Fortnightly, 22 February 2017

Fortnightly, 22 February 2017

February 22, 2017


22 February 2017
26 Shevat 5777
25 Jumada Al-Awwal 1438




1.1  Knesset Committee Approves Stock Exchange Ownership Reform
1.2  Israel Collects Record Tax Revenues in January
1.3  Israel’s Gas Royalties Increase by 8.5% During 2016
1.4  Israeli Accelerator Launched for Arab Entrepreneurs


2.1  Strategic Alliance Between Midea and Servotronix Announced
2.2  GE Digital Acquires Nurego
2.3  Demisto Raises $20 Million to Meet Growing Global Demand for Automated Incident Response
2.4  empow Secures $9 Million in Funding
2.5  Javelin Networks Announces Funding for Growth
2.6  Israeli Defense Deals with Lockheed Martin Increase By 33%
2.7  Intuition Robotics Investment from iRobot and OurCrowd
2.8  Noble Energy to Invest $550 Million in Leviathan Gas Field
2.9  Sapiens to Acquire U.S.-based StoneRiver for Approximately $102 Million
2.10  OurCrowd Continues Asia Expansion, First Platform to Bring Equity Crowdfunding to Taiwan
2.11 Kerogen Capital invests in Energean Israel
2.12  Apple Purchases Facial Recognition Startup RealFace
2.13  HemaCare Signs Distribution Agreement with Israeli-Based Partner


3.1  TSYS Signs Payments Agreement with International Bank of Qatar
3.2  Dubai Set to Host First Legoland Hotel in the Middle East
3.3  Dubai Eyes Launch of World’s First Driverless Flying Cars in July
3.4  UAE Retail Leader Reveals Plan for Major Saudi Expansion
3.5  Harris Corporation Receives $189 Million UAE Battlefield Management System Contract
3.6  Affygility Solutions Opens New Regional Office in Dubai
3.7  Snap Opens First Middle East Office in Dubai
3.8  Harris Corporation Provides Turkey with Air Traffic Management Communication System


4.1  Arava Institute’s 2017 Spring Semester Begins


5.1  Amman Approves By-Law to Set Cap on Top-Echelon Salaries

♦♦Arabian Gulf

5.2  Six Gulf Nations Aiming for Simultaneous VAT Adoption in January
5.3  Most of GCC Considered ‘Low’ Political Risk for 2017
5.4  Qatar to Increase Its $2 Billion Investment in Russian Direct Investment Fund
5.5  UAE Inflation Drops to 1.2% in December
5.6  UAE Awards $1.9 Billion in Military Contracts to Russia
5.7  China Buying into Abu Dhabi Oil with New Concession Stake
5.8  Dubai Says 14.9 Million Tourists Visited During 2016

♦♦North Africa

5.9  Tourism Shows Signs of Recovery in Egypt
5.10  Morocco Trade Deficit Rises by 29%


6.1  Greece Compromises on Bailout Reforms



7.1  Israel Rated Third Best Country to Raise Children
7.2  Israel Plans to Send Largest Ever Delegation to 2018 Winter Olympic Games


7.3  UAE Plans to Build ‘Mini City’ on Mars by 2117
7.4  Rania Nasher Named Saudi’s First Female Commercial Bank CEO
7.5  Egypt to Appoint Its First Woman Governor


8.1  Evogene and ICL Innovation Sign Collaboration for Development of Crop Enhancers
8.2  GluSense Receives Investment from JDRF T1D Fund
8.3  Intensix Raises $8.3 Million for Machine-Learning Tech to Head Off ICU Complications
8.4  Beyond Verbal Recognized for Using Vocal Biomarkers to Detect Health Conditions Using Tone of Voice


9.1  Israel Sends 2 Miniature Research Satellites Into Space
9.2  CyberArk Announces Support for Amazon Inspector for Enhanced Cloud Security
9.3  Plarium Partners with Twentieth Century Fox to Bring Acclaimed Rio Franchise to Mobile Gaming
9.4  SES and Gilat Join Forces to Make Connectivity at Sea More Accessible
9.5  Mellanox Improves Crypto Performance with Innova IPsec 40G Ethernet Network Adapter
9.6  Tadiran Telecom Announces the Release of Aeonix Version 3 UC&C Solution
9.7  Colorado DOT Adopts Datumate’s Cutting Edge Mapping Tools
9.8  illusive Adds Kill Switch Capabilities to its Deceptions Everywhere Cybersecurity Platform
9.9  hiSky Smartellite Introduces a Ka-Band Satellite Terminal for Affordable MSS and IoT Applications
9.10  Oi Selects CellMining SON Solution


10.1  January’s Inflation Falls by 0.2% as Home Prices Fall
10.2  Israel’s Economy Grew at 6.2% in the Fourth Quarter
10.3  Israel’s Foreign Currency Reserves Hit Record High of Over $100 Billion
10.4  Israel’s Housing Prices See Highest Drop in a Decade
10.5  Medical Equipment Leads Increase in Israel’s Exports


11.1  ISRAEL: IMF Concluding Statement of the 2017 Article IV Mission
11.2  ISRAEL: Dispelling the Myth That Israel is the Largest Beneficiary of US Military Aid
11.3  LEBANON: Grasping a Golden Opportunity for a Macroeconomic Uplift
11.4  LEBANON: Is Lebanon on the Path to Decriminalizing Homosexuality?
11.5  JORDAN: Why the King’s Visit to Washington Was Essential for Jordan
11.6  BAHRAIN: Fitch Affirms Bahrain at ‘BB+’; Outlook Stable
11.7  EGYPT: New Cabinet Members Sworn in After Tough Search
11.8  TUNISIA: IMF Statement on Tunisia
11.9  TUNISIA: New Tunisian Electoral Law Raises Issue of Military’s Role in Politics
11.10  MOROCCO: What’s on Morocco’s Agenda as it Rejoins the African Union?
11.11  MOROCCO: 2017 Predicted to be Good Year for Morocco in Key Areas
11.12  GREECE: Priorities for a Return to Sustainable Growth


1.1  Knesset Committee Approves Stock Exchange Ownership Reform

The Knesset Finance Committee today approved a structural change in the Tel Aviv Stock Exchange (TASE).  According to the bill, ownership of the TASE will henceforth be separated from its members, i.e. the owners will be separated from the providers of trading services.  This structural change is designed to increase competition and lower TASE trading fees.  Following the reform, the TASE will become a profit-making corporation that will be able to distribute dividends to its shareholders, and more companies will be able to trade on it and provide trading services.  Up until now, only TASE shareholders, mainly the banks, could trade on it and provide these services.

The banks will now be forced to reduce their share in the TASE to 5% by selling most of their holdings in the TASE within five years of the date on which the law is passed.  The estimated NIS 500 million in profits from the sale in excess of the capital accumulated in the TASE will pass to the state. Senior capital market sources expect the designated change to give the public control of the TASE, which will be managed like any other public company.  The second and third votes in the Knesset plenum for final passage of the bill will be held in the coming days.

The reform is projected to drastically change TASE ownership in the coming years from a total of 22 owners to many more companies.  The proportions of ownership of the TASE will change accordingly.  While 71% of the shares are currently held by the banks, their combined holdings are slated to fall to 35%, with a maximum of 5% for each bank (to be precise, 4.99%).  After the bill becomes law, the state’s supervisory and enforcement authority over the TASE will increase, and supervision will become tighter, because the state has the status of a regulator over the TASE through the Israel Securities Authority, even though it does not own shares in it.  The Securities Authority chairman will be able to veto the appointment of senior TASE officeholders, and to unseat the current officeholders.

Concerning trading days on the TASE, the issue of Friday trading was raised during the discussion of the bill.  It was eventually decided that the matter would be addressed and settled through the TASE Rules and Regulations as part of regulations to be brought before the Finance Committee for approval, rather than through the initial legislation.  It was also agreed that the banks and companies providing trading services would be obligated to report the fees they charge to the customers, including in comparison with the other companies operating on the TASE.  (Globes 20.02)

Back to Table of Contents

1.2  Israel Collects Record Tax Revenues in January

Israel’s government tax revenues totaled a record NIS 27.6 billion in January, improving on the previous record of NIS 26.8 billion set in January 2016, resulting in a NIS 4.2 billion budget surplus for the month.  The budget deficit in February 2016-January 2017 was a mere 2.1% of GDP.  The Ministry of Finance stated that a budget surplus was a frequent occurrence in January, because revenues are usually high and spending low in this month.  The Ministry of Finance announcement said that the figure included a “one-time NIS 1.2 billion payment from a capital gain on the sale of a large company.”  The Israel Tax Authority declined to release particulars about the deal involved, but market sources believe that it involves the sale of Keter Plastic in July, in which brothers Yitzhak and Sami Sagol sold 80% of their private company to BC Partners for $1.4 billion (controlling shareholders currently pay 30% capital gains tax).  (Globes 09.02)

Back to Table of Contents

1.3  Israel’s Gas Royalties Increase by 8.5% During 2016

Natural gas royalties from the Tamar reservoir totaled NIS 819 million in 2016, accounting for most of the royalties from natural resources in that year.  2016 natural resources royalties totaled NIS 854 million, up 8.5%, compared with NIS 788 million in 2015.  Additional natural gas royalties came from the Yam Tethys (NIS 1.8 million), Meged (NIS 4.7 million), Heletz (NIS 313,000), and Tamrur Cliff (NIS 11,000) gas fields.  According to the Ministry of National Infrastructure, Energy, and Water Resources, royalties from Tamar grew 7%, despite the fall in the price of natural gas.  Fees from various projects totaled NIS 5 million.  Royalties from minerals rose from NIS 11.9 million in 2015 to NIS 23.5 million in 2016, a 98% increase.  The Sheshinski 2 Committee recommendation for an increase in the royalty rate on minerals from 2% to 5%, which took effect in 2016, accounted for the increase.  (Globes 16.02)

Back to Table of Contents

1.4  Israeli Accelerator Launched for Arab Entrepreneurs

Five startups have been accepted into the first four month LEAP Haifa course operated by PresenTense, with the support of CITI Israel.  A new startup accelerator has been launched in Haifa to assist Arab entrepreneurs.  The program targets startups that have completed Series A financing, already developed a prototype product and/or received funding from the Israel Innovation Authority (formerly the Office of the Chief Scientist).  The program called LEAP Haifa is operated by PresenTense, which promotes community entrepreneurship with support from CITI Israel.  The program will last four months and each startup participating must have at least one Arab entrepreneur.  PresenTense estimates that there are 100-150 Arab startup entrepreneurs active in Israel.

There are five startups in LEAP’s first program, which began last month.  AgRobic is an environmental startup developing anaerobic wastewater treatment; HealthyMize monitors Chronic Obstructive Pulmonary Disease (COPD) patients; Innosphere is developing an innovative wearable device for treating ADHD; MindoLife is an Internet-of-Things company developing a platform for smart homes; and BambooBike, which is developing ultra-light, eco-friendly bicycles made from bamboo.  (Globes 20.02)

Back to Table of Contents


2.1  Strategic Alliance Between Midea and Servotronix Announced

China’s Midea Group Co., a leading global supplier of consumer appliances, HVAC systems, robotics and industrial automation systems, announced the establishment of a strategic partnership with Servotronix Motion Control, a leading Israeli company with a broad scope of international business in the development and sales of advanced motion control and automation systems.  All condition precedents of the strategic partnership have been satisfied and the relevant regulatory approvals have been obtained.  The alliance with Servotronix is the first collaboration of this type for Midea in Israel.

Petah Tikva’s Servotronix was founded in 1987 and develops and manufactures comprehensive and high performance motion control solutions, ranging from advanced encoders, servo drives to multi-axis motion controllers, for a wide variety of industries including industrial robots, electronics assembly, semiconductor, machine tools and medical equipment.  Servotronix will continue to operate from its headquarters in Petah Tikva, Israel, and coordinate its global activity, including marketing, sales and product development.  (Midea 09.02)

Back to Table of Contents

2.2  GE Digital Acquires Nurego

General Electric Digital has acquired Israeli Nurego, a company that supports operations for IoT networks that link industrial machines.  The acquisition comes after a two-year relationship between GE and Nurego, in which the startup operated GE’s platform Predix, software that GE called “the operating system for the Industrial Internet”.  The platform also has several native apps for industrial IoT (IIOT) companies to use.  Apparently the company has become indispensable for the Predix platform.  The company is the byproduct of a collaboration between The Hive and EMC (Dell). The Hive, Paul Maritz and EMC were the company’s primary investors, and Maritz holds a seat on the board.

Herzliya’s Nurego is a business operations (BizOps) and monetization solution for industrial and technology companies, who are transitioning to or adding cloud-native products to their existing portfolios.  Nurego BizOps solution manages all aspects of subscription business operations, while avoiding isolated systems and processes that run separately from existing opportunity-to-cash processes.  Nurego applies lean and agile methodologies to easily build measure, adapt and scale dynamic and opportunistic business models, keeping pace with rapid market disruption without the need for developer resources.  (Nurego 12.02)

Back to Table of Contents

2.3  Demisto Raises $20 Million to Meet Growing Global Demand for Automated Incident Response

Demisto announced that it has closed its $20 million Series B round of funding.  Round participants included Accel, Slack Fund and other strategic investors.  The funds will be used to expand operations to accelerate new product innovation and customer rollouts, and ramp sales and marketing to meet growing global demand for incident response management, automation, and real-time collaboration across security teams.  Today’s funding brings the company’s total funding to $26 million.  In 2016 Demisto saw rapid adoption of its incident response solution due to expanding market demand and a significant partner ecosystem which now includes more than 100 integration partners.

Demisto also announced general availability of Demisto Enterprise 2.0, making Demisto Enterprise the industry’s first comprehensive incident management platform to offer integrated threat intelligence.  The new capabilities enable customers to integrate leading threat feeds with Demisto to manage indicators and automate threat hunting operations, saving time and significantly reducing the risk of exposure.

Tel Aviv’s Demisto helps Security Operations Centers increase efficiency, improve incident response times and processes.  Demisto Enterprise combines security orchestration, collaboration and threat management to reduce manual work and provide decision support for SOC analysts.  At the heart of Demisto’s technology is DBot, a security chatbot that is integrated with dozens of products and understands hundreds of security commands.  (Demisto 09.02)

Back to Table of Contents

2.4  empow Secures $9 Million in Funding

Cybersecurity startup empow has raised $9 million, which it will use to further develop its platform and help bring its revolutionary approach for elevating cybersecurity for the enterprise to the American market.  empow will begin its expansion with a Boston office, which will provide high-level sales and support.

empow’s innovative approach employs its proprietary “security abstraction” to break down an organization’s existing security configuration into abstracted primary components called “Security Particles.”  Utilizing deep learning, empow’s platform clearly defines the security role of each particle, using one common language.  This enables the platform to instantly coordinate between the previously siloed tools, and deploy a new, unique response for every security event detected.  In this way, empow investigates and mitigates the most advanced attack campaigns in real time, with speed and intelligence impossible before.  empow’s unique cybersecurity paradigm, with funding from both private investors and the Office of the Chief Scientist at the Israel Ministry of Economy, is already in use by major U.S. enterprises and service providers.

empow is a cybersecurity startup founded in October 2014 in Tel Aviv with the motto: “rather than spend more, deploy smarter.”  empow’s platform turns what organizations have into what they need by integrating with their existing security infrastructure and creating the optimal security solution which detects, investigates and mitigates the most advanced attack campaigns. empow breaks down existing security tools into “Security Particles” to create an abstracted smart layer that sits above current security configurations and which can be reassembled to deploy a new, targeted security apparatus for each individual attack, in real time.  This gives any organization the ability to respond faster and smarter, with better coordination and more insight. In this way, empow makes more of what organizations already have.  (empow 09.02)

Back to Table of Contents

2.5  Javelin Networks Announces Funding for Growth

Javelin Networks, the only company that protects Active Directory and provides autonomous breach prevention, containment, threat hunting and incident response capabilities, in an all-in-one artificial intelligence driven platform, announced a $5 million Series-A Financing Round to fuel its development and growth.  Investors participating in the Series-A financing are RSL Capital, Hillsven Capital, UpWest Labs, Tomer Weingarten, CEO of SentinelOne and other Private Investors.

Tel Aviv’s Javelin Networks protects Active Directory and provides autonomous prevention, containment, incident response, and threat hunting capabilities in an all-in-one artificial intelligence driven platform.  It’s the only agentless solution that immediately contains attackers after they compromise a machine, preventing them from using Active Directory credentials and moving laterally into the network.  Javelin protects the one asset that attackers know is unprotected.  (Javelin

Back to Table of Contents

2.6  Israeli Defense Deals with Lockheed Martin Increase By 33%

Israel’s Ministry of Defense said deals with Lockheed Martin increased by 33% in 2016.  Israel’s dealings with the F-35 Adir fighter jet manufacturer, made as part of the reciprocal acquisitions deal signed in 2010, have so far resulted in deals amounting to $1 billion, according to the Ministry’s Air and Sea Procurement Subdivision, which operates under its Procurement and Production Directorate.  Deals worth some $258 million were signed between Israel’s military industries and Lockheed Martin in 2016, representing a 33% increase in sales, the subdivision’s report showed.  The data also showed that Israel’s defense industries were able to increase their F-35-related commercial contracts with Lockheed Martin in 2016.

