Fortnightly, 18 November 2015

Fortnightly, 18 November 2015

November 18, 2015


18 November 2015
6 Kislev 5776
6 Safar 1436




1.1  Israel & Jordan Launch First Ever Joint Infrastructure Project
1.2  Cabinet Approves 0% VAT for Public Transport


2.1  Microsoft to Acquire Data Protection Leader Secure Islands
2.2  Mayor to Boost Tech Trade Links Between London and Tel Aviv
2.3  WakingApp Raises $4.3 Million
2.4  MySizeID Raises $4 Million
2.5  Direct Energy to Acquire solutions provider Panoramic Power
2.6  Online Freelance Services Co Fiverr Raises $60 Million
2.7  Aeroflot Increasing Russia – Israel Flights
2.8  Frutarom Acquires Polish Savory Flavors Company AMCO
2.9  PowerUp FPV Kickstarter Hits Funding Goal in Four Hours
2.10  Perfecto Raises $35 Million


3.1  Orbital ATK Establishes Abu Dhabi Affiliate for Defense Customers
3.2  GE Opens Middle East Aviation Technology Center in Dubai
3.3  Big Apple Bagels Now Open in Dubai
3.4  Turkish Hair Transplant Business Reaches $1 Billion
3.5  Turkey’s Bio-Security Board Allows use of GMO Feed in Chicken Industry
3.6  Johnny Rockets Opens New Restaurant In Nicosia, Cyprus


4.1  Green System for Sustainable Natural Technology Sewage Treatment
4.2  State to Connect 450 Israeli Factories to Natural Gas
4.3  Israel’s Largest Solar Field Inaugurated


5.1  Lebanon’s Balance of Trade Continued to Show a Decline in September
5.2  Lebanon Ranks 7th out of 17 in BMI’s Medical Device Risk/Reward Index
5.3  Number of Lebanese Registered Cars Rises by 2.15%
5.4  EBRD Downgrades Growth Forecast for Jordan’s Economy

♦♦Arabian Gulf

5.5  GCC Forecasted to Raise Desalination Capacity by 40% by 2020
5.6  Qatar’s Population Hits New High of More Than 2.4 Million as of November 1st
5.7  Moody’s Says UAE Set to Return to Budget Surplus in 2017
5.8  UAE Non-Oil Business Growth Slows to 30 Month Low in October
5.9  UAE Imports Dh595 Million of Food from Australia
5.10  Saudi Arabia Intends to Privatize Airports Next Year

♦♦North Africa

5.11  Egypt’s Annual Inflation Rate Increases to 10.3% In October
5.12  Morocco’s Unemployment Rate Up in Third Quarter of 2015
5.13  EBRD Allocates € 35 Million to Boost Morocco’s Hydro Power


6.1  Turkish Economy Minister Promises Reform Package to Boost Economy
6.2  Turkey’s R&D Outlays Rise But Still Below Target
6.3  Greece & Creditors Agree to Release More Bailout Cash
6.4  Greece Lost 13,000 Jobs in September



7.1  Qatar Stiffens Penalty for Insulting the National Flag
7.2  US Gives Apollo Moon Landing Flag to UAE Space Agency
7.3  Saudi Arabia Appoints First Woman as Honorary Consul


8.1  World’s First Endovascular Neuromodulation Device Implanted in Man
8.2  Johns Hopkins – Luminox- Health Collaboration
8.3  Syneron Candela Announces New FDA Clearance for the CO2RE System
8.4  Teva Announces Breakthrough Therapy for the Treatment of Tardive Dyskinesia
8.5  Betalin Therapeutics Introduces Novel Approach to Treat Diabetes
8.6  ElMindA Raises $28 Million to Accelerate its BNA Technology Adoption
8.7  BiondVax Receives Patent in Korea for its Universal Flu Vaccine


9.1  Introducing Everysight, a Visionary Wearable Technology Company
9.2  VIPNET Replaces WiMAX Network with JET Beamforming PtMP from RADWIN
9.3  MTI Wireless Edge New 60GHz Flat Antenna is Now COTS
9.4  Aurora & Stratasys Deliver World’s First Jet-Powered, 3D Printed UAV
9.5  Argentina Signs for AESA-equipped Kfir Fighters
9.6  One-Time Shot of Power that Keeps Your Mobile Phone Mobile
9.7  Mellanox Introduces the Switch-IB 2, World’s First 100Gb/s Smart Switch
9.8  World’s Lowest Resistance, Fastest, GaN Power Switches
9.9  WhiteSmoke Releases New Grammar Checking Software
9.10  SuperCom Signs MoU for Delivery of Mobile Money Solution in Africa
9.11  IBM Teams with Mellanox to Maximize Power Systems Performance
9.12  Morphisec Debuts Moving Target Defense


10.1  Israel’s CPI Rises Unexpectedly in October
10.2  Israeli Economy Growing Again
10.3  OECD Sees 3.25% Growth in Israel During 2016
10.4  Israel Well Placed in OECD Health Index
10.5  Israel’s Incoming Tourism Increases Impressively in October


11.1  OMAN: Oman Looks East
11.2  EGYPT: Outlook Revised To Stable; Ratings Affirmed At ‘B-/B’
11.3  EGYPT: Military Influence in the Egyptian Government
11.4  MOROCCO: IMF Staff Completes 2015 Article IV Consultation
11.5  TURKEY: Erdogan’s Victory Isn’t A Win For Turkish Democracy
11.6  TURKEY: Outlook Hinges On Ability To Spur Growth, But Risks Remain


1.1  Israel & Jordan Launch First Ever Joint Infrastructure Project

Israel has issued a tender for the construction of a new bridge across the Jordan River which would connect it with Jordan, the Ministry for Regional Cooperation said on 8 November.  The bridge will be part of the “Jordan-gate” project, which will see the establishment of a joint industrial zone between the two countries.  The tender was issued through the Valley of Springs Regional Council in northern Israel, on whose land the industrial area will be built.  The project, which is the first ever joint infrastructure project between the two countries, will include two industrial areas and employment zones on both sides of the river, with a bridge that will connect between the two.  Israeli and Jordanian factories are set to be built on a 700 dunam (175 acres) swath of land on the Jordanian side, while the Israeli facility, which will span 245 dunams, will serve as a logistics base and an area for the transfer of goods to ports in Israel.

The Israel-Jordan Committee for Security and Transportation has recently approved the bridge’s construction and the tender is based on a previous agreement signed by both governments in April 2015.   The cost of the project on the Israeli side was estimated to be around NIS 200 million, of which about NIS 55 million would be allocated for construction of the bridge.

The Regional Cooperation Ministry said that the establishment of the industrial zone was intended to deepen economic and trade relations between Jordan and Israel as well as regional cooperation and stability, while adding that the industrial zone would expand employment opportunities for residents of the region – in both Israel and Jordan.  (Calcalist 08.11)

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1.2  Cabinet Approves 0% VAT for Public Transport

On 15 November, the Netanyahu government approved an initiative by Minister of the Development of the Negev and Galilee and Periphery and Shas Party chairman Deri for exempting public transportation from VAT.  Following vigorous opposition to the measure by the Ministry of Finance, a watered down version was approved authorizing Minister of Finance Kahlon and Deri “to implement the August cabinet resolution concerning implementation of the coalition agreement with Shas concerning financing for 0% VAT for public transportation, water and electricity for the economically disadvantaged in an optimal manner by 1 January 2016.”  Deri’s original demand was to anchor 0% VAT in a fast-track legislative process in order to ensure that the Ministry of Finance would not attempt to alter the exemption.  (Globes 15.11)

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2.1  Microsoft to Acquire Data Protection Leader Secure Islands

Furthering Microsoft’s investments in security technology, Microsoft signed an agreement to acquire Secure Islands, an innovator in advanced information protection solutions.  This acquisition accelerates Microsoft’s ability to help customers secure their business data no matter where it is stored – across on-premises systems, Microsoft cloud services like Azure and Office 365, third-party services, and any Windows, iOS or Android device.

Based in Israel, Secure Islands provides powerful data classification, protection and loss prevention technologies for virtually any type of file, which allows customers to apply data protection to more applications. Global customers, such as UBS, OSRAM, Vodafone and Credit Suisse, use and trust Secure Islands to protect data at each stage of the information lifecycle – from creation to sharing.

Secure Islands’ technology enhances the data protection capabilities available today with Azure Rights Management Service, Microsoft’s cloud-based information protection solution.  The company has long been a close Microsoft partner and built its solutions using our rights management technology.  Secure Islands will continue to sell its existing solutions and support its customers.

After completing this acquisition, Microsoft will integrate Secure Islands’ technology into Azure Rights Management Service to provide a flexible architecture able to meet the most rigorous protection and compliance requirements.  These new capabilities, combined with the data classification in Windows and Office 365, will provide our customers with the industry’s most comprehensive data protection solution.  The closing of this acquisition is subject to regulatory approval.  (Microsoft 09.11)

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2.2  Mayor to Boost Tech Trade Links Between London and Tel Aviv

London is the leading European destination for Israeli technology companies looking to expand overseas, Mayor Boris Johnson said on 9 November as he urged more Israeli firms to locate in the capital during his three-day trade mission to Israel.  Israel boasts one of the world’s leading tech sectors and, according to research compiled by London & Partners, the Mayor’s promotional company and IVC Research Center, London has become the number one city in Europe for Israeli tech businesses looking to list on the stock market, with companies drawn by the city’s easy access to capital and its strong entrepreneurial culture.

Technology companies make up over three quarters (76%) of all Israeli companies listed on the London Stock Exchange and over the last five years they have raised over £240 million through those listings.  There are currently 16 Israeli tech firms listed across London Stock Exchange’s markets with a combined market value of £3.7 billion.  The Mayor attended several events in Tel Aviv with an aim of increasing trade links with London, including visits to the Tel Aviv Stock Exchange and Google Campus.  (London & Partners 09.11)

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2.3  WakingApp Raises $4.3 Million

Rosh HaAyin’s WakingApp, which provides tools for quick and easy creation of augmented and virtual reality content, has raised $4.3 million in Series C funding from Youzu Interactive, as well as one of largest Internet and search companies in China.  Funds from the round will be used to expand the company’s AR/VR platform offerings, ENTiTi Creator and ENTiTi Viewer, and expanding its sales, marketing and business development in the US and China.  The two Chinese companies join existing investors Inimiti VC and Globis Capital in the round.  For Youzu, an entertainment company specializing in online game development and distribution, this is its first investment in an Israeli-based startup and represents an opportunity to move AR/VR content creation tools into the Chinese market.  (Globes 05.11)

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2.4  MySizeID Raises $4 Million

MySizeID, which was merged into stock exchange shell TopSpin in 2014 and listed on the Tel Aviv Stock Exchange (TASE), recently completed a $4 million private placement, in addition to $1.7 million raised since the company was founded (a total of $5.725 million).

Airport City’s MySizeID designs fashion apps.  The company’s app contains an algorithm for taking the user’s measurements and optimal fitting of a proposed fashion item to the consumer’s size.  After measuring the customer, the app formulates an “ID card” for each user, to which items matching his measurements will be fitted in the future.  The company recently launched an app for iPhones, called SizeUp (beta version), which contains a 3D measuring algorithm, in which the telephone is moved on a horizontal surface.

The MySizeID business model is based on commissions for each item purchased using the app and focused advertising offering the user an item matching his measurements and preferences.  The company will also charge a commission on offline purchases in which its technology is used in real time.  (Globes 06.11)

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2.5  Direct Energy to Acquire solutions provider Panoramic Power

The UK’s Direct Energy, through its parent company Centrica plc, has agreed to acquire Panoramic Power, a leading provider of device-level energy management solutions, for $60 million (£39 million).

Kfar Saba’s Panoramic Power installs and supports wireless and self-powered circuit level technology for business customers and provides them with cloud-based analytics.  This gives the customer real-time visibility and allows actionable insight into their energy usage, enabling them to lower energy consumption, reduce operating costs and increase overall operational efficiency.

The acquisition will build upon an existing exclusive partnership in the US between Direct Energy and Panoramic Power and will provide Centrica with leading capabilities in energy management technology and data science expertise, in addition to full control over research and development activity.  The energy management solutions enabled by this acquisition will initially be focused on Direct Energy Business’s existing markets, with the intention to extend them to other markets over time, as part of a wider distributed energy offering.  (Direct Energy 12.11)

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2.6  Online Freelance Services Co Fiverr Raises $60 Million

Israeli online freelance services company Fiverr announced it has raised $60 million in new financing led by Square Peg Capital, with existing investors Bessemer Venture Partners, Accel and Qumra Capital.  This brings the total amount raised by Fiverr to $110 million.  The company will use the new funding to more aggressively attract the 97% of freelancers who, according to the recent MBO Partners State of Independence in America Report, still rely primarily on word-of-mouth, local networks and other less-efficient, offline means to do business.  On Fiverr, every freelancer can turn their digital service into a product sold to small businesses and entrepreneurs around the world.

