

AMMUNE is enterprise-ready and integrates seamlessly with Check Point Next-Generation Threat Prevention appliances or Web Services.  Upon installation, AMMUNE automatically adapts itself to the protected applications’ interface.  It then continuously updates its baseline to reflect any application change.  To face the fast growth of traffic at the initiation of a DDoS attack, the elastic AMMUNE command and control system (CCS) flexibly loads more AMMUNE server instances which are later removed as the attack terminated.

Beer Sheva’s L7 Defense has developed a “Natural intelligence” (NI) platform named Ammune, which uses an innovative approach to identify and stop SaaS and on-premises Distributed Denial of Service (DDoS) attacks, in real time.  The software-based technology is fully automated, built to scale and utilizes machine learning components, not requiring any prior knowledge of the attack method or the protected system.  (L7 Defense 12.12)

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9.13  Deloitte Ranks Adgorithms 7th Fastest Growing Company in Israel

Adgorithms, creators of Albert, the world’s first artificial intelligence marketing platform, was named one of the 50 fastest-growing technology companies in Israel.  Adgorithms has a revenue growth rate of 1102%.  The Deloitte Israel annual Technology Fast 50 program recognizes and honors the 50 fastest growing technology companies in Israel (private and publicly-held), based on percentage revenue growth over a four-year period. To qualify, companies must operate in any area of technology and own proprietary technology.  Adgorithms’ 1,102% revenue growth is attributed to its first-to-market status in the marketing industry, heavy commitment to R&D, and the successful adoption of its fully autonomous artificial intelligence platform Albert by global brands, including Harley-Davidson, EVISU, and  Albert fills a great need for digital marketers who are overwhelmed by the number of channels, devices and formats they must wade through to try to keep up with the changing consumer landscape.  As a result, the demand for Adgorithms’ offering has accelerated its year-over-year growth.

Founded in 2010, Tel Aviv’s Adgorithms is the maker of “Albert”, the first-ever autonomous marketing platform.  Albert serves as a highly intelligent and sophisticated member of brands’ marketing teams that autonomously performs many of the manual, time-consuming tasks that comprise modern digital advertising and marketing campaigns.  Albert also offers proactive, ongoing insights and recommendations on information he has learned and uncovered along his journey.  (Adgorithms 13.12)

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10.1  Israel’s Trade Deficit Widens by 600%

The Central Bureau of Statistics announced on 13 December that Israel experienced a 15.5% drop in high-tech exports and a 4.1% slide in imports of consumer goods in September-November this year, compared with the corresponding period last year.  Israel’s trade deficit in November was NIS 2.7 billion.  The deficit in trade of goods (excluding ships, airplanes, diamonds, and energy materials) since the beginning of the year totals NIS 28.9 billion, compared with a NIS 4.5 billion deficit in the corresponding period last year.

According to the Central Bureau of Statistics, trade in goods in November was affected by changes in the exchange rate of the shekel against the currencies in which import and export deals are conducted.  The shekel fell 0.6% against the dollar and 1.4% against the pound sterling last month.  On the other hand, the shekel rose 1.4% against the euro, 3.4% against the Japanese yen, and 0.6% against the Swiss franc.  (CBS 13.12)

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10.2  Number of Israelis Traveling Abroad Reaches New Record in 2016

The Central Bureau of Statistics announced that some 6.3 million Israelis, a record number, traveled abroad in 2016, mostly via Ben-Gurion International Airport, but also to the Sinai Peninsula and through the land crossings into Jordan and Egypt.  The vast majority of travelers (85%) journeyed abroad once during the year, with 15% going twice and some several times. The numbers for 2016 comprise a 15% rise compared with the same period in 2015, although the country’s total population has only increased by 2%.

From January to November 2016, some 5.9 million Israelis flew out of the country, 15% more than in the same 11 month period in 2015.  The month of November, a low season between the high-traffic summer months and the High Holidays and Hanukkah, which this year falls in late December, saw only 389,000 Israelis travel abroad and was the weakest month of the year for outgoing tourism.  Approximately 5 million Israelis traveled abroad in the months from June to November.

According to assessments, by the end of 2016, some 7 million Israelis out of the country’s population of 8.6 million will have traveled overseas, an all-time high and a significant jump compared to 2015, which saw 5.88 million Israelis traveling abroad.  The rise in the number of Israelis traveling abroad can be attributed to the low dollar exchange rate, which is currently at around NIS 3.8 and a weak euro, which has dropped to an unprecedented low of about NIS 4.  Moreover, 2016 saw airfare prices drop, among other reasons over competition in the low-cost flight sector.  (CBS 11.12)

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10.3  Latet Claims 29% of Israelis Live in Poverty

According to the alternative poverty report published by the non-government organization Latet, every third Israeli child and every fourth adult live in poverty.  This report was issued in anticipation of the official data due to be published by the National Insurance Institute.  The data indicate that 2.4 million Israelis, 29% of the country’s population, are poor.  More than one million of them are children, 35% of citizens under 18.  Some 1.4 million are adults, 25% of Israeli adults.  Furthermore, according to the report, 36% of Israeli single mothers live in poverty and deprivation.  The report’s figures are based on the Multidimensional Poverty Index, which examines the level of deprivation in relations to the vital needs for a basic standard of life.

According to the report’s figures, 63.3% of citizens supported by aid organizations live in poverty despite being employed or not of working age.  This figure jumped 21.5% from last year.  It also indicates that more than half (50.6%) of people receiving aid belonged to the middle class in the past, before falling into poverty – a 23.7% jump from 2015.

The percentage of people receiving support who are in debt is almost twice as high as the general population – 65.7%.  More than half (54.2%) of the children receiving aid do not have basic school supplies and textbooks; this figure rose 24.3% from last year.  More than two thirds of people receiving aid (70.7%) said that they gave up on repairing severe defects in their homes, in comparison with 35.2% of the general population.  (Globes 12.12)

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10.4  Inbound Tourism Up 38% in November Hitting Record High

A record 287,900 tourists visited Israel in November, a rise of 38% from the same month in 2015 and 31% from November 2014, the Tourism Ministry said on 8 December.  Revenue from incoming tourism in November generated more than NIS 1.5 billion ($393 million), about the same as the ministry’s annual budget for promoting inbound tourism.  This is NIS 400 million ($104 million) more than the revenue generated by inbound tourism in November 2014.