A joint venture by Elbit Systems and Rockwell Collins that produces the specialized helmets used by F-35 pilots increased its contract by $206 million; Israel Aerospace Industries has expanded its wing production contract by $26 million; and Elbit subsidiary Cyclone, which produces part of the jet’s fuselage, has seen orders increase by $16.6 million.  Other Israeli industries that are involved in producing F-35 systems, such as SimiGon, which develops the jet’s flight simulation software; Tadiran, which produces its radio components; and microchip technology developer Gilboa, have all reported increases in their dealings with Lockheed Martin.  (Various 14.02)

Back to Table of Contents

2.7  Intuition Robotics Investment from iRobot and OurCrowd

Intuition Robotics, developer of social companion technologies, announced funding from strategic investor iRobot Corp. and equity crowdfunding platform OurCrowd.  This investment brings the total funding in the company to $6m across various funding instruments.  The new investors join Terra Venture Partners, who led the Intuition Robotics seed round, as well as other original investors including Bloomberg Beta, Maniv Mobility, and additional private investors.  iRobot Ventures is the strategic investment arm of iRobot, the leading global consumer robot company.  OurCrowd is the world’s leading global equity crowdfunding platform for accredited investors.  Intuition Robotics will open its U.S. Headquarters in Silicon Valley this year to bring on board key talent and start go-to-market operations in the US.

Ramat Gan’s Intuition Robotics is developing social companion technology to positively impact the lives of millions of older adults by connecting them seamlessly with family and friends, making technology accessible and intuitive, and proactively promoting an active lifestyle.  The company was founded by former corporate executives and entrepreneurs who previously founded and managed CloudBand, a disruptive cloud telecom venture within Alcatel-Lucent.  The founders created Intuition Robotics to pursue their passion for creating technology and products to improve people’s quality of life.  (Intuition Robotics 14.02)

Back to Table of Contents

2.8  Noble Energy to Invest $550 Million in Leviathan Gas Field

U.S. producer Noble Energy is expected to announce in the coming days an investment of $550 million in the development of Israel’s Leviathan gas field, according to a company outlook and guidance report for 2017.  The $550 million represents one-fifth of the company’s global investments of $2.3 to $2.6 billion for 2017.  The report also said, “Capital expenditures in the Eastern Mediterranean for the initial development of the Leviathan project include drilling one production well, long-lead investment items, and ramp up of construction activities.  The company will also complete an additional production well at Tamar [gas field], which was drilled in the fourth quarter of 2016.”  Israel is presently engaged in discussions with Turkey, Cyprus, Greece and Italy over the possibility of exporting its natural gas via underwater pipelines.  (Various 14.02)

Back to Table of Contents

2.9  Sapiens to Acquire U.S.-based StoneRiver for Approximately $102 Million

Sapiens International Corporation entered into a definitive agreement (subject to customary closing conditions) to acquire privately held StoneRiver, Inc., for approximately $102 million in cash (subject to certain adjustments).  StoneRiver delivers a wide range of solutions and services for the insurance industry in North America.  Headquartered in Denver, Colorado, StoneRiver’s versatile product portfolio is comprised of a policy administration suite, rating, underwriting, illustrations, reinsurance, and finance & compliance solutions for all major insurance business lines, across both property and casualty (P&C) and life and annuities (L&A).

The acquisition of StoneRiver expands Sapiens’ North American P&C portfolio with StreamSuite, a state-of-the-art insurance suite targeting the higher tier carriers, complementing Sapiens’ Stingray solution that is targeting the lower tier in the sector.  The company will also gain entry into the workers’ compensation sector, a new area for Sapiens.  Combining Sapiens’ and StoneRiver’s reinsurance solutions is expected to create a comprehensive market offering and will allow Sapiens to better serve its customers.

Holon’s Sapiens International Corporation is a leading global provider of software solutions for the insurance industry, with a growing presence in the financial services sector.  Sapiens offers core, end-to-end solutions to the global general insurance, property and casualty, life, pension and annuities, reinsurance and retirement markets, as well as business decision management software.  The company has a track record of over 30 years in delivering superior software solutions to more than 200 financial services organizations.  (Sapiens 15.02)

Back to Table of Contents

2.10  OurCrowd Continues Asia Expansion, First Platform to Bring Equity Crowdfunding to Taiwan

OurCrowd announced its expansion in Asia with a new Taipei office and financial partner, Shanghai Commercial & Savings Bank (SCSB).  Recently, SCSB received the approval of the Financial Supervisory Commission, to invest in Israel’s equity crowdfunding platform OurCrowd, making it Taiwan’s first bank to invest in an overseas FinTech equity crowdfunding platform, and becoming OurCrowd’s strategic alliance partner in Taiwan.  SCSB, in collaboration with the Taiwanese Financial Supervisory Commission, is innovating digital science and technology to create a smart financial vision, by actively utilizing financial technology to promote internet banking and mobile banking services. It also aims to use bigdata analysis for precision marketing, and to deepen social media to promote digital marketing.

Jerusalem’s OurCrowd is the leading global equity crowdfunding platform for accredited investors. Managed by a team of seasoned investment professionals and led by serial entrepreneur Jon Medved, OurCrowd vets and selects opportunities, invests its own capital, and brings companies to its accredited membership of global investors. OurCrowd provides post-investment support to its portfolio companies, assigns industry experts as mentors, and takes board seats. The OurCrowd community of almost 17,000 investors from over 110 countries has invested over $400M into 110 portfolio companies and funds. OurCrowd already has thirteen exits to date, two IPO’s and eleven acquisitions.  (OurCrowd 16.02)

Back to Table of Contents

2.11  Kerogen Capital invests in Energean Israel

Energean Oil & Gas announced that Kerogen Capital has committed to invest an initial $50 million in Energean Israel, a subsidiary of Energean, ahead of the planned $1.3 billion development of the Karish and Tanin gas fields, offshore Israel.  Energean Israel is the operator of and holds a 100% interest in each of the Karish and Tanin leases, acquired from Delek Group in December 2016, for an upfront consideration of $40mm as well as $108.5mm in contingent payments.  Proceeds from Kerogen’s investment in Energean Israel will finance the acquisition and key workstreams to investment sanction including FEED studies and the Field Development Plan currently being prepared in cooperation with TechnipFMC.  The fields contain at least 2.4 Tcf of Gas contingent resources (NSAI report), and will be developed through an FPSO that will be the first to be installed and operated in the East Mediterranean.  The gas produced from the fields will supply Israel’s growing domestic gas market, with first gas expected in 2020.

Kerogen’s investment is subject to approval by the Israeli Government, after which Kerogen will own a 50% interest in Energean Israel with Energean holding the balance.

Greece’s Energean is a leading independent E&P company focused on the Eastern Mediterranean region where it already holds seven E&P licenses, encompassing Greece, the Adriatic, offshore Israel and onshore North Africa.  Kerogen Capital is an independent private equity fund manager specializing in the international oil and gas sector.  Kerogen Capital was established in 2007 and manages approximately $2 billion across its funds. Its investors comprise a range of blue-chip institutions including endowment funds, foundations, pension plans, fund of funds, international corporations and family offices.  (Energean 15.02)

Back to Table of Contents

2.12  Apple Purchases Facial Recognition Startup RealFace

Apple has purchased Israeli startup RealFace Technology for an estimated $2 million, it was reported on 19 February.  Founded in 2014, the Tel Aviv-based startup is a leading developer of facial recognition technology.  Its software offers users a smart biometric login, with the aim of making passwords redundant when accessing mobile devices or personal computers.  RealFace has 10 employees and has raised $1 million prior to Apple’s acquisition.  The company’s software is sold in Israel, China, Europe, and the United States.

According to the financial daily Calcalist, this is Apple’s fourth acquisition in Israel.  In 2011, Apple acquired flash memory maker Anobit for a reported $400 million; in November 2013 it bought 3D sensor company PrimeSense for a reported $345 million; and in 2015 it purchased LinX for an estimated $20 million.  (Various 20.02)

Back to Table of Contents

2.13  HemaCare Signs Distribution Agreement with Israeli-Based Partner

Los Angeles’ HemaCare Corporation, a leader in cell and tissue collection, processing, and cell therapy solutions, has expanded its global capabilities through a strategic distribution agreement in Israel with Almog Diagnostic.  This partnership ensures researchers in the Israeli life sciences community can access HemaCare’s human healthy and disease state hematopoietic cell products for their basic scientific and cell therapy research and development needs in a timely manner and with local regional support.  HemaCare distribution agreements enable partners to actively provide support to customers.  Researchers will be able to obtain human biological material collected from HemaCare’s FDA-registered donor collection centers, as well as fresh and frozen hematopoietic cell products derived from its cell isolation laboratory in California, while receiving customer service and technical support in their native language through specially trained representatives locally in their region.  To ensure best in class service and support, HemaCare provides ongoing technical training and marketing support to its global partners.  (HemaCare 20.02)

Back to Table of Contents


3.1  TSYS Signs Payments Agreement with International Bank of Qatar

Columbus, Georgia’s TSYS announced that one of the oldest banks in Qatar, International Bank of Qatar (ibq), has signed an agreement to license TSYS’ future-focused PRIMESM payment solutions platform.  ibq has selected PRIME to manage all of its Visa and MasterCard credit and debit card issuing and ATM acquiring business as part of a single-platform solution.  ibq will benefit from PRIME’s integrated capability for authorization and switching, fraud monitoring and risk management, disputes and chargeback handling and ATM management.  ibq will further leverage PRIME’s unique integration layer to enable greater interoperability with the bank’s existing systems, allowing for operational and business improvements, while empowering its certified developers to develop against the integration layer whilst protecting their investment, and the security and performance of the core PRIME platform.  TSYS has approximately 400 clients across more than 80 countries around the globe.  Its PRIME licensing footprint extends across the Middle East region, and is now licensed by 6 of the top 10 banks in Qatar.  (TSYS 21.02)

Back to Table of Contents

3.2  Dubai Set to Host First Legoland Hotel in the Middle East

Details have been revealed about plans to build the first Legoland Hotel in the Middle East in Dubai.  DXB Entertainments, a Dubai-based company, and Merlin Entertainments Group, one of the world’s biggest theme park and attraction operators, will open the hotel at Dubai Parks and Resorts.   Every room in the first Legoland Hotel in the Middle East and the seventh to open worldwide will have Lego models and theming.  From the disco elevator to the Castle Play Area, Legoland designers have integrated Lego storylines for every guest to create a memorable adventure.  The hotel will be built close to Legoland Dubai which has more than 40 rides and attractions, and Legoland Water Park which has 20 slides.  The Legoland Dubai Hotel is a 60:40 joint venture between DXB Entertainments PJSC and Merlin Entertainments, and will be operated by Merlin Entertainments once opened.  (AB 15.02)

Back to Table of Contents

3.3  Dubai Eyes Launch of World’s First Driverless Flying Cars in July

Dubai’s Roads and Transport Authority (RTA), in collaboration with the Chinese EHANG Company, announced that it had carried out the first test run of an autonomous aerial vehicle (AAV) capable of carrying a human, a world first.  RTA said in a statement that it is set to start the operation of the AAV, named EHANG184 – effectively a driverless flying car – as early as July.  The EHANG184 vehicle is fitted with a touchscreen to the front of the passenger seat displaying a map of all destinations in the form of dots.  It has preset routes from which the rider chooses a destination. The vehicle will then start automatically, take off and cruise to the set destination before descending and landing in a specific spot.  A ground control center will monitor and control the entire operation, the RTA added.

The AAV is designed to fly for a maximum of 30 minutes at a maximum cruising speed of 160km/h and a maximum cruising height of 3,000 feet. It is designed to operate under all climatic conditions apart from thunderstorms.  Dubai Civil Aviation Authority issued the permits for the trial while Etisalat provided the 4G data network used to communicate between the AAV and the ground control center.  (AB 13.02)

Back to Table of Contents

3.4  UAE Retail Leader Reveals Plan for Major Saudi Expansion

UAE-based retail major Lulu Group has announced plans to add 20 more hypermarkets in the Saudi market, nearly tripling its presence in the Gulf kingdom by 2020.  The details of the expansion plans, which will build on the retailer’s existing eight hypermarkets in the country, were revealed during the launch its 133rd hypermarket in the city of Hail, north-western province of Saudi Arabia.  The new hypermarket is spread over about 160,000 square feet and will serve the residents of Al Jamiyeen District and its surrounding areas, a statement said.

In November, it was reported that the Abu Dhabi-based Lulu Group International will invest $545 million to develop three new malls in the UAE.  Mall of Umm Al Quwain will be the first to open by end-2017 followed by Avenues Mall Sharjah by end-2018 and Avenues Mall in Dubai Silicon Oasis in first quarter 2019, it was reported.  (Lulu Group 11.02)

Back to Table of Contents

3.5  Harris Corporation Receives $189 Million UAE Battlefield Management System Contract

Melbourne, Florida Harris Corporation has received a two-year, $189 million contract to provide an integrated battle management system (BMS) to the United Arab Emirates Armed Forces.  The contract was received during the first quarter of Harris’ fiscal 2017.  The Harris system will provide the UAE with initial operational capabilities as the country implements enhanced battlefield management solutions.  The contract was issued under the Emirates Command & Control System (ECCS) Land Tactical System (ELTS) program, a major C4ISR program that will integrate, coordinate and maximize the combined efficiency of UAE Armed Forces assets.

Harris Corporation is a leading technology innovator, solving customers’ toughest mission-critical challenges by providing solutions that connect, inform and protect.  Harris supports government and commercial customers in more than 100 countries and has approximately $6 billion in annual revenue.  (Harris Corporation 20.02)

Back to Table of Contents

3.6  Affygility Solutions Opens New Regional Office in Dubai

Broomfield, Colorado’s Affygility Solutions (Affygility), a leading provider of occupational health, toxicology, and industrial hygiene services for the life science industry, announced today the launch of its regional branch office in Dubai, United Arab Emirates to serve the IMEA region.  The regional branch office will be located in the Dubai Science Park in Dubai, UAE.  The Dubai Science Park is home to over 280 international life science companies. The regional branch office will serve as a hub for the India, Middle East and North Africa (IMEA) region, thus allowing for Affygility to serve their customers in the region more effectively and faster than ever before.  (Affygility 08.02)

Back to Table of Contents

3.7  Snap Opens First Middle East Office in Dubai

Los Angeles’ Snap, the company behind the popular app Snapchat, has opened its first Middle East office in Dubai Internet City to target regional markets.  Snap has expanded to the region to primarily work with advertisers and local partners in the UAE and Saudi Arabia, it said.  Snapchat, which was first launched in 2011 as Picaboo, currently has over 150 million daily active users worldwide, who create over 2.5 million ‘snaps’ per day.  (AB 07.02)

Back to Table of Contents

3.8  Harris Corporation Provides Turkey with Air Traffic Management Communication System

Melbourne, Florida’s Harris Corporation was selected to supply a next-generation, VoIP communication system to support the Republic of Turkey’s air traffic management (ATM) services.  Harris was chosen following a rigorous review by Devlet Hava Meydanlari Isletmesi (DHMI), Turkey’s air navigation service provider (ANSP).  Harris will provide DHMI with its cloud-based Voice Communication System for the 21st Century (VCS21).  The system modernizes ATM programs by delivering net-centric voice communications that reduce dependency on traditional point-to-point communications, while supporting an efficient transition to IP-based communications.  It will be installed at seven facilities in Turkey, and will include more than 337 controller working positions that can access up to 52 radio sites across DHMI control operations.  (Harris Corporation 16.02)

Back to Table of Contents


4.1  Arava Institute’s 2017 Spring Semester Begins

On 14 February, the Arava Institute opened its doors to the students of the 2017 Spring Semester.  They received a large contingent of over 50 students and interns from Israel, the Palestinian Authority, Jordan, Egypt, the U.S., Europe, and Africa.  It is one of the largest and most diverse semesters in the history of the Institute.  The academic staff worked diligently to get the campus ready, prepare the syllabi for courses, set up the orientation schedule and finalize trip plans for the semester.  For Israelis, Palestinians, Jordanians and students from around the world, security is, of course, a real concern, and at the Arava Institute, they take that concern very seriously.  All students are interviewed by us prior to acceptance, and the appropriate security precautions are taken by the Israeli government when issuing their students visas and permits.

Kibbutz Ketura’s Arava Institute for Environmental Studies is a leading environmental studies and research program in the Middle East.  It houses academic programs in partnership with Ben Gurion University, research centers, and international cooperation initiatives focusing on a range of environmental concerns and challenges.  With a student body comprised of Jordanians, Palestinians, Israelis and students from around the world, the Arava Institute offers students an exceptional opportunity to learn from leading professionals while forming friendships and developing skills that enable them to lead the region and the world in solving today’s most pressing environmental challenges.  (AI 20.02)

Back to Table of Contents


5.1  Amman Approves By-Law to Set Cap on Top-Echelon Salaries

On 20 February, the Jordanian cabinet approved the mandating reasons for a draft by-law on controlling the salaries of public employees and referred it to its Legal Committee for endorsement.  Finance Minister Malhas recommended the new regulations to Prime Minister Mulki following the state budget discussions with MPs, where the premier pledged to set a maximum limit for high salaries at ministries and public departments.  Earlier this month, the Cabinet decided to deduct 10% of any sum above JD2,000 in monthly salaries of civil servants, and set a cap of JD3,500 on public sector salaries.  The funds collected from these regulations, which also apply to the prime minister and ministers, among other top-ranking officials as of 1 February, will go to support the Treasury as part of a broader plan to rationalize public spending.

The Council of Ministers also approved completing the GPS tracking project of public vehicles, under a special tender that allows expanding the scheme to include 20,000 vehicles.  Under the first phase of the project, 5,000 tracking devices have been installed on public vehicles, which are monitored by a control room at the Transport Ministry to identify the location and trip purpose of state-owned cars, according to Petra.

