Fortnightly, 24 August 2016

Fortnightly, 24 August 2016

August 24, 2016


24 August 2016
20 Av 5776
21 Dhul Qadah 1437




1.1  Netanyahu Injects Millions Into New Welfare, Culture & Science Budgets
1.2  Fifty Foreign Construction Companies Bid to Work in Israel
1.3  Israel’s Gas Royalties Hit New Record


2.1  Israeli Startups Win Global Innovation Awards
2.2  Kaltura Announces $50 Million Investment from Goldman Sachs
2.3  PLAYSTUDIOS Acquires Scene53 and Launches POP! Slots
2.4  Pentagon Eyes US Iron Dome to Defend Forward-Based Forces
2.5  Spanish Fashion Chain Stradivarius Opens in Israel
2.6  ColorChip Raises $20 Million
2.7  Ford Buys Israeli Machine Learning Company SAIPS
2.8  Intsights Cyber Intelligence Raises $1.5 Million
2.9  CellSavers Raises $15 Million
2.10  Silicom Expands Business with Strategic Cyber Security Customer
2.11  Florida-Israel Business Accelerator Receives $1 Million in Funding From the State of Florida
2.12  Shine Technologies & Econet to Bring Benefits of Ad Blocking to 40 Million Subscribers
2.13  Mobileye & Delphi Partnership for SAE Level 4/5 Automated Driving Solution for 2019


3.1  DSW to Open New Stores in the Middle East
3.2  Japanese Glass Manufacturer to Build its First African Factory in Morocco
3.3  First Solar Wins 160MW of Module Contracts in Turkey


4.1  Dubai Government Fleets to be 10% Green
4.2  Saudi Arabia Plans Unveiled for Solar & Wind Projects
4.3  Egypt to Construct 1,000 MW Solar Power Station with $3.3 Billion in Chinese Funding


5.1  Average Lebanese Consumer Prices Fell 2.22% y-o-y by July 2016
5.2  Lebanon’s Total Number of Registered New Cars Rose to 23,684 by July 2016
5.3  Jordan’s Inflation Falls by 1.3% During First Seven Months
5.4  Jordan’s Budget Deficit Stood at JD291.2 Million in First-Half of 2016
5.5  Amman Orders Restaurants to Cut Prices by 7 – 15%

♦♦Arabian Gulf

5.6  Bahrain Inflation Rises to 3.5% in July – Driven By Housing Costs
5.7  U.S. Approves $1.15 Billion Sale of Tanks & Equipment to Saudi Arabia
5.8  Saudi Arabia to Allow Foreign Institutions Buy Shares in IPOs
5.9  Tourism Spending in Saudi Arabia Forecast to Reach $38.4 Billion
5.10  Saudi Arabia to Discuss Energy Cooperation With China & Japan

♦♦North Africa

5.11  Egypt’s Dollar Black Market Resilient Despite New Threat of Jail Terms
5.12  Egypt’s First Tranche of IMF Financing Worth $4 Billion to be Delivered in 2 Installments
5.13  UAE Agrees To Provide Egypt Central Bank with $1 Billion Deposit
5.14  Egypt Sees 50% Decrease in Tourists in First Half of 2016
5.15  Egypt’s 2015/16 Petroleum Subsidy Spending Drops By 23%
5.16  Egypt’s Unemployment Rate Falls to 12.5% in Second Quarter
5.17  Algeria Erects a Fence Along Border with Morocco
5.18  4.2 Million Tourists Visited Morocco in First Half of 2016


6.1  Greek Exports Down 8% in First Half of 2016
6.2  Troika Prompts Greece to Tighten Debt Repayments



7.1  Three Hundred Israeli Elementary Schools to Introduce Robotics Program
7.2  New Report Finds Israelis Are in No Rush to Marry


7.3  258 Women Running in Parliamentary Elections


8.1  XTL Biopharmaceuticals New Patent Filing in U.S. for Lupus Drug hCDR1
8.2  Medtronic Completes $20 Million Second Tranche Investment in Mazor Robotics
8.3  Zebra New Machine Learning Algorithm Predicts Cardiovascular Events
8.4  CollPlant Reports Positive Final Clinical Trial Results with VergenixSTR for Treatment of Tendinopathy
8.5  Nutrinia Announces $30 Million Series D Financing to Fund Clinical Development
8.6  FDA Decision Boosts Beta-02’s Artificial Pancreas
8.7  Breakthrough Israeli Study May Lead to Melanoma Cure


9.1  Mellanox Launches Integrated Networking Solutions That Accelerate NVMe Over Fabrics
9.2  NUVIAD Express – People Knowledge-centric Advertising Self Service for
9.3  IAI Drone Guard System Carries Out Flight Demos
9.4  Alvarion & Safend to Introduce New Secure Wi-Fi Solution for Enterprise Organizations
9.5  Holaverse to Enhance Its App Portfolio with Anagog’s Mobility Status SDK
9.6  Plexistor New Persistent Memory over Fabric Technology Delivers Millions of IOPS
9.7  fiXtress Optimizes Schematic Testing in ADAS Systems


10.1  Israel’s CPI Surprises with 0.4% Increase During July
10.2  Israel Enjoys 3.7% Growth During Second Quarter
10.3  Unemployment in Israel Hits Historic Low of 4.7%
10.4  Israel Breaks Travel Record as Millions of Israelis Fly Abroad


11.1  ISRAEL: Moody’s Affirms Israel’s A1 Credit Rating, Says Economy Stable
11.2  MENA Defense Budgets to Grow Despite Low Oil Price
11.3  EGYPT: IMF Reaches Agreement on a Three-Year $12 Billion Extended Fund Facility
11.4  EGYPT: Dam Construction Going Full Steam While Egypt-Ethiopia Talks Stall
11.5  TUNISIA: How the New Government Plans to Save Tunisia
11.6  TUNISIA: New Tunisian PM Tries to Break Economic Reform Curse
11.7  TURKEY: Fitch Affirms Turkey at ‘BBB-‘; Revises Outlook to Negative
11.8  TURKEY: Why are Turks Disposing of $1 Bills?


1.1  Netanyahu Injects Millions Into New Welfare, Culture & Science Budgets

On 12 August, the Netanyahu government approved the 2017-2018 state budget, setting it at 454 billion shekels ($118 billion) for 2017 and NIS 463 billion ($120 billion) for 2018.  The proposed budget will be presented to the Knesset for a vote in the coming weeks.

The government’s approval followed a marathon 24-hour budget discussion to fine-tune policies addressing major policy objectives on reducing the high cost of living, reducing socio-economic gaps, and boosting economic growth and productivity.  Speaking at the beginning of the meeting, Prime Minister Netanyahu and Finance Minister Kahlon said the biennial budget includes substantial increases in funds for the Welfare, Health, Education, Transportation, and Immigrant Absorption ministries.  The budget “includes a series of growth incentives to increase competition and reduce the cost of living,” Netanyahu said. “I cannot stress this enough: Growth is the most important element in managing Israel’s economic and social policies.  There is no social policy without the kind of economic policy that ensures growth and produces resources.”

The prime minister detailed four main steps he seeks to lead in economic policy: cutting tax rates, reducing regulation, encouraging international technology companies to invest in Israel, and promoting a major investment in public transport infrastructure.  Kahlon said the policy “seeks to continue with reducing taxes, fighting centralization, and opening the economy to competition. We will also continue with our efforts to solve the housing crisis.”

An Environmental Protection Ministry Clean Air Initiative was budgeted at NIS 260 million ($68 million).  The plan includes incentives to boost the scrapping of old diesel-fueled vehicles, and government subsidies to encourage diesel-fueled vehicles to install special particulate filters.  (Various 14.08)

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1.2  Fifty Foreign Construction Companies Bid to Work in Israel

There has been impressive demand from foreign construction companies eager to work in Israel as part of the Ministry of Construction and Housing’s call, which has just expired.  Fifty foreign construction companies have submitted bids to work in Israel, the Ministry of Construction and Housing reports.  The bidders include Chinese, Spanish, Greek, Turkish, Russian, Ukrainian, Portuguese and Vietnamese companies.  The companies will now be examined by a committee headed by the Ministry of Construction and Housing Bamberger who will investigate if the companies meet the threshold conditions set by the ministry.  He will award the proposals points after examining the quality of their work.  The plan to bring in foreign companies was approved by the housing cabinet several months ago.  The aim is to allow up to six foreign companies to work in Israel and each bring up to 1,000 workers to build residential projects.  The companies approved can either work independently or in collaboration with an Israeli contractor for up to five years. If required, there is an option to extend operations in Israel by a further three years.  By this method, the Ministry of Finance and Ministry of Housing hope to build 60,000-70,000 homes per year.  (Globes 15.08)

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1.3  Israel’s Gas Royalties Hit New Record

The Ministry of National Infrastructures, Energy and Water Resources has reported a new NIS 411 million record in revenues from fees and royalties related to natural gas, oil and minerals in H1/16.  Most of these revenues was due to natural gas and oil royalties, a total of NIS 394 million in the first half of 2016.  NIS 392 million royalties were received for a 4.5 BCM natural gas output at the Tamar gas field.  This constitutes an impressive 12.8% rise from the corresponding period last year.  The rest of the sum, NIS 2 million, was oil production royalties.  A further NIS 2.6 million were revenues from various fees and activities.  In the field of minerals, royalties increased significantly due to a change in legislation made in late 2015 following the recommendations of the Sheshinski 2 Committee.  In the first half of 2016, mineral royalties totaled NIS 13.8 million, a 105% jump from NIS 6.7 million last year.

The Ministry of National Infrastructures, Energy and Water Resources is expecting a further increase in royalty revenues in the coming years.  The increase will follow from an expected rise in Tamar output, the development of the Leviathan gas field, as well as from the future development of fields already discovered, and further fields that might be discovered following the opening of the sea to exploration.  (Globes 16.08)

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2.1  Israeli Startups Win Global Innovation Awards

Two Israeli startups have won first and second place at the Global Innovation Awards 2016 in Beijing.  Haifa startup NiNiSpeech, which developed an ingenious digital platform for speech disorder treatment, won first place, and Israeli startup AerialGuard, which has developed an autonomous navigation system for unmanned aircraft, came in second.

Each of the startups will receive $200,000 in cash.  This is the second consecutive year that an Israeli startup has won first place in the competition.  The two Israeli winners competed against 21 other startups from China, the U.S. and Europe, which were selected in an eight-month selection process out of 3,000 contenders from across the globe that vied for a place in the finals.  The winners were chosen by 11 judges from around the world and real-time voting from an audience of over 1,000 people.  (Various 10.08)

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2.2  Kaltura Announces $50 Million Investment from Goldman Sachs

Kaltura secured a $50 million pre-IPO funding from Goldman Sachs’ Private Capital Investing group.  Kaltura will use the additional capital to extend its footprint across all six continents, and to further its unique positioning as the ‘Everything Video’ company – providing leading video products for an unprecedented array of markets and use-cases.  Kaltura offers both a wide array of out-of-the-box video products for various industries, as well as a flexible and modular API-based video platform for developers, partners, and customers that are looking to create their own custom video products.  The funding comes on the heels of yet another strong year, which further cemented Kaltura as a market leader.

Ramat Gan’s Kaltura, a recognized leader in the OTT TV (Over the Top TV), OVP (Online Video Platform), EdVP (Education Video Platform) and EVP (Enterprise Video Platform) markets, has emerged as the fastest growing video platform, and as the one with the widest use-case and appeal.  Kaltura is deployed globally in thousands of enterprises, media companies, service providers and educational institutions and engages hundreds of millions of viewers at home, in work, and at school.  (Kaltura 08.08)

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2.3  PLAYSTUDIOS Acquires Scene53 and Launches POP! Slots

Burlingame, California’s PLAYSTUDIOS, a developer of award-winning, free-to-play casino games that offer real-world rewards, has acquired Scene53, an Israel-based game studio specializing in real-time, multi-player mobile games.  The two companies jointly developed the newest PLAYSTUDIOS mobile app, POP! Slots.  The game allows players to play in groups, share jackpots, and interact with friends as they explore virtual versions of iconic Las Vegas resorts.  The initial release features MGM Grand, the Mirage, and Excalibur, with additional resorts soon to be added.  POP! Slots is now available world-wide for Apple and Android mobile devices and is already earning 5-star reviews as it climbs to the top of the app store charts.

After working with Scene53 to create and launch POP! Slots, PLAYSTUDIOS moved to acquire the company and establish it as an independently operated studio, PLAYSTUDIOS Israel (PSI).  The Tel Aviv team will now focus on growing the POP! Slots product while pursuing new opportunities in the casual, free-to-play casino category.  (PLAYSTUDIOS 09.08)

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2.4  Pentagon Eyes US Iron Dome to Defend Forward-Based Forces

Rafael Advanced Defense Systems and Raytheon, its US partner for Iron Dome production, are working to transform the combat-proven Israeli interceptor into a fully American system in defense of forward-deployed US forces.  Americanized versions of the Iron Dome’s Tamir interceptors are being offered under the Raytheon-trademarked SkyHunter brand for a US Army program aimed at defending against a spectrum of threats, from cruise missiles and UAVs to rockets, artillery and mortars.  The Israeli-designed Tamir interceptor has already been adapted for launch from the US Army’s developmental Multi-Missile Launcher (MML), part of the service’s Indirect Fire Protection Capability Increment 2 — Intercept (IFPC Inc 2-I) program.

In an April IFPC program test at the Army’s White Sands Missile Range in New Mexico, the MML-launched Tamir scored its first intercept on US soil against a target drone.  Israeli government and industry sources say half of US production funds funneled into Israel’s Iron Dome program in recent years is already going to Raytheon, which produces major components for the Rafael-designed Tamir interceptor in multiple facilities throughout the US.  If selected for the US Army’s IFPC Inc 2-I program, the Tamir would be upgraded to US standards, produced in the United States and rendered fully Raytheon.  Rafael is now in the process of providing through Raytheon detailed price and availability data to the US Army.  (DID 10.08)

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2.5  Spanish Fashion Chain Stradivarius Opens in Israel

The Spanish fashion chain Stradivarius has opened its first store in Israel.  Stradivarius is the ‘little sister’ of Inditex’ Zara (the group also includes the brands Pull&Bear, Bershka and Massimo Dutti).  The first Stradivarius store was opened in Tel Aviv’s Azrieli Mall on 12 August.  Later in 2016, two further stores will be opened, in Ashdod’s C-Mall and the Grand Canyon Mall in Beer Sheva.  Stradivarius was founded in 1994 and has some 1,000 stores in 62 countries.