Of the 287,900 tourists who entered Israel in November, the vast majority, 254,000, arrived by air.  The remaining tourists arrived overland, with 28,000 coming in from Jordan and 6,000 from Egypt.  About 20,000 of November’s tourists did not stay overnight, a drop of 20% from November 2015 and November 2014.  Some 2.6 million tourists entered Israel between January and November 2016, a 2% increase over the same period last year.  (MoT 07.12)

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11.1  JORDAN:  Jordan-Israel Relations: Normalization in the Shadow of Political Deadlock

Oded Eran wrote in INSS Insight on 1 December that progress on implementing infrastructure projects for water and energy between Israel and Jordan indicates the positive potential inherent in separating economic and infrastructure progress in trilateral Jordan-Israel-Palestinian relations from progress on a political solution to the Israeli-Palestinian conflict.  This statement is not meant to detract from the urgent necessity of reaching at least a gradual solution to the conflict based on the idea of two states for two nations.  Rather, it indicates a reality of shortages of energy resources, drinking water, ports; the need to prevent pollution of crowded population centers; and the irrationality of preventing solutions to these issues if they are made conditional upon comprehensively solving all of the core issues of the Israeli-Palestinian conflict.  The water and natural gas agreements with Jordan, as well as the electricity agreement signed between Israel and the Palestinians (September 2016), prove that the sides can reach understandings and perhaps full agreements in many areas, and these can create a positive environment, even if they are not substitutes for political agreements.

On 26 September 2016, Noble Energy announced that it signed a contract with the Jordan Electric Power Company.  Noble Energy is the American partner in the consortium that holds the rights to produce natural gas in the Leviathan field, which is within Israel’s exclusive economic zone.  The supply of 3 billion cubic meters of gas per year will begin in late 2019 and continue for 15 years.  The deal is worth $10 billion, with the price of a cubic meter linked to the price of a barrel of Brent crude oil and a fixed price floor.  This deal is of critical importance for Jordan, which encountered problems when its gas supply from Egypt was cut off due both to the bombing of the pipeline in the Sinai Peninsula by the Islamic State, and to Egypt’s difficulties to abide by its agreements to sell gas to Jordan (and to Israel).  The deal is also of critical importance to the consortium, which includes three Israeli companies along with the American company, because contracts for future sales enable it to raise the financial resources to develop the Leviathan gas field.  Indeed, on 27 November 2016, the consortium’s partners announced that they had signed letters of commitment with two large international banks that committed to provide the consortium with $1.5 – 1.75 billion to fund the first phase of Leviathan development.

Since the announcement of the supply agreement, Jordan has seen ongoing demonstrations and a public campaign against the deal.  As part of the protest, for example, Jordan’s citizens were asked to refrain from turning on lights in their homes during certain hours, as specified in the media and social networks.

On 24 November 2016, the Jordanian government, headed by Hani Mulki, won a vote of confidence in parliament.  Jordanian parliamentarians of Palestinian origin slammed the government and called for the removal of the Israeli ambassador in Amman and for freezing diplomatic relations with Israel.  Yet while evidence that the peace agreement with Israel signed in 1994 has only slightly changed Jordan’s internal political reality, these are little more than a nuisance and not a real challenge for the regime.  Indeed, in years past, such an occurrence would only receive secondary headlines in the Jordanian press, as the parliament was meant to serve as a rubber stamp for the royal house.  Nonetheless, even the modest expression of the Arab Spring in Jordan prompted the King to make changes to the constitution.  While not radical changes, they brought Jordan closer to a true democratic process.  Moreover, these changes allowed the beginnings of political parties with a national agenda, and not just a local-tribal platform.  Muslim Brotherhood members, after committing a strategic mistake in boycotting the first elections after the constitution was changed, understood the situation.  Thus even though their party was disqualified by the authorities, they joined with Christian and other candidates and in the last elections succeeded in creating a significant bloc in parliament.

After the Prime Minister presented his government’s platform and requested the confidence of the parliament, a long debate among the 130 legislators ensued for three days (22-24 November) and many of them requested to speak.  Even though most of the government’s platform dealt with economic issues and internal reforms, some of the speakers saw fit to criticize the government for the Jordan Electric Power Company’s deal with Noble Energy to acquire natural gas from the Israeli gas field.  A senior Member of Parliament, Wafa Bani Mustafa, a lawyer by training, demanded the agreement be cancelled, claiming that it contradicts article 33 of the Jordanian constitution.  Even though it gives the King the authority to sign treaties, it says that “Treaties and agreements that involve expenses to the national treasury or that impact the individual or public rights of Jordanian citizens will not go into effect unless approved by parliament.”  Member of Parliament Dima Tahboub of Amman claimed that the price of gas from Israel is higher than the price in international markets.  During the parliamentary debate, a meeting of gas experts that included former Minister Ibrahim Badran and Member of Parliament Jammal Gammoh took place in Amman.  During the event, initiated by the Jordanian chapter of the BDS movement, all of the speakers came out against the deal with the “Zionist entity,” arguing that one of every three dollars paid by Jordanian citizens will go to the Israeli treasury, and that the Jordan’s purchase far exceeds its needs.  Bardan even claimed that most of agreement’s clauses are secret.  For his part, MP Gammoh, claimed that the goal of the agreement is to strengthen normalization with Israel, and that the majority of his colleagues in parliament oppose the deal.  According to him, he asked Qatar’s ambassador in Amman why his country is not helping to supply gas to Jordan, and the ambassador answered that the Jordanian government did not request such assistance.

In responding to the members of parliament at the end of the debate, Prime Minister Mulki hinted that in fact Jordan does not have good alternatives to the gas to be supplied by Noble Energy (he refrained from mentioning Israel).  According to Mulki, Jordan is in talks with Iraq, Algeria, Egypt and the Palestinian Authority, but he also noted the security issue in Iraq, which would delay the provision of gas by pipeline from Basra in southern Iraq to Aqaba in southern Jordan.  Mulki added that Qatar made no offer that could compete with the price set in the agreement with the American company, and emphasized that the contract between Jordan Electric Power and the American company would save $300 million a year throughout the supply period, hinting that the price agreed upon would be lower than the price of natural gas in international markets.  At the end of the debate, the government received the confidence of 84 members of parliament (the constitution requires 66), while 40 voted against.

Before the ink had dried on the parliament’s decision, the Jordanian Ministry of Water and Irrigation announced (27 November) that five groups of international companies had advanced to the next stage in the process of choosing who carry out the first phase of the project to transfer water from the Red Sea to the Dead Sea.  The name is a bit misleading, since the first phase is to construct a facility in Aqaba for desalinating 80 – 100 million cubic meters of water.  The announcement also does not mention an important detail, which is that Jordan, Israel and the Palestinian Authority signed an agreement whereby Israel will receive almost half of the water desalinated in Aqaba for use in the Eilat area, provide a similar amount to Jordanians in the north, and increase the amount of water provided to Palestinians.  The execution of the project’s first phase is scheduled to begin in the first quarter of 2018 and end in the last quarter of 2020.  The project’s other objectives are to be implemented at a later stage; these include transferring the brine separated from the desalinated water and additional water from the Red Sea, to the Dead Sea, in order to preserve it and to produce electricity.  Thus, according to the Jordanian announcement, at this stage full funding for the project has not yet been achieved, and aside from the American commitment of $100 million (out of a total that by conservative estimates will reach $500 million) there are no other commitments.  In addition, while there are no disagreements between experts on the rationale for desalinating water in the Aqaba-Eilat area and the water exchange agreement between Israel and Jordan, many doubt whether transferring water from the Red Sea is the cheapest and most efficient way to preserve the Dead Sea.