Meanwhile, the Cabinet decided to cancel the exclusiveness of government purchases from the King Abdullah II Design and Development Bureau (KADDB) and affiliated companies, in order to ensure equality for all Jordanian companies that produce similar products.  The group aims at establishing “new and growing businesses in the defense and security industries along with various services that would complement these industries.  The Cabinet decision is aimed at supporting local industries, providing fair competitive criteria and stimulating the Jordanian economy, under prevailing economic challenges and the decline of export volume to traditional markets due to border closures, Petra added.  (JT 20.02)

Back to Table of Contents

►►Arabian Gulf

5.2  Six Gulf Nations Aiming for Simultaneous VAT Adoption in January

Policy makers in the six-nation Gulf Cooperation Council are aiming to introduce a 5% value-added tax at the start of next year, despite administrative and technical obstacles.  The GCC, its finances strained by low oil prices, has long planned to adopt the tax in 2018 as a way to increase non-oil revenues, but economists and officials in some countries have said privately that simultaneous introduction in all countries may not be feasible.  That is because of the complexity of creating the administrative infrastructure to collect the tax and the difficulty of training companies to comply with it, in a region where taxation is minimal.  The other GCC members are Saudi Arabia, Kuwait, Qatar, Oman and Bahrain.

The UAE expects around $3.3 billion of revenue from the tax in its first year.  That would be about 0.9% of the UAE’s GDP of $371 billion in 2015, official data shows.  From the start, authorities will seek to register all companies with annual revenues exceeding $100,000 for the tax, and anticipate 95% or more of companies will comply in the initial stage.  Revenues from the tax may increase gradually with economic growth but the government is not at present considering any increase of the tax above 5%, and would not raise it in the future without a thorough study of the economic and social impact.

To broaden its fund-raising options, the UAE has been working on a debt law that would allow the federal government, not just the seven individual emirates, to issue sovereign bonds.  Once the law is passed, the federal government will aim to start issuing debt within six months, but its minimal budget deficit means the debt will not be used to fund the budget. Instead, it will be issued in conjunction with the central bank to manage liquidity in the banking system, he said.  (Reuters 12.02)

Back to Table of Contents

5.3  Most of GCC Considered ‘Low’ Political Risk for 2017

All of the GCC countries except Saudi Arabia have been labelled as “low risk” this year in a global analysis by consultancy Control Risks.  The kingdom was described as “medium” risk, according to Control Risks’ 2017 Risk Map highlighting the factors affecting political, economic and business security across the world.  The map showed Qatar, Kuwait, the UAE, Oman and Bahrain as having low levels of risk facing businesses operating within their borders.  The report warned of an increasingly complex global business landscape.  Geopolitics, cybercrime and increasing privatization of state-owned companies are among the top drivers of overall risk in the Middle East in 2017, Control Risks said.

Regulatory issues brought about by fiscal consolidation, the weakening of Islamic State (ISIL) and a push for greater foreign direct investment (FDI), increasing the need for due diligence, are also likely to drive risk in the region.  The “black swan” of 2017 for the Middle East region will be the potential unravelling of the nuclear deal with Iran as a result of changes in US foreign policy under US President Trump.

The report said countries such as Saudi Arabia, Egypt, Qatar and Iran will look to build or consolidate bridges with China, Japan, India and/or Russia to hedge against the uncertainty surrounding US’ and Europe’s engagement in the region.  Such policy realignments are likely to play out in the commercial sphere when it comes to major project awards and bilateral trade agreements.

Another issue is the collapse of IS territory, which could prompt a global exodus of foreign fighters, according to the report.  Many will be killed, some will be captured and others may be recruited into other groups or return to their home countries in Europe, Russia, the GCC or elsewhere and try to build extremist networks there.  (AB 08.02)

Back to Table of Contents

5.4  Qatar to Increase Its $2 Billion Investment in Russian Direct Investment Fund

Qatar Investment Authority (QIA) is set to increase its investment in the $2 billion joint venture with the state-backed Russian Direct Investment Fund (RDIF).  The QIA pledged an initial $2 billion to invest in Russia jointly with RDIF following its landmark deal to buy a stake in Russia’s state-owned oil giant Rosneft earlier this month.  The joint-venture has already invested $500 million across transactions in the financial, retail and mining sectors and in infrastructure.  The RDIF is expected to receive over $1 billion in new capital from the government by the end of 2017.  President Putin said in June that Russia planned to boost RDIF’s capital.  There have been discussions on transferring some government stakes in companies to RDIF to manage given its successful track record, but nothing had been finalized.

The RDIF and Saudi’s sovereign funds were seeking further co-investment opportunities in Russian infrastructure and agriculture, while the Russia-Japan Investment Fund, a joint venture with the Japan Bank for International Co-operation, was expected to make some key investments this year.  The RDIF was set up in 2011 to buy stakes in companies alongside foreign financial and strategic investors. It can invest up to 20% of its capital outside Russia.  It has reserved capital of $10 billion under management and another $30 billion in commitments from foreign partners. It has co-investment ventures with several other sovereign funds, including those of China, Qatar and France.  (AB 08.02)

Back to Table of Contents

5.5  UAE Inflation Drops to 1.2% in December

The UAE’s inflation rate fell sharply on an annual basis to 1.20% in December compared to 2.6% in November, according to the UAE National Bureau of Statistics.  The figures, cited by Reuters, showed that housing and utility costs, which account for over 34.1% of consumer expenses, rose 1.6% from a year earlier.  Food and soft drink prices, which account for nearly 14.3%, climbed 0.5% while transport costs rose 0.4% after the UAE increased domestic fuel prices for December.  London-based consultancy BMI Research said inflation in the UAE will stay low throughout 2017 as the impact of subsidy cuts wears off.  The headline consumer price index will average 1.8%, the joint-lowest annual average for six years, with housing and food to be the main drivers of inflation, the consultancy said.  (AB 19.02)

Back to Table of Contents

5.6  UAE Awards $1.9 Billion in Military Contracts to Russia

On 20 February, the United Arab Emirates on Monday awarded $1.9 billion of military procurement deals including an AED 2.6 billion contract for Russia’s Rosoboronexport, during the Idex military exhibition.  Rosoboronexport will supply 5,000 anti-armor missiles plus training and support to the UAE armed forces.  Sweden’s SAAB AB won a contract for AED 865.7 million to provide new airborne surveillance systems and spares, while UAE firm Maximus Air was awarded an AED 1.8 billion contract to supply air cargo planes.  On 19 February, the UAE awarded AED 4.5 billion worth of contracts.  Idex is the region’s largest military show, with over 1,200 companies participating.  (Reuters 21.02)

Back to Table of Contents

5.7  China Buying into Abu Dhabi Oil with New Concession Stake

State-run Abu Dhabi National Oil Company (ADNOC) said it had signed an agreement giving China National Petroleum Corporation (CNPC) an 8% stake in a 40-year onshore oil concession.  CNPC contributed a sign up bonus of $1.8 billion to enter the concession ADNOC said.  The onshore concession is operated by the Abu Dhabi Company for Onshore Petroleum Operations (ADCO).  The ADCO concession, including the Bab, Bu Hasa, Shah and Asab fields, has total resources of 20-30 billion barrels of oil equivalent over the term of the concession.  The fields produce 1.6 million barrels per day (bpd) and are expected to reach 1.8 million bpd from 2017.  (AB 19.02)

Back to Table of Contents

5.8  Dubai Says 14.9 Million Tourists Visited During 2016

Dubai’s Department of Tourism and Commerce Marketing (Dubai Tourism) said that the emirate attracted 14.9 million overnight visitors in 2016, up 5% on the previous year.  Officials said that they are firmly on track to meet the target of attracting 20 million annual tourists by 2020.  Dubai Tourism said the strong performance came despite a “particularly turbulent year” across the world as the city continued to grow its share of outbound travel market despite three of its largest source markets witnessing “unique disruptions”.

The Gulf Cooperation Council (GCC) remained the number one volume generator for tourism to Dubai, delivering the highest share of visitor volumes for 2016, with a total of 3.4 million, up 5%, with Saudis topping the list.  On a regional level, Western Europe followed closely as second highest demand driver for travel to Dubai, accounting for 21% of the 2016 total, followed by the UK and Germany.  The latest data showed that India brought in just under 1.8 million overnight tourists, up 12%, while Pakistan also featured in the top 10 markets, delivering 607,000 tourists.

With 540,000 Chinese tourists last year, China dominated the demand from Asia, firmly cementing its status as a top 10 market, and is predicted to strengthen its contribution in light of the visa exemption policies that came into force in November.  The Americas collectively brought in just short of 1 million overnight travelers, led by the United States while Russia, CIS and Central European markets accounted for about 5% of the overall tourism volumes to Dubai in 2016, led by recoveries from both Russia and Ukraine.  The African region saw a 7% decline in travelers to Dubai last year while the Australasia region dropped 9%.  (AB 07.02)

Back to Table of Contents

►►North Africa

5.9  Tourism Shows Signs of Recovery in Egypt

Tourists are slowly returning to Egypt, easing pressure on a key sector battered by years of turmoil and the 2015 bombing of a plane carrying Russian holidaymakers.  Visitors from China, Japan and Ukraine account for a large part of the growth.   China’s top public travel agency, China International Travel Service, reported a 58% increase in tourists flying to Egypt compared with 2015.  The increase is a sign of hope for a country also reeling from the shock of an economic reform program that has triggered massive inflation.

Once a key foreign currency earner, the tourism sector crashed in 2011 after a popular uprising overthrew veteran strongman Hosni Mubarak, ushering in years of sporadic unrest.  Recoveries in the sector since then have been set back by new crises.  In June 2015, a massacre of tourists at a Luxor temple was narrowly averted when assailants armed with assault rifles and explosives bungled the attack and were intercepted by police.  But in October that year, militants, who are waging an insurgency in the eastern Sinai Peninsula, struck again.  They bombed a Russian airliner carrying holidaymakers home from the popular Red Sea resort of Sharm El Sheikh.  All 224 people on board were killed.  Russia suspended flights to Egypt and Britain cut air links with Sharm El Sheikh.  Visitor numbers plunged from 9.3 million in 2015 to 5.3 million the following year.

But industry officials have cautiously welcomed what they say is a noticeable improvement since October.  In December 2016, 551,600 tourists visited Egypt compared with 440,000 the year before, according to the government’s statistics agency.  This included a 30% increase in Ukrainian tourists and a 60% increase in visitors from China, with daily flights to Aswan, a southern city rich in ancient sites.  Japan’s HIS travel agency said the number of tourists heading to Egypt “multiplied by four to five times” last year.  Since charter flights from Japan to Egypt resumed in April 2016, they have been on average 80% full, said a spokesman for the Japan Association of Travel agents.  Egypt hosted a record 14.7 million foreign tourists in 2010, a year before Mubarak’s overthrow and the ensuing economic nosedive.  (AFP 19.02)

Back to Table of Contents

5.10  Morocco Trade Deficit Rises by 29%

According to the preliminary studies done by the Moroccan Foreign Exchange Office of external trading, the trade deficit increased by 29%, a rise of MAD 2.74 billion compared to the same period of the previous year.  Foreign Exchange Office numbers showed that Morocco registered an increase in imports of goods (MAD +3.556 billion) greater than that of exports (MAD +810 million).  Imports reached MAD 32,338 billion against MAD 28.782 billion in January 2016, an increase of 12.4%, which they attributed largely to the increase in purchases of energy products (MAD +2.311 billion) in relation to the increase in the purchase price on the international market.  Excluding purchases of energy products, imports increased only by 4.9% or MAD +1.245 billion.  The increase also concerned imports of capital goods (MAD +591 million) and finished consumer products (MAD +447 million).  On the other hand, food supplies fell by MAD 423 million, notably wheat (MAD -753 million).

Exports rose by 4.2%, MAD 20.274 billion instead of MAD 19.464 billion a year earlier, which was mainly due to the increase in sales of phosphates by MAD 757 million (MAD 3.755 billion instead of 2.998 billion), which represents 93.5% of the total increase in exports.  Thus, the trade deficit stood at MAD 12.064 billion in January 2017 against MAD 9.318 billion a year earlier and the coverage rate at 62.7% against 67.6%.

Remittances from Moroccan living abroad (MRE) were up by 2.6%, with an additional of MAD 121 million.  The amount generated by MREs in the first month of 2017 is MAD 4.71 billion.  (MWN 16.02)

Back to Table of Contents


6.1  Greece Compromises on Bailout Reforms

On 20 February, Greece agreed to compromise on new bailout reforms in a bid to break a deadlock with its EU- International Monetary Fund (IMF) creditors that has sparked fears of a new Grexit crisis.  Officials representing the lenders will return to Athens shortly for talks on new measures.  Austerity-hit Greece’s Eurozone and the IMF lenders have been locked for months in a standoff over debt relief and budget targets.

Creditor officials left Athens in December after failing to sign off on the second review of Greece’s bailout and freeing up new funds.  Markets have been spooked by fears of a return of the “Grexit” crisis, with Athens at risk of default this summer if it cannot unlock the latest tranche of the huge €86 billion ($91 billion) bailout agreed in 2015.  Fears are that a long series of elections, starting with the Netherlands in March and France in April, could delay matters dangerously.

Greek Finance Minister Euclid Tsakalotos approved measures that will be automatically triggered if Athens fails to meet budget targets.  The Greek side agreed to legislate the reforms which will take effect from 2019.  But the deal will include an “inviolable” clause that there will not be “one single euro more of austerity.  The measures must still be approved by the Greek parliament, most likely in mid-March, a step that has caused problems in previous deals.  (AFP 20.02)

Back to Table of Contents



7.1  Israel Rated Third Best Country to Raise Children

InterNations, the world’s largest network for people who live and work as expats abroad, ranked Israel third on their list of 19 countries for raising a family.  First place was Finland, with the Czech Republic taking second place.  Just behind Israel, placing fourth and fifth respectively, were Austria and Sweden.  The other countries, in descending order, were: Norway, Australia, Taiwan, Belgium, Germany, France, Poland, Netherlands, Luxembourg, South Africa, Singapore, Philippines, Mexico and South Korea.  The UK and US were not on the list.

The InterNations survey rated 43 different aspects of life abroad on a scale of 1-7. One of the sub-indexes is the Family Life Index, which consists of 45 countries.  Expats were asked to rate everything from childcare and education, to children’s health and safety.  Each country had to have at least 31 respondents raising dependent children abroad, for the nation to be included in the index.

Third ranked Israel advanced one place from last year’s fourth place ranking.  According to the survey, 81% of expat parents were “happy with the childcare options” in Israel and are similarly positive about Israel’s education options, with an impressive 84% expressing “general satisfaction” in that area.  According Israel’s Central Bureau of Statistics, in 2016, there were approximately 1.96 million families in Israel in 2014, compared with 1.65 million in 2005.  The average Israeli family size in 2014 was 3.7 people, the same as the decade before and high compared to Europe.  (NoCamels 15.02)

Back to Table of Contents

7.2  Israel Plans to Send Largest Ever Delegation to 2018 Winter Olympic Games

Israel is planning to send its largest delegation ever to the Winter Olympics that begin in PyeongChang, South Korea, on 25 February 2018.  Israel wants to expand the number of its participants in four sports: figure skating, speed skating, Alpine skiing and bobsled.  In PyeongChang, for the second time in Olympic history, team figure skating will be an event and will include the 10 best teams in the world.  If the Israeli skaters receive a sufficiently high adjusted calculated score from the World Championships and other competitions, they will qualify for the team event.

Ironically perhaps, most members of the Israeli delegation do not live in Israel and speaking Hebrew is often a struggle for them.  Israeli-based members of the delegation are mainly management personnel who travel to seminars abroad and visit Israeli training camps throughout the United States and Canada, sometimes even without knowing the athletes they are traveling to evaluate.

The Israeli Olympic Committee’s Elite Sport Department is aiming for a historic medal in short track speed skating.  Israel may also make history in the bobsled competition.  The large number of participants in the alpine ski competition, over 300, means Israel will also be represented.  (IH 20.02)

Back to Table of Contents


7.3  UAE Plans to Build ‘Mini City’ on Mars by 2117

Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum announced the Mars 2117 project which aims to build a miniature city on the Red Planet within 100 years.  Sheikh Mohammed, also Vice President and Prime Minister of the UAE, said the UAE was currently among the world’s top nine investors in space science.  In a series of tweets accompanied by photos of what it describes as the planet’s first miniature city, he said the 2117 Mars project aimed to build knowledge and scientific capabilities, involving the conversion of local universities into research centers.  The project, launched at the World Government Summit, will focus on parallel research into exploring means of mobility, housing, energy and food as well as speeding up the time it takes to travel to the planet.

The first phase of the project will focus on preparing the human cadres able to achieve scientific breakthrough to facilitate the arrival of humans to the Red Planet in the next decades.  The Mars 2117 Project will start with an Emirati scientific team and will be extended to include international scientists and researchers.  In November, Sheikh Mohammed approved the final designs of the UAE’s Mars Hope probe which is scheduled to reach the Red Planet in 2021.  He gave the green light to start manufacturing the probe’s prototypes, the Arab world’s first Mars probe.  The approval came as Sheikh Mohammed inaugurated a new satellite manufacturing facility at the Mohammed bin Rashid Space Centre in Dubai.

The Hope probe is scheduled to leave Earth in 2020 and aims to produce entirely new types of data that will enable scientists to build the first truly holistic models of the Martian atmosphere.  The probe will be the first to study changes in the Martian atmosphere throughout its daily and seasonal cycles.  Hope will be a compact spacecraft the size and weight of a small car. It will blast off in a launcher rocket, then detach and accelerate into deep space.  The probe will orbit the Red Planet until at least 2023, with an option to extend the mission until 2025.  It will send back more than 1000 GB of data to be analyzed by teams of researchers in the UAE, and shared freely with more than 200 institutions worldwide for the benefit of thousands of space specialists.  (AB 14.02)

Back to Table of Contents

7.4  Rania Nasher Named Saudi’s First Female Commercial Bank CEO

Rania Nashar was named chief executive of Samba Financial Group on 20 February, becoming the first female CEO of a listed Saudi commercial bank in line with the government’s economic and social reforms.  Nashar is a board member of Samba’s global markets subsidiary and a Pakistani unit, and has nearly 20 years of experience in banking.