The chain’s main clientele is young women, with relatively affordable clothing and accessories.  The company promises that prices paid by Israeli customers will be similar to prices in Europe.  For example, price ranges in Israel will be NIS 60-180 for bags, NIS 26-76 for wallets, NIS 100-180 for dresses, jeans starting at NIS 110-160 and button-up shirts starting at NIS 60-140.  However, “Globes” found that the prices in Israel are higher than prices in other countries.  (Globes 14.08)

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2.6  ColorChip Raises $20 Million

ColorChip has raised $20 million from Gemini Israel Funds, BRM Group, IGP, Vintage, HGL Capital and Viola Credit.  The company has raised $80 million to date including the latest financing round and its previous financing round of $25 million in November 2015. IGP, Gemini and BRM led previous financing rounds.  ColorChip is a privately held Israeli company that provides cost effective, dense, hyper-scale transceivers and advanced optical splitters.  The funding will enable the Israeli company to ramp-up operations and accelerate product development.

With Internet services becoming more data intensive due to streaming HD video, virtual reality, cloud computing, and IoT devices, there is a growing need for new technologies to help datacom manage all of the exponentially growing traffic.  ColorChip’s innovative optical communication solutions are well positioned to help solve the growing bandwidth demand of the web.  ColorChip has developed unique SystemOnGlass technology a hybrid optical integrated circuit.  ColorChip uses glass wafers to industrialize its optical devices, allowing for cost effective, rapid, and highly scalable production. In essence, this allows the company to bring efficiencies commonly only seen in semiconductor fabrication to the world of optical communications.

ColorChip is also unique in the Israeli landscape, since it not only develops its solutions but is also vertically integrated and manufactures its core technology in its wholly owned and operated state of the art fab in Israel.  The fab utilizes the company’s unique IP and is a critical component of its core technology, positioning the company as a leader in the industrialized manufacture of optical assemblies.  The company is targeting the high speed transceiver 40G/100G Datacom market, predicted to reach $1.7 billion by 2019.  ColorChip is in the process of scaling up its operations, including hiring new employees in Israel, the US, and remote site facilities.  The new funding will directly support these efforts.

Yokneam’s ColorChip, established in 2001, is a pioneer and a world leading innovator in the fields of integrated optical components and sub-systems.  ColorChip technology enables reliable, scalable and robust high speed networking and communications solutions.  Through their two product lines, they deliver industry leading high speed optical transceivers to the Datacom/Telecom markets and PLC splitters to the FTTx markets.  (Globes 17.08)

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2.7  Ford Buys Israeli Machine Learning Company SAIPS

Ford has acquired Israeli computer vision and machine learning company SAIPS.  The acquisition of SAIPS is part of Ford’s pledge to develop a driverless car by 2021.  No financial details of the acquisition were disclosed.  Founded in 2013, SAIPS provides algorithmic solutions.  The company has not raised any funds to date and after the acquisition will continue operating as an independent entity within the Ford corporation.  Ford announced the acquisition as part of a raft of investments targeting a commercial fully autonomous vehicle fleet for ride sharing by 2021.

Rehovot’s SAIPS is a world-class provider of customized algorithmic solutions in the fields of computer vision and machine learning.  SAIPS core expertise is design, development and implementation of algorithmic engines that are based on Deep Neural Networks (‘Deep Learning’).  SAIPS portfolio consists of several algorithmic suites that provide state of the art solutions for the hottest computer vision challenges in the areas of detection, tracking, image enhancement, registration, segmentation, pattern recognition, positioning, 3D, prediction, video intelligence and more.  (Globes 17.08)

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2.8  Intsights Cyber Intelligence Raises $1.5 Million

Indian software company Wipro has invested $1.5 million in Israeli startup Intsights Cyber Intelligence.  In a filing to the Bombay stock exchange, Wipro said it was acquiring a minority stake in the startup.  Founded in 2015, Herzliya based Intsights Cyber Intelligence infiltrates the cyber-threat underworld to detect and analyze planned or potential attacks and threats. The company also provides advance warning and customized insight concerning potential cyber-attacks, including recommended steps to avoid or withstand the attacks and delivers in-depth analysis of cyber threats originating from in-house sources, third-party sources or threat actors.  Intsights raised $1.8 million in October 2015 from Glilot Capital Partners. Wipro made the investment through Israel venture capital firm TLV Partners.  (Globes 21.08)

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2.9  CellSavers Raises $15 Million

CellSavers has completed a $15 million financing round, led by Carmel Ventures, with participation of Sequoia Capital Israel.  The current funding follows the company’s $3 million round in seed funding led by Sequoia Capital in December 2015.  CellSavers’ platform is based on an end-to-end technological and operational solution, which enables the company to match consumers and skilled professionals in real time.  CellSavers strives to provide an outstanding customer experience by ensuring that repairs are as quick and convenient as possible, minimizing the time consumers cannot use their device.  Qualified and vetted local ‘Savers’ aim to reach customers within 60 minutes, regardless of their location, carrying out precise guaranteed repairs.  CellSavers’ service is already available across the United States in 18 major metropolitan areas including New York, Los Angeles, San Francisco, Houston, Dallas, Chicago and Atlanta.  The company will use the capital raised to further accelerate the growth of its platform and service.

CellSavers was founded in 2015 and employs 30 development, operations and marketing staff at two centers in California and one center in Herzliya.  The company also leads a team of more than 500 technicians in the US.  (Globes 18.08)

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2.10  Silicom Expands Business with Strategic Cyber Security Customer

Silicom announced that the strategic cyber security customer whose engagement with Silicom was announced in March 2015 has awarded the Company an additional new Design Win for an encryption product.  The new Design Win is for an advanced Silicom Intel-based Encryption Adapter that the customer will use to support its transition from software-based encryption to hardware-based off-loaded encryption acceleration.  In parallel, the customer continues to increase its level of interest in additional Silicom products, as demonstrated by the evaluation processes that it is currently carrying out for various server adapters, high-end and low-end platforms, FPGA-based smart cards and more.

Kfar Saba’s Silicom is an industry-leading provider of high-performance networking and data infrastructure solutions.  Designed primarily to increase data center efficiency, Silicom’s solutions dramatically improve the performance and availability of networking appliances and other server-based systems.  Silicom’s products are used by a large and growing base of OEM customers, many of whom are market leaders, as performance-boosting solutions for their offerings in the Cyber Security, Network Monitoring and Analytics, Traffic Management, Application Delivery, WAN Optimization, High Frequency Trading and other mission-critical segments within the fast-growing data center, enterprise networking, virtualization, cloud computing and big data markets.  (Silicom 23.08)

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2.11  Florida-Israel Business Accelerator Receives $1 Million in Funding From the State of Florida

The Florida-Israel Business Accelerator (FIBA) received $1 million from the Florida Department of Economic Opportunity (DEO).  The funds will support the buildout of FIBA’s state-of-the-art workspace (slated for completion this fall), as well as for operating costs including relocation incentives for startups participating in the accelerator program.  FIBA’s receipt of this funding is in keeping with the DEO’s mission to champion the state’s economic development vision by funding a variety of programs and initiatives that generate employment opportunities.

Established by the Tampa Jewish Community Centers & Federation, FIBA is a technology accelerator that focuses on attracting and launching Israel-based startups in the United States.  FIBA is the first Accelerator program of its kind created by a Jewish Community Center or Jewish Federation in North America and has been recognized by the Jewish Federations of North America (JFNA) for this innovation.

FIBA utilizes a strict vetting process to select 6-10 startup companies per cohort.  These companies then participate in a 120-day program held in Tampa, Florida.  The program is designed to provide the Israeli startups with the knowledge and resources necessary to build “market-ready” enterprises in the United States.  During the program, they will gain critical insights from a variety of business experts and have opportunities to build relationships with local business leaders.  (FIBA 21.08)

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2.12  Shine Technologies & Econet to Bring Benefits of Ad Blocking to 40 Million Subscribers

Shine Technologies and Econet Wireless are proud to announce a deal to bring network-level ad blocking to 40 million subscribers across Africa.  The agreement marks the first availability of Shine’s network-level ad control technology in Africa, following a similar agreement with the Three Group in Europe.

An analysis of Econet’s network performance has exposed that the prevalence and unchecked behavior of AdTech is robbing its subscribers of up to 40% of their data plans.  Placing the benefit of its consumers first, the introduction of Shine’s ad blocking technology is seen as a way to help subscribers protect and manage their data consumption.  Under the terms of the agreement, which was facilitated by Cumii International, the first roll-out will take place in Zimbabwe, with ad blocking coverage turned on automatically for all subscribers. All remaining Econet Group regions will follow in succession.

Herzliya’s Shine Technologies helps consumers protect themselves from negative ad practices, including: tracking, targeting, PII data mining & cellular data theft.  With Shine’s network-level solutions deployed, MNO’s and fixed-line operators can protect both subscribers and their infrastructure investments from bad operators.  (Econet 18.08)

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2.13  Mobileye & Delphi Partnership for SAE Level 4/5 Automated Driving Solution for 2019

Mobileye and Delphi Automotive announced a partnership to jointly develop a complete SAE Level 4/5 automated driving solution.  The program will result in an end-to-end production-intent fully automated vehicle solution, with the level of performance and functional safety required for rapid integration into diverse vehicle platforms for a range of customers worldwide.  The partners’ CSLP platform will be demonstrated in combined urban and highway driving at the 2017 Consumer Electronics Show in Las Vegas and production ready for 2019.

The automated driving solution will be based on key technologies from each company.  These include Mobileye’s EyeQ 4/5 System on a Chip (SoC) with sensor signal processing, fusion, world view generation and Road Experience Management (REM) system, which will be used for real time mapping and vehicle localization.  Delphi will incorporate automated driving software algorithms from its Ottomatika acquisition, which include the Path and Motion Planning features, and Delphi’s Multi-Domain Controller (MDC) with the full camera, radar and LiDAR suite.  In addition, teams from both companies will develop the next generation of sensor fusion technology as well as the next generation human-like “driving policy.”  This module combines Ottomatika’s driving behavior modeling with Mobileye’s deep reinforcement learning in order to yield driving capabilities necessary for negotiating with other human drivers and pedestrians in complex urban scenes.

Jerusalem’s Mobileye is the global leader in the development of computer vision and machine learning, data analysis, localization and mapping for Advanced Driver Assistance Systems and autonomous driving.  Their technology keeps passengers safer on the roads, reduces the risks of traffic accidents, saves lives and has the potential to revolutionize the driving experience by enabling autonomous driving.  Their proprietary software algorithms and EyeQ chips perform detailed interpretations of the visual field in order to anticipate possible collisions with other vehicles, pedestrians, cyclists, animals, debris and other obstacles.  (Delphi Automotive 23.08)

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3.1  DSW to Open New Stores in the Middle East

Columbus, Ohio’s DSW, a leading branded footwear and accessories retailer in North America, announced the signing of Apparel Group as its exclusive franchise partner in the Arabian Gulf.  The agreement will expand DSW into Saudi Arabia, Bahrain, Qatar, Kuwait, United Arab Emirates and Oman and with 40 stores across the territory, with the first stores opening in 2017.  DSW’s international stores will showcase the huge variety of styles at competitive prices within the convenient open shopping environment that DSW customers have come to expect.  The stores in the Middle East will be in both malls and on high street locations, with the initial stores averaging approximately 15,000 square feet and offering approximately 2,000 choices per store.

Apparel Group is a global fashion and lifestyle retail conglomerate residing at the crossroads of the modern economy – Dubai, UAE.  Today, Apparel Group caters to thousands of eager shoppers through 65 international brands that it represents, with 13,000 multi-cultural staff serving 1,300+ stores spread over four continents.  The Dubai-based multi-retail conglomerate that began with just one brand in 1999 is now aiming to have 1500 stores by end 2016.  (DSW 17.08)

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3.2  Japanese Glass Manufacturer to Build its First African Factory in Morocco

Japanese Asahi Glass (AGC) announced that the AGC Automotive Europe, will establish its first automotive glass factory in Africa in the city of Kenitra, Morocco.  AGC Automotive Group said that they had reached an agreement with Induver, the leading glass processing company in Casablanca, in order to co-establish the first unit of the AGC Group in North Africa.  The factory’s construction is underway and it is expected to begin production in 2019.  The AGC Group will create approximately 600 new jobs in Morocco and aims to be the hub of glass production in Africa.

In recent years, Morocco has striven to become Africa’s industrial hub and a top destination for foreign investors, with many international companies pouring into the country to invest and grow their businesses.  Earlier this month, Morocco ranked among the top 5 African countries valued by investors during the 2016-2020 period, according to a survey on international investors’ perceptions of the potential of the country’s economy by 2020.  (MWN 18.08)

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3.3  First Solar Wins 160MW of Module Contracts in Turkey

Tempe, Arizona’s First Solar has booked 160 MW DC of photovoltaic (PV) module sales in Turkey in the first half of 2016.  The orders were placed by Basariarge Enerji A.S. and Zorlu Enerji.  Zorlu Enerji, a subsidiary of Zorlu Holding, has contracted First Solar to supply 100MWDC of its high performance Series 4 thin film modules, for projects expected to be constructed and commissioned in 2017.  Basariarge Enerji A.S. – a joint venture between Basari Yatirimlar, a Turkish infrastructure company, and the Basari Group – has placed orders for 60MWDC of modules that will power its own projects, as well as PV power plants that it will provide EPC services for.  The first modules will be delivered in late 2016.  First Solar established an office in Istanbul in April 2014 and has since secured a contracted module sale pipeline of over 300MW, making it a leading PV module supplier in the country.  (First Solar 10.08)

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4.1  Dubai Government Fleets to be 10% Green

Dubai government bodies with large transportation fleets will soon be expected to order 10% electric and hybrid vehicles.  A Dubai Green Mobility Initiative Committee has been given the task of reducing harmful vehicle emissions in Dubai within the next four years.  The committee will report to the Dubai Supreme Council of Energy.  It is part of the Dubai Autonomous Transportation Strategy, launched earlier by Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, which aims to ensure 25% of cars on Dubai roads will be self-driving by 2030.  It will save $5.9 billion in annual economic revenues in several sectors by reducing transportation costs, carbon emissions and accidents.  It is estimated that transportation costs will be cut by 44%, resulting in savings of up to $245 million a year.  To support the Dubai Clean Energy Strategy 2050, the Dubai Electricity and Water Authority (Dewa)’s Green Charger initiative aims to establish electric vehicle charging stations across Dubai, with 100 charging stations having already been installed since 2015.  (AB 14.08)

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4.2  Saudi Arabia Plans Unveiled for Solar & Wind Projects

Saudi Electricity Company (SEC) has begun feasibility studies on renewable energy generation in the kingdom.  The national utilities company is working to identify possible sites for producing solar power.  The company had approved plans to build stations for solar and wind power with a total capacity of 300 megawatts, which would provide the equivalent of 25.5 million barrels of fuel over an estimated 25 years.  The plans are in line with the kingdom’s Vision 2030 economic diversification strategy, SEC said.