Fiverr says that it is also going beyond five dollars.  For the first time, the company announced that all freelancers on the site will soon be free to set their own prices rather than be required to start them at $5.  Over the next several weeks, Fiverr will introduce easy-to-understand Gig Packages across several pricing tiers.  This will dramatically simplify the way freelancers — or Fiverr sellers — price and bundle services.  The new Gig Packages will also help Fiverr sellers pocket more cash, create greater value for buyers, and make sellers nimble enough to compete for larger projects from SMBs, entrepreneurs and even corporate marketing departments.  (Globes 11.11)

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2.7  Aeroflot Increasing Russia – Israel Flights

Aeroflot, the Russian flag carrier, is expanding its services to Israel to 37 weekly flights.  The Russian Federation’s largest airline is currently celebrating 5 years of operations in Israel.  For the upcoming winter season, Aeroflot will run four daily flights on the Moscow-Tel Aviv line.  It will also operate a daily flight to St. Petersburg and two weekly flights to Rostov.  Aeroflot’s cargo operations in Israel, represented by Open Sky Cargo, expanded by more than 20% during the past year.  (Globes 11.11)

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2.8  Frutarom Acquires Polish Savory Flavors Company AMCO

Frutarom Industries purchased 75% of the share capital AMCO of Poland for $20.7 million.  The purchase agreement includes an option for acquiring the remaining balance of shares starting two and a half years from the closing date of the transaction at a price based on the company’s business performance.  The transaction will be financed using bank debt and will be completed within the next few weeks.

AMCO, founded in 1998, has an R&D and sales and marketing center along with an efficient and modern state-of-the-art production site in Warsaw, Poland with large production capacity and significant room to expand.  AMCO’s main activity is the development, production and marketing of unique and innovative savory flavor solutions (the non-sweet spectrum of flavors) that include seasoning blends, marinades, and functional ingredients for the food industry.

Haifa’s Frutarom is a multinational company operating in the global flavors and fine ingredients markets.  Frutarom has significant production and development centers on four continents and markets and sells the over 43,000 products it produces to over 19,000 customers in more than 150 countries.  Frutarom’s products are intended mainly for the food and beverages, flavor and fragrance extracts, pharmaceutical, nutraceutical, health food, functional food, food additives and cosmetics industries.  (Frutarom 11.11)

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2.9  PowerUp FPV Kickstarter Hits Funding Goal in Four Hours

In just four hours, PowerUp Toys announced the successful funding of its Kickstarter crowdfunding campaign, raising over $140,000 thus far to create world’s first paper airplane drone with a live-streaming camera – the PowerUp FPV.  Partnered with France’s Parrot to manufacture the device, the new drone creates a first-person-viewing (FPV) experience, letting people experience what it’s like to sit in the cockpit of a paper airplane, directly on their smartphone, or using a Google Cardboard headset.

Featuring a fully rotating wide-view camera, users are able to stream their flight while looking forward from the cockpit, off the wings; or even take the ultimate “selfie” with a rear-view shot as users launch their planes.  Connecting via WiFi, users can watch the video, or wireless transfer it to their smartphones and upload it to YouTube, Facebook, Twitter or favorite video sharing service from their mobile network.

Tel Aviv’s PowerUp Toys lets consumers of all ages expand their sense of play and experimentation by adding power to familiar paper airplanes.  PowerUp Toys brings homemade paper toys into the future by adding next generation mobile controls, propulsion and tools to take imagination to new heights. Experience the joy of making your ideas take flight in just a few minutes!  (PowerUp Toys 11.11)

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2.10  Perfecto Raises $35 Million

Perfecto Mobile has raised a $35 million investment from new investor Technology Crossover Ventures (TCV), with continued participation from existing investors FTV Capital, Carmel Ventures, Globespan Capital Partners and Vertex Ventures.  The latest capital infusion will fuel the expansion of Perfecto’s product offerings, which address the need for enterprises to continuously test and monitor their mobile and digital user experiences on real devices under real end-user conditions.

In the past year, Perfecto has rapidly grown and reached a number of milestones.  From a product perspective, Perfecto recently launched the Wind Tunnel, enabling automated testing against real user conditions, and reports that over 1.2 million tests run monthly in its Continuous Quality Lab.  The company has doubled its workforce this year with high growth projections for next year.  Its customer base has rapidly grown in the past year to include leading brands like Discover, and Sky and is seeing record expansion within existing customers.

Rosh HaAyin’s Perfecto enables exceptional digital experiences.  They help you transform your business and strengthen every digital interaction with a quality-first approach to creating web and native apps, through a cloud-based test environment called the Continuous Quality Lab.  (Perfecto Mobile 11.11)

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3.1  Orbital ATK Establishes Abu Dhabi Affiliate for Defense Customers

Dulles, Virginia’s Orbital ATK, a leader in aerospace and defense technologies, announced the establishment of an affiliate in Abu Dhabi, United Arab Emirates, to support the company’s growing regional defense business.  Orbital ATK and Al Tuff International are in partnership in the formation of Orbital ATK, LLC.  Orbital ATK and Al Tuff International first joined in opening a branch office in Abu Dhabi in March 2010.  As a result of the many successes of that venture, it is now time to convert that success into a new affiliate company that can have a broader impact in the region.  The new company will provide defense product sales and services to customers in the UAE related to its core competencies in small-, medium- and large-caliber ammunition production, precision and strike munitions, special mission aircraft and Bushmaster cannons.  (Orbital ATK 09.11)

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3.2  GE Opens Middle East Aviation Technology Center in Dubai

GE opened their Middle East Aviation Technology Center to support customers’ operations by leveraging data analytics, domain experience and software capabilities to increase productivity, maximize performance and minimize down time for customers using GE’s platform for the Industrial Internet.  The center is located at Dubai Airport Free Zone.  The center will enhance the service level for GE systems and engines, serve as a regional customer and product support hub, and be a place where data scientists, user experience designers and application developers can help the customer use the Predix platform to solve business challenges.  The advancements in data and analytic technologies at GE’s Middle East Aviation Technology Center are examples of where GE is taking Predix, the cloud-based platform for creating innovative, Industrial Internet applications that turn real-time operational data into actionable insights.  (GE 09.11)

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3.3  Big Apple Bagels Now Open in Dubai

Deerfield, Illinois’ BAB Systems, the franchising subsidiary of BAB, Inc. announced the opening of a new Big Apple Bagels in Dubai, UAE.  The new Dubai store is the first to open under BAB’s Master Franchise Agreement with Mont Royal General Trading for the development of Big Apple Bagels stores throughout the Middle East.  The store is located in Wafi Mall, Wafi City, Dubai and is adjacent to Cherry Berry frozen yogurt.  Wafi is considered one of Dubai’s foremost luxury malls, including over 350 shops and over 30 restaurant concepts from around the world.

BAB’s Master Franchisee, Mont Royal General Trading, focuses on acquiring master franchising agreements with successful international food and beverage brands.  Mont Royal intends to expand throughout the Middle East via direct investments and partnerships as well as through sub-franchising.  Pursuant to its Agreement with BAB, at least thirty Big Apple Bagels stores are scheduled to open over a ten-year period.  The Agreement calls for BAB to receive royalties of at least three-percent of sales in all stores opened under the Agreement.  (BAB Systems 05.11)

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3.4  Turkish Hair Transplant Business Reaches $1 Billion

The hair transplant business in Turkey has reached $1 billion, with Istanbul as the most popular destination for those want a new head of hair, Wired magazine has reported.  Istanbul houses a total of 350 clinics where 5,000 patients, mostly from the Arabian Gulf countries, arrive to get hair transplants each month.  According to the report, the transplant process, officially called the follicular unit extraction method, costs between $1,700 and $2,000, almost 10 times cheaper than any U.S. counterparts, an alluring factor for patients.  The operation includes inserting around 4,000 hair follicles, taken from the back of the head, on a bald or balding area.  In addition, the more patients are satisfied, the more frequently they return for multiple operations if their bald areas are too large for single session, the report said.  (HDN 05.11)

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3.5  Turkey’s Bio-Security Board Allows use of GMO Feed in Chicken Industry

Turkey’s Bio-security Board has allowed the local chicken industry to use feed that includes genetically modified organisms (GMOs).  The board approved the use of six types of corn and two types of soybean that include GMOs in the chicken industry.  The board mandated that producers use warning labels if they use GMO feed.

Bio-security Law No. 5977 prohibits the production of genetically modified foods in Turkey and makes it mandatory to secure permission from the ministry to transport these products through Turkey.  Individuals who produce genetically modified plants or animals, or release them into the environment, are subject to a prison term of between five and 10 years or the imposition of a fine ranging between TL 1,500 and TL 2,500, according to the law.  In a GMO food-related scandal in 2013, three ministers were accused of collaborating to save a pro-government businessman who faced charges of being involved in a GMO rice scandal.  (Zaman 05.11)

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3.6  Johnny Rockets Opens New Restaurant In Nicosia, Cyprus

Aliso Viejo, California’s Johnny Rockets opened its new restaurant at Doga Park AVM shopping mall, located in Nicosia, Cyprus.  Johnny Rockets is known for its world famous fresh, cooked-to-order burgers, sandwiches, salads and hand-spun shakes.  In addition to the traditional Johnny Rockets menu, the Nicosia location will offer special menu items including new Steak Burgers and traditional wrap options based on Johnny Rockets’ flavors.  The Nicosia Johnny Rockets will serve as the flagship restaurant, as Akari plans to open three additional Johnny Rockets in Cyprus over the next two years and recently became the new owner of the Johnny Rockets in Famagusta.  The Nicosia Johnny Rockets is approximately 4,300 sq. ft. and has 56 employees.   (Johnny Rockets 10.11)

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4.1  Green System for Sustainable Natural Technology Sewage Treatment

Unleashing the power of plants to purify wastewater, without pipes, pumps or anything else man-made, has proven a winning proposition for Israel’s Ayala Water & Ecology for the past 26 years.  Their Natural Biological System (NBS) is a sustainable natural technology for treating sewage and waste streams, rehabilitating affected water bodies and rebalancing watersheds.  Ranging in scope from acid mine drainage remediation in Chile to urban sewage treatment in India, the NBS is changing the global water-energy equation, reducing dependence on energy and maintenance, freeing up valuable water resources for on-site usage, and most of all, restoring nature’s ability to preserve and protect itself.  Ayala’s phytoremediation systems are built into the landscaping at hundreds of industrial, residential, agricultural and recreational sites in Israel, India, Chile, Mexico, France, Germany, Greece, Singapore, the US and Canada, with future projects planned for the Philippines and the UK.

From its headquarters at an organic farm in Moshav Zipori, Israel, and through worldwide partners, Ayala designs and implements NBS as a tailored solution that integrates into the social and environmental fabric, providing an economical and aesthetic side of waste treatment that has never been known before.  (Various 06.11)

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4.2  State to Connect 450 Israeli Factories to Natural Gas

Israel will connect 450 enterprises to natural gas by the end of the decade, following the approval by the Knesset Economic Affairs Committee for its second and third Knesset reading a reform for removing the barriers delaying the connecting of factories to the natural gas network in the framework of the Economic Arrangements bill.

Although enough gas was discovered in Israel over the past five years to supply local consumption for decades, only 12 of 2,000 industrial plants use natural gas.  The industrialists blame bureaucracy, the ongoing dispute between the Ministry of National Infrastructure, Energy and Water Resources and the Ministry of the Economy on the question of responsibility for safety at gas facilities, and the regulations for laying the gas pipeline, which have been changed every few months.  As a result, hundreds of plants are paying three times as much for fuel (such as crude oil and diesel oil) as they would have paid for natural gas.  The Ministry of Finance estimates that the reform will save the economy NIS 500 – 700 million a year.

If passed and properly implemented, the bill can finally bring the gas revolution near. It includes clear and short timetables for obtaining safety permits for gas facilities at factories, for obtaining permits to lay gas distribution pipelines, and shortened procedures for coordination between the various infrastructure agencies, which have created obstacles to deploying the distribution network.  The bill also stipulates that safety permits will be granted in 30 – 45 business days.  The bill eliminates the need for a construction permit, and states that the procedure for approval of the plans will be limited to 90-130 days at most.  (Globes 08.11)

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4.3  Israel’s Largest Solar Field Inaugurated

Israel’s largest photovoltaic energy field, the solar energy project in Halutziot in the Western Negev, was officially inaugurated on 11 November.  The field, which has a capacity of 55 MW, was built by Enlight Renewable Energy Solutions in cooperation with the Noy Infrastructure and Energy Investment Fund.  Investment in the project totals NIS 500 million.  The field is a joint regional venture established on land belonging to a group of communities, including the Halutziot area communities of Naveh and Benei Netzarim, as well as Ohad and Dekel.  It covers 800 dunam (200 acres), and contains 180,000 solar collectors.

The government has been promoting solar energy since 2008.  in 2009, the government set an interim target for 2014: production of 5% of electricity from renewable energy sources.  The target for 2020 is 10%.  Six weeks ago, the cabinet approved raising renewable energy targets of 13% by 2025 and 17% by 2030.  As of now, however, renewable energy accounts for only 2% of total annual electricity consumption (98% of this 2% is from photovoltaic solar facilities).  (Globes 11.11)

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5.1  Lebanon’s Balance of Trade Continued to Show a Decline in September

Lebanon’s trade deficit declined by 18.57% year-on-year (y-o-y) in September, to record  $10.67B due to a 17.38% decrease in overall imports outpacing the 11.1% decline in total exports.  The prominent trend of both the depreciating Euro and falling international oil prices are the main factors behind the contractionary trade deficit drift being registered since the start of the year.  Total imports, in the first nine months of the year, amounted to $13B compared to $15.73B during the same period last year.  In more details, the three major product categories that were imported to Lebanon by August were mineral products (16.7% share of total imports), “machinery and electrical instruments” (12.0%) and  “products of the chemical or allied industries” (11.1%).  The yearly change in the value of imported mineral products displayed a substantial drop of 44.68% from September 2014 to $2.18B.  This decline goes hand in hand with the average 45% decrease in the price of international oil since August of last year, noting that demand for this essential commodity is inelastic.  In addition, the value of “machinery and electrical instruments” imported went down by 6.41% y-o-y by September.