Women, banned from driving in Saudi Arabia and subject to a system of male guardianship, hold few top posts in the financial sector.  But reforms which Saudi Arabia launched last year to make the economy more efficient and less reliant on oil exports include boosting the role of women in the economy.  The Saudi Stock Exchange recently appointed its first female chair, Sarah al-Suhaimi, who became the first female chief executive of a Saudi investment bank when she took the helm of NCB Capital in 2014.  Saudi Arabia’s reform plans aim to have women account for 30% of the workforce in coming years, up from the current 22%.  (Reuters 20.02)

Back to Table of Contents

7.5  Egypt to Appoint Its First Woman Governor

Five new provincial governors were to be sworn-in by President Abdel Fattah al-Sisi, including a woman for the first time.  Nadia Abdou became the first female governor in Egypt.  She was named as governor of al-Beheira Governorate after her remarkable efforts to promote Hepatitis C treatment in the city.  Abdou was appointed as the deputy governor of Behiera in August 2013.  She graduated in 1968 with a degree in chemical engineering and then received a Masters degree in health engineering from Alexandria University.  She also headed a drinking water company for 12 years.  Abdou was previously nominated to be a governor of Alexandria after receiving the Dubai-based Mohammed Bin Rashid Al Maktoum Business Excellence Award for outstanding Arab women managers.  (Al Arabiya 16.02)

Back to Table of Contents


8.1  Evogene and ICL Innovation Sign Collaboration for Development of Crop Enhancers

Evogene announced they have entered a multi-year research and development collaboration for the discovery of novel crop enhancers for the improvement of nutrient use efficiency in selected crops.  Under the terms of the agreement, Evogene will utilize its computational discovery platform to identify the potential of certain compounds to improve nutrient use efficiency.  Successful candidates identified from the collaboration may be integrated into ICL’s product pipeline for further development and formulation.  Expected commercialization of products derived from the joint efforts may occur as early as five years from initiation of the research and development activities.

Rehovot’s Evogene is a leading biotechnology company for the improvement of crop productivity for the food, feed and fuel industries.  The Company operates in three key market segments: improved seed traits (addressing yield increase, tolerance to environmental stresses and resistance to insects and diseases); innovative ag-chemicals (developing novel herbicide solutions for weed control); and ag-biologicals.  Evogene has collaborations with world-leading seed and ag-chemical companies.

Tel Aviv’s ICL is a global manufacturer of products based on specialty minerals that fulfill humanity’s essential needs primarily in three markets: agriculture, food and engineered materials.  ICL is a public company whose shares are dual listed on the New York Stock Exchange and the Tel Aviv Stock Exchange.  (Evogene 14.02)

Back to Table of Contents

8.2  GluSense Receives Investment from JDRF T1D Fund

GluSense received an investment from the JDRF T1D Fund, a venture philanthropy fund exclusively devoted to finding and funding the best early-stage T1D commercial programs.  The T1D Fund’s investment will be used to bring the Glyde CGM closer to the first in-human clinical trial, a key step in the commercialization process.  GluSense’s technology uses a proprietary fluorescent glucose-sensitive biosensor that ensures accurate glucose measurement across the full physiological range, with enhanced accuracy at the medically-important hypo glucose range.  Another GluSense breakthrough ensures that the biosensor level in the implant is maintained stable over the long term using engineered live cells that constantly replenish the biosensor in the implant.  The stable biosensor level enables calibration frequency to be significantly reduced, freeing users from the daily hassle of multiple calibration finger pricks.

Rehovot’s GluSense was founded by Rainbow Medical, the premier Israeli Innovation and Investment House. GluSense team includes top scientists and engineers dedicated to creating advanced technologies and breakthrough products that will improve the lives of people with diabetes worldwide. The company is funded by Rainbow Medical, several venture funds from US and China, Israel’s Innovation Authority and the JDRF T1D Fund.  (GluSense 18.02)

Back to Table of Contents

8.3  Intensix Raises $8.3 Million for Machine-Learning Tech to Head Off ICU Complications

Intensix reeled in an $8.3 million Series A.  The funds are pegged for the expansion of its sales and marketing ops in North America as well as further development of its predictive analytics platform.  While it is easy to recognize that something has gone wrong when, for example, a patient’s blood pressure drops, signs of deterioration can come too late.  Results from a prospective study at Tel Aviv Medical Center showed that the platform could recognize deterioration before care teams notice it might occur.  The study started out modeling sepsis, the leading cause of death in the ICU, and its results have become the starting point of an interventional study.  The company teamed up with the Mayo Clinic last year to look into the feasibility of using its platform to predict deterioration associated with infection.  The results will be published later this month.

Intensix is also in discussions with different institutions in the U.S. to conduct more studies of the platform, Salomon. The company will focus on collecting information and verifying the accuracy of the technology in order to be ready for the commercial phase next year.  As more players start using the tech, its predictive ability will only improve.

Netanya’s Intensix platform applies machine learning to the early detection of life-threatening complications in intensive care.  A proliferation of structured and unstructured ICU data—from vital signs to historical and demographic data—goes into the system, is run through a set of models and results in predictions.  ICU staff and management could use these predictions to head off deterioration before it happens.  Studies have shown that the tech could potentially save lives, reduce the length of hospital stays and lower costs, the company said in a statement.  (Intensix 08.02)

Back to Table of Contents

8.4  Beyond Verbal Recognized for Using Vocal Biomarkers to Detect Health Conditions Using Tone of Voice

Beyond Verbal has been recognized by Frost & Sullivan as the winner of the 2016 Global Voice Analytics for Disorder Diagnostics Visionary Innovation Leadership Award.  Beyond Verbal earned Frost & Sullivan’s 2016 Global Visionary award for its commitment to advancing long-standing screening, monitoring, and diagnostic problems with a unique, non-intrusive approach.  Beyond Verbal has proven that vocal intonations can provide significant insights into the inner-workings of human beings, and the company recently found a significant connection between vocal biomarkers and Coronary Artery Disease (CAD) with the Mayo Clinic.

Beyond Verbal’s technology enables the understanding of emotions, well-being, and health conditions through the human voice.  The company will be attending the Health IT Conference 2017 (HIMSS17) in Orlando from 19-23 February 2017.

Since its launch in 2012, Tel Aviv’s Beyond Verbal has been using voice-driven emotions AI to dramatically change the way we can detect emotions and reveal health conditions.  The only input needed is the human voice, making this technology non-intrusive, passive, and cost effective.  Beyond Verbal’s technology has been developed based on ongoing research into the science of emotions that started in 1995.  By combining the company’s patented technology with its proprietary machine learning-based algorithms and AI, Beyond Verbal is focusing on emotions understanding and discovering vocal biomarkers.  During the past 22 years, the company has been able to hone its technology through multiple internal tests and independent external validations.  (Beyond Verbal 21.02)

Back to Table of Contents


9.1  Israel Sends 2 Miniature Research Satellites Into Space

Two Israeli civilian satellites developed with the support of the Israel Space Agency were be launched into space on 8 February, via the Indian Space Research Organization in Bangalore.  The satellites will be two of the record-breaking 104 satellites from around the world to be catapulted into orbit on the same launcher.  The miniature Israeli satellites are designed to assist in the research of climate phenomena and to perform medical experiments.  Both satellites have been integrated with innovative technologies that enable Israeli researchers to guide their experiments and receive information directly.

One of the satellites is BGUSAT, developed by the Israel Aerospace Industries and the Science Ministry for a research mission held at Ben-Gurion University of the Negev.  BGUSAT, which weighs 5 kilograms (11 pounds) and is around the size of a milk carton, is fitted with special cameras capable of identifying different climate phenomena and a control system that allows for the selection of areas to photograph and research.  The satellite will enable researchers to receive high-quality images of the kind they were previously only able to access through costly requests from foreign satellites.  The Israel Space Agency has allocated NIS 1 million to pay for the cost of the images sent back to Earth.

The second miniature satellite is owned by Israeli firm SpacePharma, which developed the world’s first nanosatellite to include an experimental lab.  SpacePharma scientists will be able to view the four experiments in the lab in real-time through the use of a smartphone application.  The integrated and automated laboratory system also allows scientists to use the application to make changes in the course of the experiment, to receive data on radiation and temperature, and to record microscopic images in real time.  (IH 14.02)

Back to Table of Contents

9.2  CyberArk Announces Support for Amazon Inspector for Enhanced Cloud Security

CyberArk announced expanded privileged account security solutions for Amazon Web Services (AWS) to help customers better protect against, detect and respond to advanced threats.  For enterprises migrating to the cloud, CyberArk helps customers seamlessly extend and consistently enforce the security policies they have in place today on their on-premises infrastructure into their emerging cloud and DevOps environments.  When a leading provider of value-added services to telecommunication operators and retailers in Latin America chose to move its data center to AWS, it recognized the importance of ensuring privileged account security was in place to protect its cloud assets from the beginning.  It chose to work with CyberArk to improve the process of managing security.

Within organizations’ cloud environments, the rapid creation and deletion of instances and their associated administrator accounts must be closely managed. CyberArk can detect and rotate credentials based on company policy, and monitor and record privileged access to deliver greater visibility into the security of cloud assets.  In addition to AWS, CyberArk supports customers across multiple cloud environments including AWS, Azure, Google, Alibaba, mixed, hybrid, on-premises and as well as DevOps environments.

Petah Tikva’s CyberArk is the only security company focused on eliminating the most advanced cyber threats; those that use insider privileges to attack the heart of the enterprise.  Dedicated to stopping attacks before they stop business, CyberArk proactively secures against cyber threats before attacks can escalate and do irreparable damage.  The company is trusted by the world’s leading companies – including 45% of the Fortune 100 – to protect their highest value information assets, infrastructure and applications.  (CyberArk 09.02)

Back to Table of Contents

9.3  Plarium Partners with Twentieth Century Fox to Bring Acclaimed Rio Franchise to Mobile Gaming

Plarium announced a partnership with Twentieth Century Fox to bring the Academy Award-nominated Rio franchise to fans worldwide on Android and iOS mobile devices with Rio: Match 3 Party.  Releasing this spring, the game features a creative mix of match-3 puzzles, mini-games, and character collection to create a fun and exciting Rio experience for players of all ages.  The game will also feature fan-favorite characters from the film including Blu, Nico, Jewel, Roberto, Gabi, Luiz, Pedro, Rafael, Bia and more.

Rio (2011) and Rio 2 (2014) feature a star-studded cast led by voice work from Jesse Eisenberg (Social Network, Batman v. Superman) that follows the adventures of Blu, a rare Blue Spix’s Macaw, as he makes his way through Rio de Janeiro, and the jungles of the Amazon.  The new Rio mobile game will allow fans to play through these beautiful and iconic locations.

Founded in 2009, Herzliya’s Plarium Global is dedicated to creating the best mobile and social experience for hardcore gamers worldwide.  With over 250 million registered users, we’re proud to be consistently ranked among Facebook’s top hardcore game developers.  Plarium employs more than 1000 individuals and is headquartered in Israel with eight offices and development studios across Europe and the United States.  (Plarium 15.02)

Back to Table of Contents

9.4  SES and Gilat Join Forces to Make Connectivity at Sea More Accessible

Luxembourg’s SES S.A. and Gilat Satellite Networks announced a strategic collaboration focused on delivering affordable connectivity to a broad range of small ships and vessels left underserved at sea in the Caribbean and beyond.  Set for commercial launch in April 2017, the plug-and-play platform is the latest offering within the SES Maritime+ service, which was first introduced late last year.  The new collaborative solution bundles Gilat’s MarineRay 60P all-in-one Ku-band maritime VSAT (very small aperture terminal) antenna package with SES’s tailored maritime capacity on both wide beam and upcoming high throughput satellite (HTS) capacity to help small yachts and ship operators break through barriers to entry.

The collaborative solution, sold through a network of authorized dealers across the globe, will be available first to small yachts and vessels traversing Caribbean waters, followed by small craft operating in the Mediterranean Sea, North Sea, and ocean waters throughout Southeast Asia.

Petah Tikva’s Gilat Satellite Networks is a leading global provider of satellite-based broadband communications.  With 30 years of experience, we design and manufacture cutting-edge ground segment equipment, and provide comprehensive solutions and end-to-end services, powered by our innovative technology.  Delivering high value competitive solutions, their portfolio comprises of a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid State Amplifiers (SSPA) and Block Upconverters (BUC). Gilat’s comprehensive solutions support multiple applications with a full portfolio of products to address key applications including broadband access, cellular backhaul, enterprise, in-flight connectivity, maritime, trains, defense and public safety, all while meeting the most stringent service level requirements.  (Gilat 15.02)

Back to Table of Contents

9.5  Mellanox Improves Crypto Performance with Innova IPsec 40G Ethernet Network Adapter

Mellanox Technologies announced superior crypto throughput of line rate using Mellanox’s Innova IPsec Network Adapter, demonstrating more than three times higher throughput and more than four times better CPU utilization when compared to x86 software-based server offerings.  Mellanox’s Innova IPsec adapter provides seamless crypto capabilities and advanced network accelerations to modern data centers, thereby enabling the ubiquitous use of encryption across the network while sustaining unmatched performance, scalability and efficiency.  By replacing software-based offerings, Innova can reduce data center expenses by 60% or more.

The Innova IPsec adapter addresses the growing need for security and “encryption by default” by combining Mellanox ConnectX advanced network adapter accelerations with IPsec offload capabilities to deliver end-to-end data protection in a low profile PCIe form factor.  The Innova IPsec adapter offers multiple integrated crypto and security protocols and performs the encryption/decryption of data-in-motion, freeing up costly CPU cycles.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end Ethernet and InfiniBand intelligent interconnect solutions and services for servers, storage, and hyper-converged infrastructure.  Mellanox intelligent interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance.  (Mellanox 13.02)

Back to Table of Contents

9.6  Tadiran Telecom Announces the Release of Aeonix Version 3 UC&C Solution

Tadiran Telecom, a global provider of Unified Communications & Collaboration (UC&C), Contact Center, and Control Room Software, today announced the release of Aeonix Version 3, the most powerful, robust and easy to use version of their Aeonix Unified Communications & Collaboration (UC&C) platform.

Aeonix is a pure software based Unified Communications & collaboration (UC&C) solution that consolidates diverse business applications into a single powerful platform. It is an open architecture system based on a strong foundation that is fault tolerant.  Aeonix can be deployed in a private or public cloud environment and as an on premise or hybrid solution.

Petah Tikva’s Tadiran Telecom is an established global provider of Unified Communications & Collaboration (UC&C), Contact Center and Control Room software, serving businesses of all sizes, including tier-1 organizations in various market segments in 41 countries worldwide.  UC&C solutions from Tadiran feature a comprehensive family of products including their Aeonix, contact centers, and Dispatch Console platforms, as well as a full line of IP phones and applications for mobility and desktop needs.  (Tadiran Telecom 16.02)

Back to Table of Contents

9.7  Colorado DOT Adopts Datumate’s Cutting Edge Mapping Tools

Datumate’s professional Site Survey Solution has helped the Colorado Department of Transportation (CDOT) to quickly and safely survey a water pond located at the highway intersection of Colorado Boulevard and I-25 in the Denver Metro area.  Denver has an additional 300 water quality ponds and this technology will be primarily used to monitor the capacity of new ponds.  Datumate’s leading technologies will help Colorado’s DOT expedite projects such as asset management, infrastructure and bridge intersection surveying, project and incident management and more, while maintaining high accuracy as well as employee safety.  DatuSurvey Enterprise is photogrammetry software that automates professional surveying office work.  DatuSurvey Enterprise turns drone and camera based images to accurate, georeferenced 2D maps and 3D models, generating a variety of outputs and calculations to expedite deliveries, save time and dramatically reduce costs.

Yokneam Illit’s Datumate is digitally transforming civil engineering processes used in construction, surveying and infrastructure inspection markets with fully automated, highly precise and cost effective solutions that keep field crews safe. Datumate utilizes state-of-the-art image-processing and advanced drones and camera technologies that dramatically reduce the amount of time surveying crews spend in the field, speed up construction progress checks and shorten infrastructure inspection duration, while maintaining survey grade accuracy.  (Datumate 16.02)

Back to Table of Contents

9.8  illusive Adds Kill Switch Capabilities to its Deceptions Everywhere Cybersecurity Platform

illusive networks has successfully achieved Cisco compatibility certification with Cisco’s Identify Services Engine (ISE) Platform Exchange Grid (pxGrid) and Cisco Umbrella.  The Internet of Everything (IoE) continues to bring together people, processes, data and things to enhance the relevancy of network connections.  As a member of the Cisco Solution Partner Program, illusive networks is able to quickly create and deploy solutions to enhance the capabilities, performance and management of the network to capture value in the IoE.  Illusive’s integration of Cisco pxGrid powers enhanced prevention, providing customers with the earliest, most effective, and accurate attack detection.  Incorporating kill switch capabilities into their advanced deceptions technology, data is collected from the compromised hosts as soon as an attack is detected.  This data is then sent to the pxGrid platform, triggering ISE to execute containment of the compromised hosts.  Customers have full control of the level of containment, actions taken per deception policy and designation of the host’s mitigation status, alongside comprehensive forensics information in real-time.