Since the announcement of Vision 2030, the company has reportedly worked with the Ministry of Energy and Mineral Resources to develop plans for two solar energy projects with a capacity of 9.5 gigawatts in the towns of Al Jouf and Rafha, and a wind energy project in Harimale, intended to produce 2,750 kilowatts of wind power and pave the way for further similar projects on Saudi Arabia’s west coast.  (AB 14.08)

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4.3  Egypt to Construct 1,000 MW Solar Power Station with $3.3 Billion in Chinese Funding

Egypt is to construct a 1,000 MW solar power station and a solar panels factory that will be implemented in two stages, 500 MW each.  According to the agreement, it is expected that China will fund the establishment of the station and the factory with $3.3b in concessional financing.  A memorandum of understanding (MoU) that was signed on 27 July to construct the solar power station with a capacity of 1,000 MW and a solar panels factory.

The Ministry of Military Production announced earlier in May during the Third Annual Energy Conference that it is evaluating the possibility of constructing a factory to manufacture solar panels in Egypt.  This project would complement the MoU signed by the Ministry of International Cooperation with the Ministry of Military Production and China to exchange experiences, help local production, and the transfer of technology and knowledge required to manufacture and produce solar energy from silicon panels.  The latest negotiations with China come in the framework of cooperation between the three ministries to support the energy sector by diversifying sources of energy and increasing the usage of renewable energy.

However, many solar companies had disputes with the Ministry of Electricity over the agreement for purchasing solar energy according to the feed-in-tariff system, which led to the withdrawal of many solar energy companies from the projects, such as Cairo Solar, Scatec Solar and EDF.  (Mada Masr 18.08)

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5.1  Average Lebanese Consumer Prices Fell 2.22% y-o-y by July 2016

According to the Central Administration of Statistics (CAS), average consumer prices, reflected by the average Consumer Price Index (CPI), dropped by 2.22% y-o-y by July 2016.  In fact, the average CPI fell from 97.52 points during the first 7 months of the year of 2015 to an average of 95.35 points in the same period of 2016.  Specifically, the CPI’s components with the largest shares decreased y-o-y by July 2016, where average prices of food and non-alcoholic beverages (20.6% of CPI) declined 1.53% y-o-y by July 2016, which can be associated to the 1.4% fall in international prices of a basket of food commodities, depicted by the FAO Food Price Index.

Moreover, due to the noticeable falls in oil prices between July 2015 and July 2016, transportation (13.1% of CPI) and water, electricity, gas & other fuels (11.9% of CPI) also observed yearly reductions of 5.84% and 13.40%, respectively.  Other sub-indices that witnessed the same downward trend in value were health (7.8% of CPI) and communication (4.6% of CPI), posting a 2.80% and 0.32% y-o-y declines, respectively.  However, the education sub-index, constituting 5.9% of the CPI, rose by 1.49% y-o-y by July 2016.  Moreover, average restaurants & hotels prices (2.6% of CPI) increased by 2.70% y-o-y by July 2016, which can be linked to the summer season.  Also, the actual rent sub-index for households (old and new rent), with a weight of 3.4% of the CPI, went up 2.52%.  Regionally, all of Lebanon’s regions witnessed month-on-month slight growths in CPI.  (CAS 22.08)

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5.2  Lebanon’s Total Number of Registered New Cars Rose to 23,684 by July 2016

Based on data from Association of Lebanese Car Importers, the total number of newly registered commercial and passenger cars slightly rose 0.41% year-on-year to 23,684 cars by July 2016, where the number of registered commercial cars increased by 18.47% y-o-y to 1,540, while the number of registered passenger vehicles marginally dropped 0.65% to reach 22,144 cars during the first seven months of the year.  Specifically, Japanese model cars grasped the largest market share in total passenger cars, with a share of 37.42% since the beginning of the year up to July 2016.  Korean cars followed, with a market share of 35.35% by July 2016, while European cars occupied 20.23% of the total market share.  Moreover, both American and Korean cars witnessed a rise in their sales with respective increases of 15.43% and 0.58% y-o-y, while European and Japanese cars’ sales dropped 1.65% and 3.35%, respectively.  As for car brands, Kia remained in the lead with the largest share of 19.67% of newly registered passenger cars,  followed by Hyundai, Toyota and Nissan with respective shares of 15.52%, 13.82%, and 10.26%.  (ALCI 17.08)

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5.3  Jordan’s Inflation Falls by 1.3% During First Seven Months

Jordan’s inflation in the first seven months of 2016 went down by 1.3%, compared with the figure recorded during the same period last year, according to the Department of Statistics (DoS).  Main item groups that contributed to the drop were transportation, fuel and lighting, vegetables, dried and canned legumes, and nuts.  Other groups whose prices went up during the January-July period included rents, entertainment, tobacco, cigarettes and clothes.  (JT 15.08)

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5.4  Jordan’s Budget Deficit Stood at JD291.2 Million in First-Half of 2016

Jordan’s general budget in the first six months of 2016 registered a post-assistance deficit of JD291.2 million, compared with JD223.5 million in the same period of 2015, the Finance Ministry said.  The ministry added that local revenues and external grants until the end of June 2016 totaled some JD3.528 billion, compared with JD3.350 billion in the January-June period of 2015.  Local revenues in the first half of 2016 stood at JD3.288 billion, marking a 6.7% growth, when compared to the same period of 2015 that registered JD3.055 billion.  On the other hand, expenditure in the January-June period of 2016 totaled JD3.819 billion, compared with JD3.573 billion registered in the same period of the previous year.  (JT 22.08)

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5.5  Amman Orders Restaurants to Cut Prices by 7 – 15%

Stemming from its commitment to addressing citizen’s immediate concerns, the government on 14 August ordered popular restaurants to cut food prices by 7 to 15%.  The Cabinet decided that eateries should reduce the prices of meals which include meat and Shawarma by 15% and hummus and ful by 7%.  Deputy Prime Minister Jawad Anani said the decision follows a decline in the cost of these meals, adding that it will help people with medium and low income.  He explained that the decision followed a study carried out in collaboration with the private sector.  He vowed that the government will not hesitate in taking any decision that would positively reflect on citizens’ lives, saying the decision is binding to all concerned restaurants and a strict follow-up will be put in place.  (AMMONNEWS 14.08)

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►►Arabian Gulf

5.6  Bahrain Inflation Rises to 3.5% in July – Driven By Housing Costs

Inflation in Bahrain rose to 3.5% in July, driven by increases in housing and utility prices.  Inflation rose 0.2% compared to June and jumped from 1.1% in the year-earlier month.  In July, housing and utility costs, which account for 24% of consumer expenses, rose 3.8% from a year earlier.  Prices of food and non-alcoholic beverages, which account for 16% of the basket, climbed 4.9%.  Inflation in Bahrain rose to 3.8%, its highest level since December 2013 in April.

Bahrain experienced a pronounced pick-up in its headline growth during the first quarter of the year, according to the Economic Development Board (EDB).  Its latest Bahrain Economic Quarterly report showed growth reached 4.5%, its highest level since 2014, led by the 12.1% year-on-year growth in the oil sector.  The report also noted resilience in the non-oil economy, where it continued to grow and benefit from a large pipeline of infrastructure investment.  (AB 22.08)

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5.7  U.S. Approves $1.15 Billion Sale of Tanks & Equipment to Saudi Arabia

The U.S. State Department has approved the potential sale of more than 130 Abrams battle tanks, 20 armored recovery vehicles and other equipment, worth about $1.15 billion, to Saudi Arabia.  The approval for land force equipment coincides with Saudi Arabia leading a military coalition in support of Yemeni forces loyal to the exiled government of President Abd-Rabbu Mansour Hadi who are trying to oust Iran-allied Houthi forces from the capital, Sanaa.  The U.S. Defense Security Cooperation Agency, which implements foreign arms sales, said that General Dynamics will be the principal contractor for the sale.  Lawmakers have 30 days to block the sale, although such action is rare.

Saudi Arabia and its mostly Gulf Arab allies intervened in Yemen’s civil war in March 2015 after the Houthi movement had pushed the Hadi administration into exile in Saudi Arabia.  (DOD 09.08)

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5.8  Saudi Arabia to Allow Foreign Institutions Buy Shares in IPOs

Saudi Arabia will permit foreign institutional investors to buy shares directly in initial public offers, a move that could help the government sell billions of dollars’ worth of stakes in state companies including oil giant Saudi Aramco.  New rules published by the Capital Market Authority, taking effect at the start of next year, list qualified foreign investors among the types of institution allowed to bid in the book-building process which underwriters use to price and allocate shares in IPOs.  Previously, the CMA had said foreign institutions would be permitted to buy shares directly from IPOs only on a case-by-case basis, although they could participate indirectly through channels such as local IPO funds.

Under sweeping economic reforms designed to reduce Saudi Arabia’s reliance on oil exports and announced this year, the government plans in coming years to offer shares in a wide range of firms, including a stake of up to 5% in Aramco that could be worth tens of billions of dollars.  Some of the shares may be offered abroad but they are also expected to be listed on Riyadh’s bourse.  With a capitalization of just $380 billion, the Saudi market is too small to absorb many large IPOs so inflows of foreign capital may be key to ensuring the offers go smoothly.  (Reuters 18.08)

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5.9  Tourism Spending in Saudi Arabia Forecast to Reach $38.4 Billion

Tourism spending in Saudi Arabia is expected to exceed $38.4 billion this year, according to official forecasts.  Figures from the Saudi Commission for Tourism and National Heritage (SCTH) show the total expected spending by domestic tourists and tourists from overseas.  Meanwhile, Saudis are expected to spend more than $22.9 billion on tourism abroad, according to the SCTH’s latest tourism statistics bulletin.

There are 11 international hotels projects in the pipeline that will provide over 2,800 new rooms, Saudi Gazette reported.  Tourism as the second more important sector for driving economic growth after oil and petrochemicals, and he urged the kingdom to support and encourage new foreign investors in the tourism industry.  More than 600,000 pilgrims are expected to arrive in Medina before Haj, according to the Ministry of Haj and Umrah.  (AB 15.08)

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5.10  Saudi Arabia to Discuss Energy Cooperation With China & Japan

Saudi Arabia plans to discuss energy cooperation agreements with China and Japan.  The Saudi cabinet approved to delegate a number of ministers to discuss with the Chinese side the following projects: a memorandum of understanding (MOU) to cooperate in the energy sector; an initial cooperation memorandum in the field of crude storage.  Discussions with Japan for an MOU for cooperating in the energy sector were also approved by the cabinet.

Saudi Arabia has traditionally accounted for most of the crude imports by Asia, the world’s biggest oil-consuming region.  But recently OPEC’s top producer has lost ground in a number of major markets including Russia and China, and faces a further threat from Iran, which is ramping up exports after the removal of Western sanctions.  The kingdom, however, has responded by pumping and shipping more oil, and with knockdown prices in Asia from state oil giant Saudi Aramco.  (Reuters 22.08)

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►►North Africa

5.11  Egypt’s Dollar Black Market Resilient Despite New Threat of Jail Terms

Desperate to elude roving financial police and fearful of new jail terms for black-market money-changing, Egypt’s currency traders are driving with bags of cash to meet clients in discreet locations around the vast capital Cairo.  Starved of hard currency since a 2011 uprising and an ensuing surge in violence and instability that have scared off many foreign tourists and investors, Egypt has been fighting a black market for dollars in which the divergence from the official central bank rate has widened to more than 40%.

Egyptian authorities have blamed exchange bureaus for the crisis and have arrested traders, shut dozens of outlets and revoked the licenses of those found to be trading far beyond the official rate of 8.78 pounds to the dollar.  On 9 August, parliament set prison sentences of up to 10 years and fines of up to EGP 5 million for traders selling foreign currency at black market rates.  Previously there were no prison sentences or fines set for violators.  Despite the intensifying crackdown, traders say the black market remains active and resilient behind the scenes.

Egypt devalued its currency by nearly 14% in March to close the gap with the black market rate — but in vain given the acute shortage of foreign currency.  Net foreign reserves have shriveled by more than half since 2011 to $15.536 billion as of last month — enough for less than three months of imports even as Egypt has kept the pound artificially strong through weekly dollar sales.  (Reuters 17.08)

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5.12  Egypt’s First Tranche of IMF Financing Worth $4 Billion to be Delivered in 2 Installments

The $12 billion loan facility that the International Monetary Fund has preliminarily agreed to provide for Egypt will be divided into three tranches, each worth $4 billion.  After Egypt and IMF reached an initial financial deal, the IMF said that each tranche will be divided up into two installments, with an expected interest rate to be set at 1.5%.  The two installments will be worth $2.5 billion and $1.5 billion. However no details have yet been determined about the third tranche.

Egypt, which relies heavily on imports, particularly of foodstuffs, has been suffering a severe shortage of US dollars in the wake of political and security unrest that has scared off tourists and foreign investors, two major sources of hard currency.  The Arab nation’s foreign reserves have more than halved since 2011 to reach $15.5 billion in July.  There were intensive talks between IMF and the government over the past weeks over the program that Egypt is following to support the economy and reduce the budget deficit, public debt and inflation.  This program makes Egypt’s position stronger in its negotiations with the fund.