At any rate, progress on implementing these two infrastructure projects for water and energy between Israel and Jordan indicates the positive potential inherent in separating economic and infrastructure progress in trilateral Jordan-Israel-Palestinian relations from progress on a political solution to the Israeli-Palestinian conflict.  This statement is not meant to detract from the urgent necessity of reaching at least a gradual solution to the conflict based on the idea of two states for two nations.  Rather, it indicates a reality of shortages of energy resources, drinking water, ports; the need to prevent pollution of crowded population centers and the irrationality of preventing solutions to these issues if they are made conditional upon comprehensively solving all of the core issues of the Israeli-Palestinian conflict.  The water and natural gas agreements with Jordan, as well as the electricity agreement signed between Israel and the Palestinians (September 2016), prove that the sides can reach understandings and perhaps full agreements in many areas, and these can create a positive environment, even if they are not substitutes for political agreements.  The Israeli side presumably “subsidized” and lowered the costs for the other side in the agreements, whether Jordanian or Palestinian.  This is worthy subsidy, since in this way Israel contributes to the stability of its local geostrategic environment.  (INSS 01.12)

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11.2  JORDAN:  How Jordan Survives, Part 2

Dr. Paul Rivlin explains in the Moshe Dayan Center how the Jordanian regime has remained in power despite the challenges it has faced in recent years.

Jordan suffers chronic deficits in the balance of payments and as a result has been dependent on inflows of funds from abroad.  These largely consist of remittances from Jordanian workers in the Gulf and grants and investments from Arab states in the Gulf and other countries, most notably the United States.  Foreign aid is included in net development assistance in Table 1.

In recent years, the current account of the balance of payments has deteriorated massively.  In the period 2001 to 2005, there was a surplus, averaging $127 million per year.  From 2006 to 2010, the surplus became a deficit averaging almost $2 billion annually, while from 2011 to 2015 it reached just over $3.4 billion each year.  This has occurred despite the fall in the cost of imported oil since 2014. In 2014 the cost of oil imports peaked at $5.5 billion (15.3% of GDP), and in 2015 it fell to an estimated $3.6 billion (9.4%).

Table 1:  The Balance of Payments, 2008-2015 ($ billions)

Source: World Bank and Central Bank of Jordan

Weaker economic conditions in the Gulf have reduced the amount of aid and investment, as well the volume of remittances from Jordanian workers.  Remittances alone have been equivalent to 15 – 20% of national income.  The Gulf is also the main destination for Jordanian exports and it supplies most of its energy requirements.  Additionally, Jordan receives substantial grants and foreign direct investment from the GCC.

Inflows of workers’ remittances, foreign investment, and tourism revenues have been negatively affected by regional conflict and tension.  Therefore, while the balance on trade improved because of lower oil import costs, the current account, which includes remittances and services, deteriorated.  The reduction of these inflows was an important factor in the slowdown of the economy.

The share of foreign debt in gross national income declined from 129% in 2000 to almost 62% in 2008, but has risen since then to 68.5% in 2014.  Total public debt, which includes internal and external debt, rose from 89% to 93.4%, and this poses an increasing burden on the budget because of the interest that has to be paid.

The reliance on energy imports meant that Jordan was subject to the instabilities prevailing in international energy markets.  These have included fluctuations in prices and disruptions to supply as a result of terrorist attacks on gas pipelines.  In 2000, Jordan imported 94.1% of its energy needs and by 2011 this had reached 96.1%.  As it has very limited refining capacity, it imports refined as well as crude oil.  In 2000, the cost of energy imports came to 7.5% of GDP, in 2010 it was 11.6%, and in 2012 it was 19%, falling to 16.2% in 2013.

The price and availability of fuel has been perhaps the most sensitive issue in Jordan’s delicate political economy.  In order to reduce the costs of energy to consumers, the government held prices below those that would be dictated by international costs.

Between 2010 and 2011, the cost of energy subsidies rose from 1.3% of GDP to 6.3%.  This was the result of a reversal of policies designed to reduce subsidies that had been implemented since 2005.  As a result of rising international prices for oil and shortages of gas imported from Egypt due to terrorist attacks, the government tried to hold down domestic prices.  The electricity subsidy was the difference between the National Electric Power Company’s (NEPCO) cost recovery price and the wholesale price charged to distributors.  This gap rose almost seven-fold between 2010 and 2011.  As a result of attacks on the pipeline bringing gas from Egypt, Jordan had to increase imports of fuel oil.  As a result, NEPCO’s debt nearly tripled in those years.

Energy subsidies benefited the better-off, who consumed much more energy than the poor, encouraging consumption and weakening the balance of payments.  In 2012, the government ended energy subsidies, with the exception of those on liquid petroleum gas used for cooking.  It also introduced a five-year electricity tariff adjustment program that was designed to enable the National Electricity Production Company (NEPCO) to reach full cost recovery by 2017.

This announcement resulted in a major outbreak of unrest throughout the country.  These took place as King Abdullah struggled to contain a growing and increasingly diverse opposition that threatened to undermine the tribal support that underlies the Kingdom’s stability.  Facing a $3 billion budget deficit, attributed largely to the disappearance of financial aid from the Gulf Arab states, the government tried to reduce fuel subsidies — effectively raising prices by 10% in September 2012, only to reverse itself a day later after thousands took to the streets.  The cabinet then announced a cut in subsidies that would result in increases of 14% on prices at the pump and more than 50% for gas used for cooking.

In 2014, as international prices for oil fell, reforms became easier to implement.  Energy diversification has been pursued with the opening in 2015 of a liquid national gas (LNG) terminal in Aqaba.  This resulted in a very large increase in gas-to-power and reduced reliance on diesel and fuel oil.

In 2016, NEPCO signed an agreement with Noble Energy, under which the latter will provide 40% of the Kingdom’s electricity-generating needs from the Israeli Leviathan gas field.  The contract was for 300 million cubic feet (8.5 million cubic meters) of gas per day over a 15-year term.

Jordan is one of the driest countries in the world, yet its population growth rate (both the natural rate and that including refugees) is one of the fastest.  In 2014, it had 123 cubic meters of water per person per year, less than 25% of the international water poverty line of 500 cubic meters.  Adding the 1.3 million Syrian refugees brought the volume per person down to 105 cubic meters.