The three leading countries that Lebanon imported goods from were China, Germany and France with respective weights of 11.89%, 6.94% and 6.06%.  Similarly, total exports fell yearly from $2.51B by September 2014 to $2.23B this year.  Specifically, the value of exported “prepared foodstuffs, beverages, and tobacco” (16.24% share of total exports) experienced a yearly detraction of 6.06% by September despite the 13.35% rise in exported volume to 279,909 tons.  The decline in prices may be aligning   with European prices, especially following the Euro depreciation in addition to the drop in costs due to the decline in raw material prices and their impact on input prices. Furthermore, exported “pearls, precious stones, and metals”, constituting 14.88% of total exports, went down by 22.98% y-o-y by September.

In addition, “Machinery and electrical instruments” (13.99% share of total exports) underwent an annual 7.25% shrinkage on the back of the 17.91% fall in tonnage exported to 41,469 tons which was partially offset by a rise in export prices.  In terms of the major destinations of the Lebanese exports, UAE, Iraq and Syria grasped corresponding weights of 10.46%, 7.61% and 7.42%.  In September alone, total exports declined by 13.62% from September 2014 to $243.39M this year. In parallel, overall imports down ticked by 14.23% to $1.43B. In turn, the trade deficit narrowed from $1.39B to $1.19B in September.  (BoS 14.11)

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5.2  Lebanon Ranks 7th out of 17 in BMI’s Medical Device Risk/Reward Index

In its quarterly Industry Risk/Reward Index for Q4/15, in terms of the medical device industry, Business Monitor ranked Lebanon 7th out of 17 in the Middle East and Africa (MEA) region (Saudi Arabia being 1st).  Lebanon’s overall score was 51.4 out of a hundred, above the regional average of 49.9.  In terms of industry rewards, the medical device market in Lebanon placed 13th (39.1 below the 42.2 regional average).  The market is expected to record a modest 2014-2019 compounded annual growth rate (CAGR).  While manufacturing proficiency is limited, the market mainly imports medical devices from China, Europe and the US.

Looking at the risk factor involved with the industry, Lebanon is ranked 8th in industry risk (56.7 above the 48.7 regional average) according to the report.  The Ministry of Public Health (MOPH) plays a limited role in regulating healthcare; nonetheless it has adopted a national medical device regulatory strategy and controls the importation of medical devices.  Regarding country rewards, it was placed 2nd (70.01 well above the 57.4 regional average).  Lebanon’s population is considered small, but its population growth is high based on world standards.  With less than 10% of the population 65 years and older, which is high relative to the region, medical device market could prosper in the country.  (BMI 09.11)

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5.3  Number of Lebanese Registered Cars Rises by 2.15%

According to the Association of Lebanese Car Importers, the number of newly registered commercial and passenger cars during the first 10 months of 2015 increased by 2.15% year-on-year (y-o-y) to 34,734 cars, which might be in line with the overlying factor that oil prices are on a bearish trend.  In fact, in the month of October alone, the number of total newly registered cares surged by 12.56% from October of last year.  Worth mentioning, newly registered passenger cars grasped 94.46% of total registration whilst newly registered commercial cars constituted the remaining 5.54%.  With that in mind, the slight progression on the sum of both came about from the yearly 2.27% increase in newly passenger registered cars to 32,811 by October, while commercial ones ticked up by 0.31% annually to 1,924.  Notably, there was a change in the market share of car importing-countries, due to the average 15% y-o-y depreciation of both the Japanese Yen and the Euro against the US dollar to Euro/Dollar 1.1552 and Dollar/Yen 120.15, respectively by End-October.

For instance, Japanese cars were the most demanded cars in Lebanon in the first 10 months, with their share improving from 34.98% in 2014, to 39.93% this year.  Meanwhile Korean cars lost their hold on the number one spot, going down from 39.83% to 32.95% in 2015.  European cars maintained their third rank, however with a higher market share of 20.69%, compared to 18.75% in 2014.  Looking at the car brand breakdown, Kia held the largest share of 18.19% of the total, followed by 15.78% for Toyota.  Furthermore, Hyundai and Nissan respectively grasped shares of 14.66% and 12.14%. In terms of sales per importer, NATCO SAL (imports Korean manufactured Kia) maintained its holding as top performer, grasping an 18.149% share, while BUMC (imports Japanese made Toyota and Lexus) and Century Motor Co (imports Korean produced Hyundai) captured 16.21% and 14.66% of the market, respectively.  (ALC 10.11)

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5.4  EBRD Downgrades Growth Forecast for Jordan’s Economy

The European Bank for Reconstruction and Development (EBRD) said it had downgraded its growth forecast for Jordan’s economy this year from 3.6% to 2.8%.  The London-based bank attributed the decision to revise its growth forecast to instability in countries bordering the Kingdom as the deteriorating regional situation is expected to continue to weigh on the economy.

Regional instability is adversely affecting Jordan’s economic performance, with growth dropping from 3.1% in 2014 to 2.2% in the first half of 2015, the EBRD said.  The worsening turmoil in neighboring Syria and Iraq has weighed on tourism and goods exports as Syria and Iraq together account for around 20% of Jordan’s export markets, and other important export destinations rely on transit routes through these countries, the EBRD said, indicating that the Kingdom’s exports contracted by over 8% on the year in the first half of 2015, and tourist arrivals were down by over 13% over the same period.

The EBRD said growth is expected to improve moderately to 3.5% in 2016, with risks skewed to the downside, adding that low global energy prices should continue to benefit Jordan given its high energy import dependency.  Last month, the World Bank and the International Monetary Fund (IMF) cut their growth forecast for Jordan in 2015 due to regional instability and the growth rate achieved in the first half of the year.  The World Bank expects Jordan’s economy to grow by 2.5% this year, while the IMF’s forecast was put at 2.9% from 3.1% projected earlier in the year.  The two international financial organizations and the government expect the economy to expand by 3.7% in 2016 and budget planners prepared next year’s budget accordingly.  (JT 05.11)

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►►Arabian Gulf

5.5  GCC Forecasted to Raise Desalination Capacity by 40% by 2020

The GCC will increase its total seawater desalination capacity by nearly 40% by 2020 in an effort to meet the rapidly increasing demand for potable water in the region.  The data, revealed by the International Water Summit in collaboration with MEED Projects said the GCC’s current seawater desalination capacity of approximately 4,000 million imperial gallons a day (MIGD) is set to increase to more than 5,500MIGD over the next 5 years as the GCC states invest heavily in increasing potable water supply.  Desalination is becoming an increasingly important matter for countries like the UAE and Qatar which have experienced rapid rises in demand for water on the back of strong economic and population growth, and Saudi Arabia where groundwater supplies are depleting.

Currently, demand for potable water in the region is about 3,300 MIGD, and is expected to grow to about 5,200MIGD by 2020.  While current reserve margins between supply and demand appear to be at comfortable levels, at country and local network levels the supply-demand gaps are much smaller.

For example, while Qatar and the UAE have enjoyed comfortable reserve margins in recent years, Saudi Arabia, Oman and Kuwait have faced real challenges meeting demand, especially during the summer months.  Ageing plants also do not always operate at full design capacity, further reducing the theoretical total output.  (AB 06.11)

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5.6  Qatar’s Population Hits New High of More Than 2.4 Million as of November 1st

Qatar’s population has risen to a new record high of more than 2.4 million, according to official figures for the end of October.  Some 2,412,483 people were recorded to be in the country by November, said figures from the Ministry of Development Planning and Statistics.  The figures represent a near 9% jump in the population since October 2014.  The last record high was six months ago, when 2,374,866 were recorded to be in the country at the end of May.  The latest data showed that the population continues to be dominated by men, with 1,812,418 males compared to 600,065 females.  Qatar’s monthly statistics bulletin covers both citizens and expatriates, but it does not include residents who are outside the country at the time the report is collated.  The rise comes as hundreds of thousands of migrant workers continue to pour into Qatar to work on major infrastructure projects ahead of the country hosting the 2022 World Cup tournament.  (bd 06.11)

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5.7  Moody’s Says UAE Set to Return to Budget Surplus in 2017

The UAE, which is currently experiencing a deterioration in its fiscal balances, will return to budget surpluses in 2017 owing to recovering oil prices and a planned increase in production levels, Moody’s Investors Service has said in a new report.  The ratings agency said it forecasts relatively modest budget deficits in 2015 and 2016, owing to the low oil price environment and given that hydrocarbons remain the backbone of the UAE economy despite diversification efforts.  Based on its oil price projections that have Brent rising to $73 by 2019 after a modest dip in 2016, the UAE government will record a budget surplus in 2017, with surpluses growing during the rest of the decade.

Moody’s said its forecasts are based on the UAE’s planned increase in the volume of oil production, with capacity targeted to rise by 30% by 2020.  The rating agency projects an upward trend, even if this target is not fully achieved, given that the planned increase is a response to growing domestic demand for processed hydrocarbons that has so far been met with imported gasoline.  Additionally, Moody’s said that the UAE sets itself apart from regional peers in its successful diversification efforts, moving away from hydrocarbon dependency and growing a competitive service sector.  Service industries accounted for 54.9% of nominal GDP in 2014, while the rating agency expects non-residential construction, tourism, trade and financial services to boost economic growth in 2016.  (AB 14.11)

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5.8  UAE Non-Oil Business Growth Slows to 30 Month Low in October

The UAE’s non-oil private sector lost further growth momentum at the start of the fourth quarter of 2015, with business conditions improving at the least marked pace in two-and-a-half years, according to an Emirates NBD survey.  At 54.0, the headline Emirates NBD UAE Purchasing Managers’ Index (PMI) fell from 56.0 in September and was also below the average recorded since data collection began in August 2009 (54.6).  Underpinning the slowdown were weaker expansions in output and new orders, but the respective rates of increase were nevertheless robust overall.

The overall loss of momentum was reinforced further by another modest rise in employment. The rate of job creation was muted in comparison with historical data and little-changed from the six-month low seen in September.  Data for prices signaled a moderation in cost pressures faced by UAE non-oil private sector companies.  Both salaries and purchasing costs rose more slowly in October, with the respective index for the former pointing to only a modest rise overall.  (NBD 06.11)

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5.9  UAE Imports Dh595 Million of Food from Australia

The UAE currently imports food products worth Dh595 million from Western Australia annually, and is one of the top five countries importing sheep and lamb meat from the region.  Some of the major food categories imported by the UAE include canola worth Dh278 million; sheep worth Dh63 million; lamb worth Dh60 million; and carrots worth Dh47 million.  A delegation led by Ken Baston, minister for agriculture and food; fisheries, Western Australia, visited the UAE to further expand the trade between the two countries.

The Middle East accounts for over 97% of Western Australia’s live sheep exports in 2013-14.  The top destinations in order of value were Kuwait, Qatar, Jordan and UAE.  The four markets have collectively been worth $2 billion to the Western Australian agro-food industry over the past five years.  Qatar presents significant opportunities in terms of strengthening investment ties.  Egypt is a potentially valuable market for Western Australia’s grains and meat.

The UAE is also one of Western Australia’s biggest trading partners for mineral and agriculture commodities.  With established business relations and growing bilateral ties, the State is fast increasing its presence in the UAE and in the Middle East and Africa.  (KT 06.11)

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5.10  Saudi Arabia Intends To Privatize Airports Next Year

Saudi Arabia will begin privatizing its airports and related services in Q1/16, the country’s civil aviation authority has said, as the kingdom seeks ways to support state finances due to lower oil prices.  The announcement is the latest sign the world’s top crude exporter is looking at ways to manage the impact of lower oil prices on its budget.  The IMF has forecast a deficit this year of more than $100 billion.

King Khaled International Airport, the main airport in the capital Riyadh, will be the first asset to be privatized in the first quarter next year.  Air traffic control and information technology units will followed in the second and third quarters respectively.  Other units at the country’s international airports, as well as local and regional airports, will also be privatized according to a schedule to run up until 2020.

Saudi Arabia has privatized units of the national airline in recent years.  Saudi Airlines Catering Co and Saudi Ground Services Co have been listed on the stock market and the cargo unit is expected to be next.  The kingdom has been investing heavily in aviation infrastructure to back the industry’s expansion plans, including building multi-billion dollar projects to expand capacity at the country’s airports.  But the kingdom, the biggest Arab economy and the largest country in the Gulf geographically, still has one of the smallest airline networks in the region relative to its size.  According to GACA 2014 statistics, the latest on its website, there are 27 airports in the kingdom of which four – in Riyadh, Jeddah, Dammam and Medina are – are international.  (Reuters 16.11)

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►►North Africa

5.11  Egypt’s Annual Inflation Rate Increases to 10.3% In October

Egypt’s annual inflation rate accelerated to 10.3% in October compared to 9.2% in September, official statistics agency CAPMAS announced on 10 November.  The monthly inflation rate hit 2.3% in October compared to September.  Urban annual inflation rate reached 9.7% while rural inflation rate hit 10.9%.  General prices soared in Egypt after the government raised fuel prices in July 2014 as part of its fiscal reform program aimed at reducing the ballooning budget deficit.  Egypt, a net importer, has also seen its Pound value weakened to the dollar.  (CAPMAS 10.11)

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5.12  Morocco’s Unemployment Rate Up in Third Quarter of 2015

Morocco’s unemployment rate reached 10.1% in Q3/15, an increase of 0.5% compared to the same period in 2014, according to a report on quarterly results for the labor market issued by the Haut Commissariat au Plan (HCP).  The number of unemployed people in the labor force grew by 5.8%, increasing from 1,140,000   people registered as unemployed in 2014 to 1,206,000 jobless in the same period in 2015, according to HCP.  The unemployment rate in urban areas rose from 14.5% to 15.1%, and in rural areas from 4.1% to 4.3percent.