In July 2014 Egypt embarked on a fiscal reform program aimed at curbing the growing state budget deficit — currently estimated at 11.5% of GDP in 2015/16 — that included cutting subsidies and the introduction of new taxes, among them the value added tax (VAT), which is planned to be introduced next month at a rate of 14%.  The government will slash its total subsidy bill in the 2016/17 budget, which began in July, by 14% compared to the last fiscal year’s bill that is estimated at EGP 154 billion.  (IMF 15.08)

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5.13  UAE Agrees To Provide Egypt Central Bank with $1 Billion Deposit

The United Arab Emirates has agreed to provide Egypt’s central bank with a $1 billion deposit for a duration of six years.  Egypt this month signed a preliminary deal for a $12 billion IMF lending program contingent upon the government securing $5-6 billion in bilateral financing for the first year.  Egypt has previously also secured pledges from the United Arab Emirates and Saudi Arabia for about $4.5 billion, but none of the promised transfers have yet materialized.

The International Monetary Fund (IMF) agreed in principle to grant Egypt the $12 billion three-year facility to support a government reform program aimed at plugging a budget gap and rebalancing the currency market, but this must still go to the IMF board for approval.  Egypt’s net foreign reserves fell sharply to $15.536 billion at the end of July.  Egypt had roughly $36 billion in reserves before an uprising in 2011 overthrew Hosni Mubarak.  That ushered in a period of political turmoil that scared away tourists and foreign investors, key sources of foreign exchange.  (Reuters 23.08)

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5.14  Egypt Sees 50% Decrease in Tourists in First Half of 2016

The number of tourists coming to Egypt dropped by 50% in the first half of 2016 compared to the same period last year, the head of Egypt’s Tourism Authority Samy Mahmoud said.  Only three million tourists visited Egypt in the first six months of 2016.  Mahmoud added that tourism revenues during the period witnessed a drop of 60% compared to 2015, adding that all tourism markets in Egypt have seen a fall, except for tourists coming from Ukraine and China, whose numbers saw a 30% increase year-on-year.

Egypt saw $6.1 billion in tourism revenue in 2015, as the total number of tourists and nights spent dropped by 6% and 14% respectively from 2014.  Tourism revenue totaled $500 million in the first quarter of 2016, around 66% down compared to the same quarter a year earlier.  The ministry attributed the decline to Russia’s suspension of passenger flights to Egypt following the October crash of a Russian airliner in Sinai that killed all 224 people on board.  The UK has also suspended flights to Egypt’s Sharm El-Sheikh following the crash, citing security concerns.

According to Mahmoud, Russian and British tourists amounted to 45% of the number of tourists coming to Egypt.  Officials have said that Egypt has been losing EGP 2 billion monthly due to the continuous blows to tourism.  Tourism is an important source of foreign currency for Egypt, which has been seeking billions in foreign financing facilities to address a severe hard currency shortage with FX reserves down to $15.5 billion in July.  (Ahram Online 09.08)

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5.15  Egypt’s 2015/16 Petroleum Subsidy Spending Drops By 23%

Egypt’s spending on petroleum subsidies fell by 23% in 2015/16 to EGP55 billion ($6.27 billion), the head of state oil company EGPC said.  Egypt has been trying to lower subsidies which make up a large portion of the state budget.  Petroleum product subsidies cost EGP 71.5 billion in 2014/15.  Egypt aims to lower this to about 35 billion in the financial 2016/17 which began last month.  In 2014 the government cut spending on energy subsidies, causing domestic prices of natural gas, diesel and other fuels to rise by as much as 78%.  (Reuters 15.08)

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5.16  Egypt’s Unemployment Rate Falls to 12.5% in Second Quarter

 CAPMAS announced on 15 August that Egypt’s unemployment rate has declined to 12.5% in the second quarter of 2016 from 12.7% in the quarter before.  The number of unemployed Egyptians reached 3.6 million from April to June 2016.  The total labor force increased in the quarter by 153,000 or 0.6% compared to the previous quarter to reach 25 million people.  The Egyptian government says it aims to reduce the jobless rate in the 91 million nation to less than 10% by the end of the fiscal year 2018/19 based on a targeted growth rate in the economy of at least 6%.

Unemployment among females in Q2 was 25.6% compared to 25.7% in the first three months of the year, while unemployment among males dropped to 8.5% compared to 8.9%.  Unemployment in the age group 15-29 amounted to 79.8% out of the total number of jobless.  Urban unemployment fell to 14.1% from 15.2% in the first quarter, while in rural areas, the joblessness increased to 11.2% from a previous 10.9%.  (CAPMAS 15.08)

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5.17  Algeria Erects a Fence Along Border with Morocco

In the wake of a 100 km. fence erected by Morocco along its border with Algeria last year, and a 700 km. long trench by Algeria on its side, Algeria is building a 3.5-meter-high fence along its border with Morocco.  Algeria’s new fence is approximately 8 km south of Ahfir and about 10 km north of Beni Drar.  Amid strained relations between the neighboring countries, the fence will be built as high as the one built by Morocco last year.  The location of the fence is at an important crossing point for sub-Saharan migrants and fuel smugglers.  The fence will also separate Algeria from the Moroccan cities of Ahfir and Beni Drar.  The purpose of the fence is to put an end to smuggling from Algeria into Morocco, as well as Moroccan drug smuggling into Algeria.  Algerian authorities refused to officially confirm commencement of the construction of the fence, according to the source.  (MWN 19.08)

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5.18  4.2 Million Tourists Visited Morocco in First Half of 2016

Some 4.2 million tourists visited Morocco in the first half of 2016, decreasing by 2.6% compared to the same period of 2015, according to figures by Morocco’s Tourism Office.  The number of foreign tourists was down 5.6% while arrivals of Moroccans living abroad posted an increase of 1.7%, the Office noted in its latest statistics on tourism in Morocco.  Tourist arrivals from the United Kingdom, Germany, France and Italy decreased by 8%, 7%, 5% and 5% respectively, said the Office, noting that the number of tourists from Holland showed stagnation.  According to data provided by the professionals of tourist accommodation, overnight stays in tourist accommodation facilities decreased by 4% compared to the same period of 2015.  (MWN 23.08)

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6.1  Greek Exports Down 8% in First Half of 2016

Greece’s exports fell by 8% in the first half of 2016 – the third largest drop in the 28-member European Union.  The country’s exporters attributed this to Greek companies’ exhaustion in the face of years of recession and the capital controls that were imposed last summer.  The lack of liquidity is making it impossible for businesses to adopt aggressive marketing strategies for Greek products.  According to Eurostat, the value of exports in the January-June period came to €12 billion, of which €7.1 billion was to fellow EU members and the other 4.9 billion to third countries.  Exports to EU states were up 1% from the same period last year, but exports to third countries were down 18% in the same period.

The largest percentage drop among the 28 member-states was noted in Cyprus, which posted a 21% slide, followed by the UK on 11%.  The situation for Greek exports may soon worsen in some markets – in Britain, for example, where the pound has weakened against the euro.  Greece’s imports in the first half of this year were down 4%, to €21.5 billion, for a trade deficit of €9.5 billion, of which €4.8 billion was with EU partners and €4.7 billion with third countries.  Eurostat’s figures confirm the decrease in Greek exports this year but also the decline in comparison with our partners, despite efforts in recent years to improve the Greek economy’s competitiveness.  (Various 18.08)

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6.2  Troika Prompts Greece to Tighten Debt Repayments

Athens’ plans for allowing taxpayers to make debt repayments to the state in 100 installments has been halted by the country’s lenders, who are refusing to consent to the scheme on the grounds that it will inflate debts to the state coffers.  Deputy Finance Minister Alexiadis said there will be no new regulation for the repayments and called on debtors either to service their debts or make use of the existing framework of 12 or 24 installments.  Greece’s lenders had been increasing the pressure recently to make the debt repayment process for those who owe money to the state more rigorous.

As of 1 July, the legal framework was tightened for those with debts to the state.  As a result, those who were already in the 100-installment scheme learned they would have to pay any debts incurred after that date no later than 15 days after the deadline.  If they have not paid after 15 days, they are thrown out of the 100-installment scheme and will face the same penalties as anyone else.  From 1 January 2018, the precondition for the continuation of the arrangement will be that they have repaid any new debts by the date they were due.

According figures from the Ministry of Finance, debts to the state are growing at a rate of €1 billion per month.  In the first half of the year, the amount of new taxpayer debt to the state came to €6.8 billion.  In order to reduce the growth rate of the debt and increase state revenues, the government, in agreement with its creditors, has moved to coercive measures against state debtors.  Plans by the General Secretariat of Public Revenue that will see foreclosures and auctions for 55% of debtors are already in progress.

According to data from the Center for the Collection of Social Security Arrears (KEAO), the amount of overdue contributions that it has verified comes to €16.6 billion.  Its data also show that most of those who registered for the payment scheme have been unable to keep up with their installments.  A total of 147,308 signed up for the program but only 50,249 are still paying, and just 8,842 have successfully completed payments.  As regards the 100-installment program, according to KEAO data, 36,053 borrowers out 75,451 – almost 50% – dropped out of the scheme during April-June 2016.  (eKathimerini 23.08)

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7.1  Three Hundred Israeli Elementary Schools to Introduce Robotics Program

Some 300 elementary schools in Israel will be adding robotics to their curricula for the 2016-2017 school year under a new initiative by the Education Ministry.  Students will learn how to code and will receive hands-on experience in operating robots of various types.  Administrators say the goal of the program is to enhance problem-solving skills by focusing on algorithms, analysis and creativity.  The program is already part of the curriculum in some Israeli high schools and 30 elementary schools have tested a pilot version for younger students.  (Various 17.08)

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7.2  New Report Finds Israelis Are in No Rush to Marry

Israelis may fall in love, but they are in no rush to marry, according to a new Central Bureau of Statistics survey released ahead of Tu B’Av, the Israeli Valentine’s Day, which fell on 19 August.  The report on marriage and divorce trends in Israel found that the average age at which Israelis marry for the first time has risen in recent decades.  For men, the average age of marriage rose from 25 in 1970 to 27.6 in 2015.  For women, it rose from 21.7 to 25 in the same time frame.  The data also shows an increasing number of second marriages: Of all couples who married in 2014, 5.1% were marriages between two divorcees, 4.4% were marriages between a single woman and a divorced man, and 2.9% were between a single man and a divorced woman.

Despite these changes, Israel’s first-time marriage rate is one of the highest among Organization for Economic Cooperation and Development nations: For every 1,000 people, around 6.2 couples marry each year.  However, 21.9%, no fewer than 11,114 couples, divorced within two years of marrying.

The findings also indicate a growing phenomenon of older singles.  Tel Aviv leads with 48% of men and 24% of women aged 45-49 who live in the city never having married.  Tel Aviv also holds the record for most divorces in 2015, with 763 couples divorcing that year.  Jerusalem comes in second with 728 divorces, followed by Rishon LeZion with 431 divorces.  The fewest divorces were noted in the small northern city of Kiryat Tivon (29) and the central city of Azur (23).

According to the data, the number of singles of both sexes has also been increasing in the ultra-Orthodox communities, in which members usually marry young.  In Bnei Brak, 20% of young men and 13% of young women are single.  According to the data, 50,797 couples entered their first marriage in 2014, of them 36,900 Jews, 11,878 Muslims, 1,078 Druze and 860 Christians.  (CBS 21.08)

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7.3  258 Women Running in Parliamentary Elections

Some 258 female candidates are running in the upcoming Jordanian elections, up from 215 in the 2013 polls, the Sisterhood Is Global Institute (SIGI) Executive Director said.  The increase in the number of women running for office was due to the 2015 Elections Law and changes to electoral districts.    Of the 230 lists running in the 20 September elections, 198 lists, or 86%, feature only one female candidate, while 23 lists, or 10%, have more than one woman running.  Seven lists are male-only (3%), and two lists are all-female.  Only one list, in Aqaba, features a woman with a disability.

The Independent Election Commission is scheduled to approve or reject the lists submitted by candidates on 25 August, so all figures are provisional until then.  Candidates submitted applications for their lists last week.  The law requires that a woman must be present on the committee, for example to check the identity of female candidates wearing the niqab, a face veil, and also to provide moral support to women candidates.  Twenty-one female candidates have previously served as lawmakers, including 14 who were members of the last Jordanian Parliament.  (JT 22.08)

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8.1  XTL Biopharmaceuticals New Patent Filing in U.S. for Lupus Drug hCDR1

XTL Biopharmaceuticals announced that it has filed a new patent application with the U.S. Patent and Trademark Office to protect doses of hCDR1 lower than 0.5 mg weekly, in the treatment of Systemic Lupus Erythematosus (SLE).  The new patent application is based on clinical evidence that lower doses of hCDR1 may be as efficient, or in some instances more efficient, than the higher doses previously tested in the treatment of SLE.  Lower doses of hCDR1 may improve clinical outcomes in SLE patients when used as a standalone treatment, or when used as a combination therapy in addition to standard of care.  Improved outcomes may include the potential to control disease activity in patients who do or do not require steroids.  For patients who do require steroids, an hCDR1 combination therapy may decrease the dosage of steroids required to control disease activity.

Ra’anana’s XTL Biopharmaceuticals is a clinical-stage biotech company focused on the development of pharmaceutical products for the treatment of autoimmune diseases including lupus.  The Company’s lead drug candidate, hCDR1, is a world-class clinical asset for the treatment of systemic lupus erythematosus (SLE). Treatments currently on the market for SLE are not effective enough for most patients and some have significant side effects.  (XTL Biopharmaceuticals 11.08)

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8.2  Medtronic Completes $20 Million Second Tranche Investment in Mazor Robotics

Mazor Robotics announced the completion of the second tranche of the equity investment by Medtronic pursuant to a previously executed agreement between the parties. The Company issued new securities representing 3.40% of Mazor’s issued and outstanding share capital, on a fully diluted basis, at a price per ADS $21.84, which is equal to the volume weighted average price of the ADS’s for the trailing 20-day period ending on and including August 9, 2016, for an aggregate purchase price of $20 million.  The triggering milestone for this second tranche investment was the July 12, 2016 unveiling by the Company of Mazor X, a transformative Surgical Assurance Platform to enhance predictability of spine surgeries for the benefit of patients and those who treat them.