Tel Aviv’s illusive networks is pioneering deception-based cybersecurity with its patent-pending Deceptions Everywhere technology that neutralizes targeted attacks and Advanced Persistent Threats (APT) by creating a deceptive layer across the entire network.  By providing an endless source of false information, illusive networks disrupts and detects attacks with real-time forensics and without disruption to business.  (illusive networks 20.02)

Back to Table of Contents

9.9  hiSky Smartellite Introduces a Ka-Band Satellite Terminal for Affordable MSS and IoT Applications

hiSky, the pioneer in affordable voice and data satellite communications, announced today the introduction of its revolutionary Ka-band based solution, a small portable device combining its state of the art technology.  Smartellite, uses advanced phased array beam steering antennas to automatically locate satellites at any location.  A proprietary built-in modem designed for low-to-medium bit rates allows for the fast acquisition of satellite signals while the advanced network management system is designed to provide voice and low bit-rate data communication services.  hiSky already has several registered patents for this solution.  hiSky’s develops an end-to-end solution, including its proprietary hub base station, hardware and software.

Rosh HaAyin’s hiSky brings innovative technology to the field of voice and data satellite communications.  Offering mobile connectivity that is affordable, portable, and easy to use, hiSky’s Smartellite makes satellite communication accessible even in the most remote and extreme locations, on land, at sea or in the air.  (hiSky 21.02)

Back to Table of Contents

9.10  Oi Selects CellMining SON Solution

CellMining, along with its Brazilian partner AsGa Sistemas, announced that Oi has selected CellMining’s unique SON solution to automatically optimize its network and improve the Quality of Experience (QoE) for mobile network subscribers nationwide.  Oi chose CellMining’s SON solution, which is driven by Subscriber-Network Analytics technology, after a rigorous selection process that included several SON and network equipment vendors in the market.  It also incorporated a Proof of Concept trial, which demonstrated the accuracy and effectiveness of CellMining’s unique customer-centric analysis approach, making trace tools obsolete and providing Oi’s engineers with a demonstrable improvement in network performance when closed-loop SON actions were performed.  CellMining’s business partner AsGa Sistemas played a key role in winning the contract.

Caesarea’s CellMining provides Mobile Network Operators with a unique toolset for optimizing user experience and network performance based on real-time metrics of subscriber data.  The company’s ground-breaking Subscriber Network Analytics technology monitors subscriber experience data, identifies usage patterns, and reconstructs entire call and communication flows for individuals and business customer groups.  CellMining has pioneered the integration of SON (Self-Optimizing Networks) with CEM (Customer Experience Management), to provide mobile operators with a world-class solution to optimize their networks for subscriber experience excellence.  (CellMining 21.02)

Back to Table of Contents


10.1  January’s Inflation Falls by 0.2% as Home Prices Fall

On 15 February, the Central Bureau of Statistics announced the Consumer Price Index (CPI) for January.  The CPI fell by 0.2%, rising by just 0.1% over the past 12 months.  During January, clothing prices fell 9%, footwear prices fell 10%, vehicle insurance fell 6.2% and housing services costs fell 0.8%.  Price rises in January included fuel (3.3%) and electricity (3.5%).  (CBS 15.02)

Back to Table of Contents

10.2  Israel’s Economy Grew at 6.2% in the Fourth Quarter

Israel’s GDP grew by an annualized 6.2% in Israel in the fourth quarter of 2016, according to a Central Bureau of Statistics estimate.  The figure is the highest quarterly growth rate since the second quarter of 2013.  According to this estimate, the economy grew 5% in the second half of 2016, following 3.2% growth in the first half of the year.  Growth for 2016 as a whole was raised to 4% from the previous estimate of 3.8%, and per capita growth was 1.9%.  The fourth quarter growth estimate is subject to revision.  In an analysis of GDP elements, business product jumped 5.9% in the fourth quarter, while exports of goods and services were up 4.5% and investments in fixed assets climbed by a whopping 10.2%.  Spending on private consumption rose by a relatively moderate 2.9%.  (CBS 16.02)

Back to Table of Contents

10.3  Israel’s Foreign Currency Reserves Hit Record High of Over $100 Billion

Israel’s foreign currency reserves crossed the $100 billion mark in January, their highest level since the Bank of Israel was established in 1954.  Foreign currency reserves stood at $101.6 billion at the end of January, an increase of $3.16 billion from the end of the previous month.  The bank attributed the increase to foreign currency purchases, which came to $50 million; a revaluation that increased the reserves by about $868 million; overseas government transfers totaling some $2.2 billion; and private sector transfers amounting to some $28 million.  A breakdown of Israel’s foreign currency reserves shows that at the end of 2016, 70% of reserves were in dollars, 25% in euros and 5% in British pounds.  Israel’s foreign currency reserves came to $98.4 billion at the end of 2016, following a $1.2 billion increase in December.  Many of the foreign currency purchases by the Bank of Israel in 2016 and during January were made as part of its policy of intervening in forex trading to prevent shekel appreciation.  (BoI 07.02)

Back to Table of Contents

10.4  Israel’s Housing Prices See Highest Drop in a Decade

Housing prices in Israel marked the highest drop in a decade in the last two months of 2016, the Central Bureau of Statistics said on 15 February.  According to the report, housing prices decreased by a total of 1.2% in November and December, the highest drop over the past 10 years.  The period between January to October saw a 6.4% rise in prices.  This price drop corresponds with Finance Minister Moshe Kahlon’s assertion that home prices have been coming down moderately.  The data also revealed that while the prices of bigger apartments remained the same or dropped moderately, the prices of small apartments have gone up.  The average price of a 1.5- to two-bedroom apartment has gone up by 1.5%, while the price for a 3.5- to four-bedroom apartment has dropped by 0.5%.  According to the report, in the fourth quarter of 2016, the average price of a four-bedroom apartment increased by 2%.  (CBS 15.02)

Back to Table of Contents

10.5  Medical Equipment Leads Increase in Israel’s Exports

Figures published on 16 February by the Israel Export and Industrial Cooperation Institute show that the rising trend in exports of goods from Israel continued in November 2016 – January 2017.  Exports of goods, excluding diamonds, totaled $12.3 billion during this period, 2% more than in the corresponding period in the preceding year.  Excluding the sharp downturn in exports of electronic components over the past three months, Israeli exports rose by 9%.

The Export Institute regards these figures as further evidence that Israeli exports are recovering, following a prolonged period of stagnation and decline that began in 2012.  The Export Institute says that recovery is taking place despite a steep decline in exports of electronic components from Israel, which totaled only $980 million in November 2016 – January 2017, 43% less than in the corresponding period in the preceding year.  This decrease was caused by the upgrading of US manufacturer Intel’s main fab in Kiryat Gat, which includes setting up an advanced innovative production line.

The increase in exports of goods in November 2016 – January 2017 follows a 1.8% rise in July – October 2016.  The Export Institute says that the trend continued in November 2016-January 2017, with key export sectors substantially increasing their volume of activity.  Pharmaceutical exports were up 8% to $2 billion during this period, and exports of electronic and computer equipment and optical devices used for medical purposes shot up 46% to $2.8 billion.  Exports of machinery and equipment, including equipment for agro-technology, renewable energy, irrigation systems, robotics, food, and printing, grew 28% to $1.6 billion.  (IE&ICI 16.02)

Back to Table of Contents


11.1  ISRAEL:  IMF Concluding Statement of the 2017 Article IV Mission

On 8 February the IMF issued a concluding statement to describe the preliminary findings of IMF staff at the end of an official staff visit to Israel.

Israel is enjoying solid economic growth and low unemployment, making this an especially favorable time to undertake reforms to help sustain strong and inclusive growth.  Monetary policy should continue to support the return of inflation to the target band.  Major progress has been achieved in reducing public debt, a trend that should be maintained while raising potential growth through sound investments in education, health, and infrastructure.  Establishing deposit insurance and enhancing bank resolution tools would enable further steps to ease entry into the banking system.  Recent housing initiatives may moderate prices in the near term, but deeper reforms are needed to durably enhance supply and affordability.  Israel can achieve substantial productivity gains through well designed reforms, including steps to ensure that regulation achieves its public policy goals at lower cost.  Progress on raising labor participation must continue.  This will require greater efforts to close gaps in education and mobility, complemented by increased support for the working poor.

Recent developments and outlook

Israel’s economy is growing solidly and unemployment has declined, yet inflation remains low.  Early estimates are for 3.8% growth in 2016, although this partly reflects one-off factors especially a surge in vehicle purchases.  Job creation is strong, at almost 3% in 2016, helping reduce the unemployment rate to only 4.4% by the fourth quarter, and supporting a rise in wage growth from low levels.  CPI inflation was ~0.2% in 2016, with core inflation (excluding the impact of energy costs, fruit and vegetable prices and government measures) low yet positive at 0.4%.

The economic outlook is positive in the near term but challenges will increase over time.  Domestic demand growth is projected to moderate but a firming in exports will help keep real GDP growth at around 3% in 2017.  Growth is expected to remain around 3% in the medium term, but there are significant risks from regional tensions and from uncertain trading partner growth.  Domestically, growth could be impeded if infrastructure or skill bottlenecks emerge, or if progress in closing the gaps in the labor participation and productivity of the Haredi (Ultra-Orthodox Jewish) or Israeli-Arab populations is insufficient.

Monetary policy

Inflation is expected to increase gradually but there are uncertainties around the timing of this increase.  A further rise in wage growth, together with higher foreign inflation and commodity prices, makes an eventual increase in Israeli inflation likely.  Yet lower import prices, in part due to the appreciation of the shekel in recent years, may continue to drag on inflation in the near term, and there is also uncertainty about when domestic wage growth will affect inflation.  Moreover, margins appear to be narrowing, perhaps linked to competition from rising internet purchases, which may continue to weigh on inflation going forward.

Monetary policy should remain accommodative pending a durable rise in inflation and inflation expectations.  The Bank of Israel (BOI) maintained an appropriately accommodative monetary policy in 2015-16 given spillovers from low foreign inflation and easy monetary policies in major advanced economies.  This policy stance, together with the BOI’s guidance that monetary policy will remain accommodative for a considerable time, has helped keep long-term inflation expectations near the center of the 1-3% target band.  Nonetheless, there has been some decline in short and medium-term expectations, which, together with the uncertainties around the pace of inflation increases, argues for avoiding a premature monetary tightening and waiting until inflation is heading back toward target on a durable basis before acting.

Housing and Macroprudential Policies

Housing prices have risen to high levels as demand growth meets inadequate supply, with the heaviest impacts on low income households.  Even after doubling in real terms since 2007, Israeli housing prices rose almost 8% on average in 2016.  Housing completions have failed to keep pace with the formation of new households.  Affordability is low, with the ratio of house prices to income rising to levels significantly exceeding those in many other countries.  In the past decade, a growing share of households therefore needs to rent, and rising rents reduce the income left for other spending, especially for low income households.

Recent housing market reforms include useful measures, but some initiatives are costly and may not have lasting benefits.  Bringing the relevant authorities under the Ministry of Finance (MOF) is already expediting land planning.  The Housing Cabinet has helped address financing issues and impediments to urban renewal, which should be expanded substantially to boost supply where it is needed most.  Although recent tax measures may dampen price rises in the near term owing to investor sales, without a supply change the price trend is unlikely to be altered significantly.  The Buyer’s Price scheme helps households purchase a first house, yet it benefits relatively few households that win a lottery, and comes at significant off-budget fiscal cost.

Reforms that enable a durable expansion of housing supply are needed to improve affordability over time and thereby also lower macro-financial risks.  Municipalities face disincentives to releasing land for residential development and to granting building permits in a timely manner, because residential property taxes are well below those on commercial real estate.  Blanket agreements with municipalities are overcoming these frictions in the case of major residential projects, but correcting municipal incentives would ensure the supply of residential property becomes more responsive to demand on a lasting basis.  Improved public transport provisions is important to help relieve housing shortages in major centers.  Construction costs and the time to build should be reduced by streamlining extensive building regulations and further opening the residential construction market to foreign competition, which could also help ease shortage of skilled workers.  Finally, municipalities could charge taxes on undeveloped privately held land to promote its use.  Macroprudential measures have avoided high housing prices leading to excessive household debt and the BOI should continue to monitor developments closely.

Financial Sector Policies

Maintaining strong supervision is critical for the continued health of Israel’s financial system.  The robustness of Israel’s banking system, which enabled it to come through the global financial crisis without public financial support, is underpinned by rigorous BOI supervision.  While preserving these high standards, it is welcome that a more risk-focused supervisory approach is being adopted to lower compliance costs.  The establishment of an independent Capital Markets, Insurance and Savings Authority is a notable step forward.  It is also important to put the Solvency II framework into operation for the insurance sector in order to ensure its resilience to shocks and thus its capacity to meet commitments to clients.  To improve coordination among regulators, especially the sharing of information, the legislation for the Financial Stability Committee needs to be enacted.

The Israeli authorities are taking a range of measures to promote the efficiency of the financial sector in delivering services to firms and households.  A banking ID card is available to improve information for customers.  A credit register is in development, which will broaden access to credit and help lenders compete.  Policies to enable electronic banking have been established, access to the payment systems has been expanded and scope for sharing IT infrastructure has been increased.  Banks are also scaling back branch and staffing costs, aided by temporary relief in capital requirements.  To promote competition, credit card companies will be separated from the two largest banks, while keeping them under BOI supervision given their importance for the payments system.  Enacting the securitization legislation is important to facilitate the funding of these companies.

Further strengthening the financial stability framework while reducing regulatory uncertainty is needed to fully realize the benefits of greater competition.  A more contestable banking market increases the need for deposit insurance with appropriate coverage limits, together with enhanced bank resolution tools, to protect stability and contain potential costs.  Hence, both of these instruments should be established before lowering minimum capital requirements for bank entry.  More broadly, in the wake of major decisions on financial sector reform, it is important to safeguard the operational independence of each financial regulator from political pressures, including to ensure that potential new entrants are not deterred by uncertainty about future regulatory arrangements.

Fiscal Policy

Israel extended its record of reducing public debt in 2016.  The central government deficit came in at 2.1% of GDP, well below the 2.9% target, as spending was kept within budget and revenues exceeded projections, partly owing to exceptionally high vehicle sales.  General government debt declined by almost 2% to 62% of GDP thanks to the low deficit, strong nominal GDP growth, and significant non-debt financing.

However, despite Israel’s solid economic prospects, the two-year budget for 2017–18 allows higher deficits and gradually rising debt.  Central government deficit targets for both 2017 and 2018 were raised to 2.9% of GDP, from 2½ and 2¼% respectively.  Some of the new spending measures contained in the budget are welcome, yet investment rises little.  In practice, the deficit is likely to be about 2¾% of GDP in 2017/8 given prudent revenue projections and firm spending control.  On existing commitments, deficits of about 3% of GDP can be expected in later years.  The debt ratio is therefore projected to rise 1½% in the next five years, to a level that exceeds the advanced economy median.

Fiscal policy should be doing more to support Israel’s growth potential.  Reforms of education and vocational training, supported by additional resources, could narrow the wide gaps in educational outcomes, bolster the skills of those already in work and help Arab women and Haredi men enter the work force.  Prospects for rising road congestion threaten productivity.  Timely implementation of current public transportation projects is needed, and higher than planned investment appears advisable.  Healthcare services are achieving good results, yet queues are much longer for public services, making recent steps to contain pressures on resources from private insurers appropriate, even at some budgetary cost.

Funding these essential public investments in human and physical capital while protecting Israel’s fiscal buffers will require a balanced approach.  Defense spending accounts for a substantial share of public expenditure (6% of GDP, 20% of central government spending), making it important during peacetime to adhere to the multi-year defense budget to contain this spending in a durable manner.  Additional savings can be achieved by raising the efficiency of central government administration and by further improving public procurement.  Revenues can be significantly enhanced by scaling back tax benefits (which total 5% of GDP), replacing blanket VAT exemptions with targeted transfers, and through planned steps to enhance revenue administration.

Altogether, fiscal policy should aim to keep the deficit around 2% of GDP on average over the cycle.  A central government deficit on this scale (equivalent to 3% of GDP for general government on a Government Finance Statistics basis) would generate a gradual debt decline in normal times, rebuilding fiscal space after recessions result in higher deficits and debt through the automatic stabilizers.  Nonetheless, if structural reforms with clear benefits for potential growth are adopted, a deficit that is somewhat higher could be appropriate temporarily if needed to accommodate upfront reform costs.  Current macroeconomic conditions support making the modest adjustment needed to reach a 2% target in the coming years.  Indeed, if the deficit is below target in 2017, the authorities should seek to lock in that over performance by not cutting taxes or raising spending without offsetting measures.

Important improvements in the medium-term fiscal framework have been made, but political commitment is key to its effectiveness.  Enhanced commitment controls (the Numerator rule) improve prospects to contain spending trends.  To embed this change, it will be critical for the government to observe this rule in the next few years.  The recently adopted expenditure review procedure will ensure that streamlining programs for 2017/8 are implemented and help identify future budget savings.  However, the medium-term budget framework remains susceptible to deviations from the fiscal rules.  Including concrete measures in the budget document to close such deviations would enhance their credibility.  The government should also set clear criteria for that limit changes in the spending and deficit ceilings to exceptional cases such as natural disasters.

Structural Reforms

Inclusiveness is central to sustaining strong growth in Israel.  Together Haredi and Arab Israelis make up 26% of the population, but 43% of primary school children, so they play an increasingly important role in shaping Israel’s future.  Great strides have been made in broadening employment, especially by Haredi women, yet much room remains to benefit from higher labor participation by Haredi men and Arab- Israeli women.  Low average wages for these groups reflect education and skills gaps that, together with inefficiencies in sectors sheltered from international competition, leave Israel with much scope to lift labor productivity closer to the levels of leading advanced economies over time.