The Syrian crisis increased water demand in Jordan by an average of 22%, but in areas where Syrian refugees are concentrated, water demand increased by 40%, which means that water and sanitation infrastructure must expand.  Jordan has to do today what normally takes 10 years to accomplish, along with all the associated capital investment.

The Water Authority of Jordan has faced increased demand and reduced subsidies, while water prices in Jordan remain low by international standards.  The water collection and distribution systems are inefficient with much water lost due to overdrawing from highland aquifers, resulting in lower water tables and declining water quality.  This is unsustainable.

In 2013, Jordan consumed 902 million cubic meters of water: 53% for irrigation and 42% for domestic use, and the rest for industry and other sectors.  In that year precipitation yielded 8,194 million cubic meters, 95% of which was lost to evaporation.  The volume and predictability of precipitation has been affected by climate change.  Population growth and urbanization have increased demand and led to the overexploitation of aquifers and the contamination of supplies.  Groundwater has been polluted by fertilizers in the irrigation system.

At the end of 2015, there were 689,053 registered refugees in Jordan and 24,935 asylum seekers.  They were equal to 10% of the population.  According to the census, there were a total of 1.3 million Syrians, equal to 19% of the population.

The influx of refugees has increased pressure on Jordan’s infrastructure and resources, including its fragile economy and social fabric.  The effects of the Syrian refugee crisis on the Jordanian labor market include a drop in average wage levels, lower employment opportunities, harsher working conditions, increasing child labor, and an expansion of the informal labor market.  Since 2003, there have also been large numbers of Iraqi refugees in Jordan.  The exact number is not known but estimates range between 200,000 and 450,000.

In January 2016, it was reported that rent in towns near the Syrian border had nearly tripled, making housing unaffordable for many Jordanians.  The hospitals, schools, sanitation and water systems were also under severe strain.  Some Jordanian observers questioned the wisdom of continuing to accept Syrian refugees and warned that resource, budget and demographic pressures might disrupt life in the country for at least a decade.  According to an official estimate, the direct cost of the refugee crisis to the government from the beginning of the conflict in Syria was forecast at $4.2 billion by 2016.

Given the magnitude of the economic problems that Jordan faces, preserving financial stability has been an impressive achievement.  This should, however, be seen in the wider context of the slowdown of growth and the very alarming state of the labor market.  Like elsewhere in the region, unemployment and poverty have generated frustration and encouraged extremist politics, leading to Jordanian participation in terrorism.

The economy does not provide enough employment that meets the requirements of a labor force that is relatively well educated and wants well paid jobs.  The result is emigration and unemployment among Jordanians, as well as reliance on imported labor for low skilled tasks.  Military spending is high, which is expected given the threats from abroad and the potential for unrest at home.  It is, however a burden on the budget.  The state budget and balance of payments are in deficit and the inflow of resources from abroad has been unstable.  Despite this, the regime has remained in power and Jordan has avoided the chaos that followed the outbreak of the Arab Spring elsewhere.  How has this been possible?

Jordan has received refugees in huge numbers since the 1940s.  During the Arab-Israel war of 1947-49, hundreds of thousands fled the West Bank to Jordan.  More left in 1967 when Jordan lost control of the West Bank.  In 1991, large numbers of Jordanians and Palestinians left Kuwait and other Gulf states and returned to Jordan.  From the early 1990s, refugees arrived from Iraq and their numbers increased after 2003.  The most recent and largest inflow from Syria should be seen in this context.

The ruling Hashemites and their closest supporters and associates, the East Bank Bedouin, have always been a minority in their own country.  This was even true after 1967, when Jordan lost the West Bank and part of its Palestinian population.  From the country’s foundation there was a division of labor: the Palestinians were dominant in the business community and the East Bankers formed the army, police and civil service.  Each side needed the other and the fact that they were both Sunni contributed to stability, especially after the Arab Spring when Sunni-Shiʿa tensions rose throughout the region.

Jordan has been surrounded by countries in conflict for many years.  Civil wars are raging in neighboring Iraq and Syria, and the Israeli-Palestinian conflict continues.  Although it has been severely weakened, the Islamic State and other Sunni extremist groups remain active and have staged attacks in Jordan.  Iran has reemerged following the nuclear agreement and is increasing its influence in Iraq and Syria, while it maintains its foothold in Lebanon through Hezbollah.

King Hussein, who ruled for forty seven years until his death in 1999, was very popular, not only as a symbol of unity, but also because he was seen as effective.  His son, Abdullah may not be as popular but he has managed to remain in power and maintain Jordan’s unity and security for nearly two decades.  There has been opposition both to the lack of democracy or its weakness, as well as to the corruption of those close to the court.  There has also been opposition to the king’s pro-Western policies and relations with Israel.  In recent years these have been seen through the prism of religiosity: Jordan’s pro-Western orientation has been seen as anti-Islamic.  The king has committed Jordan to the fight against the Islamic State and Islamic radicalism more generally.  He has also warned of the danger posed by Iran to Sunni states in the region.

Internally, the Muslim Brotherhood, known as the Islamic Action Front (IAF), boycotted the entire electoral process in 2010 and 2013.  Since then, it has had change in leadership and a softening of its ideology, which led to a shift in its position on the elections.  In 2015, it took part in the general elections but did not do well.  The weak performance of the Front was due to its ties to the Egyptian Muslim Brotherhood, which was removed from government after only a year in power and is now hounded by the Egyptian authorities.  Another reason was the hatred and fear of the Islamic State by many, which grew stronger in January 2015, following the brutal murder of a Jordanian pilot, who was held captive by the Islamic State in Syria.

The secret of monarchic survival and the relative stability of Jordan is the ruler’s appeal to all sections of society: he represents tradition, continuity, and stability.  The king has also managed to obtain foreign aid and foreign political support including military aid, all designed to maintain stability in Jordan.  This has eased the severe economic constraints that prevail.

The September 2016 elections for the lower house of parliament provided an indication of the political challenges facing Jordan.  The elections were held under a new law allowing multiple votes for open proportional lists.  This replaced the long standing single-vote system, which has been criticized for years by various political players, especially the Muslim Brotherhood.  The Muslim Brotherhood, which had boycotted the last two elections decided to contest the poll through its political arm, the Islamic Action Front.  In all, 1,252 candidates ran in 226 lists in the elections.

Voter turnout was very low, reflecting discontent with the system of government.  Jordan has more than four million registered voters but one million reside outside the country and cannot vote.  Voter turnout was only 37%, compared to over 50% in the 2013 elections.  A lack of confidence in the role of the legislature and its limited influence on government policies have been cited as reasons for the low turnout.  The Islamists won 15 out of the 120 seats.  Political parties won approximately 17% of the seats, almost two-thirds of which belonged to Islamist parties.  No nationalist or leftist party gained representation. Independent deputies, mainly businessmen, professionals, and tribal figures accounted for the majority of the seats.  At least 50 candidates were re-elected.