Following the completion of the second tranche investment, Medtronic has purchased a total of 1.96 million ADS’s, representing 7.27% of Mazor’s issued and outstanding share capital, on a fully diluted basis, for a total of $31.9 million.  As of June 30, 2016, cash, cash equivalents and investments totaled $47.5 million.  Following the completion of the second equity investment, the Company’s cash, cash equivalents and investments will total approximately $65 million and the fully diluted share count will be approximately 53.9 million.

Caesarea’s Mazor Robotics believes in healing through innovation by developing and introducing revolutionary technologies and products aimed at redefining the gold standard of quality care.  Mazor Robotics Guidance Systems enable surgeons to conduct spine and brain procedures in a more accurate and secure manner.  (Mazor 15.08)

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8.3  Zebra New Machine Learning Algorithm Predicts Cardiovascular Events

Zebra Medical Vision announced two new software algorithms that automatically quantify the amount of calcified plaque in coronary arteries and detect presence of fatty liver in patients’ CT scans.  Individually, the algorithms inform caregivers about the cardiovascular and metabolic state of their patients, and together they provide even stronger predictors for risk of heart attack and stroke.  Applying either of these tools independently can greatly assist physicians in early identification of these treatable conditions – but recent research shows that the presence of fatty liver indicates a 2x-4x risk of having high-risk coronary artery plaque and experiencing heart attack and sudden cardiac death.

By applying these algorithms to their patients’ routinely acquired CT scans, caregivers can identify high risk patients earlier, using one or both of these important indicators.  In addition, self-insured large employers or insurance companies can better assess risk using existing imaging data.  Despite the prevalence of these conditions, both fatty liver and cardiovascular disease are still under diagnosed.  Timely recognition should prompt lifestyle and therapeutic interventions aimed to increase well-being and decrease risk of illness.

On track to create one hundred new insights in the next three years, Zebra has already secured partnerships with Dell Services and has received financial backing from Intermountain Healthcare, one of the leading healthcare organizations in the US. Zebra continues to expand its relationships and work with ACOs, HMOs and other payors and providers seeking to improve care at lower cost through the power of analytics, predictive modeling and preventative care.

From research to reality and commercialization, Shefayim’s Zebra Medical Vision uses big data to deliver large-scale clinical research platforms and next generation imaging analytics services to the healthcare industry.  Its Imaging Analytics allow healthcare institutions to identify patients at risk of disease, and offer improved, preventative treatment pathways to improve patient care.  (Zebra Medical Vision 15.08)

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8.4  CollPlant Reports Positive Final Clinical Trial Results with VergenixSTR for Treatment of Tendinopathy

CollPlant announced positive final extended clinical trial results for Vergenix STR for the treatment of tendinopathy.  The Company anticipates receiving CE mark approval for Vergenix STR in the third quarter of 2016.  The prospective, open label, single-arm trial was conducted at three leading Israeli hospitals (Meir Medical Center, Assaf Harofeh Medical Center and Hadassah Hospital), and the trial’s objective was to demonstrate the safety and performance of Vergenix STR in 40 patients suffering from inflammation of the elbow tendon, commonly referred to as tennis elbow.  All patients were followed for a total of six months after a single treatment. Product performance was assessed by measuring reduction in pain and recovery of motion, as reported by the specific Patient Related Tennis Elbow Evaluation questionnaire (“PRTEE”).  At three months following treatment, Vergenix STR patients (N=39) reported an average PRTEE score improvement of 51% over baseline.  At six-month follow-up, Vergenix STR patients (N=36) reported a mean PRTEE score improvement of 59% over baseline.

Vergenix STR, intended for the treatment of a range of tendon injuries, incorporates CollPlant’s recombinant human collagen in combination with platelet-rich plasma (PRP) derived from the patient’s blood.  Following its injection into the injured site, the product transitions from a fluid to a solid phase, whereupon, it releases, in a controlled fashion, platelet-derived proteins. These proteins, in combination with collagen, induce the healing effect on the tendon.

Ness Ziona’s CollPlant is a regenerative medicine company leveraging its proprietary, plant-based rhCollagen technology for the development and commercialization of tissue repair products, initially for the orthobiologics and advanced wound care markets.  The Company’s cutting-edge technology is designed to generate and process proprietary recombinant human collagen (rhCollagen), among other patent-protected recombinant proteins.  Given that CollPlant’s rhCollagen is identical to the type I collagen produced by the human body, it offers significant advantages compared to currently marketed tissue-derived collagen, including improved biofunctionality, superior homogeneity and reduced risk of immune response.  (CollPlant 17.08)

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8.5  Nutrinia Announces $30 Million Series D Financing to Fund Clinical Development

Nutrinia announced the closing of a $30 million Series D financing to fund two pivotal trials for registration.  TPG Biotech, the life science venture investment arm of leading global alternative asset firm TPG, led the investment, joined by H.I.G. BioHealth Partners and WuXi Healthcare Ventures, as well as existing investors including OrbiMed, Pontifax and others.  Nutrinia will use the proceeds to initiate two pivotal trials for registration in separate indications related to acceleration of gut maturation and adaptation: intestinal malabsorption in preterm newborns born between 26 and 32 weeks’ gestational age, and infants with SBS who are under 12 months old.

Ramat Gan’s Nutrinia is a clinical stage biotechnology company focused on developing a proprietary oral formulation of insulin for gastrointestinal indications in infants.  Insulin has been shown to induce a receptor-mediated response leading to gut maturation and adaptation, important in preterm newborns with intestinal malabsorption and infants similarly affected by Short Bowel Syndrome.  There are no approved therapies for either of these orphan conditions.  Nutrinia’s unique oral formulation of insulin is locally acting, and stable at room temperature, rapidly dissolving into saline, formula or breast milk, and designed for administration through the plastic tubing used in enteral feeding as well as simply orally.  (Nutrinia 21.08)

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8.6  FDA Decision Boosts Beta-02’s Artificial Pancreas

Beta-O2’s device, which contains living pancreas cells that automatically secrete insulin into the blood stream, could be a boon for diabetics. – essentially an artificial pancreas.  Then, the US FDA decided that any company that implants insulin-secreting stem cells must place them in such a device.  Suddenly, these companies have begun taking interest in Beta-O2, which has been working on such a product for over a decade.

Beta-O2 has been founded around a more interesting, but less practical, product.  Beta-O2’s original product included implanted cells together with a source of oxygen, an alga, similar to those living in the sea, and a small LED lamp providing light for the alga to photosynthesize.  This idea, like many Israeli ideas, was genius but less practical.  They have replaced the alga and the lamp with an internal oxygen reservoir, which can be filled by an injection to a subcutaneous port.  At present, a daily injection is required; in the future, we intend to enable a weekly injection – not nearly as frequent as the many injections diabetes patients are required to make, and more pleasant than insulin injections.  Beta-O2 injects live pancreas cells from various sources, but the regulation regards stem cells specifically.  At present, implanted stem cells must be encapsulated in order to enable removal if their functioning becomes problematic, for example if they turn into cancer cells.  So far, this technology has undergone successful trials involving live cells, but not stem cells.

Founded in 2004, Rosh HaAyin’s Beta-O2 is developing the ßAir Bio-artificial Pancreas, intended to cure Type 1 diabetes (TID).  The company is currently testing human donor derived cells in a Phase I safety study of the ßAir Bio-artificial Pancreas for type 1 diabetes patients at Uppsala University Hospital in Sweden.  Thus far four patients have been implanted with the device.  Beta-O2 is also pre-clinically testing the ßAir Bio-artificial Adrenal as a treatment for stress disorders.  Results of some recent studies demonstrating the device’s xenotransplantation potential were published in a February issue of PNAS.  (Globes 22.08)

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8.7  Breakthrough Israeli Study May Lead to Melanoma Cure

Israeli and European researchers say their collaborative research has unraveled the metastatic mechanism of melanoma, the most aggressive of all skin cancers.  According to a paper published 22 August in the journal Nature Cell Biology, the scientists discovered that before spreading to other organs, a melanoma tumor sends out tiny vesicles containing molecules of microRNA.  These cause morphological (structural) changes in the skin’s dermis layer in preparation for receiving and transporting the cancer cells.  The researchers also found chemical substances that can stop the process and are therefore promising drug candidates.  Despite a range of therapies developed over the years, there is still no full cure for this life-threatening disease.  The new study proposes novel and effective methods for diagnosis and prevention.

The researchers began by examining pathology samples taken from melanoma patients before the invasive stage.  The group was able to discover and block a central mechanism in the metastasis of melanoma.  Then they looked for substances that could intervene and block the process in its earliest stages.  They found two such chemicals: one that inhibits the delivery of the vesicles from the melanoma tumor to the dermis; and another that prevents the morphological changes in the dermis even after the arrival of the vesicles.  Both chemicals were tested successfully in the lab, and may serve as promising candidates for future drugs.  In addition, the changes in the dermis, as well as the vesicles themselves, can be used as powerful indicators for early diagnosis of melanoma.

A Tel Aviv University group worked in close collaboration with the German Cancer Research Center in Germany, the Sheba Medical Center at Tel HaShomer and the Wolfson Medical Center in Holon.  (ISRAEL21c 23.08)

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9.1  Mellanox Launches Integrated Networking Solutions That Accelerate NVMe Over Fabrics

Mellanox Technologies announced a family of end-to-end networking solutions and software for connecting solid-state storage to the fabric.  The Mellanox ConnectX-4 adapter, ConnectX-5 adapter and BlueField family of programmable processors support smart offloads that connect solid state drives (SSDs) directly to the network in the most efficient way possible, thereby simplifying system design and reducing both power and storage system costs.

The recently launched ConnectX-5 adapter includes hardware offloads for the newly-approved NVMe Over Fabrics standard to remove the storage system processor from the data path.  This enables Flash-based storage platforms to connect more NVMe SSDs than ever before without the burden of adding additional costly CPUs to the system.  Both the ConnectX-4 and ConnectX-5 adapters integrate full hardware support of Remote Direct Memory Access (RDMA) over both InfiniBand and Ethernet, at network speeds ideally matched for flash storage, including 25, 40, 50, and 100Gb/s speeds.  Utilizing the newly released Resilient RoCE software, NVMe Over Fabrics solutions using Ethernet can be easily deployed in ordinary enterprise data centers.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage.  Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability.  (Mellanox 09.08)

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9.2  NUVIAD Express – People Knowledge-centric Advertising Self Service for Businesses

NUVIAD announced availability of NUVIAD Express – an innovative advertising service which allows business owners and mobile marketers to create mobile campaigns focused on location, people knowledge and deep big-data analytics.  For the first time, advertisers and business owners can just enter the address of their business or the addresses of their competitors and NUVIAD Express will provide detailed audience analysis including gender, age group, most used apps in the area, and more.  This data can then be used to create mobile campaigns targeting the exact audience for the business using advanced click-to-call technology.

Tel Aviv’s NUVIAD Technologies is one of the leading mobile advertising providers focusing on mobile advertising and native ad formats, and utilizing advanced machine learning algorithms to deliver highly targeted mobile advertising campaigns while continuously improving their results.  (NUVIAD 11.08)

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9.3  IAI Drone Guard System Carries Out Flight Demos

Israel Aerospace Industries’ Drone Guard counter-unmanned air vehicle system has recently participated in a series of demonstrations to showcase its capability to potential customers.  A number of armed forces witnessed the trials, during which the system disrupted the flight of different types of UAV.  The system is already operational, and more undisclosed customers are waiting for deliveries.  The ELTA division of IAI says the demand stems mainly from the threat of UAVs carrying explosives; Drone Guard is capable of detecting a small UAV from a distance of 1.6nm (3km).  After detection by radar the threat is identified by an optical sensor and the disruption unit is activated.  The UAV is then either held at a fixed area until its fuel or battery run out, or it is sent back to its launch point.

To meet this emerging challenge, ELTA has developed a special system that integrates a 3D radar and electro-optical (EO) sensors for detection and identification, as well as dedicated electronic attack jamming systems for disrupting the flight.  To detect low-signature, low-level and low-speed airborne targets, ELTA has adapted its 3D radars, which include short (5nm), medium (8nm) and long (11nm) ranges, with special UAV detection and tracking algorithms, as well as adapting them with EO sensors for visual identification of the target.  (IAI 12.08)

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9.4  Alvarion & Safend to Introduce New Secure Wi-Fi Solution for Enterprise Organizations

SuperCom announced that Alvarion, a recently acquired global provider of autonomous Wi-Fi networks, and Safend, a recently acquired encryption and global data security company are collaborating to launch a new secure wireless communication platform.  The new solution is expected to be released later this year.  By integrating Safend’s cutting edge encryption and endpoint data protection internally with Alvarion’s versatile Wi-Fi solution, SuperCom will create a best-of-breed solution that will enable enterprises the flexibility and mobility while incorporating enhanced registration and screening methods as well as security management and monitoring tools.

Alvarion’s versatile series of Access Points enables the construction of scalable Wi-Fi networks with Quality of Service (QoS), security and high service reliability. Alvarion’s product supports Passpoint with hotspot capability and includes a rich set of networking features for core integration with cellular and fixed-line operators. The access points are controlled and managed by the Arena cloud based controller. Our Avidity series is an evolution of Alvarion’s high performance outdoor access point and it features our mature radio algorithms that together structure a sustainable network.

Herzliya’s Alvarion Technologies is a global provider of autonomous Wi-Fi networks designed with self-organizing capabilities that enable constantly optimized performance.  They are guided by our belief that the sustainability of any network stems from the combined strength of its elements.

Herzliya’s Safend is a leading developer of information security solutions for organizations that provide extensive protection of sensitive corporate information found in the computers of the organization.  Safend’s product suite includes encryption of computer drives, removable storage devices and CD / DVD precise control over the physical and wireless ports and devices connected to them and control and supervise the placement and transfer of sensitive content.