Unemployment is acute for young people holding diplomas and those aged between 15 and 24 years old (collectively, 21.4%), and for those living in the countryside (39.3%).  The highest unemployment rates were reported among diploma holders (up 1.2 points) and young people aged between 15 and 24 years old (up 0 .8 point), underlined HCP.  The unemployed labor force also includes discouraged workers of legal employment age who are not actively seeking employment or who did not find employment after long-term unemployment. In the 2015 third quarter results, those unemployed persons accounted for 79,000 of the unemployed, or 6.6% of the total compared to 5.4% last year, according to the same source.  (MWN 05.11)

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5.13  EBRD Allocates € 35 Million to Boost Morocco’s Hydro Power

The European Bank for Reconstruction and Development (EBRD) is increasing its support to Morocco’s renewable energy sector with a loan of up to € 35 million to the Office National de l’Electricite et de l’Eau Potable (ONEE).  ONEE will use the funds to finance a rehabilitation program of 12 small and medium-sized hydropower plants and the refurbishment of safety elements,  The overhaul will contribute to the extension of the lifespan of the plants and improve their energy efficiency.  The loan is already the third transaction between the EBRD and ONEE, further strengthening the Bank’s close relationship with the state company and confirming its strong involvement in the power sector in Morocco.

Thanks to technical cooperation funded by the Government of Austria, the investment takes into account the risks to hydropower operations resulting from climate change and corresponding climate resilience measures.  (MWN 05.11)

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6.1  Turkish Economy Minister Promises Reform Package to Boost Economy

A number of economic reforms are in the pipeline to boost the Turkish economy following the 1 November elections, Turkish Finance Minister Mehmet Simsek has said in an interview with the Financial Times.  Following a rapid period of growth, which peaked with 9.2% in 2010, the Turkish economy now faces a rather slower pace, as the country’s GDP stood at 2.9% last year.  The reforms will focus on boosting tax collection, competitiveness, personal savings, employment and pensions, Simsek said.

He also mentioned efforts to deepen capital markets inside Turkey and changes to the tax laws which would encourage companies to borrow locally and raise equity instead of debt to fund expansion.  Simsek said reforms would aim to bring the current account deficit — widely seen as the country’s economic Achilles heel — under control by focusing on core issues of domestic consumption and increasing high value exports.  Concerns about the impact of election giveaways — which include a promised increase in the minimum wage and more payouts to farmers — are deemed overblown by Sismek since they total far less than 2% of GDP and have already been accounted for in the 2016 budget, with controlled spending in other areas.  Simsek estimated their annual costs to be about TL 24 billion, or approximately $8.4 billion.  (AA 05.11)

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6.2  Turkey’s R&D Outlays Rise But Still Below Target

Research and development (R&D) investments as a percentage of Turkey’s GDP rose from 0.95% in 2013 to 1.01% in 2014, yet the ratio lags far below the government goal of 3% for the year 2023.  R&D expenditures grew by 18.8% year-on-year in 2014 to reach a total of TL 17.6 billion, the Turkish Statistics Institute (TurkStat) said.  The government aims to push the R&D ratio to GDP up to 3% in 2023, the government’s target date for seeing Turkey among the top 10 economies of the world by GDP.  The R&D investments totaled 0.59% of GDP in 2005.

Regarding the distribution of R&D expenditures, commercial entities have the largest share, with 49.8%.  Universities accounted for 40.5% of spending on R&D, and the share going to public institutions was 9.7%.  As for the financing of R&D projects, commercial enterprises were responsible for 50.9% of all R&D investments last year, while 26.3% were financed by the government and another 18.4% by universities.  The remaining portion was financed by other national and foreign funds, TurkStat said.

While commercial enterprises made most of their R&D investments in the manufacturing industry, universities most often invested in medical sciences R&D.  The government’s R&D investments were principally in industrial production and technology.

Even though Turkey recorded an 18.8% increase in R&D investments last year, it was ranked among worst in terms of investment in R&D by the Organization for Economic Cooperation and Development (OECD), the Turkish Confederation of Employers’ Associations (TISK) said in a report in July.  (Zaman 17.11)

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6.3  Greece & Creditors Agree to Release More Bailout Cash

Greece struck a deal with European creditors on 17 November on economic measures it needs to make to get its next batch of bailout money, including a €10 billion ($10.7 billion) cash injection for its crippled banks.

Though the government of Prime Minister Alexis Tsipras had already made many of the reforms required by its third international bailout, it has balked at a few.  Those include a law making it easier to evict people in arrears on their mortgages and measures to reduce the burden on banks of bad loans.  But Pierre Moscovici, the European Union’s top economy and finance official, said Greece and the creditors had reached a deal on all outstanding issues — a development that also brings promised discussions on reducing Greece’s debt burden one step nearer.  Once Greek lawmakers approve the measures, Moscovici said the institutions that oversee Greece’s bailout program will assess Athens’ compliance, paving the way for the cash disbursements.

The news of the breakthrough also helped lift the main Greek stock index, which was up 2.4% in mid-afternoon trading.  In Athens, Finance Minister Tsakalotos confirmed that legislation would be fast-tracked though parliament and voted on late Thursday.  The key compromise made, he said, was on foreclosure law.  Assistance for distressed mortgage holders will be maintained, though fewer people will qualify for foreclosure protection.  The mortgage protection scheme is expected to remain in effect for three years, by which time Greece and its creditors hope the economy will be steadily healing.  Confirmation that Greece has cleared its latest hurdles means the country should get €2 billion in loans as well as €10 billion for its banks, which are reeling from limits on money transfers and another likely recession.  (AP 17.11)

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6.4  Greece Lost 13,000 Jobs in September

More than 13,000 thousand jobs were lost in the month of September in Greece, the second worst salaried employment drop in the last 15 years, according to the Labor Ministry.  In the past years Greece has faced repeated rounds of spending cuts and tax hikes imposed by the bailout agreement with Greece’s European creditors.  The country’s multiple rescues from the brink of bankruptcy since 2010 thanks to bailout loans have led to increasing unemployment and rising poverty, and resulted in an overall erosion of living standards.

Nearly 27.9% of the population could not find a job between 2009 and 2014, according to the Statistical Office of the European Union (EuroStat).  Employment has declined from 42.25% to 38.15% since last September, according to ministry statistics.  Part-time employment, however, has increased by 15.46% and shift work added 7.71%, suggesting that those who cannot find full-time jobs are obliged to work fewer hours and earn less.  More people are working without insurance benefits.  Because work is scarce, workers are willing to work without insurance benefits.

Greece’s bailout deal is to provide €86 billion ($95.5 billion) over three years if the Greek government enacts economic reform legislation as called for by the bailout agreement.  (Anadolu Agency 06.11)

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7.1  Qatar Stiffens Penalty for Insulting the National Flag

Qatar has issued a series of laws that increase the penalties for publicly insulting the flag of Qatar or the flag of any non-hostile country, international organization and entity.  Under the new law issued by the Emir Sheikh Tamim bin Hamad Al Thani, those who publicly insult the flag could face three years in jail and a fine of up to $54,000 (QR200,000), which is 14 times the previous fine of $4,000 (QR15,000).  The offences under the new law include acts like lowering a flag or damaging it or any other act that expresses hatred and disdain can attract punishment.

Qatar has also introduced new penalties for those who collect donations without proper authorization.  The new law prohibits anyone from collecting donations personally or through others, with a possible penalty of a maximum of one year in jail and/or a fine of up to $13,500 (QR50,000) for those who commit and offence.  A newspaper or a medium that publicizes advertisements that seek donations will also be punished under the new law, with a maximum fine of $27,000 (QR100,000) or suspension of its activities for no more than one year.  (AB 16.11)

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7.2  US Gives Apollo Moon Landing Flag to UAE Space Agency

The United States has given the UAE Space Agency the stars-and-stripes flag that was carried to the moon in 1971, as a token of its support for the country’s space exploration programs.  The UAE is investing billions of dollars in space-related industries and wants to be a global leader in the field.  It has two satellites in orbit above Dubai and a third planned for South Korea, and work is under way for its ‘Hope Probe’ mission to Mars, scheduled for 2021 to coincide with the 50th anniversary of the emirates.

At the Dubai Airshow on 10 November, the US International Pavilion presented the new UAE Space Agency, formed earlier this year to oversee space policy and research, with the same flag carried on board the Apollo 14 mission in 1971 –the year of the UAE’s independence.  (AB 11.11)

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7.3  Saudi Arabia Appoints First Woman as Honorary Consul

Hala Waleed Juffali has become the first woman to assume the post of honorary consul in Saudi Arabia following her appointment to the position by Saint Lucia.  The office of the honorary consul was opened in Jeddah as part of Saint Lucia’s efforts to expand its diplomatic presence in the Middle East.  Prior to assuming office, Juffali visited Saint Lucia and met with government officials and a host of personalities representing local authorities and organizations as well as governmental entities.  She also became acquainted with the business sector and lifestyle of Saint Lucia.  Upon obtaining the approval from Saudi authorities, Juffali started working at her office on 1 November.  (Saudi Gazette 04.11)

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8.1  World’s First Endovascular Neuromodulation Device Implanted in Man

Enopace Biomedical, a developer of minimally invasive, implantable endovascular neuromodulation therapy for heart failure patients, announced the first successful human implantation of its Harmony System, a catheter-based neurostimulator device to treat patients with congestive heart failure.  Enopace’s advanced technology consists of a leadless implantable catheter-based neurostimulator for heart failure patients, which increases cardiac efficiency by reducing left ventricular workload.

Enopace Biomedical, based in Caesarea, Israel, is developing an implantable, miniature neurostimulation device for congestive heart failure patients.  The company was founded in 2008 by Herzliya Pituah’s Rainbow Medical, a unique private operational investment company that seeds and grows start-up companies developing breakthrough medical devices.  By addressing significant unmet market needs, Rainbow Medical seeks to improve people’s lives and generate exceptional returns for its shareholders.  (Enopace Biomedical 06.11)

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8.2  Johns Hopkins – Luminox- Health Collaboration

Johns Hopkins Technology Ventures and Luminox- Health, a leading Israeli Health IT incubator, are collaborating on establishing an ecosystem that serves as worldwide leader in the exponentially growing eHealth market through the creation of a runway that connects Israel’s unique entrepreneurship and innovation with world-class medical expertise, faculty thought-leadership and technology at Johns Hopkins.  This collaboration provides the opportunity for Hopkins faculty to team-up with Israeli entrepreneurs in building disruptive solutions to modern medical challenges.

The JHTV-Luminox collaboration includes unique programs for Israeli startups and entrepreneurs, including the “HexciteIL” Program – designed to co-create startups by bringing well-vetted Israeli entrepreneurs to Baltimore and pairing them with outstanding multi-disciplinary teams comprised of Hopkins medical, computer science, and engineering faculty in an intensive 3-month program to identify use-cases, co-develop IP, perform rapid prototyping, and conduct sponsored research.  HexciteIL will be offered through the Johns Hopkins Medicine Technology Innovation Center, operating in FastForward East. HexciteIL is designed to translate disruptive solutions to address unmet needs in healthcare.

As part of the collaboration, Luminox is establishing an investment fund focused on early-stage digital health innovations that will collaborate with the FastForward program.  FastForward, Johns Hopkins’ innovation hub and technology accelerator, is designed to transform research into products for the commercial market.  Through this program, Luminox companies will conduct research at Johns Hopkins with its faculty members, co-developing startups side by side with Israeli entrepreneurs through the Johns Hopkins HexciteIL initiative.  This program takes startups through early-market feasibility evaluation, discovery of potential customers and development of technology.

Johns Hopkins Technology Ventures (JHTV) is The Johns Hopkins University’s intellectual property administration center, serving Johns Hopkins researchers and inventors as a licensing, patent and technology commercialization office, and acting as an active liaison to parties interested in leveraging university research or materials for academic or corporate endeavors.

Luminox is a leading Israeli digital health startup hub and a strategic innovation partner of the world’s leading corporates.  Luminox scouts, builds, nurtures and scales up digital health startups.  From its headquarters in Tel Aviv, it is plugged-in to the heart of Israel’s movers and shakers in the digital health domain.  Luminox’s expertise spans across the complete value chain of the Digital-Health ecosystem, including clinical informatics, mobile-Health, Big-Data, Tele-Care and Digital-Therapeutics.  (JHI 06.11)

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8.3  Syneron Candela Announces New FDA Clearance for the CO2RE System

Syneron Medical announced that the US FDA has granted numerous additional indications for use of the CO2RE CO2 device.  This clearance, including more than 90 specific indications in total, significantly expands the business opportunity for CO2RE users for high patient demand treatments.  The new indications for use include gynecology applications (including vaginal treatments), wrinkles, scars, and a wide range of dermatology and plastic surgery indications.  CO2RE incorporates proprietary advanced scanner technology, high peak power and a high brightness CO2 laser. A previously FDA cleared version of the device was initially launched in 2010.  The CO2RE is currently sold in more than 50 countries.  CO2RE is a CO2 laser offering multi-depth pulse technology, delivering precisely fractionated beam patterns to treat two layers of the epidermis and dermis simultaneously.  This precision technology creates areas of superficial and deep ablation and coagulation to activate remodeling at several tissue depths.  This same technology presents advantages in treatment of several body areas in addition to the demonstrated performance of the aesthetic treatments.