Product market reforms are needed to increase competition, boost productivity, and reduce living costs.  Regulation should be reviewed and modernized to achieve public policy goals in a low-cost manner.  Simple and timely administration of regulations, such as a “one-stop shop,” is critical for the ease of doing business.  State enterprise reforms would help reduce costs felt across the economy, with action in the electricity sector key to helping Israel make efficient use of its natural gas resources.  Barriers to external competition should be lowered by expanding the coverage of quota increases and tariff cuts, especially on food, with targeted subsidies to support agriculture.  Moreover, import procedures should be simplified, Israeli standards aligned with those in other advanced economies, and restrictions that hinder foreign competition in services eased.

Reducing participation and productivity gaps calls for a range of efforts supported by increased resources:

Skills:  Innovative programs to enhance the motivation and ability of Haredi men and Arab-Israeli women to gain employment are being introduced with promising results.  Over time the resources allocated to these programs (currently only 0.2% of GDP) should be expanded.  Close coordination with employers is especially important to ensure the effectiveness of this spending.

Jobs:  More jobs are needed in, or close to, Haredi and Israeli-Arab communities. Investments in connecting their towns to main roads need to be increased, alongside improvements in access to public transport.  Other supports for local business development, including access to financing, are also needed.

Strengthening progress toward goals for poverty reduction also requires additional support for the working poor.  The minimum wage has risen significantly in recent years, to reach about 51% of average wages, which is among the highest by international standards.  The priority now, is to substantially increase the Earned Income Tax Credit (EITC), which currently averages just 7% of the minimum wage, at a total fiscal cost of only 0.1% of GDP.  Eligibility for the EITC should be expanded, including by lowering the minimum earnings threshold.  These steps would give families greater capacity to support the education and health of their children, while reinforcing incentives to work.  (IMF 08.02)

Back to Table of Contents

11.2  ISRAEL:  Dispelling the Myth That Israel is the Largest Beneficiary of US Military Aid

Executive Summary: Many American detractors of Israel begin by citing that Israel receives the lion’s share of US military aid.  The very suggestion conjures the demon of an all-powerful Israel lobby that has turned the US Congress into its pawn.  But these figures, while reflecting official direct US military aid, are almost meaningless in comparison to the real costs and benefits of US military aid – above all, American boots on the ground.  In reality, Israel receives only a small fraction of American military aid, and most of that was spent in the US to the benefit of the American economy.

On 10 February, Prof. Hillel Frisch wrote in BESA Center Perspectives that countless articles discrediting Israel (as well as many other better-intentioned articles) ask how it is that a country as small as Israel receives the bulk of US military aid. Israel receives 55%, or $3.1 billion per year, followed by Egypt, which receives 23%.  This largesse comes at the expense, so it is claimed, of other equal or more important allies, such as Germany, Japan and South Korea.  The complaint conjures the specter of an all-powerful Israel lobby that has turned the US Congress into its pawn.

The response to the charge is simple: Israel is not even a major beneficiary of American military aid.  The numerical figure reflects official direct US military aid, but is almost meaningless compared to the real costs and benefits of US military aid – which include, above all, American boots on the ground in the host states.

There are 150,500 American troops stationed in seventy countries around the globe.  This costs the American taxpayer an annual $85-100 billion, according to David Vine, a professor at American University and author of a book on the subject.  In other words, 800-1,000 American soldiers stationed abroad represent $565-665 million of aid to the country in which they are located.

Once the real costs are calculated, the largest aid recipient is revealed to be Japan, where 48,828 US military personnel are stationed.  This translates into a US military aid package of over $27 billion (calculated according to Vine’s lower estimation).  Germany, with 37,704 US troops on its soil, receives aid equivalent to around $21 billion; South Korea, with 27,553 US troops, receives over $15 billion; and Italy receives at least $6 billion.

If Vine’s estimate is correct, Japan’s US military aid package is nine times larger than that of Israel, Germany’s is seven times larger, and Italy’s is twice as large.  The multipliers are even greater for Egypt.  Even the Lilliputian Gulf states, Kuwait and Bahrain, whose American bases are home to over 5,000 US military personnel apiece, receive military aid almost equal to what Israel receives.

Yet even these figures grossly underestimate the total costs of US aid to its allies.  The cost of maintaining troops abroad does not reflect the considerable expense, deeply buried in classified US military expenditure figures, of numerous US air and sea patrols.  Nor does it reflect the high cost of joint ground, air, and maritime exercises with host countries (events only grudgingly acknowledged on NATO’s official site).

US air and naval forces constantly patrol the North, Baltic and China Seas to protect American allies in Europe and in the Pacific – at American expense.  Glimpses of the scale of these operations are afforded by incidents like the shadowing of a Russian ship in the Baltics, near run-ins between Chinese Coast Guard ships and US Navy ships dispatched to challenge Chinese claims in the South China Sea, and near collisions between US Air Force planes and their Chinese counterparts in the same area.

In striking contrast, no US plane has ever flown to protect Israel’s airspace.  No US Navy ship patrols to protect Israel’s coast.  Most importantly, no US military personnel are put at risk to ensure Israel’s safety.

In Japan, South Korea, Germany, Kuwait, Qatar, the Baltic states, Poland and elsewhere, US troops are a vulnerable trip-wire.  It is hoped that their presence will deter attack, but there is never any assurance that an attack will not take place.  Should such an attack occur, it will no doubt cost American lives.

This cannot happen in Israel, which defends its own turf with its own troops.  There is no danger that in Israel, the US might find itself embroiled in wars like those it waged in Iraq and Afghanistan at a cost of $4 trillion, according to Linda J. Bilmes, a public policy professor and Harvard University researcher.

Japan’s presence at the top of the list of US military aid recipients is both understandable and debatable.  It is understandable because Japan is critical to US national security in terms of maintaining freedom of the seas and containing a rising China.  It is debatable because Japan is a rich country that ought to pay for the US troops stationed within it – or in lieu of that, to significantly strengthen its own army.  At present, the Japanese army numbers close to 250,000, but it is facing the rapidly expanding military power of its main adversary, China.  A similar case can be made with regard to Germany, both in terms of its wealth and its contribution towards meeting the Russian threat.

What is incomprehensible is not why Israel receives so much US military aid, but why Japan has received nine times more aid than Israel does.  This is a curious proportion given the relative power Israel possesses in the Middle East and its potential to advance vital US security interests in times of crisis, compared to the force maintained by Japan relative to China.

Ever since the Turkish parliament’s decision in March 2003 not to join the US-led coalition, and the Turkish government’s refusal to allow movement of American troops across its borders, Israel has been America’s sole ally between Cyprus and India with a strategic air force and (albeit small) rapid force deployment capabilities to counter major threats to vital US interests.

It takes little imagination to envision these potential threats.  Iran might decide to occupy Bahrain, which has a Shiite majority seriously at odds with the ruling Sunni monarchy.  It might take over the United Arab Emirates, which plays a major role in the air offensive against the Houthis, Iran’s proxies in the war in Yemen.  There might be a combined Syrian and Iraqi bid to destabilize Sunni Jordan, in the event that both states subdue their Sunni rebels.  Any of these moves would threaten vital energy supplies to the US and its allies.  Only Israel can be depended upon completely to provide bases and utilities for a US response and to participate in the effort if needed.

The politicians, pundits and IR scholars who attack Israel and the Israeli lobby for extracting the lion’s share of US military aid from a gullible Congress know full well that this is not true.  Israel receives a small fraction of the real outlays of military aid the US indirectly gives its allies and other countries.  These experts also know that 74% of military aid to Israel was spent on American arms, equipment, and services.  Under the recently signed Memorandum of Understanding, that figure will be changed to 100%.  The experts simply cite the wrong figures.

The US is now led by a businessman president who knows his dollars and cents.  He has been adamant about the need to curb free-riding by the large recipients of real US aid.  He will, one hopes, appreciate the security bargain the US has with Israel – a country that not only shares many common values with the US, but can make a meaningful contribution to American vital interests with no trip-wires attached.  (BESA 10.02)

Back to Table of Contents

11.3  LEBANON:  Grasping a Golden Opportunity for a Macroeconomic Uplift

Bank Audi observed on 9 February that in 2016, the Lebanese economy did not get out of its state of sluggishness that characterized its performance during the past half a decade.  Despite a continuously growing private consumption, economic sluggishness was mainly tied to a weak private investment component within the context of a wait and see attitude among investors delaying major investment decisions in the country.  Mirroring the sound growth of private consumption offset by declining private investment, the analysis of Lebanon’s imports and that account for 36% of GDP suggests a rise of 5.2% in imports of non-oil consumption products in 2016 coupled with a stagnation in imports of investment products.

Strong rise in financial inflows, generating a noticeable surplus in the balance of payments

Lebanon’s foreign sector witnessed a significant improvement in activity in 2016, driven by a considerable 44% growth in financial inflows that led to a net surplus in the balance of payments of $1.2 billion for the first time since 2010.  In fact, the second half of 2016 reported significant financial inflows mostly driven by the financial engineering operations of the Central Bank.

Significant rise in public finance deficit with a growing indebtedness ratio

Lebanon’s fiscal performance reported a net deterioration in the first eight months of 2016, amidst a faster growth in expenditures (9.5%) relative to that of public revenues (4.1%), as suggested by the most recent figures released by Lebanon’s Ministry of Finance.  In fact, Lebanon’s public finance deficit rose by 27% from $2.0 billion in the first eight months of 2015 to $2.5 billion in the first eight months of 2016.  The rising fiscal deficit was financed by additional indebtedness.  As a percentage of GDP, government debt rose from 138.4% in December 2015 to 142.8% in November 2016.

Noticeable money creation on the back of strong financial inflows following BDL’s swaps

Lebanon’s monetary conditions benefited in 2016 from improved sentiment on the back of domestic political settlement and the Central Bank of Lebanon’s financial engineering operations in the second half of the year, which reinforced BDL’s foreign assets to reach a new historical high level, and contributed to a strong money creation over the year.

Strong banking activity growth amidst BDL financial engineering operations

Lebanon’s banking sector witnessed a vigorous activity growth over the course of the elapsed year, driven by strong deposit growth amidst a surge in financial inflows following the BDL financial engineering operations in the second half of the year.  Measured by total assets of banks operating in the country, banking activity grew by 9.9% in 2016 to reach $204.3 billion at year-end.  The growth in volume proved 78% higher than the one registered during the previous year and 61% higher than the rise seen on average in the last five years.

Improved capital markets sentiment following domestic political settlement

Lebanon’s capital markets ended the year 2016 with mild equity price gains, mainly supported by the overall domestic political settlement in the last quarter of the year that solved the Presidential conundrum and led to the formation of a national unity government.  Yet, the Lebanese Eurobond market saw expansions in bond spreads year-on-year, despite improved investor sentiment, mainly due to local sales to internationals amid a tightening US$ liquidity in the banking system following BDL’s recent swap operation.

Lebanese economy set to rebound in 2017

Our macro forecasts for 2017 post-presidential elections and cabinet formation but with the persisting absence of a regional settlement, rest on a 4% real GDP growth for Lebanon (i.e. more than double the average it reported over the past 6 years, at 1.8%).  This could be driven by a 15% growth in private investment and a 7% growth in private consumption within the context of an 18% growth in financial inflows towards Lebanon, benefitting banking activity at large.  (Bank Audi 09.02)

Back to Table of Contents

11.4  LEBANON:  Is Lebanon on the Path to Decriminalizing Homosexuality?

Florence Massena posted in Al-Monitor on 13 February that education and awareness seem to be the solutions to creating a society and legal system that are more tolerant toward the LGBT community in Lebanon.

On 26 January, Lebanese judge Rabih Maalouf issued a court order stating that “homosexuality is a personal choice and not a punishable offense.”  Maalouf is the fourth judge since 2009 to go against Article 534 of the Lebanese penal code, which states sexual acts that “contradict the laws of nature” are punishable by up to a year in prison.

In 2013, the Lebanese Psychiatric Society stated that homosexuality is not a mental disorder and does not need to be treated.  In 2015, the society updated the statement, calling for the abolition of Article 534.  “These are all small steps aiming to decriminalize homosexuality.  This is not a victory,” Bertho Makso, a Lebanese activist from the nongovernmental organization Proud Lebanon, told Al-Monitor.  “The real victory will be when Article 534 is changed or abolished. But now the priority is to educate people to avoid homosexuals’ persecution and make change happen.”

Makso said, “This ruling is very important because the judge used a different law about personal freedom not affecting society, adding that the duty of the court is to protect human rights and people’s dignity.”  Maalouf referred to Article 183 of the penal code — which states: “An act undertaken in exercise of a right without abuse shall not be regarded as an offense” — and to the International Convention of Human Rights that Lebanon signed in 2006.

According to a source close to the Ministry of Justice, who spoke to Al-Monitor on condition of anonymity, “This ruling adopts a different position than the three previous rulings, whose judges had argued over the impossibility to define ‘nature’ to rule out criminalization by Article 534.”

He added, “I am convinced of this last approach because it brings same-sex conduct out of this text by using logic.  Plus, the Lebanese law cannot be opposed to international conventions, having more power than the penal code.”

But he is not optimistic in regard to the amendment or abolition of Article 534.  “I really doubt this law can be abolished because of the composition of the Lebanese parliament,” he said.  “They are very inspired by religious texts and the Quran says, for example, that homosexuality is a sin and it shouldn’t be talked about publicly.  It is a real barrier for LGBT [lesbian, gay, bisexual and transgender] freedom.  The only good thing is that most judges — even conservative ones — no longer use jail time as a punishment for homosexuality.  Usually it is a fine they have to pay when they are released.  The judicial trend in Lebanon is not to be too harsh, but the problem is in the detention part, where LGBT people are often subjected to humiliation and sometimes even torture by the Internal Security Forces [ISF].”

The ISF was in fact using anal examinations on people suspected of same-sex relations, which Human Rights Watch denounced in a 2012 report, saying that “Lebanese public prosecutors often order invasive and abusive, anal examination procedures for men suspected of homosexual sex.”

The same year, the Lebanese Order of Physicians banned doctors from carrying out the “egg tests” — whereby a metal egg-shaped object is inserted into the rectum — on suspected homosexuals as it is related to torture, according to the physicians’ order.  Subsequently, a statement by the Ministry of Justice urged the country’s public prosecutor to ban the tests.  “The police have threatened people with this test since 2013, but they are no longer subjecting people to it,” Makso said.  “Now they use other techniques available to prove that someone is homosexual — by checking his cellphone’s applications, contacts and pictures on social media.  Still, members of the LGBT community are proved to be arbitrarily detained and tortured, even psychologically.”

Nasser, whose name has been changed at his request, told Al-Monitor, “As a gay man in Lebanon, I have absolutely no complaints.  I get a free pass, like most other gay men before me.”  He said, “The dividing lines are ‘women versus men,’ ‘cis versus trans’ and ‘rich versus poor’ — not urban and rural.  Gay and trans women and men have it harder than cis gay men.  Gay men can take a seat and stop playing victims.”  For Nasser, the best way to change the situation for good is “more rights over one’s own body and personal rights’ awareness being discussed in schools in order to make a real political and attitude change in the long term.”

In regard to educating the public on the issue, Makso said, “We will continue leading small fights, but again we have to work on society — maybe with the public support of famous figures and in collaboration with the media.”  Education and awareness seem to be the only solutions to create a more tolerant society and legal system toward LGBT people in Lebanon, with small victories like the Jan. 26 court order.  (Al-Monitor 13.02)

Back to Table of Contents

11.5  JORDAN:  Why the King’s Visit to Washington Was Essential for Jordan

Osama Al Sharif posted in Al-Monitor on 7 February that King Abdullah’s visit to the United States, where he met with President Donald Trump, helped reassure Jordanians that US military and economic support for the kingdom will continue.

Jordanians are feeling a certain sense of pride following King Abdullah’s recent visit to Washington, where he conferred with key administration and congressional officials and became the first Middle Eastern leader to meet with President Donald Trump.  Although Abdullah’s 2 February meeting with Trump was brief, taking place on the sidelines of the annual National Prayer Breakfast, it covered an array of issues of particular importance to the Jordanian monarch and the region.  The White House issued a statement in which it said that Trump had “conveyed the US’ commitment to Jordan’s stability, security and prosperity.”  It added that the president had “highlighted Jordan’s critical contributions to defeating IS [Islamic State] and discussed the possibility of establishing safe zones in Syria.”  In addition, it said, Trump “underscored that the United States is committed to strengthening the security and economic partnership with Jordan.”  These expressions of commitment signaled the success of the royal visit in the eyes of the king and a majority of Jordanians.

A royal court statement quoted by the Jordan Times said the two leaders also discussed the Syrian crisis, reviving Israeli-Palestinian peace negotiations and ways to boost their strategic partnership and work jointly to combat terrorism.  The newspaper also reported, “The two leaders agreed to hold a summit meeting during an official visit King Abdullah will make to the US soon.”

Local media praised the king’s diplomatic breakthrough and one commentator, Fahd al-Khitan, wrote 2 February in al-Ghad that Abdullah had fought a diplomatic battle in the US capital on behalf of all Arabs.  He also noted that the Jordanian monarch had met the US president even before Israeli Prime Minister Benjamin Netanyahu had done so.  A number of Amman dailies pointed to a 2 February New York Times article in which the authors credited Abdullah for a shift in Trump’s policy on the construction of new Jewish settlements in the Palestinian territories.

In regard to the settlements, on the day of the Abdullah-Trump meeting, the White House issued a statement described by some as a warning to Israel after announcements of new approvals for settlement construction on the West Bank, including in East Jerusalem.  The statement read, “While we don’t believe the existence of settlements is an impediment to peace, the construction of new settlements or the expansion of existing settlements beyond their current borders may not be helpful in achieving that goal.”