Since 1988, Herzliya’s SuperCom has been a leading global provider of traditional and digital identity solutions, providing advanced safety, identification and security solutions to governments and organizations, both private and public, throughout the world.  Through its proprietary e-Government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services, SuperCom has inspired governments and national agencies to design and issue secured Multi-ID documents and robust digital identity solutions to its citizens and visitors.  (SuperCom 15.08)

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9.5  Holaverse to Enhance Its App Portfolio with Anagog’s Mobility Status SDK

Anagog and Shanghai’s Holaverse, a leading mobile app publisher with a portfolio of games and utility apps, announced their collaboration to include Anagog’s Mobility Status SDK in the entire Holaverse portfolio of apps.  Anagog’s Mobility Status SDK indicates user’s real-time activity / status (e.g., walking, driving) and location (home, office, in the street) in order to offer the most relevant services to the specific mobility status at hand, resulting in better user engagement and loyalty over time.  Israel’s Anagog was founded in 2010 and used the first years to develop and perfect the mobility status algorithms that allow for advanced on-phone machine learning capabilities for best user experience with ultra-low battery consumption and with a high level of privacy protection.  The company have filed 16 patents to date and is currently developing a set of additional related advanced technologies and services.  (Anagog 15.08)

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9.6  Plexistor New Persistent Memory over Fabric Technology Delivers Millions of IOPS

Plexistor announced a breakthrough in using persistent memory over fabric (PMoF).  Persistent memory can now be dis-aggregated and shared across multiple servers using Plexistor’s PMoF Brick running on commodity hardware. PMoF makes it possible to achieve near-memory speed and operational simplicity without sacrificing persistency.  Benchmarks performed on a Mellanox infrastructure over 100GbE using Plexistor’s PMoF Brick demonstrated record performance: more than 1.6 million random 4KB IOPS at less than 6µs with throughput of 7GB/sec.  This is over an order-of-magnitude better than the recently announced rack-optimized Flash storage DSSD appliance, which offers 100µs latency.  Plexistor’s PMoF Brick architecture is designed to fully utilize emerging persistent memory technologies, such as Intel Optane, providing higher performance for workloads like NoSQL databases and big data analytics. The solution also leverages traditional Flash technologies and auto-tiering software in order to provide a seamless and cost-effective solution for the enterprise.

Plexistor has built a new storage solution to converge memory and storage to support the new workloads that demand memory and fast storage.  The solution delivers ultra-low latency storage and huge memory experience, enabling applications to run large data sets at near-memory speed.  Plexistor was founded in 2013 and is headquartered in Sunnyvale, CA, with its R&D in Herzliya, Israel.  (Plexistor 16.08)

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9.7  fiXtress Optimizes Schematic Testing in ADAS Systems

BQR, a world leader in Reliability and Maintenance engineering solutions for the EDA market, announced that Mobileye, a leader in autonomous driving technologies, uses BQR fiXtress ASR (Automatic Schematic Review) for optimizing ADAS (Advanced Driver Assistance Systems) schematic testing.  FiXtress ASR serves as a Rule Based Verification System, automatically detecting schematic design errors based on component parameters and rules.  Typical engineering practices include a complex design review process.  fiXtress ASR automates this procedure, performs more effective checks, and verifies proper implementation of the reference design as recommended by chip manufacturers.  The fiXtress testing checks the inter-connection of chips according to a sequence of rules, such as the interconnection of a Mobileye ASIC to LPDDR4 memory chip.  For engineers’ convenience, fiXtress is integrated with Cadence Allegro and OrCAD, Mentor and Altium design tools.  It uses the BOM and Netlist along with component libraries, enabling verification of the vehicle manufacturer’s design in a few moments.

Rishon LeTzion’s BQR has been providing consulting services and developing software solutions in the area of reliability and maintenance engineering for over 25 years.  BQR’s flagship product is fiXtress, a leading solution interfacing with EDA tools from the early stages of PCB design, performing unique error detection, and helping engineers perform rapid and precise electrical stress calculations.  BQR’s clients using the software include Elbit, ELOP, Elisra, Tadiran, IAI, DSO Singapore, Cisco, Baker-Hughes and more.  (BQR 22.08)

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10.1  Israel’s CPI Surprises with 0.4% Increase During July

The Central Bureau of Statistics announced that Israel’s Consumer Price Index (CPI) rose by 0.4% in July, after rising 0.3% in June, 0.3% in May and 0.4% in April.  Prior to the past four months, the CPI had fallen for five straight months.  Nevertheless, over the past 12 months, the CPI has fallen 0.6%, a level well below the government’s inflation target range of between 1% and 3%.  Prominent price rises in July included fruit and vegetables (7.6%) and housing costs (1.9%).  The housing price index, published separately from the CPI, showed that home prices fell 0.3%, but has still risen 6.9% over the past 12 months.  (CBS 15.08)

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10.2  Israel Enjoys 3.7% Growth During Second Quarter

The Central Bureau of Statistics announced that, after a poor first quarter, the Israeli economy has grown at 2.9% in H1/16.  Indeed, the economy stepped its growth up to an annualized 3.7% clip in the second quarter.  The figures show that private consumption, the economy’s growth engine for the past two years, grew even faster in the first half of the year, with a 7.3% increase.  Another significant positive development was investment in fixed assets, which jumped 13% in the first half, following several quarters of underperformance.  A no less significant improvement came in exports of goods and services, which climbed 4.9% in H1/16, compared with the H2/15.

The poor export figures for the first quarter of the year gave rise to fears that the economy was on the verge of a recession.  In retrospect, however, it turns out that the Central Bureau Statistics’ estimates were too pessimistic; first quarter growth was 2.2%, not 0.8%, as the Central Bureau of Statistics initially reported.  The figures for the first half published here are also preliminary estimates.  (CBS 16.08)

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10.3  Unemployment in Israel Hits Historic Low of 4.7%

According to the Central Bureau of Statistics, unemployment in Israel continues to break new records, as the national unemployment rate in July fell to a historic low of 4.7%.  The rate of unemployment among women dropped from 4.95% in June to 4.7% in July, while the rate for men remained unchanged at 4.6% in the same period.  Among Israelis aged 25 to 64, the rate of unemployment in July stood at 4.1% for men and 3.9% for women.  In absolute terms, 184,000 individuals were unemployed in July.

The number of participants in the civilian workforce over the age of 15 reached an all-time high of 3.94 million and the number of people actually employed rose to a record 3.74 million, an increase characteristic of the summer months, when teenagers find summer work and fresh high-school graduates start jobs.  The percentage of participants in the civilian workforce rose to 64.4%, among the highest percentages in the West: 69.7% of men and 59.2% of women were part of the civilian workforce.  (CBS 23.08)

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10.4  Israel Breaks Travel Record as Millions of Israelis Fly Abroad

A record of 3,623,800 Israelis traveled abroad between January-July 2016 — 14.6% more than the same period last year, the Central Bureau of Statistics reported on 8 August.  Some 3,350,400 traveled through Ben-Gurion International Airport, an all-time record that corresponds with an increase of 15% compared to the same period last year.  If the current trends hold, a record of 6.65 million Israelis (78% of all Israelis) will have traveled abroad by the year’s end.  In 2015, a total of 5,880,000 Israelis traveled abroad.

According to the CBS report, some 831,000 Israelis traveled abroad in July, of whom 36,000 left Israel more than once during that month.  Some 234,600 Israelis passed through the overland crossings to Jordan (including Israeli Arabs whose ultimate destination was Saudi Arabia and the Arabian Gulf states). This amounts to a 9.3% increase compared to the same period last year.  Some 99,200 Israelis traveled to Sinai through the Taba Border Crossing near Eilat, representing a 44.9% increase.  (CBS 08.08)

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11.1  ISRAEL:  Moody’s Affirms Israel’s A1 Credit Rating, Says Economy Stable

International credit rating agency Moody’s affirmed Israel’s A1 credit ratings over the weekend, favoring Israel’s economy for a stable outlook.  The rating follows a visit by Moody’s executives to Israel last month, during which they met with Finance Ministry and Bank of Israel officials, as well as leaders of the public and private sectors.  In a statement issued 11 August, Moody’s noted that its decision to affirm Israel’s A1 rating stemmed from the government’s economic and fiscal policies.

Moody’s noted, however, that Israel’s rating was exposed to the risks of the regional geopolitical dynamics, which mandate appropriating considerable resources to defense spending.  Israel’s international credit rating and positive outlook are supported by the country’s economic resiliency; the stability of its economic institutions, which allow Israel to successfully deal with regional and global upsets; and Israel’s industrial diversity, which spans high-tech, agrotech, as well as electronics, pharmaceuticals and other quality goods and services, the agency said.

Moody’s found that Israel’s foreign currency reserves are at an all-time high of $100 billion, saying the reserves further attested to Israel’s economic resiliency.  The agency expects the government’s budget deficit for 2016 will defeat the set goal 2.9% of the gross domestic product, adding that should the current state budget proposal be approved by parliament, the fiscal guidelines defined last year would require some adjustment.

Moody’s further set Israel’s growth projections at an average of 2.5% between 2016 and 2019, despite regional and global geopolitical risks, adding that the deficit target of 2.9%, set for the 2017-2018 budget, may lead to a minor increase in debt-GDP ratio between late 2016 and 2018.  (Moody’s 11.08)

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11.2  MENA Defense Budgets to Grow Despite Low Oil Price

Despite fiscal concerns and a lower oil price, defense budgets in the Middle East are forecast to reach the spending highs of 2014 by 2019 at the latest, according to new analysis released by IHS Markit, a world leader in critical information, analytics and solutions.

The Middle East was the fastest growing region in terms of defense spending between 2012 and 2014.  Spending for the Middle East and North Africa peaked at $160 billion in 2014 and then modestly dipped in 2015 due to the dramatic drop in oil prices.  However, even at the ‘low point,’ defense spending in 2015 and 2016 in the region will still be higher than 2013 figures.  Defense spending returned to growth in the Middle East and North Africa region in 2016, and is expected to rise to almost $180 billion by 2020.  Defense spending trends are heavily influenced by oil prices moves, but defense budgets have actually risen as a share of government spending in the short term, as other spending has been cut.

Winners and Losers

Conditions and prospects differ significantly between major energy producing states in the region.  According to IHS Janes Defense Budgets, defense spending is expected to fall in Bahrain, Iraq and Oman during the next five years. UAE, Saudi Arabia and Qatar appear to be in the strongest position, aided by non-oil growth and substantial reserve funds.

Algeria:  Algeria’s defense budget has grown 17% annually in the last decade. In terms of defense spending in proportion of GDP, it has grown from 2.7% of GDP in 2005 to 5.9% of GDP in 2016.  While wider state spending was cut by 9% in 2016, the defense budget actually increased by 2% as the majority of the state budget cuts affected healthcare, social security and infrastructure spending.

Saudi Arabia:  Saudi Arabia is one of the biggest spenders on defense in the region and one of the most exposed to the low oil price.  But, there are signs defense and security spending is being protected.  Riyadh announced a 30.5% cut to defense and security spending in 2016.  However, around 25% of all Saudi spending has be re-defined as ‘budget support provision’ and that can be used to support any element of the budget.  Given that the overall budget is down about 2%, defense will be heavily supported from that funding.”  The Kingdom’s defense budget jumped from $32 billion in 2010, to $48 billion in 2015, and is forecast to break the $50 billion mark in 2019, with a total defense spend of $52 billion.

Qatar:  Qatar is pursuing wholesale modernization and expansion of its military capabilities and is leading the way in terms of defense procurement.  Qatar ostensibly became the fastest-growing defense budget and the largest single export market in the world in 2014.  Since 2014, Qatar has finalized $25 billion in deals, which is staggering considering their total defense budget is around $4.5 billion a year.  IHS Janes Defense Budgets expects Qatar’s defense budget to reach $5.5 billion by 2020 and expects to see significant further investment over the next 24 months.

UAE:  Growth in the UAE’s defense budget has been relatively conservative since 2012, but it is likely to increase to over $20 billion by 2020.

IHS Markit is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide.  The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions.  (IHS Markit 22.08)

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11.3  EGYPT: IMF Reaches Agreement on a Three-Year $12 Billion Extended Fund Facility

In response to a request from the Egyptian authorities, an International Monetary Fund (IMF) mission visited Cairo from 30 July to 11 August 2016 to discuss support for the authorities’ economic reform program through IMF financial assistance.  At the end of the visit, the IMF issued the following statement:

“I am pleased to announce that, in support of the government’s economic reform program, the Egyptian government, the Central Bank of Egypt (CBE) and the IMF team have reached a staff-level agreement on a three-year Extended Fund Facility (EFF) in the amount of SDR 8.5966 billion (422% of quota or about $12 billion).  This agreement is subject to approval by the IMF’s Executive Board, which is expected to consider Egypt’s request in the coming weeks.

“Egypt is a strong country with great potential but it has some problems that need to be fixed urgently.  The EFF supports the authorities’ comprehensive economic reform program as stated in the government plan approved by the parliament.  The government recognizes the need for quick implementation of economic reforms for Egypt to restore macroeconomic stability and to support strong, sustainable and job-rich growth.  The program aims to improve the functioning of the foreign exchange markets, bring down the budget deficit and government debt, and to raise growth and create jobs, especially for women and young people.  It also aims to strengthen the social safety net to protect the vulnerable during the process of adjustment.

“The government’s fiscal policy will be anchored to placing public debt on a clearly declining path toward more sustainable levels.  Over the program period general government debt is expected to decline from about 98% in 15/16 to about 88% of GDP in 2018/19.  The aim is to raise revenue and rationalize spending, to reduce the deficit and to free up public funds for high-priority spending, such as infrastructure, health and education, and social protection.  As indicated in the budget approved by the parliament, the government will adopt the VAT law after approval by the parliament and will continue the program begun in 2014 to rationalize energy subsidies.  It will advance the structural reform agenda to help increase investment and strengthen the role of the private sector

“Social protection is a cornerstone in the government’s reform program. Budgetary savings that come from other measures will be partially spent on social protection: including specifically food subsidies and targeted social transfers.  The social protection measures will preserve or increase support for insurance and medicine for the poor, subsidies for infant milk and medicine for children, health insurance for young children and female primary providers and vocational training for youth.  The government will also develop a plan to enhance the school meals program.  Priority will also be given to investment in public infrastructure.