Syneron Candela is a leading global aesthetic device company with a comprehensive product portfolio and a global distribution footprint.  The Company’s technology enables physicians to provide advanced solutions for a broad range of medical-aesthetic applications including body contouring, hair removal, wrinkle reduction, tattoo removal, improving the skin’s appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite.  Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Candela are located in Israel.  (Syneron Medical 05.11)

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8.4  Teva Announces Breakthrough Therapy for the Treatment of Tardive Dyskinesia

Teva Pharmaceutical Industries announced that the U.S. FDA has granted Breakthrough Therapy Designation status to SD-809 (deutetrabenazine) for the treatment of patients with moderate to severe tardive dyskinesia, a hyperkinetic movement disorder affecting about 500,000 people in the US.  Breakthrough Therapy Designation is granted to a drug that is intended to treat a serious condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement on a clinically significant endpoint over available therapy or placebo where there is no available therapy.  For SD-809, the designation request included results from Teva’s Phase II/III study, Aim to Reduce Movements in Tardive Dyskinesia (ARM-TD). In the ARM-TD study, SD-809 was compared to placebo for change in Abnormal Involuntary Movement Scale (AIMS) score from baseline to end of therapy.

Tardive dyskinesia, for which there are no approved therapies in the United States, has been described as a condition characterized by repetitive and uncontrollable movements of the tongue, lips, face, and extremities and has been reported with some widely used medications for psychiatric conditions such as schizophrenia and bipolar disease, as well as with certain drugs used for treating various gastrointestinal disorders.

Teva Pharmaceutical Industries is a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions to millions of patients every day.  Headquartered in Israel, Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,000 molecules to produce a wide range of generic products in nearly every therapeutic area.  (Teva 09.11)

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8.5  Betalin Therapeutics Introduces Novel Approach to Treat Diabetes

Betalin Therapeutics , a biotech company specializing in tissue engineering for curing diabetes, introduces the Engineered Micro Pancreas (EMP), a novel technology that provides significant levels of glucose-regulated insulin secretion over extended periods of time.

Betalin Therapeutics’ EMP is based on the premise that in order for beta cells to properly function, it is necessary to provide an appropriate connective tissue scaffold that ensures the long term survival of the cells.  The proprietary platform technology is a method to prepare acellular organ-derived micro-scaffolds that preserve the architecture and the basic composition of organ connective tissue and ensure that no seeded cell will be more than 150 microns from a source of nutrients and gases.

Key findings show that human islets, or beta cells derived from them in EMPs, function in vitro similarly to freshly dissected pancreatic islets.  In particular, they continue to secrete insulin in a regulated manner and in levels comparable to fresh islets for over three months, whereas beta cells that are not supported by a scaffold retain functionality for only a few days.  In addition to supporting regulated levels of insulin secretion, the EMPs become readily vascularized when transplanted into suitable hosts.

Ramat Gan’s Betalin Therapeutics strives to cure diabetes by a single transplant of its proprietary Engineered Micro Pancreas (EMP), which provides significant levels of glucose-regulated insulin secretion over extended periods of time.  The company was established in 2015, based on technology developed at the Department of Cell and Developmental Biology at the Hebrew University of Jerusalem and was licensed under an exclusive worldwide agreement with Yissum, the technology transfer office of the Hebrew University.  (Betalin Therapeutics 10.11)

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8.6  ElMindA Raises $28 Million to Accelerate its BNA Technology Adoption

ElMindA announced the successful completion of an oversubscribed $28 million Series C financing round.  The global syndicate of investors in this round includes Shanda Group, New England Patriots owner – The Kraft Group, Wexford Capital, WR Hambrecht & Co, Palisade Capital Management, OurCrowd and Healthcrest AG and others.  Proceeds will be used to continue advancement of ElMindA’s proprietary BNA (Brain Network Activation) system, which uses multi-channel EEG-ERP electrophysiology technology to provide a more accurate, objective assessment of brain functionality over time.  ElMindA will also use the funds for commercial and clinical adoption following BNA’s 2014 FDA clearance in the U.S., and CE Mark approval in Europe for brain function assessment.

BNA is a non-invasive technology for measuring and analyzing brain function.  It uses advanced signal processing and machine-learning algorithms of big populations’ data in order to identify patterns of neuronal networks activated during a specific brain function, such as memory or attention.  The information can then be utilized for personalized clinical decision making.  It has the potential to impact an estimated two billion people worldwide living with neurological and psychiatric disorders, such as Alzheimer’s disease, Parkinson’s disease, depression and ADHD, as well as those who have sustained traumatic brain injuries, like concussion.

Herzliya’s ElMindA was founded in 2006 to address an unmet need to objectively assess brain health and brain-related disorders in order to enhance diagnosis and treatment across a full spectrum of neurological and psychological disorders.  ElMindA translates state-of-the-art neuroscience via advanced algorithmic science into clinically meaningful Brain Network Activation (BNA) maps.  (ElMindA 16.11)

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8.7  BiondVax Receives Patent in Korea for its Universal Flu Vaccine

BiondVax Pharmaceuticals announced that its main patent on the Multimeric Multi-Epitope Polypeptide Influenza Vaccines family was granted in Korea.  This is a family of patents for vaccination against influenza in humans, and specifically vaccines that confer long-lasting protection against multiple and differing flu strains.  The Korean Intellectual Property Office accepted BiondVax’s claims for M-001 and similar polypeptides.  This patent approval strengthens BiondVax’s intellectual property in international markets.  Patent protection has already been granted in other countries: the US, Europe, Japan, Hong Kong, Australia, China, Russia and Mexico.

Ness Ziona’s BiondVax is an innovative biopharmaceutical company developing a universal flu vaccine, designed to provide multi-season and multi-strain protection against most human influenza virus strains, including both seasonal and pandemic flu strains.  BiondVax’s technology utilizes a unique, proprietary combination of conserved and common peptides from influenza virus proteins to activate both arms of the immune system for a cross-protecting and long-lasting effect.  (BiondVax 17.11)

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9.1  Introducing Everysight, a Visionary Wearable Technology Company

Everysight announced its official launch.  Everysight is spun out of Elbit Systems, the largest defense technology company in Israel and market leader in advanced fighter jet and rotary wing helmet mounted display systems, and backed by external investors.  The Everysight team brings decades of cutting edge experience in augmented reality and vision display systems to the consumer wearable market.

Driven by a passion for cycling, the company chose to focus first on smart glasses for cyclists and, in 2016, will launch its first product: Raptor by Everysight.  Raptor smart glasses pack uniquely unobtrusive display technology and powerful functions into a deceptively sleek design.  The team spent several years working with professional cyclists to design and optimize Raptor, which looks and feels like traditional sports eyewear, but with hidden technology that helps athletes get the most out of their activity.

Raptor will also be equipped with Everysight Beam technology, which sets it apart and makes it a superior and first-of-its-kind product.  Similar to what pilots have been using for decades, Everysight Beam is a unique see-through display technology that crisply overlays information directly in the wearer’s line of sight.  With Everysight Beam, the lens itself serves as the augmented display, eliminating offset displays found on other smart glasses.  Everysight Beam avoids peripheral distractions, reduces eyestrain and eliminates opaque display elements that can obscure the view.  In addition to superior optics, smart glasses with Everysight Beam are stylish, lighter and more comfortable.

Haifa’s Everysight is a consumer smart glasses company spun out of Elbit Systems – the largest defense technology company in Israel and the market leader in advanced fighter jet and rotary wing helmet mounted display systems – and backed by external investors. Everysight is revolutionizing the way people see and experience information. With decades developing vision systems and heads up displays, the Everysight team brings cutting edge experience to the field of wearable technology.  (Everysight 17.11)

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9.2  VIPNET Replaces WiMAX Network with JET Beamforming PtMP from RADWIN

RADWIN announced that VIPNET, a major ISP in the Ivory Coast, has chosen RADWIN 5000 JET Beamforming Point-to-MultiPoint systems to replace its existing 3.5 GHz WiMAX network.  The new RADWIN-based corporate access network spans the major cities in the Ivory Coast, providing ultra-capacity connectivity to key institutions including Banks, Government offices, Mining and Gas & Oil companies.

Tel Aviv’s RADWIN is a leading provider of wireless broadband backhaul, access and mobility solutions, designed to perform in the most challenging environments. RADWIN’s solutions deliver ultra-capacity and incorporate the industry’s smartest technologies including innovative Smart Beamforming antennas.  (RADWIN 05.11)

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9.3  MTI Wireless Edge New 60GHz Flat Antenna is Now COTS

MTI Wireless Edge announced the commercial availability of its 57-66GHz 38.5dBi ETSI Class 2 embedded flat antenna as part of the well-established product line of high performance low cost antennas covering the Point-to-Point V-Band and E-Band applications.  The range also includes COTS 41/44.5/50.5dBi parabolic dishes with OMT in E-Band targeting the PtP wireless links as well as the Small Cell Backhaul (SCBH) market for 4G/LTE. All antennas are built to withstand the toughest electrical and environmental requirements according to international standards such as ETSI while maintaining low cost.  MTI made a major investment in its test and production facilities and is fully equipped with the state-of-the-art equipment to support challenges involved with the V-Band and E-Band up to 90GHz.

Rosh HaAyin’s MTI Wireless Edge is a leader in the development and production of high quality, low cost, antenna solutions for wireless applications such as 4G/LTE, Broadband Wireless Access, SCBH and RFID.  MTI has more than 40 years’ experience in supplying antennas for both military and commercial applications from 100 KHz to 90 GHz. MTI flat panel antenna range includes base station, subscriber and Omni Directional antennas for all broad and narrow band WiMAX and broadband wireless applications in both licensed and unlicensed bands.  (MTI 09.11)

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9.4  Aurora & Stratasys Deliver World’s First Jet-Powered, 3D Printed UAV

Stratasys has teamed with Manassas, Virginia’s Aurora Flight Sciences to deliver, what is believed to be, the largest, fastest, and most complex 3D printed unmanned aerial vehicle (UAV) ever produced.  Unveiled for the first time at the recent Dubai Airshow, the high-speed aircraft is built using lightweight Stratasys materials to achieve speeds in excess of 150mph.  To realize the joint goal to design and develop an advanced 3D printed demonstration aircraft, the final UAV – which has a 3m (9ft.) wingspan and weighs only 15kg (33lb.) – leveraged 3D printing for 80% of its design and manufacture and is built on the expertise of Aurora Flight Sciences’ aerospace and Stratasys’ additive manufacturing.

For Aurora, Stratasys’ additive manufacturing solutions provided the design-optimization to produce a stiff, lightweight structure without the common restrictions of traditional manufacturing methods.  This also enabled the cost-effective development of a customized – or mission-specific vehicle – without the cost constraints of low-volume production.

For more than 25 years, Stratasys has been a defining force and dominant player in 3D printing and additive manufacturing – shaping the way things are made.  Headquartered in Minneapolis, Minnesota and Rehovot, Israel, the company empowers customers across a broad range of vertical markets by enabling new paradigms for design and manufacturing.  (Stratasys 09.11)

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9.5  Argentina Signs for AESA-equipped Kfir Fighters

Argentina signed a contract on 10 November covering the purchase of 14 Kfir Block 60 fighters.  The nation’s air force opted to acquire upgraded examples of the Israel Aerospace Industries-produced combat aircraft, which have been non-operational for two decades.  IAI had been offering a Block 60 version of the roughly 40-year-old Kfir design, powered by a GE Aviation J79 engine.  The company says the power plant will be supplied in a “zero-hour” condition after a complete overhaul, with replacement required after 1,600 flight hours.  The upgraded fighter also will be fitted with an Elta Systems EL/M-2032 active electronically scanned array (AESA) radar, and use open architecture avionics that will allow the customer to install other systems.  Elta says the sensor provides an all aspect, “look-down shoot-down” performance, and will support simultaneous air-to-air and strike missions, with the ability to track up to 64 targets.