One new development was that the Maʿan (Together) list made history by winning two seats.  This was a modest indication of a growing debate in Jordan within the political elite on the need to create a civic, secular, and democratic society to confront both authoritarian and religiously driven agendas.

After the elections, the king reappointed the same unelected cabinet that had been in office, with only a few minor alterations, and has proceeded to rule by royal decree.  Unpopular decisions to buy gas from Israel, and to revise the school curriculum by removing controversial Qurʾanic verses, were issued as royal decrees.  In October 2016, these moves were followed by riots in a suburb of Amman, after a series of police raids there.

As the Muslim Brotherhood is seen by many as pro-royal, the aggrieved have found more extreme outlets. As a result, there has been support for the Islamic State despite its brutal execution of the Jordanian pilot.

Despite its Western orientation, Jordan is a deeply conservative country.  A reflection of this is the female labor force participation rate: at 13.3% in 2015, it was even lower than Saudi Arabia.  The conservative or even fundamentalist nature of significant parts of society was revealed after the September 2016 killing of a well-known journalist, Nahid Hattar.  He had been accused of insulting Islam and was shot dead on the steps of Amman’s courthouse before hearings on blasphemy charges.  There was much support for his killer on social media in Jordan. With all these conflicting pressures, King Abdullah will have to continue walking an economic and political tightrope for the foreseeable future.  (Dayan December 2016)

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11.3  IRAQ:  IMF Executive Board Completes First Review of Iraq’s Stand-By Arrangement

On 5 December, the Executive Board of the International Monetary Fund (IMF) completed the first review of Iraq’s three-year Stand-By Arrangement (SBA), which is designed to support Iraq’s economic reform program and restore fiscal balance over the medium term.  The Board also completed financing assurances review under the SBA.  The SDR 3.831 billion arrangement (about $5.34 billion at the time of approval) was approved in July, 2016.  The Board’s approval enables the disbursement of SDR 455 million (about $617.8 million).

As part of the completion of the first review, the Board also approved Iraq’s request for a waiver for the non-observance of the continuous ceiling on new external arrears, and request to modify performance criteria.  The Board also approved the request for a waiver of applicability for end of September targets of four performance criteria on the floor on gross international reserves (GIR) of the Central Bank of Iraq (CBI), the ceiling on net domestic assets (NDA) of the CBI, the ceiling on the stock of outstanding arrears to international oil companies and the ceiling on the stock of gross public debt, as well as a request for the re-phasing of the arrangement.

Iraq’s economic reform program supported by the SBA aims to address the urgent balance of payments need, bring spending in line with lower global oil prices, and ensure debt sustainability.  The program also includes measures to protect the poor, strengthen public financial management, enhance financial sector stability, and curb corruption. Iraq will require the support of the international community to implement these policies.

Following the Executive Board’s decision, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair of the Board, issued the following statement:

“The economic policies implemented by the Iraqi authorities to deal with the shocks facing Iraq – the armed conflict with ISIS and the ensuing humanitarian crisis and the collapse in oil prices – are appropriate.  In the fiscal area, the authorities are implementing a sizable fiscal adjustment, mostly through retrenchment of inefficient capital expenditure while protecting social spending.  In the external area, the authorities are maintaining the peg of the Iraqi dinar to the U.S. dollar, which provides a key anchor to the economy.  Performance under the Stand-By Arrangement has been mixed; however, understandings have been reached on sufficient corrective actions to keep the program on track.  Resolute implementation, together with strong international support, will be key.

“The revised fiscal program in 2016 and the draft budget in 2017 are aligned with the SBA.  The composition of the fiscal adjustment should be improved over time by increasing non-oil revenue and reducing current expenditure, including the payroll and pension payments, and reforming the electricity sector, subsidies, and state-owned enterprises, in order to make room for larger but more effective and efficient investment expenditure that is conducive to growth.

“Significantly improving public financial management will be important.  Arrears need to be assessed and paid following verification, and expenditure commitment and cash management should be strengthened to prevent the accumulation of new arrears.

“Measures to bolster financial sector stability include strengthening the legal framework of the Central Bank of Iraq, restructuring state-owned banks, and eliminating exchange restrictions.  Measures to prevent money-laundering, counter the financing of terrorism, and strengthen the anti-corruption legislation also need to be implemented.

“Implementation of the budget-sharing agreement with the Kurdistan Regional Government would put both the federal government and the Kurdistan Regional Government in a better position to address the shocks to the Iraqi economy.”  (IMF 05.12)

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11.4  KUWAIT:  Kuwait’s Snap Parliamentary Elections Bring Return of the Opposition

On 29 November, Kristin Smith Diwan at the Arab Gulf States Institute in Washington wrote that on 26 November, Kuwait held parliamentary elections, its fourth in just five years, in a vote that marked the return of the opposition after nearly four years of electoral boycotts.  Despite the handicap of a new one vote electoral system, and the short time for preparation due to the early dissolution of the Parliament, the opposition managed to have a strong showing, capitalizing on a public eager to see a stronger Parliament serve as a check on the ruling family-led executive.  Voters came out in high numbers seeking new faces: 70% turnout resulted in a turnover of 60% of members of parliament, with most estimates giving the opposition a bloc of 15 with the potential of attracting a majority of the 50 seats on certain issues.

Leading the opposition will be Kuwait’s Sunni Islamists, anchored by the Muslim Brotherhood-affiliated Islamic Constitutional Movement (ICM), looking to repair its standing after a punishing five years out of power.  Among the new faces are a number of youthful ones, including the youngest member of parliament ever elected in Kuwait, in addition to one woman.  All will face pressure to deliver on pocketbook issues as Kuwait negotiates severe budget deficits.  Many members of the opposition will also look to push back on limitations on civil liberties, such as new media and terror laws, the government’s punitive withdrawal of citizenship, and plans to collect citizens’ DNA to aid in security.

The difficult economic and political challenges faced by Kuwait would be best served by collaboration and conciliation within the Parliament and with the executive – something difficult to achieve with the sectarian and political divisions still plaguing the small emirate.  Counted among those divisions are ones within the ruling family itself. The competition for the future leadership of the country is escalating as a key transition looms, one in which this Parliament could play a part.

Islamist Opposition Regroups

This election continues a period of marked political instability, as the past seven Parliaments have failed to serve their full term due to dissolutions imposed by the courts on procedural grounds, or by the emir in a constitutionally-permitted maneuver.  In the last instance, the emir dissolved the Parliament nine months before its scheduled end of term, citing domestic and regional challenges.  However, most analysts judged that the emir moved early for more tactical reasons: to gain advantage over an opposition resolved to return after years of boycotts.  This election thus served as the first full test of the new electoral system established with the emir’s decree in 2012, which prompted the electoral boycotts.  The reduction of votes from four to one was widely predicted to negatively impact the opposition, which used the multi-vote system to build electoral coalitions.