“The CBE monetary and exchange rate policy will aim to improve the functioning of the foreign exchange market, increase foreign reserves, and bring down inflation to single digits during the program.  Moving to a flexible exchange rate regime will strengthen competitiveness, support exports and tourism and attract foreign direct investment.  This would foster growth and jobs and reduce financing needs.

“Financial sector policies will be geared toward safeguarding the strength and stability of the banking system.

“Structural reforms will aim at improving the business environment, deepening labor markets, simplifying regulations and promoting competition.  The ambition is to significantly improve Egypt’s ratings in Doing Business and Global Competitiveness. In this context, the reform measures being implemented target creating a competitive business environment, attracting investment and increasing productivity to provide fertile ground for private sector activity.

“Public financial management and fiscal transparency will be strengthened to improve governance and delivery of public services, enhance accountability in policymaking, and combat corruption.

“With the implementation of the government reform program, together with the help of Egypt’s friends, the Egyptian economy will return to its full potential.  This will help achieve inclusive job-rich growth and raise living standards for the Egyptian people.  We at the IMF are ready to partner with Egypt in this program.  We will also encourage other multilateral agencies and countries to support Egypt.  We have talked to our colleagues in the World Bank and the African Development Bank and they are willing to help.  It would also be very helpful for Egypt’s bilateral partners to step forward at this critical time.  (IMF 11.08)

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11.4  EGYPT:  Dam Construction Going Full Steam While Egypt-Ethiopia Talks Stall

Ayah Aman posted in Al-Monitor on 10 August that Ethiopia is seeking rapprochement with Egypt through the media after years of rising apprehension over the Grand Ethiopian Renaissance Dam of the Blue Nile watershed.  The tension arose almost as soon as then-Ethiopian Prime Minister Meles Zenawi laid the foundation stone in April 2011 for the now almost-finished dam.

Political and technical negotiations between the capitals, Cairo and Addis Ababa, are stumbling as the countries try to agree on policies to reduce the risks Egypt expects if Ethiopia begins operating the dam without considering consulting firms’ recommendations.

Al-Monitor was part of the first Egyptian press delegation’s visit to the project site 31 July, in coordination with the Stockholm International Water Institute and the Nile Basin Initiative’s Eastern Nile Technical Regional Office.  Ethiopian officials — who traveled from Addis Ababa where policies are made to the Benishangul-Gumuz Region where the Renaissance Dam is — sent a number of positive messages calling for transparent cooperation on dam issues with Egypt and Sudan.  They also tried to reassure Egypt’s concerned public about Ethiopia’s progress on the dam.

Standing in front of the under-construction structure while water flowed behind him, Renaissance Dam project manager Simegnew Bekele spoke to reporters. “We have long experience that allows us to play a leading role in building dams.  We know how to build and run dams and reservoirs based on studies and designs we make.” Bekele assured the gathering that the dam “is a project built professionally by Ethiopian hands on Ethiopian lands with responsibility that guarantees benefit for everyone.”

While Egypt, Sudan and Ethiopia are continuing technical and political negotiations about ways to reduce the potential negative impacts of the dam, construction at the site is continuing at a fast pace.  The left and right sides of the dam’s body are finished.  However, water is not stored behind the dam yet.  Inside the reservoir, 35,000 hectares (almost 135 square miles) have been prepared and qualified for use.  Construction work on the saddle dam is taking place about 5 kilometers away from the main dam site.

Construction at the Renaissance Dam site started in December 2010 after an agreement was reached with construction company Salini Impregilo of Milan, Italy, and Metals and Engineering Corp. of Addis Ababa.  The site is 40 kilometers from the Sudanese-Ethiopian border on a tributary of the Blue Nile.  The project is expected to store 74 billion cubic meters (60 million acre-feet) of water and generate 6,000 megawatts of electricity.  It is funded nationally through direct donations and bond sales started by Zenawi, who died in 2012.

“All dimensions related to safety of the dam, quality of construction, operation and maintenance have been designed and put into consideration in a way that makes us reliable, as the project will be of benefit to downstream countries as much as it is to the Ethiopian people,” Bekele said in his response to growing Egyptian doubts about the dam. “Ethiopia has vowed to make use of its water resources to benefit everyone. We think beyond the horizon,” he added.

Bekele outlined the positive aspects of the dam for Egypt and Sudan.  “One of the key advantages of the dam is to organize the water flow all year long.  Hence, we can avoid dangers of a flood and water losses caused by natural flow and evaporation, as well as alluvium accumulation problems.  It will also make navigation in the Nile smoother and support peace and regional stability,” he said.

Despite the transparency Bekele showed, as he is responsible for running Renaissance Dam construction and was showing the press delegation around the dam sites all day, he refused to answer pressing questions about when water will be stored behind the dam and the number of years it will take to fill the reservoir.  The answers would help determine the amount of water that will flow to Egypt and Sudan, and represent important factors in assessing the risks Egypt might face.

Al-Monitor attended a 30 July talk in Addis Ababa by the National Tripartite Committee where Sudanese and Ethiopian officials met — while Egypt’s official was absent for undisclosed reasons.  “The tripartite committee is not concerned about continuing construction or ending the project this year or any time. However, we want to make sure that filling and operating [the dam] will have the least impact on downstream countries, and will have the most benefit for [Egypt, Sudan and Ethiopia],” said Saif Hamad, head of the Sudanese delegation.

The committee is evaluating the applications of two French consulting firms to assess the dam’s impacts. One would address hydraulic impact; the other, environmental, economic and social effects. However, this effort to obtain technical assessments has stalled more than once because of many disputes over the past two years. The three countries held political negotiations in December with ministers of water and foreign affairs in Khartoum, Sudan, to push for cooperation, which has become the last resort for Egypt and Ethiopia to solve problems they fear the dam could cause.

“Finishing the two studies does not necessarily mean that countries would agree on the results and output.  However, these outputs would be subject to assessment by the tripartite technical committee, where a suitable scenario on how to deal with the outputs would be agreed on,” said Gedion Asfaw, who leads Ethiopia’s experts’ panel in the tripartite committee.

Ethiopians talk about the dam enthusiastically.  Al-Monitor interviewed people in the capital’s suburbs and areas surrounding the dam site near the border with Sudan — in the Benishangul-Gumuz Region, which suffers from power cuts almost all the time.  The people expressed pride that their country could take on such a massive a project.  Egypt rejected the proposal in the beginning, but the project became a reality that the Ethiopian government created to achieve development and fight poverty.

Cairo’s concerns, however, will grow even larger as Ethiopia aspires to export energy generated by the hydroelectric project, not only to adjacent African regions, but also to Europe and MENA (Middle East and North Africa) markets.  This is definitely going to make Egypt more apprehensive about ensuring its water supply from the Blue Nile, which originates in the Ethiopian Highlands.  (Al-Monitor 10.08)

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11.5  TUNISIA:  How the New Government Plans to Save Tunisia

Ahmed Nadhif posted on 18 August in Al-Monitor that Tunisian President Beji Caid Essebsi has tapped Nidaa Tunis leader Youssef Chahed to form a unity government that will focus on terrorism, corruption and Tunisia’s deteriorating economy.

The Tunisian Parliament is getting ready to vote for confidence in the new government before 1 September, the legal deadline set for the government’s formation under the Tunisian Constitution.  On 3 August, President Beji Caid Essebsi appointed the leader of the ruling Nidaa Tunis, Youssef Chahed, to form a new national unity government after the parliament withdrew confidence from the former government led by Habib Essid on 30 July, under accusations of inefficiency.

Essebsi launched an initiative during a 2 June interview on state television “to form a national unity government whose priorities include the war on terrorism and corruption and the entrenchment of democracy.”  The government is to include parties and unions, unlike the deposed one, which was formed by four parties in the parliament: Nidaa Tunis, to which Essebsi belongs; the Islamist Ennahda; and two liberal parties, the Free Patriotic Union and Afek Tounes.

The new government will face major security and economic challenges, in addition to having to deal with corruption.

On 13 July, the Tunisian presidency published the text of the initiative, called the “Carthage Document,” which includes the outline of the potential government’s work schedule.

As designated prime minister, Chahed was already part of the decision-making circles in the country. Before his appointment, he was minister of local affairs for the deposed government.  On the day of his appointment, he said that the new government will work on “achieving five main priorities: winning the battle against terrorism, declaring war on corruption and the corrupt people, fostering development to create job opportunities, controlling the financial budgets and focusing on the environment and sanitation.”  He further noted that the new government will “give more chances for representation to the youths and women and will be honest with the Tunisian people from the beginning about their financial, social and economic situation.  The country is at a critical stage and needs exceptional decisions and sacrifices.”

But despite the optimism in his speech, Chahed will have a tough time on every level.  The tasks he proposed in his governmental program require patience and wide governmental coordination as well as a stable security situation.

Journalist Mohamed Bettaieb told Al-Monitor, “The realization of the five points that Chahed listed in his speech depends on the first point, which is fighting terrorism.  The economic situation, fighting corruption and controlling the financial budget all require security and stability.  The clashes with the terrorist groups are the main reason behind the deteriorating economic situation.”

Since 2011, Tunisia has been the target of several terrorist operations executed by jihadi groups affiliated with al-Qaeda like the Okba Ibn Nafaa Brigade and others supporting IS.  The attacks have claimed the lives of more than 220 security and military personnel and 98 civilians, according to a survey by the local Inkyfada website.

Bettaieb added, “Improving the security situation depends on improving the performance of the security apparatus, which has recently achieved remarkable success.  For instance, the month of Ramadan this year was free of any terrorist operations, which hasn’t been the case since 2012.  Many terrorist operations targeted the army and police in 2013, 2014 and 2015, when the tourist resort of Sousse was attacked.  In March 2016, IS attacked Ben Gardane to establish an Islamic emirate.”

He noted, “These successes — relative as they might be — must be maintained to preserve the current defense and security team.  The ministers of defense and interior must also remain in their positions to save time and effort for the country, especially since they are technocrats and are not affiliated with any political party.  This ensures that their ministries are not biased to any political party.”

Bettaieb added, “The new government is up against another challenge, which is the return of Tunisian youths fighting with jihadi groups in Syria and Libya, especially in the wake of the Islamic State defeats in these battlefields, and the challenge of fighting jihadi groups in the western mountains along the Algerian border.”

Tunisians make up much of the ranks of IS in Syria, Libya and Iraq.  According to most estimates, the number of Tunisian fighters in Syria and Iraq exceeds 3,000. In Libya, Tunisians constitute the majority of IS members at approximately 500 fighters.

This difficult security situation has led to economic decline, and Tunisia has been suffering a tough economic situation since 2011.  The Tunisian Central Bank warned 12 August that the rising trade deficit, which neared 6 billion dinars ($3 billion) in the first half of 2016, might worsen.  Since the fall of the former regime led by Zine el-Abidine Ben Ali, the state has adopted a foreign-debt strategy.  Tunisia’s debt has increased by 58% since 2011.  Tunisia’s most recent debts are bonds worth $500 million issued on 5 August with US guarantees.

Apart from the economic crisis and the war on terrorism, Chahed’s new government will face rampant corruption in the state institutions.  Corruption in the country is worse than it was before the fall of Ben Ali’s regime in 2011.  According to the Corruption Perceptions Index published annually by Transparency International, Tunisia came in 59th in 2010, Ben Ali’s last year.  In 2015, it occupied 76th place.  This decline was a wake-up call for local civil society groups to launch initiatives to curb corruption. The May 2016 survey revealed that 62% of Tunisians believe that the government is not making enough efforts to fight corruption.

Political analyst Abdel Sattar al-Aidi told Al-Monitor, “The new government’s success in achieving the priorities that Chahed mentioned in his designation speech depends on a clear and accurate program and on the political parties’ willpower to form a government that would pull the country out of its crisis instead of power-seeking and engaging in an undeclared conflict.  Most importantly, there should be public and union support from the Tunisian General Labor Union, but this will bank on the new government’s economic vision.  It is noteworthy that the Tunisian General Labor Union is the largest union in the country and can make the government’s work successful by declaring a social truce, halting labor strikes and delaying salary increase demands.  Chahed noted in his speech that the country needs exceptional decisions and sacrifices.  We are afraid these sacrifices might affect the limited-income class through reducing basic material subsidies or freezing salary upgrades.”

Each time a new government seeks the parliament’s vote of confidence, Tunisians’ hopes rekindle, and they dream of improving their economic and social situations.  The prime ministers make promises to fight corruption, save the economy and enhance the conditions of the marginalized.  But these hopes soon disappear. Will Chahed’s government be the exception to the rule?  Or will it have the same fate as its predecessors?  (Al-Monitor 18.08)

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11.6  TUNISIA:  New Tunisian PM Tries to Break Economic Reform Curse

Tunisia has gone through five prime ministers in as many years since its revolution, each pushing a widely-praised transition to democracy.  None, though, has made much progress in building the economic stability and opportunity that young Tunisians demand.  Now the sixth post-uprising premier, French-educated technocrat Youssef Chahed, is making bold promises even before he has taken office to tackle Tunisia’s problems.  But a looming budget crisis and debt repayments, coupled with political inertia, may prevent the 40-year-old premier-designate from escaping the fate of his predecessors.

Since the 2011 overthrow of autocrat Zine El Abidine Ben Ali, Tunisia has achieved free elections, a new constitution and a spirit of compromise between secular and Islamist parties — in contrast to the repression, chaos or war that has afflicted other countries which also had “Arab Spring” revolts.  The flip side is that popular protests, labor union resistance and political squabbling have held back plans to overhaul heavy state spending including on a huge body of public workers, and to implement banking and investment laws.

After the last premier lost a parliamentary confidence vote over the economy and security, President Beji Caid Essebsi called last week for Chahed to lead a national unity government capable of advancing economic reforms demanded by lenders including the International Monetary Fund and World Bank.  “We are in times that require exceptional decisions and sacrifices,” Chahed told reporters, saying his focus would be tackling corruption and terrorism, promoting economic growth and clearing up public finances.  “I want to talk frankly with the Tunisian people about the reality of the country’s financial situation.”