The nation’s pending acquisition will see it join Colombia, Ecuador and Sri Lanka in operating the Kfir.  The Colombian air force has already upgraded its C10- and C12-model examples to IAI’s enhanced standard, including the AESA radar and Rafael Litening targeting pod.  The cockpit features a head-up display and large multi-function displays, while the type is also capable of being refueled in flight.  (FG 10.11)

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9.6  One-Time Shot of Power that Keeps Your Mobile Phone Mobile

For all of us who’ve experienced that sinking feeling as our phone battery edges toward the red zone when we’re nowhere near a working outlet, Israeli startup Mobeego has welcome news.  On November 9, Mobeego announced a global launch of its disposable charger, which can power a smartphone or old mobile phone battery for up to four hours.  The $2.50 disposable charging unit, playfully designed in the shape of a tiny energy-drink can, connects to the phone via a $5 miniature adapter (for both Android and iOS phones) that you’d buy once and keep on your key ring or in your wallet.  Each adapter comes with one free charging unit.  Mobeego says the charger is designed as an inexpensive, simple, instant and environmentally friendly solution for continuous and worry-free use of smartphones, without the need to use a standard smartphone charger, pre-charge a charging unit, use a cable or find an available power outlet.  Ordinarily the words “disposable” and “environmentally friendly” do not go together, but Mobeego has designed its point-of-sale display with a slot into which used chargers can be deposited for recycling and reuse of some of the parts.  A newer model will include a refundable deposit to assure a greater number of returns.  Mobeego is reportedly in advanced talks with potential franchisees in countries including the US, Germany, France, Belgium, Russia, South Africa, Chile and Israel.  The company plans to sell several hundred thousand charging units within the coming months and several million charging units during 2016. (Mobeego 12.11)

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9.7  Mellanox Introduces the Switch-IB 2, World’s First 100Gb/s Smart Switch

Mellanox Technologies announced Switch-IB 2, the new generation of its InfiniBand switch optimized for High-Performance Computing, Web 2.0, database and cloud data centers, capable of 100Gb/s per port speeds.  Switch-IB 2 is the world’s first smart network switch that offloads MPI operations from the CPU to the network to deliver 10X performance improvements.  Switch-IB 2 will enables a performance breakthrough in building the next generation scalable and data intensive data centers, enabling users to gain a competitive advantage.

Switch-IB 2 enables application managers to use the power of data.  It integrates 144 SerDes which can operate at 1Gb/s to 25Gb/s speeds per lane and delivers 7.02 billion messages-per-second, 90ns switch latency and low power consumption, making Switch-IB 2 the best solution for high-performance computing, cloud, Web 2.0, database and storage centers.  Collective operations, commonly used in HPC communication protocols such as MPI and SHMEM, have implications on overall application performance and scale.  Switch-IB 2 enables the switch to manage collective communications using embedded hardware.  Switch-IB 2 decreases the amount of data traversing the network, reduce application latency with additional benefit of freeing up CPU resources for computation rather than using them to process communication.

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 12.11)

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9.8  World’s Lowest Resistance, Fastest, GaN Power Switches

VisIC Technologies, a technology-leading developer of Gallium Nitride power semiconductors, has now delivered ALL-Switch Evaluation Boards (EB) and samples to leading customers.  The EB allows customers to perform extensive testing confirming ALL-Switch’s leadership switching parameters.  The EB includes gate driver and switching control logic based upon commercially available components. ALL-Switch is configured for hard switching on the EB and can switch a 400V load with greater than 30A currents at over 500kHz.  Meeting the highly demanding requirements of power switching with GaN has been the Holy Grail for power conversion research in the last decade.  ALL-Switch is a product realization of that research.

Based in Rehovot, Israel, VisIC was established in 2010 by experts in GaN transistors to develop and sell advanced GaN-based power conversion products.  VisIC has been granted keystone patents for GaN technology and has additional patents pending.  (VisIC 12.11)

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9.9  WhiteSmoke Releases New Grammar Checking Software

WhiteSmoke launched a new version of their grammar checking software, named “WhiteSmoke Expert”, available for PC users.  WhiteSmoke’s software already corrected over two billion grammar errors over the course of its fourteen-year run.  Earlier this year, WhiteSmoke released a mobile app, available on Android and iOS.  Tel Aviv’s WhiteSmoke was established in 2002 to answer an emerging need – quality written communications in a time of increasing global interactions brought on by the growth of the internet.  Since that time, millions of users the world over have relied on WhiteSmoke products to ensure their writing is clear and professional.  (WhiteSmoke 12.11)

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9.10  SuperCom Signs MoU for Delivery of Mobile Money Solution in Africa

SuperCom has signed a memorandum of understanding with a leading Mobile Network Operator in Africa to implement and deliver a mobile money solution using SuperCom’s SuperPay technology.  Both parties have agreed to jointly deliver an advanced secure mobile wallet to be used by millions of existing subscribers with any mobile device and to deploy matching mobile POS technology through the operator’s vast agent network.  The solution will provide a range of services such as cash deposits and withdrawals, money transfer, bill payments, account top ups, in-store payments and more.  The business model is based on revenue sharing between the Mobile Network Operator and SuperCom.

SuperPay is SuperCom’s secure mobile payment hybrid suite which brings a new level of secured cross-network mobile payment transaction capabilities.  Designed specifically as a flexible end-to-end mobile payments solution, the SuperPay suite is a secure and effective customizable answer for governments, MNOs and banks.

Since 1988, Herzliya’s SuperCom has been a leading global provider of traditional and digital identity solutions, providing advanced safety, identification and security solutions to governments and organizations, both private and public, throughout the world.  (SuperCom 13.11)

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9.11  IBM Teams with Mellanox to Maximize Power Systems Performance

Mellanox Technologies announced that IBM has selected Mellanox’s ConnectX-4 EDR InfiniBand adapters and EDR 100Gb/s IB switch systems for their new Power Systems LC line of servers designed for cloud environments and high performance cluster deployments and infused with OpenPOWER-based innovations.  The technology will be utilized in the servers and high performance computing clusters as a part of an open architecture model which will feature technology from IBM, Mellanox and several other members of the OpenPOWER Foundation.

Mellanox’s ConnectX-4 adapter cards with Virtual Protocol Interconnect (VPI) support both EDR 100Gb/s InfiniBand and 100Gb/s Ethernet connectivity, and are the most powerful, flexible solutions for today’s emerging data center.  Mellanox’s EDR InfiniBand switch family provides industry-leading processing efficiency, with features such as static routing, adaptive routing and advanced congestion management. These combined features ensure the maximum effective fabric bandwidth by eliminating processing bottlenecks.

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 04.11)

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9.12  Morphisec Debuts Moving Target Defense

Beer Sheva’s Morphisec ended its stealth mode with the unveiling of Morphisec Moving Target Defense, a new way for enterprises to defend against targeted and zero-day cyberattacks that exploit application vulnerabilities.  Spearheaded by leading Israeli security experts, Morphisec is offering a powerful and easy-to-use prevention solution that turns the tables on attackers, forcing them to futilely chase after unpredictable moving targets.  Morphisec recently closed its Series A round of funding with key investors such as JVP (Jerusalem Venture Partners), GE Ventures and Deutsche Telekom.

Morphisec’s game-changing security solution leverages the concept of polymorphism, a technique commonly used by attackers to evade traditional security solutions.  In addition to allowing enterprises to block unnoticed attacks, Morphisec’s real-time investigation tools accurately and instantaneously identify attack fingerprints – one of its big advantages over existing forensic solutions.  IT security managers using Morphisec Moving Target Defense can rest assured their network is protected from unknown (zero-day) and attacks which seek to exploit unpatched application vulnerabilities.  (Morphisec 17.11)

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10.1  Israel’s CPI Rises Unexpectedly in October

Israel’s Consumer Price Index (CPI) rose 0.1% in October, the Central Bureau of Statistics reported on 15 November.  Expectations on the capital market were for a 0.1% fall in the index, or that it would remain unchanged.  In 2015 to date, the CPI has fallen 0.5%. In the past twelve months, it has fallen 0.7%.  The rise in October was also surprising considering that VAT fell from 18% to 17% on the first of October.  The outstanding price rises in October were in tomatoes (39.4%), clothing (2.9%), tourist accommodation (6%), shoes and footwear (4%), non-alcoholic beverages (3.1%), cakes (5.3%), and university fees (0.7%).  The outstanding price falls in October were in overseas flights (3.4%), electrical and household appliances (3.5%), cucumbers (30.4%), cars (1.1%0, and communications (0.8%).  (CBS 15.11)

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10.2  Israeli Economy Growing Again

After the stagnation of the second quarter, the Israeli economy is showing modest recovery.  In preliminary figures released on 16 November, the Central Bureau of Statistics says that GDP grew by an annualized 2.5% in the third quarter of this year.  The annual growth rate was 0.2% in Q2/15 and 2.5% in Q1/15.  The third quarter growth reflects rises in private consumption, in public spending, in investment in fixed assets, and in exports of goods and services excluding diamonds and start-up companies.

Imports of goods and services fell 0.2% in the third quarter, following a 7% drop in the previous quarter.  Spending on private consumption rose 2.4% (on an annual basis) in the third quarter, which translates into a 0.3% rise in spending per capita.  The rise in private consumption follows an annualized fall of 0.32% in the second quarter and an annualized rise of 3.7% in the first quarter.

Investment in fixed assets rose by an annualized 0.7% in the third quarter, after a 3.1% drop in the second quarter.  Investment in residential construction rose by an annualized 1.7% in the third quarter, following on from a 3.4% rise in the second quarter and a 5.3% rise in the first.

Exports of goods and services excluding diamonds and start-up companies rose by an annualized 9.7% in the quarter.  This breaks down into a 7.7% annualized rise in industrial exports excluding diamonds, a 45.9% annualized rise in tourism (9.9% on a quarterly basis), and a 10.2% annualized rise in exports of other services excluding start-up companies.

Total exports of goods and services rose by an annualized 4.4% in the third quarter, after a fall of 9.6% in the previous quarter, with exports of diamonds down 42.4% on an annualized basis (12.9% on a quarterly basis), and a decline in the export of start-up companies.  (CBS 16.11)

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10.3  OECD Sees 3.25% Growth in Israel During 2016

The OECD said that after a moderate pace in 2015 (2.6%), economic growth is projected to pick up to around 3.25%% in 2016 and 2017.  This increase in activity should keep unemployment low.  A rise in the minimum wage, falling oil prices and budgetary measures to stimulate the economy will support domestic demand, while exports are likely to recover with the improvement in the global economy.  The OECD’s economists added that following an accommodative monetary policy is appropriate to prevent an appreciation of the shekel, as long as inflation remains low and other major central banks maintain their expansionary stances.

The OECD’s economists remain concerned about Israel’s real estate market.  Property market tension poses a risk, however, and macro-prudential policy may need to be reinforced if necessary.  The fiscal easing planned for 2016, including tax cuts and major spending increases, will make the medium-term public debt reduction objective more difficult to achieve.  Stepping up structural reforms to strengthen competition in sheltered sectors would be beneficial to boost productivity and promote inclusive growth.

Concerning the environment, the OECD said that the commitment to reduce CO2 emissions per capita by 26% before 2030 is welcome but could be more ambitious. Introducing a carbon tax would help to meet this objective in a growth-friendly way.  Pursuing public rail transport development would also reduce the costs of urban congestion.  The taxation of private cars should target their use rather than their ownership, and the tax breaks associated with company cars should be abolished.  (Globes 09.11)

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10.4  Israel Well Placed in OECD Health Index

The development of modern medicine is still slow in comparison with the rate at which the global population is aging and the resulting chronic morbidity, but the health indices in Israel are fairly good in comparison with Western countries, according to a new Organization for Economic Cooperation and Development (OECD) report published by the Central Bureau of Statistics.

For example, the rate of hospitalization in Israel for heart failure in 2013 was 233 per 100,000 people over age 15, compared with 380 in Germany, 370 in the US and an average of 250 in OECD countries.  The 30 day mortality rate in Israel among those aged 45 years or more suffering a severe heart attack is 8%, compared with an OECD average of 9%.  Israel is also above average in the extent of mammography tests, inoculation of senior citizens against influenza and in other aspects.  In breast cancer, Israel is slightly above average in its recovery rate, but not in its mortality rate, which is 31% for breast cancer, compared with the OECD average of 25%.

The OECD report also shows that the detection rates for cervical cancer and colon cancer in Israel are higher than average, with the mortality rate from cervical cancer being lower than average, while the mortality rate for colon cancer is about the mean.  Per capita national spending in Israel on health in terms of purchasing power is only $2,500, compared with $5,800 in Norway, $4,300 in Canada and an OECD average of $3,600.  Additionally, private spending on health in Israel accounted for 40% of total national spending on health, compared with an OECD average of only 27%.  (CBS 04.11)

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10.5  Israel’s Incoming Tourism Increases Impressively in October

Despite the wave of Palestinian terrorism, data compiled by the Central Bureau of Statistics showed that 290,000 tourists visited Israel in October — a 29% increase from the 224,000 who visited in September.  The number of incoming tourists this October also marked a 5% increase from the previous October.  From January to October of this year, 2.4 million tourists visited Israel — a 4% drop from the same period the previous year.  Of the tourists who visited Israel in October, 257,000 arrived in Israel by air, while 33,000 arrived by land (25,000 via crossings with Jordan and 8,000 via crossings with Egypt).  (CBS 09.11)

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11.1  OMAN:  Oman Looks East

Oman’s foreign policy has recently been the center of considerable analysis.  As a country that harbors no hostility toward any government in the world and as the organizer and host of diplomatic talks between global adversaries, Oman has been called the Switzerland of the Middle East.  As the Gulf Cooperation Council (GCC) member on the best terms with Iran, Muscat has for decades served as a diplomatic bridge between the Islamic Republic and the Gulf Arab states and their Western allies.

Giorgio Cafiero posted on 11 November in Al-Monitor that indeed, Muscat’s diplomatic maneuvers have recently shaped world history.  In July 2012, Oman hosted secret talks between US and Iranian officials, which culminated in the landmark Iran nuclear deal signed earlier this year in Austria.  Most recently, Oman’s flurry of diplomatic activities aimed at peacefully resolving the crises in Syria and Yemen have also made headlines in the international press.