Trump’s surprising position on one of the most controversial issues impeding the resumption of peace talks between Israel and the Palestinians was hailed by local observers as an important outcome of the king’s visit.  In fact, during his five days in Washington, Abdullah did not shy away from highlighting the risks in carrying out Trump’s election promise to relocate the US Embassy from Tel Aviv to Jerusalem.  A regular visitor to the US Capitol, Abdullah maintains good relations with senators and representatives on both sides of the aisle and met with chairs and members of various congressional committees on 31 January.  According to a royal court statement, “The king warned that moving the US Embassy to Jerusalem will have regional consequences that will diminish the opportunity for peace and reaching the two-state solution.  It may also weaken the chances for a successful war on terror.”

Although diplomatically unusual, Abdullah’s working visit to Washington only a few days after Trump’s inauguration was politically essential for Jordan.  The king, who will host the annual Arab summit 29 March, wanted to convey Arab concerns about key regional issues — such as Syria, the Israeli-Palestinian peace process, terrorism, instability in Iraq and other matters — before the new administration develops policy on them.  Probably even more of a priority was Abdullah’s desire to receive assurances that Jordan’s strategic military and economic relationships with the United States will remain unchanged or perhaps be increased, which he did.

Jordan relies heavily on US economic and military assistance, which was boosted under the Barack Obama administration and in 2016 totaled $1.6 billion.  The presence of more than 1.2 million Syrians in the kingdom (including more than 650,000 registered refugees), the war in Syria, the closure of the Jordanian border with Iraq and a decline in aid from Gulf states have exacerbated economic conditions in Jordan. In particular, 2017 will prove to be a difficult year for Jordanians as the government seeks to raise $643 million in additional taxes and tariffs.

Another issue Abdullah underscored during his visit was Jordan’s pivotal role in fighting IS, which presents a threat to the kingdom through its presence in southern Syria, close to Jordan’s borders, as well as internally.  He raised the topic in a meeting with Vice President Mike Pence on 30 January and according to a royal statement, “The King emphasized that Muslims are [the] No. 1 victims of the outlaws of Islam, the Khawarej, who pose a global problem and do not represent any faith or nationality and target all of us who do not subscribe to their ideology of hate.”  His defense of moderate Islam was important in the wake of Trump’s controversial 27 January executive order banning entry into the United States by visitors from seven majority-Muslim countries.

Amman joined the US-led anti-IS coalition in fall 2014 and paid a heavy price when the terrorist group burned alive a captured Jordanian pilot whose plane had been shot down over Raqqa in December 2014.  Although not much has been said about Jordan’s military operations against the organization in recent months, the Jordan Times reported the Jordanian armed forces as having disclosed on 4 February that its jets had destroyed various IS targets in southern Syria.  This latest operation indicated Jordan’s readiness to launch preemptive raids against IS targets not far from its borders, something that the Trump administration, which has put the defeat of IS among its top foreign policy objectives, apparently supports.

Political commentator Oraib al-Rantawi told Al-Monitor that it was important for Abdullah to hear Trump’s and other top US officials’ views concerning the Syrian crisis, especially in regard to developments on the southern front and the president’s desire to establish safe zones inside Syria.  The king had met with Russian President Vladimir Putin in Moscow on 25 January and praised Russia’s role in trying to resolve the Syrian crisis and in fighting terrorism.  “The king has managed to maintain good relations with both Moscow and Washington and followed a policy that safeguarded Jordanian interests away from regional polarizations,” Rantawi said.

In the eyes of former Prime Minister Taher al-Masri, the royal visit represented a triumph of Jordanian diplomacy.  “The king managed to secure our national interests in this volatile and complex region,” Masri remarked.  He told Al-Monitor that while Trump’s official position on Israeli settlements and Jerusalem remain in question, the king was able to influence the new US administration on these sensitive issues.  “We hope the fruits of this visit will materialize soon and will spare this region further suffering,” said Masri.  (Al-Monitor 07.02)

Back to Table of Contents

11.6  BAHRAIN:  Fitch Affirms Bahrain at ‘BB+’; Outlook Stable

On 15 February Fitch Ratings affirmed Bahrain’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDRs) at ‘BB+’ with a Stable Outlook.  The Country Ceiling has been affirmed at ‘BBB+’ and the Short-Term Foreign and Local Currency IDRs at ‘B’.  The issue ratings on Bahrain’s senior unsecured foreign and local currency long-term bonds have been affirmed at ‘BB+’.  The ratings on the sukuk trust certificates issued by CBB International Sukuk Company 5 have also been affirmed at ‘BB+’.  The issue ratings on Bahrain’s senior unsecured local currency short-term bonds have been affirmed at ‘B’.

Key Rating Drivers

Bahrain’s ratings are supported by high GDP per capita and human development indicators (relative to the BB median), a developed financial sector and the boost to external financing flexibility from strong GCC support.  The strengths are balanced by double-digit fiscal deficits, high and rising debt, a highly oil-dependent government budget and domestic political tensions that hamper fiscal adjustment.

Fitch expects the fiscal deficit to fall only moderately to 12.3% of GDP in 2017 (assuming Brent averages $45/bbl), from an estimated 13.6% of GDP in 2016 and 15.4% of GDP in 2015.  The estimated fiscal breakeven Brent oil price of $84/bbl for 2017 is well above expected oil prices in the medium term. Continued deficits will push debt to 84% of GDP in 2018 from 75% of GDP in 2016 (well in excess of the BB median of 51% of GDP).  Fitch’s deficit numbers include estimated extra-budgetary spending of 2.6% of GDP, and the 2016 fiscal outturns are still preliminary.

Subsidy reform, spending restraint and growing non-oil revenue underpin the adjustment effort.  Gradual increases in domestic gas and fuel prices partly offset the negative effect of oil price weakness on hydrocarbon revenue, which Fitch expects to rise 13.4% in 2017 after a fall of only 10% in 2016.  Fitch expects spending to grow at a rate below non-oil GDP growth, after a broad-based cut of 8.2% in 2016.  The biggest spending cuts were to subsidies and transfers (24%, reflecting the start of utility price reforms), and capital spending (31%).  Notably, the nominal wage bill also fell (by 3.1%), for the first time in recent history.  The government is increasing non-hydrocarbon revenue by adjusting various fees.  Our forecast has it rising by 14.4% in 2017 after 5.8% in 2016.  These measures will continue in 2018, supplemented by the introduction of VAT.

Bahrain will finance its deficits through a mixture of foreign and local debt. In our forecast, the government’s foreign borrowing reaches roughly $3.2b in 2017 and $2.2b in 2018, after $2.9b in 2016.  Fitch assumes domestic borrowing will be less than a third of these amounts, in line with 2016.  A debt management strategy is still in the early stages of development, but the government wishes to limit domestic borrowing.

The government would have recourse to other means of financing in a stress scenario.  Its deposits in domestic banks (around 14.2% of GDP in 2016) mostly reflect the assets of the Social Insurance Organisation, which could increase its holdings of government debt.  Government-owned Mumtalakat Holding Company has an illiquid portfolio of mostly domestic assets with a balance sheet value of around 30% of GDP.

Fitch expects GDP growth of 2.4% in 2017-2018.  This reflects constant hydrocarbon volumes (after a fall in 2016) and a moderation of non-hydrocarbon growth to 3% from an estimated 3.4% in 2016.  Spending on projects financed by the $7.5b GCC development fund provides crucial support to growth amid government retrenchment. $3.9b of projects had been awarded to contractors as at end-2016 up from $1.1b at end-2015.  Growth is also supported by state-owned enterprise projects (in oil, gas, and aluminum).

Banks are well placed to extend more credit to the economy and the government, enjoying profitability, high levels of capitalization and liquidity, and low nonperforming loan levels.  Higher policy rates and yields on government bonds have not yet translated into significantly higher private sector borrowing costs.  Fitch expects credit to the private sector to expand by 4%-5% per year in 2017-18, from an estimated 3.5% in 2016.

The GCC development fund reflects the broader support that Bahrain enjoys from some GCC countries, particularly Saudi Arabia and Kuwait.  Bahrain gets most of its oil from the Abu Sa’afa field shared with Saudi Arabia (it is entitled to 50% of production, but has sometimes received significantly more as a form of support).  In Fitch’s view, further material support from the GCC would be forthcoming in case of extreme political, financial or fiscal instability, given Bahrain’s small size and strategic importance.  The expectation of such support has supported Bahrain’s market access and US dollar peg despite a low level of foreign exchange reserves, which had fallen to an estimated 1.2 months of current external payments at the end of 2016.

Tensions continue between the Sunni-led government and the predominantly Shia opposition.  Sporadic violence appears to have intensified in H2/16 after Al Wefaq, the main opposition group, was dissolved on charges of harboring terrorism.  In Fitch’s view, social pressures and the lack of a sustainable political solution hamper implementation of the fiscal reforms necessary to tackle the worsening debt trajectory.

Rating Sensitivities

The main factors that could lead to negative rating action are:

– Failure to reduce the fiscal deficit leading to a sharper than expected rise in the debt-to-GDP ratio.

– Severe deterioration of the domestic security situation.

The main factors that could lead to positive rating action are:

– A reduction in the budget deficit consistent with a decline of the government debt-to-GDP ratio in the medium term.

– A broadly accepted political solution to domestic political tensions.

Key Assumptions

-Fitch assumes that Brent crude will average $45/bbl in 2017 and $55/bbl in 2018.
-Fitch assumes no change to the rule of the royal family.
-Fitch assumes that regional conflicts will not directly impact Bahrain or its ability to trade.
-Fitch assumes no change to the peg of the Bahraini dinar to the US dollar. (Fitch 15.02)

Back to Table of Contents

11.7  EGYPT:  New Cabinet Members Sworn in After Tough Search

Ahmed Aleem posted on 16 February 2017 in Al-Monitor that Egypt faced a lot of rejections before it was able to field nine new Cabinet members.

After months of discussion and after numerous candidates declined to serve, Egypt has nine new Cabinet members and two fewer ministries. Parliament unanimously approved the nominees 14 February and President Abdel Fattah al-Sisi swore in the ministers 16 February.

The International Cooperation Ministry and the Investment Ministry were merged and will be headed by Sahar Nasr. The embattled Supply Ministry was merged with the Trade and Industry Ministry; Ali al-Moselhy will head the new Supply and Trade Ministry.

The government of Prime Minister Sharif Ismail has been widely criticized in the media, so much so that Sisi had announced on 16 January during a meeting with the editors-in-chief of national newspapers, that the reshuffle was imminent. “We will fix what needs to be fixed and improve performance,” Sisi said.

Securing new Cabinet members was a lengthy and difficult task. Ismail told Middle East News Agency on 19 January that many potential Cabinet candidates had declined to serve, especially in some much-criticized ministries.  That reluctance coincided with reports indicating high corruption rates in some service ministries, particularly the Supply Ministry and the Health Ministry, during the past six months.  A fact-finding committee formed by parliament to investigate corruption in the Supply Ministry issued a report in August that estimated state budget losses from a wheat scandal at EGP 1 billion ($60.6 million).

Parliamentary sources told Innfrad news website that a number of candidates for education minister also declined that post, in light of the large number of tasks entrusted to this ministry and the recent scandals it is facing, such as ones involving leaked exams and a textbook shortage.

Ikram Badr al-Din, a political science professor at Cairo University, told Al-Monitor, “Some candidates are refusing the ministerial portfolio when it comes to service ministries, since these positions are exposed to harsh criticism … by the public.”  He explained that a minister in most cases lacks sufficient power, and whenever there is a shortcoming in any of the services provided to the citizens, the media launches a severe attack on that minister.  “This scared off numerous candidates,” he said.

“The service ministries are the most rejected ones [by candidates], given their nature and their direct relation to citizens’ living requirements.  These ministries are associated with crises such as rising prices [of food and other supplies] in November and the Supply Ministry’s role in this crisis.  A crisis also erupted between pharmacists and the Health Ministry due to the rising price of medicines,” he said.  “In most cases, the ministers were blamed and held solely accountable for these crises” by the public and the media.

Gamal Shiha, chairman of parliament’s Education Committee, told Al-Monitor, “The rejection of service ministries is not something new, especially in recently years.  Many ministers have had different reasons to decline these positions, such as avoiding criticism, low salaries or personal reasons.  Therefore, it is difficult to have a clear idea on the reasons behind this.”

Rafaat al-Saeed, chairman of the advisory board of the National Progressive Unionist Party (Tagamoa), suggested another reason it might be difficult to fill some posts: The terms tend to be short.  The Cabinet was reshuffled in March 2016, just months after the government was formed in September 2015.  “From 2011 until today, there have been about 425 ministers who took office and then resigned.  Anyway, the current government is not expected to last long, even after these latest Cabinet reshuffles, especially since a minister would remain in his post for an average of about six months only.  This instability in this position makes any candidate reluctant to accept it,” Saeed said.  He also cited the amount of criticism that can come with the posts.

“Ministers are afraid to address or confront people’s demands, especially with regard to some basic services. Service ministries are being attacked and criticized by some television channels, which makes things even more complicated,” he added.

In the same vein, Gamal Zahran, head of the political science department at Port Said University, told Al-Monitor, “Some candidates are declining ministerial positions because of the government’s performance in the last period.”  Egypt is in the middle of an economic crisis, and its youths face an unemployment rate of more than 30%.

Some parliamentarians have complained because Health Minister Ahmed Emad el-Din Rady retained his post. Sources close to Tahrir news said Rady remained in his position because several university professors and prominent physicians declined offers for the job.  During the parliament session, Ismail said that “around 15 or 16 candidates” had declined the position.  Some candidates expressed concern about facing criticism, while others said they were concerned about handling confidential dossiers related to the ministry’s work.  (Al-Monitor 16.02)

Back to Table of Contents

11.8  TUNISIA:  IMF Statement on Tunisia

On 7 February, the IMF announced that Mr. Bjorn Rother, IMF mission chief to Tunisia, made the following statement at the end of a staff visit to discuss the economic outlook and the authorities’ policy intentions under Tunisia’s economic reform program supported by a four-year IMF Extended Fund Facility (EFF) arrangement approved in May 2016:

“The Tunisian economy has remained resilient in a difficult domestic and international environment.  Growth is expected to pick up to 2.5% in 2017 from 1.3% in 2016, supported by improved confidence following the successful “Tunisia 2020” conference in November and the adoption of crucial private-sector legislation.

“Significant macroeconomic challenges persist. Public debt has continued to increase, reaching more than 60% of GDP in 2016.  Measures taken by the authorities in the 2017 budget law will reduce the overall fiscal deficit modestly to 5.6% of GDP from an estimated 6% in 2016, higher than the initial target under the EFF due to lower growth and fiscal policy slippages.  The public wage bill as a share of GDP is among the highest in the world, and the external current account deficit remains elevated.

“The IMF team and the government agree that urgent action is necessary to protect the health of public finances, increase public investment, and accelerate progress with delayed structural reforms.  The authorities have outlined their near-term priorities to include mobilizing more tax revenue in a fair and efficient way, rationalizing the public-sector wage bill to create more space for public investment, and implementing the fuel-price adjustment mechanism.  Putting the social security system on a sustainable basis is another important priority.  These measures are critical to move the Tunisian economy towards higher growth and more jobs, and to ensure that Tunisians continue to benefit from adequate basic services.

“The team welcomes the government’s resolve to move ahead with modernizing the civil service.  Efforts are also ongoing to ensure the health of public banks and state-owned enterprises, establish an independent, high anti-corruption authority, and implement effective safety nets for the most vulnerable groups in society.

“The team had constructive discussions with the Head of Government Chahed, Minister of Finance Zribi, Minister of Investment Abdelkefi, Minister of Public Service Briki, and Central Bank Governor Ayari as well as their staff and will remain engaged in a close policy dialogue on reducing fiscal and external imbalances and reinvigorating structural reforms.”  (IMF 07.02)

Back to Table of Contents

11.9  TUNISIA:  New Tunisian Electoral Law Raises Issue of Military’s Role in Politics

Ahmed Nadhif posted on 16 February in Al-Monitor that the Tunisian parliament approved a new law on municipal elections, which granted military and security members the right to vote and raised concerns that the decision threatens the institutions’ neutrality.

On 2 February, the Tunisian parliament approved a law related to local and municipal elections, granting members of the security and military institutions the right to vote for the first time in the country’s history.  This precedent sparked controversy in Tunisia, as some people believe that military officers should enjoy the right to vote, just like their fellow citizens, while others believe that passing such a law will jeopardize the impartiality of the military institution and will involve it in political affairs.

After years of complete neutrality in political and electoral life, Tunisian soldiers, officers and security members will cast their votes in the upcoming municipal and local elections.  Chapter 6 of the new local electoral law states that “military and security officers are allowed to vote in local and municipal elections only.”  But this law contradicts Article 18 of the Tunisian Constitution, which states, “The national army is a republican army charged with the responsibility to defend the nation, its independence and its territorial integrity. It is required to remain completely impartial.”

The law also contradicts Article 19 of the constitution, which states, “The national security forces are responsible for maintaining security and public order … with complete impartiality.”

In this context, Sami bin Salameh, a former member of the Independent Higher Authority for Elections in Tunisia, told Al-Monitor, “Security and military officers, as well as members of the armed forces, are special citizens.  For that reason, we must always adapt their rights as citizens to the respect of principles related to security and military life, hence discipline, loyalty, neutrality and readiness to serve.  Granting them the right to vote in elections — even if only municipal — is a dangerous process that could affect these four principles, interfere with their work and involve them in the political arena in spite of themselves.  After all, Tunisia is still living an incomplete transitional phase plagued by difficulties and violation attempts from parties.”

The military institution has yet to issue a comment on the law, as its members are quite reserved and do not disclose their opinions to the media.  Salemeh pointed out the security hazards of granting security and military officers the right to vote, saying, “Their votes will reveal their political and ideological affiliations, in addition to disclosing their identities and where they are based due to their registration on electoral lists.”