The most prominent party returning to elections was the Muslim Brotherhood-backed ICM.  Under the current emir, and especially since taking a more strongly oppositional stance in 2011, the Muslim Brotherhood has suffered institutionally, losing standing in key ministries to pro-government Salafis, and experiencing increased pressures on its extensive international charitable activities.  The movement has been working to separate its political society from the main organization, a move that allowed leadership to emerge from middle tier and younger members.  This has allowed the Kuwaiti Brotherhood to avoid the divisions seen in other countries such as Jordan, although a significant minority of ICM members did vote to maintain a boycott in some form in internal elections.  The ICM chose a conservative electoral strategy, selecting proven candidates, and mostly running only one per district.  This strategy paid off as the ICM won four seats across four different districts, narrowly losing only one seat in a district where it ran two competitive candidates.

Salafi movements in Kuwait are very divided between pro-government candidates and a number of other more activist trends.  These elections were punishing to the pro-government candidates, including two former ministers.  The activist trends were more successful, returning a number of well-known former members of parliament to the National Assembly, although some others failed in their bid.

The return of the Sunni Islamist opposition, alongside many new independent and reformist candidates in urban districts, resulted in a reduction in Shia members of parliament.

Tribal Constituencies in Transition

Kuwait’s more tribal outer constituencies are experiencing greater political volatility.  These once reliably pro-government regions have become more educated and more dissatisfied with their share of the rentier bargain, suffering to a greater extent from the decline in public service and public sector jobs.  This trend is exemplified by the undisputed leader of the tribal populists, Musallam al-Barrak.  In his long parliamentary career he rejected participation in tribal primaries – the illegal but informally practiced pre-elections to consolidate tribal support behind selected candidates – in favor of building a broader coalition campaigning against corruption and Kuwait’s merchant oligarchy.

Yet with Barrak still in prison over his confrontations with the emir, his powerful Mutair tribe was divided on whether to run pro-government, opposition candidates, or to boycott, thereby weakening its position.  Meanwhile, stricter enforcement of the law against tribal primaries, and the implementation of the one vote system wreaked havoc on the voting strategies of Kuwait’s larger tribes.  Unable to cast votes for multiple candidates, tribes resorted to voting stratagems designed to divide the electorate among potential members of parliament, organizing their voters, for example, by name.  This appeared to have failed, as winners of informal tribal primaries went down to defeat and the three biggest tribes – the Matran, Ajman, and Awazem – reduced their usual parliamentary representation of around 15 seats to only seven.  This provided an opening for smaller tribes, some of which have rarely held representation.

New Faces, Including Youth

The high degree of turnover and defeat of some veteran politicians means the Parliament will be infused with some new faces, many of them notably younger than their predecessors.  The deputy minister of youth affairs, Alzain Alsabah, sent her congratulations to six elected representatives from among the youth constituency, urging them to help realize the National Youth Policy, now under development.  Other sources placed the number of young members of parliament at seven, four new to Parliament.  Several of these have voiced strongly reformist programs, with at least two connected to the Kuwaiti Association for Protecting Public Funds, an anti-corruption organization.  It remains to be seen if these youthful members can win the confidence of a diverse and ambitious younger generation, among them leading political activists who continue to face legal prosecution and continue to support a boycott of the elections.

Women continued to struggle in this election, with only 15 contesting and only one candidate, former Member of Parliament Safa al-Hashem, winning a seat.  Women have failed to build upon the 2009 high of four seats in the Parliament, leading some activists and analysts to call for the implementation of gender quotas.

Parliamentary Dynamics

The 2016 election unquestionably strengthens the opposition; it could hardy do otherwise given the historically pro-government Parliament elected during the boycott.  However, the opposition and reformist voices ran mostly as independents and represent significantly different trends.  Their ability to coalesce will vary based on issue, and on the conviction of the government, which maintains its 12-member ex-officio voting Cabinet. Internal procedural changes implemented over the past few years will also weaken the ability of parliamentary members to interpolate ministers – their most formidable power.

The ability of the disparate opposition to unify, and consequently to be effective, will face an early test in the election of the speaker of the house.  There are currently three candidates hoping to challenge the current speaker, Marzouq al-Ghanem.  The opposition needs to coalesce behind one candidate to have any chance of unseating the influential head of Parliament.

Given the populist rhetoric of the campaign, there could be greater resistance to fiscal budgetary cuts, including the unpopular cut in fuel subsidies passed while the Parliament was in summer recess.  A broader coalition against privatization and large public tenders may be more susceptible to government influence, and arguments about the need for economic diversification and growth.

Another issue that may garner greater parliamentary scrutiny is tough new surveillance and security measures, which many members of the opposition view as veering toward citizen intimidation.  The new media law, the DNA law, and the increasing punitive use of the withdrawal of citizenship were all prominently discussed during the campaign.  The ability of the Parliament to change some of these policies may be limited, however, due to executive privilege.

The core group of the Sunni Islamists, and the relative weakness in the tribal populists, may impact the agenda setting of the opposition.  The Sunni Islamists expressed strong concern for regional affairs, including the ascendance of Iran.  As the Parliament traditionally defers to the executive on foreign policy matters, there is a danger that these concerns will be directed more domestically at the Shia community, perhaps questioning the government handling of the Abdali cell and weapons cache discovered in the summer of 2015.  The danger of this Parliament exacerbating sectarian animosity, never far from the surface, is real.

Another factor that will impact the Parliament is the unity of the ruling family-led government itself.  The government made progress in its agenda with a more pliable Parliament, but its effectiveness has still been curtailed by the limited capabilities of the bureaucracy.  This led the royal court to circumvent the government altogether on high profile public projects, such as youth programs, the new opera, and the renovation of Al Shaheed Park. Royal leadership beyond the current emir, age 87, is hotly contested however, and competition between rival royals has been impacting parliamentary dynamics.  The fact that the current parliament could have an impact on any contested succession – a precedent set in 2006 – heightens its importance, and perhaps the likelihood of yet another unscheduled parliamentary dissolution.

Kristin Smith Diwan is a senior resident scholar at the Arab Gulf States Institute in Washington.  (AGSIW 29.11)

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11.5  EGYPT:  Why Can’t Egyptians Get The Medicines They Need?

Mohamed Saied posted in Al-Monitor on 29 November that Egypt’s decision to float the pound sent drug prices soaring, and drug companies have responded by curtailing imports, leading to a critical shortage.

Mohammed Lufti was desperate to obtain the prescription drugs his mother needed to live.  He couldn’t afford them, but he was trying to raise funds for her treatment after a stroke sent her to a Cairo hospital’s intensive care unit.  “My mother is dying and we cannot afford the treatment,” he tweeted 19 Nov.  But even if he could raise enough money, he hadn’t been able to find the drugs.  Egypt has been suffering from an acute shortage of many medicines, especially imported ones, since its Central Bank decided on 3 November to float the Egyptian pound.