While Oman continues to play its unique diplomatic cards in the region, the sultanate is also following other GCC states in shifting attention east toward China.  Since Oman and China established official diplomatic relations in 1978, China’s thirst for oil has been the most influential factor shaping Sino-Omani relations.  In recent years, however, Muscat and Beijing’s relationship has expanded into non-oil sectors, paving the way for the two nations to form a stronger long-term partnership.

Ties between the two countries date back to pre-Islamic history.  Oman sent trade missions to China as early as the fourth century.  By the eighth century, the Omanis reportedly introduced eastern China to Islam, according to former US Ambassador to Oman Gary Grappo.

In 1983, Oman became the first Arab country to export its oil to China.  Beijing recognized the sultanate as a potentially important player in China’s quest to secure Middle Eastern energy supplies.  Over the years, China’s consumption of Oman’s oil has become crucial for both nations’ economies.  China is Oman’s top export partner, last year accounting for 43% of the nation’s exports (the United Arab Emirates and South Korea ranked second and third at 10% and 8%, respectively), and Oman is China’s fourth-largest trading partner in the Middle East and North Africa region.

Although oil continues to dominate Sino-Omani trade, the nature of their bilateral relations has expanded.  Since 2005, both governments have held annual strategic consultations to address piracy in the Gulf of Aden and other international security threats.  In 2010, Muscat and Beijing launched the Oman-China Friendship Association to strengthen ties in economic, social, cultural and scientific sectors.

According to Muhammad Zulfikar Rakhmat, an expert on Sino-GCC relations, Omani and Chinese firms have signed construction deals for a power plant as well as for infrastructure projects, including a port and facilities for shipbuilding and water management.  There are more than 40 Chinese companies doing business in Oman.  Rakhmat also notes that Oman and China’s growing ties have taken on a cultural and humanitarian nature.  For example, in 2007, Muscat and Beijing agreed to establish the chair of Arabic studies at China’s Peking University, and more than 3 million Chinese visited Oman’s pavilion at the 2010 Shanghai Expo.  Furthermore, Oman responded to the Sichuan earthquake of 2008 by providing the country with 350 residential housing units, along with medical and education facilities.

It appears Muscat also is leveraging its deepening relationship with China to spread Omani influence in east Africa.  Last month, construction began on a $10 billion port in Bagamoyo, Tanzania (about 50 miles north of Dar es Salaam), a special economic zone in the east African nation.  The port is a joint project among China Merchants Holdings International Co., a Hong Kong-based conglomerate; Oman’s State General Reserve Fund, a sovereign wealth fund in Oman; and the government of Tanzania.  Tanzanian President Jakaya Kikwete welcomed the project, hailing it as a means to achieve an “industrial revolution in Tanzania.”

Oman’s free-trade zones offer China a politically stable entry point into the Arab and African worlds to sell cheap consumer goods and make investments.  In turn, a strong relationship with China gives Muscat the means to gain greater autonomy from the West.  The political risks of appearing too closely aligned with the United States and United Kingdom are mitigated by strengthening relations with China (the same can be said of Oman’s growing relationship with Iran).  After the United States launched operations in Afghanistan in 2001 and Iraq in 2003, Omani police forcefully quelled demonstrators protesting US foreign policy.  According to experts, these demonstrations also signaled disapproval of Oman’s alliance with Washington and London.  In fact, prior to 2004, the US military used Oman’s facilities for its operations in Afghanistan and Iraq.

Looking forward, Oman’s relationship with China — the world’s largest economy — has great potential to grow.  Beijing has not played an aggressive role in the Mideast since the Dhofar Rebellion, which ended in 1976.  Although human rights issues in Xinjiang and China’s support for the Syrian regime have led conservative Gulf Arabs to criticize Beijing, China ultimately does not carry the same baggage on the “Arab Street” as does the United States.  Thus, the ruling monarchy faces fewer political risks by reinforcing its ties with Beijing.  Economically, the energy demands from China’s middle class will ensure that the world’s most populous country remains Oman’s top destination for oil exports, especially as the United States becomes progressively less reliant on Middle Eastern oil.

At this juncture, unknown variables surrounding Oman’s succession issue — the ailing, 74-year-old Sultan Qaboos bin Said Al Said has not named an heir — have left many analysts speculating about the Gulf Arab nation’s future, both domestically and on the international stage.  Although unpredictable factors will shape Oman’s future, it is difficult to imagine China not playing an increasingly important role as a vital strategic partner of the sultanate, regardless of who succeeds Qaboos.  (Al-Monitor

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11.2  EGYPT:  Outlook Revised To Stable; Ratings Affirmed At ‘B-/B’

On 13 November, Standard & Poor’s Ratings Services revised its outlook on the Arab Republic of Egypt to stable from positive and affirmed its ‘B-/B’ long- and short-term foreign and local currency sovereign credit ratings.


The outlook revision to stable reflects our view that the economic recovery will not outperform our previous expectations, with GDP growth projected at 4.0% on average over the next three years.  We now also think that Egypt’s external imbalances will persist, with gross external financing needs exceeding 100% of the country’s current account receipts and usable reserves in the next few years.  In our view, the strong external support that Egypt has received over the past few years could be affected by fiscal pressures in Gulf Cooperation Council (GCC) countries.

We expect that Egypt’s economic growth will be supported by broad political stability, alongside policymakers’ commitments to embark on a new round of economic and fiscal reforms.  The new fiscal reforms include measures on both the expenditure and revenue sides, such as the wage reform and the more recently introduced value-added tax (VAT) system on goods and services.  We understand that the cabinet has ordered the Minister of Finance to submit the VAT law for ratification.

That said, in our view, Egypt’s economic recovery will depend on maintaining security, sociopolitical stability, and on continuing to address bottlenecks and structural shortcomings in the energy and the foreign exchange markets.

Our ratings on Egypt remain constrained by wide fiscal deficits, high domestic debt, low income levels, and institutional and social fragility.  Although we expect GCC states to continue to provide financial and economic assistance to Egypt in the form of direct investment, participation in new projects, and concessional loans to purchase petroleum products, given Egypt’s strategic importance in the region and in present-day conflicts in the Middle East, we also expect that fiscal pressures in GCC countries could affect such support, in particular the level of grants.

We project Egypt’s real GDP growth will accelerate to 4.2% in 2015, which represents a significant rebound from the average 2.1% recorded in 2011-2014.  The economic recovery is supported by improved political conditions, a recovery in construction, manufacturing, services, and tourism, and came off a low base recorded during the 2011-2014 political turmoil.  We project Egypt’s economic growth will remain at about 4% per year on average in 2016-2018, supported by domestic consumption and investment.  We expect Egypt to continue to benefit from resilient remittances from Egyptians working abroad and from inward foreign investment.  In our view, Eni’s discovery of “Zohr”, a natural gas field offshore of Egypt, could support growth through investment in the oil and gas sector, and could improve the country’s energy and trade imbalances in the medium term. Moreover, improving demand from Europe and a depreciating currency should help exports to recover over the medium term.

Saudi Arabia, the United Arab Emirates (UAE), Kuwait, and Oman pledged $12.5 billion in economic and financial assistance to Egypt during the Economic Development Conference held in Sharm el-Sheikh in early 2015.  They have already demonstrated support to Egypt by providing substantial financing – totaling almost $25 billion – in grants, aid, and concessionary loans over the past three years.  At the end of April 2015, the Central Bank of Egypt (CBE) received $6 billion in deposits from the GCC states, which helped increase Egypt’s foreign currency reserves to just above $20 billion as of June 30, 2015.  Nevertheless, Egypt’s international reserve position has since weakened to $16 billion, partially due to the redemption of $2.3 billion in external debt.  The current level of foreign currency reserves represents a limited buffer to absorb any further downward pressure on the Egyptian pound, in our view.

President Abdel-Fattah El-Sisi, formerly Field Marshal and Chief of Army Staff, was sworn in as president in June 2014.  Since then, the Egyptian political and security landscape has seen a broad return to stability.  In our opinion, the new parliament, elected in October and November 2015, will support the government’s stated priorities.  The security and sociopolitical improvement in Egypt remains fragile, however, with incidents of hostility occurring between the government and supporters of the now-outlawed Muslim Brotherhood and conflicts against the Egyptian affiliate of Islamic State in Northern Sinai.

In addition to the stabilizing political situation and stimulating growth measures, the government has launched several fiscal reforms since 2014, including raising administered fuel and electricity prices.  We understand it plans to gradually phase out fuel subsidies over the next five years.  The government also raised taxes on higher income earners, corporations and property, and introduced taxes on dividends.  These measures target a deficit reduction over the next few years, but are partly counterbalanced by spending on health, education, and social transfers.

We expect Egypt’s fiscal deficits and domestic debt ratios to remain high in 2015-2018.  We project that the fiscal deficit for fiscal year July 2014-June 2015 will reach 11.5% of GDP, which is a mild improvement from 12.8% in 2013-2014, as a result of subsidy reforms.  We expect fiscal consolidation to continue apace and the fiscal deficit to average 9.5% of GDP over 2015-2018, underpinned by an increase in fiscal revenues on the back of the recovering economy.  We consider the government’s ability to significantly cut spending as limited, particularly given Egypt’s shortfall in basic services and its constitutionally mandated expenditures.

We estimate the annual change in general government debt will average about 10% of GDP in 2015-2018.  We expect net general government debt will average about 81% of GDP in 2015-2018, having risen substantially from an average of 73% in the past four years.  We project general government interest expenditure will reach one-third of general government revenues on average in 2015-2018, exceeding the 29% average in 2011-2014.  Despite the persistently wide fiscal deficit, we do not expect the government to face major challenges in raising domestic financing through the Egyptian banking system because Egyptian banks still enjoy a comfortable liquidity position.  Egyptian banks have so far remained keen buyers of government debt, and in recent years have chosen to invest their excess domestic currency liquidity in government debt offerings.  Despite strong loan growth in 2014-2015, the overall loan-to-deposit ratio for Egyptian banks has remained broadly flat at around 41%. In addition, the government successfully raised $1.5 billion in June 2015 through a Eurobond offering, which was more than three times oversubscribed, reflecting a strong international investor appetite.

We understand that the government’s external financing plan for this fiscal year (July 2015-June 2016) is to issue another Eurobond and sukuk in order to diversify its funding sources.  We also consider that Egypt will very likely receive further concessional loans from international official institutions during this fiscal year.

We forecast current account deficits to average 4.6% of GDP in 2015-2018, prompted by a widening of the overall trade deficit, as import demand will remain strong while export and tourism receipts will decline between now and 2016.  We expect Egypt’s overall net external liability position to stand at 130.5% of CARs in 2015 and to average 165% of CARs in 2015-2018.

We assess Egypt’s monetary policy flexibility as low, reflecting our view of the CBE’s intermittent interventions in the foreign exchange market and its exposure (along with that of the banking system) to the government, as well as an annual inflation rate exceeding 10%.  Notwithstanding the CBE’s interventions, the Egyptian pound has continued to depreciate against the U.S. dollar, by an additional 12% since January 2015.


The stable outlook reflects our expectation that Egypt will largely remain politically stable, and its economy will continue to progressively grow in the face of important macroeconomic headwinds.  The stable outlook also reflects our view that fiscal deficits will improve, but remain at high levels.

We could raise our ratings on Egypt if the economic recovery outperformed our current expectations, or if narrower-than-expected current account deficits lead to a stronger external position.

We could lower the ratings if fiscal or external indicators were to deteriorate significantly, or if Egypt’s fiscal funding options were to deteriorate.  (S&P 13.11)

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11.3  EGYPT:  Military Influence in the Egyptian Government

Maged Atef wrote in Fikra Forum on 2 November that in a seemingly paradoxical scene, military cars, soldiers and officers in military uniform stationed themselves at the door of one of the polling stations in Giza for protection.  Meanwhile, loudspeakers broadcasted upbeat songs, calling for people to participate in the celebration of democracy.

This strange scene is an accurate representation of the relationship between the military and the democratic process in Egypt today or, alternately, the relationship between the army and politics in Egypt.

Following the January 2011 revolution, Egyptians overthrew the rule of army generals that had lasted for more than sixty years.  For the first time, the president of the republic was a civilian rather than a soldier.  Yet the experiment in civilian rule did not last longer than a single year as the military overthrew President Mohamed Morsi in 2013 after protests and strikes calling for the army to oversee Morsi’s removal.  Fulfilling the protesters’ demands, the leader of the Egyptian army – General Abdul Fattah al-Sisi – assumed Morsi’s duties, later becoming the President of the Republic.

The relationship between the army and politics in Egypt is complex.  Throughout the past six decades, military men have governed Egypt and the army has maintained tight control of the Egyptian administrative apparatus.  It became normal for many governors to have previously served as generals and for retired army officers to occupy most of the district head positions in Egypt.  For example, all district heads are foreign officers in Alexandria, the second largest governorate in Egypt.

This phenomenon is not restricted to the administrative apparatus.  A “quota” of positions for retired officers has developed in many aspects of civil society, visible in sensitive positions in industry, water, utilities and even the Cairo Opera House.