Tunisia has been the stage of several terrorist operations since 2011, some committed by jihadi groups affiliated with al-Qaeda such as Uqba Bin Nafi Battalion and others by groups pledging allegiance to the Islamic State.  These terrorist acts have claimed the lives of more than 220 security officers and soldiers and 98 civilians, as per a survey conducted by local website Inkyfada.  The latest of such attacks targeted a military vehicle in Jebel Samama, in the west of the country and killed three soldiers in August 2016.

Political analyst and journalist Abdel Sattar al-Aidi told Al-Monitor, “Granting security and military officers the right to vote in local and municipal elections only — rather than in legislative and presidential elections — constitutes a good test for their discipline and commitment to complete neutrality in politics.  At the same time, it allows them to enjoy their right of citizenship, especially given that the constitution affirms total and indiscriminate equality — including professional indiscrimination — between citizens and guarantees all Tunisians the right to vote.”

Aidi added, “The assessment of the upcoming municipal elections will be important and useful.  If the country finds it difficult to maintain the military and security institutions’ neutrality after granting their members the right to vote, the law will be amended and the article that allows them to vote will be annulled.  You never know until you try. If need be, the new electoral law will be amended to suit the needs of society and the state.”

Fida Nasrallah, the director of the Carter Center in Tunisia, which had specialized in electoral monitoring, supervising the drafting process of the constitution and putting in place the elections’ legal framework, told Al-Monitor in a previous interview on 12 October, “Depriving them [military officers and internal security staff] of their right runs contrary to the international obligations of the Republic of Tunisia under the international covenant of the United Nations on civil and political rights.  In addition, it is contrary to Article 21 and Article 34 of the Tunisian Constitution.”

Nasrallah said in the same interview, “The fear that the army will not remain neutral and that the vote may be manipulated is an obsession shared by many countries.  But these concerns can be reduced by adopting certain measures, not by categorically denying the rights of the armed forces.”  The Carter Center had urged the Tunisian parliament in a statement 28 September to grant the military and security forces the right to vote.

The Islamist Ennahda movement first objected to granting military and security officials the right to vote in elections, only to vote later in favor of the new law on 31 January.  Apparently, Islamists are sensitive to the military institution, given its history in the region.  In Egypt, for instance, former Muslim Brotherhood-affiliated President Mohammed Morsi was toppled by his defense minister, Abdel Fattah al-Sisi, on 3 July 2013.  In Turkey, a group of army officers spearheaded the failed coup attempt against Islamist President Erdogan on 15 July 2016.

When the electoral law deliberations took flight in September, former officers in the Tunisian army objected, saying this could potentially cause division in the security and army ranks.  Meanwhile, secular parties, especially the Popular Front, which includes 11 parties; leftist, environmental and national groups; and the liberal Afek Tounes Party welcomed the law.

The upcoming elections will be the basis for deciding whether allowing the military and security officers to vote in municipal and local elections was the right thing to do.  Still, the concerns of the opponents of this law are justified.  Involving the security and military institutions in political life — even if for a good cause — might risk the future of a country still treading carefully toward democracy while fighting an open war against terrorist groups on its eastern borders with Libya and western borders with Algeria.  But, at the same time, the upcoming elections will practically test the internal security and military institutions’ ability to maintain their discipline and respect for the neutrality principle stipulated by the constitution while practicing their right to vote.  (Al-Monitor 16.02)

Back to Table of Contents

11.10  MOROCCO:  What’s on Morocco’s Agenda as it Rejoins the African Union?

Habibulah Mohamed Lamin posted on 10 February in Al-Monitor that Morocco wants to take advantage of its strong economic presence to gain political support in the Western Sahara dispute while becoming a hub for Western investments in the African continent.

Morocco is ready to raise its global stature, flexing its muscle before the world by joining the African Union (AU) and making clear what it can offer — or withhold — in the areas of finance and security.

The country’s investments, security and migration control will remain its power points with which to bargain for political support from the West, which in turn wants a greater presence in Africa.

Morocco wants to put to bed international friction over its decades long battle with the Polisario Front independence movement over disputed Western Sahara territory recognized by some countries as the Sahrawi Arab Democratic Republic (SADR). In fact, Morocco left the AU’s predecessor, the Organization of African Unity, in 1984 to protest the group’s admission of SADR.

But now Morocco is back.

On 31 January, Moroccan King Mohammed VI gave his first speech before the AU at a summit in Addis Ababa, Ethiopia, seeking to open a new relationship with the African bloc.  Thirty-nine countries reportedly voted for Morocco’s return to the AU. Counting Morocco, 55 countries are now members of the union.  The king has been touring eastern Africa during the past six months to gain support for his country’s AU bid, meeting with African leaders from Nigeria to Ethiopia to sign trade agreements.

Although Morocco has been out of the AU for decades, it maintains economic ties with other African countries. The king made that clear in his speech, emphasizing Morocco’s economic presence in the African continent.  “Strong bilateral relations have thus been significantly developed: Since 2000, Morocco has signed nearly a thousand agreements with African countries, in various fields of cooperation,” he said.

Some 85% of Morocco’s foreign investments are in Africa, varying from banks and agriculture to car insurance.  Morocco is also Africa’s third-largest exporter after South Africa and Egypt.  According to African Development Bank President Akinwumi Adesina, Morocco “is one of the bank’s best-performing portfolios on the continent.”

However, Morocco’s lengthy absence from the highest decision-making body in Africa has left it without much political capital regarding the Western Sahara issue.  Africa has a long history of decolonization, and the sensitivity of this particular matter has given the Sahrawi people’s right of self-determination a top priority on the AU agenda.  Over the past three decades, the AU has been calling for a UN Security Council referendum on what is considered Africa’s last colony.

Issandr El Amrani is the Crisis Group’s North Africa project director, based in Rabat, Morocco’s capital. He believes there are two reasons Morocco insisted on becoming part of the AU.  “First, Morocco has gained little political support on the Western Sahara question within the AU, so it wants to weigh in along with other West African ally states,” he said.  “Second, Morocco wants to become the intersection point between the West and West Africa.”  Amrani told Al-Monitor that Tanger Med Port in Morocco is considered one of Africa’s most important transshipment points, linking West Africa to the rest of the world, from Europe to North America to Asia.

Perhaps these goals explain the friendly tone of the Moroccan king’s speech, which was well-received and applauded by other African leaders.  “It is so good to be back home, after having been away for too long! It is a good day when you can show your affection for your beloved home,” Mohammed said.

Previously, Morocco set the expulsion of SADR as a precondition for it to join the AU.  Though that demand has been dropped for now, observers still see the new approach as simply a way for Morocco to get along with others while it develops its long-run plan.  Academic and lecturer Patrick Delices, who specializes in African and Caribbean studies, told Al-Monitor, “The policy of Morocco remains the same regarding SADR, but its political approach is different, as it now elects to win over various member states within the AU in hopes of weakening the political influence of SADR, Algeria and South Africa on the continent of Africa.”

Nevertheless, SADR has had the upper hand within the AU for the past 30 years.  Its allies — Algeria, South Africa and Nigeria — have been the major powers shaping the continent’s policies.  Morocco has watched the developments closely, but has much less influence, so it is entering the union using a new strategy, rather than issuing demands.  “By joining the AU, Morocco is planning to become a major economic and political player in Africa by capturing markets and by eroding and subverting the political influence of SADR and its Polisario Front,” Delices said.

Recently, SADR Foreign Minister Mohamed Salem Ould Salek said Morocco’s readmission to the AU constitutes “recognition” of SADR.  Later, Moroccan Deputy Foreign Minister Nasser Bourita rejected his adversary’s statement in an interview with Le Desk to say that Morocco does not “and will never recognize … this so-called entity.”  Beyond that, Bourita confirmed Delices’ assessment by adding that his country will “redouble its efforts” so African states that recognize SADR “change their position.”

The Moroccan king demonstrated that intention when he traveled to Juba immediately after the AU summit to meet South Sudan’s president, Salva Kiir Mayardit.  During the early February state visit, Morocco agreed to fund a $5 million feasibility study on moving South Sudan’s capital from Juba to Ramciel.  In 2011, South Sudan estimated the move would cost a total of $10 billion.

The youngest African state had previously recognized and pledged support for SADR.  Some observers have alleged that the Moroccan king’s travels to South Sudan and other countries amount to a “bribery expedition” in which Morocco offers financial support to countries in exchange for their votes to revoke SADR’s membership in the AU.  “Globally, Morocco does not want to be seen as a kingdom engaged in colonialism and the negativity associated with it — economic exploitation and political oppression.  Morocco wants to be viewed favorably by Africa and the rest of the world, especially as Africa’s leading investor,” Delices told Al-Monitor.

Morocco is determined to establish stronger political and economic ties with African and European countries, but its return to the AU comes as the Western Sahara cause is becoming more visible in the European Union.

The EU Court of Justice recently decided to separate Western Sahara imports from EU-Moroccan trade agreements.  Though it wasn’t clear why that move would endanger Morocco’s agreements, Morocco threatened to end economic cooperation with the EU unless a farm deal is renewed.  Morocco’s state news agency, MAP, reported in an official statement that there would be “further repercussions” on the EU if the agreement isn’t extended.

Morocco has been an important partner in monitoring terrorist activity in Europe.  Will the EU be forced to choose between respecting its justice system and taking care of its security concerns?  The latter has been more challenging since terror attacks have taken place from France to Germany.  As a security partner, Morocco would be hard to lose. But breaching a judicial decision would also harm Europe’s reputation globally.  Morocco’s recent moves all demonstrate that it is unafraid to use its strengths as leverage both to dominate its enemy, SADR, and to improve its place in the world order.  (Al-Monitor 10.02)

Back to Table of Contents

11.11  MOROCCO:  2017 Predicted to be Good Year for Morocco in Key Areas

The future is looking good for Morocco on several key levels, namely political stability, social standards and economic outlook, according to a new report from BMI Research.  Despite the continuing delays in forming a coalition government, Morocco’s 2017 outlook continues to be positive.  The report predicts limited risks resulting from Head of Government, Abdelilah Benkirane’s ongoing failure to form the country’s new government.

Forming the government became more complex and challenging than anyone had anticipated when Bekirane was given the task more than four months ago.  Conditions forced on him by other parties such as the National Rally of Independents (RNI) and the Popular Movement (MP), who each insisted on the exclusion of the Socialist Union of Popular Forces (USFP), forced Benkirane and the negotiations into a full stall.  At one point the RNI had also insisted on the exclusion of the Istiqlal Party (PI).

It is thought by the authors of the BMI Research report that fundamental differences in party ideologies are at the heart of the standstill.  Benkirane’s Party, the Justice and Development Party (PJD), espouse a moderate Islamist doctrine battling government corruption. The RNI runs on a more liberal social platform.  There is also an interesting theory that the delay could end up being of benefit to the Royal Family by way of curtailing the PJD’s growing popularity.  Although the report does not indicate any concern about the PJD challenging the authority of King Mohamed VI, the current blockage could result in stunting the party’s growth.

Recent unrest in the northern Rif region is also not thought to be of great concern regarding the country’s stability.  This is because the recent clashes with government officials and security forces continue to be occurring in isolated pockets, such as al Hoceima where clashes occurred over the recent death of a fishmonger when he was crushed in a garbage truck during the confiscation of his merchandise by government officials.  The tragedy was taken up as a battle-cry in the areas against government corruption and security force abuse.  Researchers at BMI Research, however, do not consider the tensions to be a real threat to overall Moroccan political and social security.

Recent reforms initiated by King Mohammed VI are also being lauded for aiding in the strengthening of the constitutional government, with moves such as the 2011 constitution which somewhat limited the King’s authority.

Although Morocco’s 2017 outlook does appear solid, with a predicted GDP rise of 4.3%, the report does warn, however, that cracks could potentially appear if the coalition government formation doesn’t happen soon.  Long-term projections continue to look good, with Morocco placing 4th out of 19 countries in the MENA region, and scoring 69.8% out of 100 for Long-Term Political Risk.  Reasons for the continued confidence include Morocco’s commitment to becoming an import/export hub in the region, which makes it extremely attractive to investors.  (BMI 16.02)

Back to Table of Contents

11.12  GREECE: Priorities for a Return to Sustainable Growth

Greece should deepen and accelerate reforms, which, together with further debt relief, are needed to allow the economy to return to a sustainable growth path, the IMF said on 7 February in its latest annual assessment of the Greek economy.

The IMF’s Article IV report notes that the country has made progress in reining in its fiscal and external deficits, although this has taken a heavy toll on society.  The report identifies a path to sustainable growth and prosperity that requires a two-pronged approach: ambitious policies on the part of the Greek authorities and significant debt relief on the part of Greece’s European partners.

The Q&A below highlights some of the key issues about the country’s progress and its reform priorities for the period ahead.

IMF News: Greece had its last Article IV Consultation in mid-2013.  How have the Greek economy and policies evolved since then?

Greece reduced its fiscal and current account deficits significantly since the onset of the crisis.  In particular, the fiscal primary and current account deficits declined from 11 and 15% of GDP, respectively, to around zero at the end of 2015.  This is an impressive adjustment for a country that is part of a currency union and does not have access to monetary and exchange rate policy tools.

But extensive fiscal consolidation and internal devaluation have come with substantial costs for society.  The unemployment rate is still unacceptably high at 23% (October 2016), and Greece has suffered a prolonged recession, with output 25% below its pre-crisis level.  The high societal costs have weakened support for ongoing reforms.

The government renewed its reform effort since mid-2015 with a new adjustment program supported by the European Stability Mechanism.  Specifically, they legislated a number of important fiscal (e.g. pensions, VAT, income tax), financial (e.g. insolvency legislation, nonperforming loan servicing and sales loans, bank governance) and structural reforms (e.g. privatization, actions to facilitate competition in key sectors).  So, in all, there have been some setbacks but also some progress since the last Article IV consultation.

IMF News: Greece now has a new set of policies in place.  Are these reforms sufficient for Greece to embark on a sustained recovery?

While Greece has recently made progress with carrying out reforms, challenges remain.  In particular, fiscal policies are still not conducive to growth.  Half of wage earners are exempt from personal income tax, while the deficit of the pension system remains at a record high (10.5% of GDP, almost four times as high as the euro-area average).  At the same time, overdue bank loans make up 45% of total loans and unpaid taxes to the state amount to 70% of GDP.  As a result, investment and growth remain weak.  For Greece to return to sustainable growth and exit successfully from official financing, it needs to deepen and accelerate reforms.

IMF News: The report mentions that fiscal policies are not growth-friendly.  What policies does the IMF recommend?

Greece does not require further austerity at this time.  Accounting for ongoing reforms, Greece is expected to achieve a primary fiscal surplus of 1.5% of GDP over the medium and long term.  Greece does not need to run a higher primary surplus than that.

But if Greece decides aim for a fiscal surplus higher than 1.5% of GDP, it needs to show how it can credibly achieve this higher target.  In this case, additional structural reforms will be needed. However, these reforms should be implemented only once the recovery is well underway.

Regardless of fiscal target, Greece should seek more growth-friendly and equitable policies.  Specifically, Greece needs to broaden its personal income tax bases to allow for a more equitable distribution of the tax burden.  The revenue this would generate can be used to reduce the high tax rates that are now sending jobs into the informal economy or to neighboring countries.  At the same time, further pension reforms are needed to improve the viability of the system and allow for a better and more targeted welfare system to protect those who are most vulnerable.

Greece also needs to address tax evasion and the large tax debt owed to the state by restructuring tax debt for viable taxpayers based on their capacity to pay, and by strengthening enforcement for those who can afford to pay but choose not to do so.  The full establishment of the new independent revenue agency will be critical in this regard.

IMF News:  You also mentioned that the financial sector is still burdened by very high nonperforming loan ratios.  What can Greece do to address this issue?

Nonperforming loans should be reduced rapidly and decisively to allow for a resumption of credit and growth.  As long as banks’ balance sheets remain burdened by such nonperforming loans, they will be unable to direct resources to the more productive parts of the economy.  Addressing this problem requires the full implementation of the debt restructuring legal framework, with stronger enforcement and an out-of-court mechanism to deal with both bank and tax debt.

At the same time, supervisory tools need to be strengthened to provide incentives to banks to reduce their nonperforming loan stock.  Finally, bank governance needs to be further strengthened and capital controls eliminated as soon as prudently possible, while preserving financial stability.

IMF News: Any other reforms that the IMF recommends to support growth?

Labor and product market reforms are essential to support Greece’s long-term growth potential.  The labor market reforms of 2011 helped improve the labor-cost competitiveness of the country.  However, lagging implementation of product market reforms means that, so far, wage-earners have been bearing the burden of adjustment.  But it would be wrong to conclude that Greece should return to the previous, less flexible labor market framework.  Instead, existing reforms should be complemented with measures to bring the collective dismissal and industrial action rules in line with best practices and with more decisive efforts to open up remaining closed professions and remove barriers to competition and investment.

IMF News: Can we conclude that with these reforms, Greece will finally overcome the deep downturn and return to growth and prosperity?

Even with full implementation of these policies, Greece cannot grow out of its debt problem.  European partners need to provide further debt relief, in addition to the generous relief provided thus far, to put Greece’s debt on a sustainable downward path.  This need not involve an upfront haircut and could include instead further extensions of maturity and grace periods, as well as fixing the interest rate on Greece’s official loans to ensure that interest costs remain manageable as global interest rates normalize.

But debt relief alone is also not sufficient to address Greece’s policy challenges.  This is why a two-pronged approach is required for Greece to return to sustainable growth and prosperity: ambitious policies on the part of the Greek authorities and ambitious debt relief on the part of Greece’s European partners.  (IMF 07.02)

Back to Table of Contents


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.

EDI’s other services include development of feasibility studies and tailored research reports, as well as identification of potential joint ventures for commercial clients.  For more information on how we may better assist you, please visit our Web site at:  http://