“These drugs are imported and … doctors told me that the companies had stopped distributing them following the floating of the Egyptian pound,” Lufti, who works in a clothing factory, told Al-Monitor.  He said his mother needed a combination of three antibiotics to live: polymyxins B and E and tigecycline.  “But I could not find them and the doctors told me that her condition was deteriorating day after day.”  His mother died waiting for the drugs, he said.

The Egyptian government strictly regulates drug prices, so pharmaceutical companies haven’t been able to raise prices.  Yet they must pay about twice as much now to import the medicines or their ingredients.  Their only alternative, some say, is to curtail imports and set restrictions on distribution, which they have done.

Ahmed El-Ezabi, the chairman of the Pharmaceutical Industry Chamber, told Al-Monitor that the pharmaceutical sector became unstable following the Central Bank’s decision.  Agreeing to float the pound, however, helped Egypt secure a $12 billion loan from the International Monetary Fund.  The IMF did specify that the government must raise subsidies for food and medicine, which hasn’t been done yet.

Health Minister Ahmed Emad al-Din Rady initially denied claims of a crisis in the pharmaceutical sector, saying drug companies were making such claims as a ruse to justify a call for price hikes.  But he retracted that statement on 17 November and acknowledged the lack of imported drugs.  He said there are 146 medicines with no available alternatives in the local market.

The Egyptian government has agreed to spend $186 million to import the unavailable drugs.  On 16 November, the health minister assigned state-run holding company Vacsera Co. and government-owned Egyptian Pharmaceutical Trading Co. (EPTC) to import the drugs, to avoid price controls among private companies.

Although the drug shortage reached a crisis stage after the government floated the pound, the problem emerged in the first quarter of 2016, when the foreign exchange market suffered from a severe dollar shortage and a major drop in the country’s foreign exchange reserves at the Central Bank.  The bank devalued the pound by 14% in March, and it reached 8.78 against the dollar.  However, the pound continued to plummet and now stands at 18 pounds to $1.

In mid-May, the Ministry of Health allowed companies to raise the price of the cheapest drugs — those selling for up to 30 pounds ($3.40) per pack — by 20% effective 1 July, and warned drug manufacturers against closing down production.  That decision applied to drugs manufactured locally, which rely on imported raw materials affected by the foreign exchange crisis.

Mohammad al-Abed, the chairman of the Pharmacies Committee at the Pharmacists General Union, said that according to the union’s 16 August report, the pharmaceutical market suffered a shortage of 919 types of drugs — local and imported.  This is in addition to the 146 imported drugs for which a shortage became apparent after the decision to float the pound, he said.

He added, “The record mentioned only the missing drugs in the private pharmacies, [which make up] two-thirds of the medicines needed by the market. … The drugs that have no alternatives on the Egyptian market are mostly medicines for blood and tumors.”

Sherif al-Sabki, a manager at EPTC, blamed the current situation with locally made drugs on hoarding by consumers who anticipated higher prices and scarce products after the pound was floated.  But the true shortage of locally made drugs — which account for about 60% of the market’s needs — will emerge when the raw materials inventory in factories run out, he said, noting that those materials were purchased at the old price of the dollar before the pound was floated.

Sabki acknowledged the current lack of imported drugs, estimating that 15% of those medicines have no alternatives on the local market.  “The importing companies will suffer huge losses … as the cost of such drugs has increased by 200%,” he said.  He believes the situation is the result of those companies’ accumulated debt in dollars.

He added, “These companies — such as the Egyptian Pharmaceutical Trading Co. — have imported the existing quantities of drugs using deferred checks with the old price of the dollar, which was 8.78 pounds, while this price has doubled in banks following the decision to float the dollar.”

During a 20 November meeting with pharmaceutical companies, the minister of health refused to raise drug prices at that time, deferring the discussion until April.  A number of delegates from the Pharmaceutical Industry Chamber protested, but the meeting was adjourned without reaching any solution.  Sabki called upon the state to find a swift solution to the rising cost of medicine, to shield consumers against the crisis that is likely to worsen once the reserves of raw materials run out, and in light of the reluctance of some companies to import.

For this part, Ezabi said delegates of 154 factories in the chamber pledged during several meetings with government representatives that they will continue manufacturing as long as they can endure the losses.  He called on the government to make up the difference in the price of the pound until it reaches a decision on raising the prices of drugs and the importing companies settle their debts for drugs they bought on credit.  He said he expects a breakthrough in the next two months.

Commenting on locally manufactured drugs, Sabki said the only solution is for the government to gradually raise the prices of medicines after studying the actual cost of every medicine type.

As for the importing companies, Sabki believes the government has to take into account the size of the losses they may incur. He expects an inevitable price increase.  (Al-Monitor 29.11)

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11.6  TUNISIA:  EU Providing €213.5 million to Tunisia for Reforms & Funding Social Infrastructure

The European Commission reaffirms its support to Tunisia with a new financial assistance package worth a total of €213.5 million for reforms and funding social infrastructure.  This follows the International Investment Conference TUNISIA 2020 where the European Commission, represented by Commissioner Johannes Hahn, reaffirmed its support towards Tunisia’s transition to a modern democracy based on freedoms, socio-economic development and social justice.  The 2016 financial support package for Tunisia will consist of four programs:

1) The ‘Program to support the modernization of public administration and public undertakings, in support of the 2016-2020 Development Plan’ (€73.5 million) aims to assist Tunisia in the process of reforming its public administration with a view to increasing the effectiveness, efficiency, quality and transparency of public services and public undertakings.

2) The ‘Program of support for education, mobility, research and innovation’ (€60 million) is intended to improve access to a high quality education system, making it possible to increase the employability of young people and stimulate socioeconomic integration.  This measure, which is targeted particularly at Tunisia’s young people, will complement the major investment by the EU in vocational training.  It provides for a mobility component which will allow 1 500 Tunisian students and teachers to access mobility grants under the ERASMUS+ Program.  The support for the research and innovation system will promote greater participation by Tunisian researchers and institutions in the Horizon 2020 Program with which Tunisia has been associated since 1 January 2016.

3) The ‘Pilot initiative on integrated local development’ (€60 million) seeks to support the process of decentralization enshrined in the Constitution and to reduce development disparities between the coastal regions and the interior.

4) The ‘Program to support the health sector in Tunisia’ (€20 million) aims to assist Tunisia in strengthening its health system by improving the quality and accessibility of health services for all.


The Programs adopted today, financed by the European Neighborhood Instrument, translate into action the guidelines set out in the Joint Communication of the Commission and the High Representative on Strengthening EU support for Tunisia, adopted on 29 September 2016.  That communication reaffirmed the enhanced commitment of the European Union to support the reforms currently being undertaken by the Tunisian Government in order to complete the transition to democracy and to ensure the country’s socioeconomic development.