The predominance of generals within the Egyptian administrative apparatus coincided with a noticeable growth in the military’s economic activities.  The projects undertaken by the economic arms of the military — the National Service Products Organization, the Arab Organization for Industrialization, and the Engineering Authority of the Armed Forces — and published on their official websites makes one realize the magnitude of the military’s economic structure and the extent of its effect on the Egyptian economy.  These factors made the army a “stakeholder” in the Egyptian economy so to speak, with interests that require protection: incentive to monitor the political situation and intervene if necessary or if its interests are threatened.

Accordingly, the scene at the polling stations was from the first moment in line with the structure of power in Egypt.  The army’s presence was not meant only to protect the polling stations or to transport the judges supervising the electoral process in army planes.  The number of candidates who are officers in the army was significant and in the words of Karam Ulfi, a researcher in parliamentary affairs, “quite a phenomenon,” when compared to the previous parliamentary elections.

It is no coincidence that the former Deputy of Intelligence Services, General Sameh Seif el-Yazal, is at the top of the “For the Love of Egypt” list that is backed by President Sisi.

Moreover, the number of officers standing as candidates in this election is remarkable.  While no one in Egypt today has a precise answer to what drove this trend, the available information suggests that this parliament is very important to both the president and the army.

Sisi does not yet have a strong political backing on which he can rely.  He lacks the National Socialist Union of Nasser or the National Democratic Party of Mubarak.  Nor does it seem that a full and complete political backing is likely to form in the near future.  Therefore, Sisi has no legislative or political support in the upcoming period other than those that he trusts: former generals.

Moreover, the new parliament will be entrusted with approving laws enacted by Sisi during his time as the sole legislative power.  Almost 400 laws passed during this period – the most prominent being the law on the exercise of political rights, the 2013 demonstration law, the 2015 civil service law, and the 2015 anti-terrorism law.  For future legislative flexibility, the loyalty of the parliament must be completely assured in order to pass these types of laws without obstacles.

There are many controversial issues in the constitution.  At the same time, very little is known about the implications of these issues, especially those that relate to the two most powerful men in Egypt, the president and the defense minister.  For example, it is as of yet unclear whether Sisi wants to amend articles 133, 161 and 234 of the current constitution.  Article 133 sets the presidential term at four years and states that a president can only be re-elected once.  It also bars a president from occupying any party position during his time in office.  Article 161 gives the House of Representatives the power to raise a motion of no confidence in the president or to call for early elections.  As for the defense minister, article 234 states that he must be appointed with agreement from the Supreme Council of the Armed Forces.  The provisions of this article remain in effect for two full terms of office from the date that the constitution enters into force, meaning that the president can neither appoint nor fire the minister of defense.  As of yet, it is unclear whether Sisi wishes to remove this advantage from the defense minister and whether the army would allow him to do so.

These questions remain unanswered for the time being. It is unknown what the president’s intentions are or to what extent his wishes are in line with the desires of the army generals.  In the short term, it still appears that this arrangement will succeed in providing “relative” stability. In the long term, though, it is impossible to make predictions in a country like Egypt.

Maged Atef is a journalist living in Cairo.  (Fikra 02.11)

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11.4  MOROCCO:  IMF Staff Completes 2015 Article IV Consultation

An International Monetary Fund (IMF) team visited Morocco from 21 October to 4 November 2015 to conduct discussions with the Moroccan authorities on the 2015 Article IV consultation, as well as on the third review of economic performance under the Precautionary and Liquidity Line (PLL) arrangement approved in July 2014.  The discussions focused on increasing the resilience and the potential of the Moroccan economy.  At the conclusion of the visit, the IMF issued the following statement:

“Prudent economic policies and sustained structural reforms have served Morocco well over the last few years.  Growth is recovering and should reach 4.7% in 2015, due in part to a good agricultural season.  However, the recovery in non-agricultural activity remains sluggish, because the European recovery is slower than expected. Inflation is low and credit has remained subdued.  The current account deficit narrowed further in 2015 to a projected -1.5% of GDP, and international reserves improved further to 6.5 month of imports.  This performance reflects in part the reduced fuel and food import bill, and sustained growth in automobile exports and remittances.  The fiscal deficit has continued to improve in recent years due to measures taken by the government, in particular subsidy reforms.  Poverty rates, unemployment, and inequality have declined over the past decade, but much remains to be done to promote a more inclusive growth. In particular, continued efforts are needed to reduce social and regional disparities, increase female labor force participation, and improve the quality of education and medical coverage.

“Growth is expected to slow to 3% in 2016, as agricultural activity returns to normal, and should strengthen gradually in the medium term to close to 5%.  However, risks from lower growth in advanced and emerging countries, an increase in world energy prices resulting from geopolitical tensions in the region, and a surge in global financial market volatility remain substantial.

“Fiscal developments through end September have been positive and in line with the 2015 deficit target of 4.3% of GDP in 2015.  The efforts to further strengthen public finances, as reflected in the 2016 draft budget that targets a deficit of 3.5% of GDP, are welcome.  In the medium term, fiscal reforms should continue to increase the economy’s resilience to shocks and to provide more room for investment in infrastructure, health, education, and social protection, which are crucial to raise the economy’s potential and inclusiveness. In that respect, the progress achieved in reforming the subsidy system and in strengthening the fiscal framework is commendable.  Looking ahead, a priority is to make the tax system more efficient and equitable.  Reforming the pension system is also urgent to secure its viability.  These reforms would help place public debt on a downward path.  Indeed, public debt remains sustainable and resilient to various shocks, but it should be reduced in order to create further fiscal space.

“On the external front, the improved current account position and robust capital flows have helped strengthen international reserves.  Looking forward, efforts to improve the business environment, transparency and governance will be essential to enhance external competitiveness.  We support the authorities’ efforts to improve financial inclusion and access to credit, especially for very small, small, and medium enterprises.  In addition, we welcome the authorities’ intention to move to a more flexible exchange rate regime, which would facilitate the further diversification of the economy, and enhance its international integration and its capacity to absorb external shocks.

“The recent Financial Sector Assessment Program confirmed that, overall, the financial sector remains sound.  Banks are well capitalized and profitable, and benefit from stable funding resources.  Risks to financial stability are limited, although rising non-performing loans and concentrated exposures need to be monitored carefully.  Banking supervision is effective and should continue improve.  The authorities’ efforts to strengthen the financial policy framework by implementing the 2014 banking law and Basel III standards and enhancing systemic risk surveillance are welcome.  The adoption of the new central bank law would further reinforce Bank-Al-Maghrib’s independence and its role in banking supervision and financial stability.

“The mission would like to thank the Moroccan authorities and all those with whom it had the opportunity to meet, including representatives of the private sector and civil society, for their cooperation and productive discussions.”  (IMF 04.11)

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11.5  TURKEY:  Erdogan’s Victory Isn’t A Win For Turkish Democracy

Brookings stated that Turkish President Recep Tayyip Erdogan’s gamble – holding what he called “a re-run election” – has paid off handsomely.  His party received almost 50% of the popular vote yesterday, up from about 41% in the 7 June elections.  The ruling Justice and Development Party (AKP) will have 317 seats in parliament, enabling it to form a one-party government.  The main opposition party, Republican People’s Party (CHP), did marginally better than it had (with roughly 25% of the vote).  Both the Turkish and Kurdish nationalist parties, the Nationalist Action Party (MHP) and the Peoples’ Democratic Party (HDP), lost vote shares: from 16% to 14% and from 13% to 11%, respectively.  The AKP attracted more than two million disaffected votes from the MHP and over one million conservative Kurdish voters from the HDP.

Erdogan hoped that an insecure domestic environment marked by violence and an economic downturn would bring voters back to the AKP. It did, with voters apparently perceiving his party as a stabilizer of sorts.

How full is the glass?

There are two main views on the election results.  One posits that a government under current Prime Minister Ahmet Davutoglu’s leadership, with a newly solidified majority, will now be able to decisively address Turkey’s economic, ethnic, social, and foreign policy challenges.  The other is more pessimistic, emphasizing that the repression of free expression and the overall climate of fear prior to the election inhibited a fair vote.  Proponents of the second view add that the results will further deepen the existing divide between the supporters of AKP and its opponents.

In his victory speech, Davutoglu apparently recognized the polarization of the country, adopting a conciliatory tone and expressing affection for the whole country.  He promised a government that would represent all Turkish citizens, not just his supporters.  He promised a “new” Turkey that will ensure security, freedom, and prosperity for all. But will he be able to deliver?

A model’s downfall

For those who worry about polarization in Turkey and the increasingly authoritarian tendencies of its government, the country is slipping deeper into trouble.  Turkey is moving away from the principles and policies that, for a long time, had kept it on track towards achieving a fully democratic system of governance.  Ironically, the goal of building a country that would one day meet those standards came closest to realization under an AKP government in the 2000s.  At that point, Turkey “sufficiently” met the EU’s Copenhagen political criteria – including respect for freedom of expression and minority rights, as well as transparent and accountable government supported by the rule of law.  This helped to start accession negotiations in 2005 for Turkey to become a member of the EU, a club of advanced democracies.  When Turkey – EU relations began to cool in 2006 and resistance to Turkey’s eventual membership rose among some leading EU member countries, then-Prime Minister Erdogan expressed his commitment to the same high standards, calling them the Ankara criteria.

However, this resolve on the path to better democracy, which had earned Turkey the status of a model for the Middle East and many Muslim countries around the world, began to erode after the AKP’s resounding victory in the 2011 elections.  Erdogan became more authoritarian, particularly towards the opposition.  He increasingly attributed Turkey’s growing internal and external challenges to the machinations of conspirators.  The main tenets of democracy — the rule of law, an independent judiciary, freedom of speech, and accountability — were increasingly ignored and Turkey’s model credentials eroded.  Regional leaders like Tunisia’s Rached Ghannouchi, among others, stopped referring to Turkey as a model.  Instead, Erdogan’s style of governance increasingly came to resemble Vladimir Putin’s in Russia.

Anxieties about the “new” Turkey

It is Erdogan’s authoritarian tendencies that are making many in Turkey worried today.  The election results will likely further embolden the party, and the prime minister and the president may seek to change the constitution in favor of a presidential system.  Davutoglu himself made that clear in his victory speech, arguing that the election results constituted a kind of referendum in support of a “new” Turkey that needed this new form of government.

But in the absence of institutions that would ensure the checks and balances critical for running a presidential system, it makes sense to worry that Turkey may move in the direction of authoritarianism.  Davutoglu emphasized inclusiveness and democracy in his address, and such comments are naturally very welcome.  But his references to freedom of expression were conspicuously brief.  Nowhere in his speech was there mention of the importance of the institutions or consensus politics that are central to advanced democracies.

Instead he emphasized promises of affection derived from the teachings of Rimi, the medieval Islamic philosopher, whose tomb is in his home town of Konya.  Davutoglu called for mutual affection as a starting point in fixing the current woes.  It’s not clear yet whether that will be enough to help Turkey join the ranks of advanced democracies.  Its failure will mean more polarization, chaos, and instability that will instead make Turkey look increasingly like its unfortunate Middle Eastern neighbors.  (Brookings 02.11)

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11.6  TURKEY:  Outlook Hinges On Ability To Spur Growth, But Risks Remain

Turkey’s credit outlook will hinge on the new government’s ability to tackle slowing growth and high inflation as credit risks of the country still remain, Moody’s said on 4 November.

The Justice and Development Party (AKP) won back its single-party rule in an election on Nov. 1, ending months of uncertainty for investors and briefly sending assets sharply higher.  But that rally largely petered out after a day, and investors are once again forced to confront deeper structural problems, such as waning growth and large external financing needs.

“The election result removes political uncertainty,” Alpona Banerji, a senior credit officer at Moody’s told a conference in Istanbul.  “However, the credit outlook will be determined by the policy environment and policy implementation that would overcome a slowdown in growth and high inflation, as well as the inhospitable capital environment that most (emerging markets) are going to be facing.”

Government officials said in July the economy was likely to expand between 2 and 2.5% this year, falling far short of an official target of 4%, due to the uncertainty after a June election failed to produce a single-party government.

Economists also expect growth will fall short of official targets next year, too, a Reuters poll has shown.  Moody’s has a “Baa3” rating on Turkey, with a “negative” outlook.  It is next due to review Turkey on 4 December.

‘Policies matter’

Investors have been hoping the new government will see Finance Minister Mehmet Simsek and former Deputy Prime Minister Ali Babacan once again named to the economic team.  Both men are well known by foreign investors and are seen of anchors of investor confidence.

But to Moody’s Banerji the actual names were not important.  “We’re pretty agnostic about who comes to power, we’re not tied to any one individual,” he told Reuters on the sidelines of the conference.  “It is the policies that matter to us. It is the economic policy execution, trying to weaken this link between the current account and growth.”

Moody’s said despite the majority win for AKP lowering political uncertainty, banks in Turkey still face elevated risk aversion towards emerging markets and elevated geopolitical risks in a note on 2 November.  “Key to the country’s banking system outlook will be the new government’s economic strategy and the extent to which reforms boosting the country’s savings rate and growth potential are introduced, both essential to tackle fragile investor confidence and volatile Turkish lira,” it added.  (Moody’s 04.11)

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The Fortnightly newsletter is a free service of Atid, EDI. We are a team of economic and trade development consultants, headquartered in Jerusalem, but active throughout the region and beyond. EDI works with an international clientele interested in identifying and researching business opportunities in the region. We also serve as the regional representative offices for a number of U.S. states and bilateral Chambers of Commerce, as well as European clients.