Many Tunisians ask whether Chahed, an agricultural specialist and Essebsi ally, can muster the political capital to push through change.  Some opponents dismiss him as an Essebsi puppet, chosen for his loyalty to the president rather than his ability to deliver. He is now negotiating to form his Cabinet.  “Chahed has been handed a poisoned chalice, the financial situation is pretty catastrophic.  He is going to find the coffers empty and lots of demands,” said Jamel Arfaoui, a local analyst and newspaper columnist.  “He is facing potential protests at the same time as the need for reforms.”

The change of premier comes at a difficult time.  Three major attacks by Islamist militants have badly hit tourism bookings, forcing job cuts in an industry that accounts for 8% of the economy.  Unemployment is already at 15%, with the rate far higher for young people in a country where more than half the population is under 29.

Months of on-off protests and sit-ins by jobless youths have also disrupted production and exports of the state-run phosphate industry, another major revenue earner.  Essebsi estimated losses at $2 billion from sector disruptions over five years.

Under the 2016 budget, the public deficit is supposed to fall to 3.9% of gross domestic product from 4.4% in 2015.  But that assumes the economy will grow 2.5% whereas the actual rate in the first quarter was only 1% year-on-year, weakening tax revenue.  Next year will be tougher still for the public finances. Around $3 billion is due in debt service payments and the state will struggle just to come up with the roughly $450 million it needs every month to pay its employees.

At 13.5% of the GDP, Tunisia’s public sector wage bill is proportionately one of the highest in the world.  “Revenues forecast for 2017 will not be enough to cover the 1 billion dinars each month for 700,000 public sector employees,” Central Bank Governor Chedli Ayari said last week.  “We are going to need more foreign financing in this difficult context and with the fall off in tourism and phosphate revenues.”

Social Pressures, Political Will

A senior member of Essebsi’s Nidaa Tounes Party, Chahed will easily secure approval for his new Cabinet in parliament, where Nidaa Tounes and Islamist party Ennahda in the ruling coalition control a majority.  But outside parliament, he must navigate relations with the unions and the social unrest that has scuppered past government attempts to push through the kind of financial sacrifices and austerity reforms he is promising.

The IMF has approved a $2.88 billion four-year loan program for Tunisia.  However, release of much of this is subject to reviews of the government’s progress on economic and financial reforms.

Tunisia has been under pressure for some time from its international lenders to implement measures on the public deficit, investment and the financial sector.  Mehdi Jomaa, a technocrat prime minister managed to secure temporary fiscal reforms in 2014 to boost revenues.  The last premier, Habib Essid, got a law to protect the central bank from political meddling through parliament, although only after protracted negotiations within the ruling coalition.

Deeper reforms have stalled, often because successive governments have lacked the political capital or will to stand up to popular pressures against public spending reductions or austerity measures.  An attempt to increase vehicle tax triggered violent protests in 2014, forcing the government to step back.  A tax on border traffic also provoked rioting last year, leading to another government retreat.

Now doctors and lawyers are threatening strikes over increased audits on their billing to help combat tax evasion, while the powerful UGTT union is resisting reforms to raise the retirement age and reduce state pension payments.

Twice this year the government and the UGTT reached deals increasing public wage salaries, adding pressure to the state finances.  A new investment code law, aimed at increasing incentives for foreign investors and reducing bureaucracy, has been parked in parliament for three years after two revisions.

Social pressure over jobs already exploded into mass protests in southern and central regions at the start of the year, a reminder of the conditions that helped to inspire the Tunisian revolution and later Arab Spring uprisings.  “The Chahed government wants to chip away at freedoms to push through painful measures in his economic plan,” said Hamma Hammai, leader of the Popular Front opposition party.  “But the government will fail because it is not proposing anything new, just the same as Essid.”  (Reuters 11.08)

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11.7  TURKEY:  Fitch Affirms Turkey at ‘BBB-‘; Revises Outlook to Negative

On 19 August, Fitch Ratings affirmed Turkey’s Long-Term Foreign and Local Currency Issuer Default Ratings (IDR) at ‘BBB-‘.  The Outlooks have been revised to Negative from Stable.  The issue ratings on Turkey’s senior unsecured foreign and local currency bonds have also been affirmed at ‘BBB-‘.  The Country Ceiling has been affirmed at ‘BBB’ and the Short-Term Foreign and Local Currency IDRs at ‘F3’.

The issue ratings on Turkey’s Hazine Mustesarligi Varlik Kiralama Anonim Sirketi’s (Hazine) Foreign and Local Currency global certificates (sukuk) have also been affirmed at ‘BBB-‘.

Key Rating Drivers

The revision of the Outlook on Turkey’s IDRs reflects the following key rating drivers and their relative weights:

HIGH:  An unsuccessful coup attempt in July confirms heightened risks to political stability.  The authorities are responding to the coup attempt with a purge of the followers of those it blames, with around 70,000 public sector workers suspended so far.  The scale of the purge generates uncertainty over capacity and continuity.  The implications for checks and balances, which in Fitch’s opinion have eroded in recent years, are unclear, as is the potential for further disruption from those behind the coup attempt.  The overwhelming public opposition to the coup attempt and subsequent unity of most political parties could lessen political fractures.

Security conditions have worsened outside of the context of the coup attempt.  Terrorist attacks in Istanbul and Ankara have caused multiple fatalities.  The removal of a large number of senior military officials may hinder the capacity to address ongoing security challenges, in Fitch’s opinion.  The attacks are having a material impact on the tourism sector, which directly constitutes around 3% of GDP and 13% of current external receipts.  Revenues from foreign tourist arrivals were down 41% yoy in H1/16.  A diplomatic rapprochement with Russia should provide some support to the sector, but without a significant improvement in security conditions, a broad-based recovery is unlikely.

MEDIUM:  Political uncertainty is expected to impact economic performance and poses risks to economic policy.  Growth is forecast to dip due to lower investment, although a strong start to the year means that at a Fitch-forecast 3.4% of GDP in 2016, it will be above the peer median.  The prospects for significant structural reform that would shift the structure of growth from private consumption have diminished in Fitch’s opinion, although the government continues to progress with its more modest agenda.  The central bank and commercial banks are facing renewed political pressure on interest rates. Fitch does not expect the fiscal stance to weaken in response to the coup attempt.

Turkey’s IDRs also reflect the following key rating drivers:

External vulnerabilities are large but long-standing and financing has been resilient in the aftermath of the coup attempt.  The gross external financing requirement (including short-term debt) for 2016 is forecast at 186% of end-2016 reserves and the international liquidity ratio is 76%, around half the peer median.  A few planned corporate issuances were postponed in the immediate aftermath of the coup attempt, but since then the syndication rollover rates by banks have ranged between 64% and 145% and the cost of funding has risen only marginally.

The current account deficit has continued to narrow due to the lagged impact of lower oil prices on the import bill, despite the drop in tourism revenues, and Fitch forecasts it to bottom at 4.3% of GDP in 2016, before rising to close to 6% of GDP by 2018.  Funding remains largely debt-based, although maturities continue to rise gradually.  As a result, net external debt is forecast to rise from 35% of GDP (BBB median 5.8%) at end-2015 to 39.3% of GDP by end-2018 (double the end-2010 level).  Reserves increased by 10% over H1/16 due to the lower current account deficit and a fall in central bank FX sales and are forecast to end the year equivalent to 6.5 months of current external payments, a ratio that is forecast to decline to 5.8 months by 2018 as imports rise.  Net reserves are around one-third of gross reserves.

Headline fiscal performance has remained solid this year, with a central government primary surplus of 1.3% of projected full year GDP in H1/16, despite the implementation of spending commitments made at the late-2015 election (most of which are one-off).  However, this was supported by one-off receipts worth around 1% of GDP and lower capex.  Fitch expects a small primary deficit this year, but debt/GDP is forecast to fall to 32.2% at end-2016, compared with a peer median of 40.2%.  Security spending and refugees pose expenditure pressures.  Fitch assesses the fiscal restraint in the face of multiple political events as impressive compared with rating peers and highlights the importance of the fiscal anchor to the government.

Average inflation has fallen so far in 2016, due to food prices, but at forecast 8.2% remains well above the peer median of 1.7%.  Core inflation (CPI-I) was 8.7% in July, above the average cost of central bank funding.  The central bank has narrowed the interest rate corridor by trimming the top end by a cumulative 200bps since March, although it points to a slowdown in credit growth as evidence of tighter financial conditions.  Plans to continue to simplify the policy framework and improve communication could over time address risks around policy coherence.

The banking sector functioned smoothly through the coup attempt and deposit outflows were minimal. NPLs are 3.3% and capital adequacy, at 15.8% at end-June, is slightly above the peer median.  The banking system is consistent with Turkey’s investment grade rating, with a ‘BBB’ on Fitch’s Banking System Indicator.

Rating Sensitivities

The following factors, individually or collectively, could trigger a downgrade:

– Prolonged or deepened political instability, insecurity or geopolitical stresses that undermine economic performance or economic policy credibility.

– A materialization of stresses stemming from external financing vulnerabilities.

– A reversal in the declining trend in debt/GDP or a worsening of external imbalances.

As the Outlook is Negative, Fitch does not anticipate developments with a high likelihood of triggering an upgrade. However, the following factors, individually or collectively, could lead to a revision of the Outlook to Stable:

– A more stable and predictable domestic political and security environment.

– Implementation of reforms that address structural deficiencies in the economy.  (Fitch 19.08)

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11.8  TURKEY:  Why are Turks Disposing of $1 Bills?

Tulay Cetingulec posted in Al-Monitor on 18 August that the discovery of $1 bills on Turkish soldiers involved in the 15 July putsch suggest the greenback has been used as a secret code of communication.

What is $1 worth around the world?  An unlimited rice meal in India, a cup of coffee in Portugal and an hour of street parking in some places in the United States.  A bottle of cheap wine is what you get in Italy, a lottery ticket in Australia and half an hour of foot massage in the Philippines.  In Turkey, you can treat yourself to a simit and tea — and, as it turns out, you can stage a coup.

One-dollar bills have been found on high-ranking officers involved in the 15 July coup attempt, in what is perhaps the most bizarre of the many oddities to emerge from the massive crackdown on the Gulen community, the accused culprit in the putsch.  The $1 bills have been found also on policemen, judges, academics, businessmen, teachers and other civilians linked to the Gulen community, the government’s former ally, which it now calls the Fethullah Gulen Terror Organization (FETO).

The bills are said to denote membership in the secretive group, and their serial numbers are believed to have coded meanings.  Justice Minister Bekir Bozdag has said the $1 bill “is undoubtedly of some important function within FETO,” while Prime Minister Binali Yildirim has vowed to defeat “the lowlifes who sell their souls for $1.”

Ordinary Turks are also angry, protesting the dollar in various ways. In Istanbul, for instance, a group of shopkeepers threw $1 bills in the sewage, pledging not to deal with dollars again. In the most prevalent reaction, however, the greenback is now banished from wedding parties, where the bride and the groom as well as the musicians entertaining the guests are often sprayed with banknotes.  Two days before the coup attempt, for instance, a wedding in Sanliurfa made the headlines for the “shower of dollars” that hailed down on the newlyweds.  But, as the media report, “Weddings have ushered in a Turkish lira-era” after July 15.

Spraying dollars at wedding parties may convey an air of affluence and largesse, but it is actually a cost-cutting measure devised by crafty Turks.  One dollar is worth roughly 3 Turkish lira, while the smallest Turkish banknote is 5 liras — more expensive while at the same time less cool than the greenback.  So, to make a real impression with Turkish currency, one has to be prepared to sacrifice banknotes of at least 10 or 20 Turkish lira.

Others prefer to sacrifice probity instead, using fake $1 bills to reduce further the cost of showing off.  This seems to have become a widespread practice, judging by a report from the western town of Nazilli, just a day before the coup attempt.  A group of wedding musicians felt so exasperated and humiliated by the rising trend that they called a press conference to display — and then burn — the fake dollars they had been thrown at recent parties, which totaled $5,000 in face value.  The musicians said fake dollars were being sold openly at city bazaars and urged police to take action.

Now the main usage area of the $1 bills in Turkey seems to be gone, as no one wants to be associated with the putschists.  In currency exchange offices, no one is asking for $1 bills, while those with leftovers from oversea trips are said to be tearing the bills up or throwing them away, with only the bravest turning up for exchange.

One of the exchange offices Al-Monitor visited had accumulated hundreds of $1 bills, with one employee grumbling, “It’s not like before.  People are afraid to both buy and sell them.”  Another currency dealer said the demand for $1 bills ended “at a stroke” after Gulenists were reported to use them for secret communication.  “People have come to see them as criminal tools,” he added.  A third shop had done away with the $1 bill altogether.  “No $1 bills here,” the dealer said.  “Neither buying nor selling.”

Yet, not all $1 bills are of an “incriminating” nature.  The serial number matters.  According to media reports, a serial number that begins with the letter F denotes that the holder is a top Gulenist leader, while C is for lower-level managers and J for ordinary members.  Other reports claim the $1 bills were blessed personally by Fethullah Gulen, the US-based cleric heading the sect, before being distributed to members, and that the serial numbers serve as a sort of ID number, the records of which Gulen keeps at his mansion in Pennsylvania.

Meanwhile, others who disposed of the greenback after the putsch did so not out of fear but to make profits.  The Turkish currency plunged sharply over the coup attempt, leading many to sell their dollars to buy more of the cheapened lira before it recovered.

Yildirim and President Erdogan, for their part, have praised the sell-off as a display of patriotism, a vantage point that meshes with a widespread conviction among Turks that the United States colluded with the putschists.

In a 9 August speech in parliament, Yildirim said Turks had exchanged $11 billion in 10 days, which helped to fend off a potential crisis at the markets amid fears of an exodus by panicked foreign investors.  “The people not only averted the coup but also funneled money to the markets.  A nation like this can only be applauded.  By converting $11 billion to Turkish lira in the 10 days after the coup, you gave [the country] lifeblood and strength,” Yildirim said.

So the prime minister seems confident that Turks have grown more loyal to their national currency, atop banishing the $1 bill.  This should be great news for the wedding bands in particular.  The musicians in Nazilli could have never imagined their protest would bear fruit so soon.  (Al-Monitor 18.08)

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