Since 2011, the EU has more than doubled its financial contribution to cooperation with Tunisia.  The country is also the principal beneficiary, in the Southern Neighborhood, of the ‘umbrella’ Program, which allows for increased European financial support to partners working to strengthen democracy and human rights.  The combination of grants (over €1.2 billion), macro-financial assistance (MFA €800 million) and loans, including those from the European Investment Bank (€1.5 billion), will bring total support to Tunisia from 2011 to 2016 to approximately €3.5 billion.  The scale of the support reflects the EU’s firm commitment to the country.  As well as increased support, the last five years have ushered in more diverse approaches and forms of assistance to address Tunisia’s needs in the wake of its historic democratic transition.  (European Commission 05.12)

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11.7  TURKEY:  How the Turkish Lira Entered Free Fall

Mustafa Sonmez posted in Al-Monitor on 30 November that the European Parliament’s vote to suspend Turkey’s membership talks is the latest move to worsen the rapid decline of the Turkish lira’s foreign exchange rates.

In its heyday, years before the 2009 global financial crisis as well as in the ensuing years, when the United States and Europe pursued liquidity expansion to battle the crisis, Turkey’s ruling Justice and Development Party (AKP) enjoyed abundant inflows of foreign capital, with an annual average of nearly $38 billion for the past 14 years.

Those resources, however, were used mostly toward domestic demand, financing consumer loans and sectors that bring in no foreign exchange gains, such as construction.  As a result, Turkey’s current account deficit became a chronic problem and its external debt stock, 40% of which is short-term, swelled to nearly 60% of the GDP.  In addition, inflation and unemployment in those years got stuck at 7 – 8% and around 10%, respectively, while investments ground to a halt.  Thanks to the global fall in energy prices, the current account deficit — $35 billion annually on average — did not widen, but did not recede either.

The US Federal Reserve’s decision to hike rates, the first signal of which came in 2013, led to occasional outflows of foreign capital and the appreciation trend of the dollar began.  Yet the Fed’s vacillations and the European Union’s zero-rate expansionist policies meant that foreign funds were willing to stay in emerging economies such as Turkey’s for some time longer.  As a result, the fragile Turkish economy was able to stay on its feet, though the inward structural loss continued.

Turkey’s reliance on external funds had grown, but starting in the second half of 2013, foreign investors began to lose their appetite in Turkey, leading the Turkish lira to lose ground fast.  The dollar’s appreciation against the lira since 2013 will be 60% by the end of 2016 if its rise this year is contained at the current 12%.  Given that consumer prices have increased 25% in the same period, the economic structural loss caused by the rise of the greenback becomes plain as day.

The economic decline since 2013 has been reflected in the reports of both the International Monetary Fund and credit rating agencies, which serve as a beacon for investors.  Along with economic risks, Turkey’s political and geopolitical risks have also been on the rise since 2013.  The Gezi Park revolt in the summer of 2013 and the AKP’s acrimonious fallout with longtime ally Fethullah Gulen later in the year were factored in as higher political risks at home.  In terms of foreign policy, Turkey’s stance in the Syrian civil war and the Iraqi turmoil, the crisis with Russia and recurring frictions with the United States all went down in the books as increasing geopolitical risks.  On top of all this, Ankara’s shift to a path of conflict with the Kurdish movement, followed by the Gulenist coup attempt on 15 July, meant that the risks had hit the ceiling, and credit rating agencies cut Turkey to “non-investment” grade.

In November, two major external developments have further darkened Turkey’s outlook.  First, Donald Trump’s election victory in the United States accelerated the flight of foreign capital, underway since the rating downgrade, as Trump’s signals of rate hikes to boost economic growth seemed to encourage investors.  This, in turn, intensified the Turkish lira’s slump against the dollar.

The bigger blow, however, came 24 November, when the European Parliament voted in favor of freezing membership talks with Turkey, citing Ankara’s worsening record on human rights and the rule of law.  The vote is not binding for European leaders and the general expectation is that member states will not take any further steps against Turkey, making do with the “political message” delivered by the Parliament’s vote.  But even this message was enough to further scare off investors.

Earlier on 24 November, the Central Bank’s Monetary Policy Committee had used its rate-hike weapon in a bid to rein in the dollar.  Despite President Erdogan’s pressure for lower interest rates, the committee announced a drastic hike of 50 basis points in its policy rate, bringing it to 8%, along with other moves aimed at curbing foreign exchange rates.  But before these decisions could make any impact on the markets, the news from the European Parliament propelled the dollar anew, sending it to a record high of 3.47 Turkish liras.

Erdogan and the government, meanwhile, lashed out at the European Parliament, adopting a bellicose attitude and dismissing the criticism on violations of the rule of law, human rights, free speech and media freedoms.  According to the prevailing sentiment in the higher echelons in Ankara, the call to freeze membership talks was nothing but a conspiracy against the ruling regime.

No matter what Ankara believes, the European Parliament’s move has compounded the country’s risk aggregate.  From the vantage point of investors, the vote signifies a major rift in Turkey-EU ties, the healing of which will take time and depend on conditions.

The real question now is how Turkey will meet its burden of liabilities and contain economic contraction with a dollar that has perched itself at the 3.4 benchmark against the lira.  Amid the increased perception of risk, the inflow of foreign capital will further decline, foreign exchange deficits will worsen and meeting liabilities will become more difficult.  Hit by huge losses due to the rising price of the dollar, how are economic actors with foreign exchange deficits going to adapt to the new environment?

While the dollar seems unlikely to climb down from its current level, the Central Bank’s rate hikes will push the economy to contract.  The more expensive dollar will inevitably lead to cost inflation through the increased price of imported inputs, which, for the Central Bank, will mean further rate hikes.  The dollarization of deposits, meanwhile, is also accelerating, as appeals for a return to the Turkish lira seem to bear little fruit.  This, too, is creating pressure to hike rates.

In sum, the Turkish economy is now under the double strain of a more expensive dollar and higher interest rates, which are likely to increase further.

Nonfinancial companies have taken the heaviest blow from the dollar’s appreciation.  Spurred by too much enthusiasm for Erdogan’s “mastership era,” the rush to external borrowing several years ago has left them with $211 billion in foreign exchange deficit, up from $67 billion in 2009.  Now they will have to contend also with higher interest rates and a shrinking domestic market.  The private companies’ crunch will inevitably bear on the banks they deal with.  Preventing a crisis in the real sector from spilling over to the financial one will not be an easy task.  Who can guarantee that efforts to contain such crises using public finances will keep the budget fireproof and not create huge deficits?  With a government reluctant to acknowledge its problems, controlling the blaze does not seem easy at all.  (Al-Monitor 30.11)

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