Fortnightly, 25 July 2018

Fortnightly, 25 July 2018

July 26, 2018


25 July 2018
13 Av 5778
12 Dhul Qadah 1439




1.1  Jerusalem Approves Second Israeli Stock Exchange
1.2  Finance Committee Allows State 10 Months to Sell Bank Leumi Shares
1.3  Israeli Government Supports National Biotech & Healthcare With Significant Grants


2.1  Aurora Labs Raises $8.4 Million Series A for Self-Healing Automotive Software
2.2 Raises $50 Million in a Series C Funding Round
2.3  Foresight Increases Ownership in Rail Vision Becoming Largest Shareholder
2.4  Arbe Robotics Raises $10 Million in Additional Capital
2.5  Salesforce Signs Definitive Agreement to Acquire Datorama
2.6  Mantis Vision Announces $55 Million Funding and Luenmei Quantum Joint Venture
2.7  Toka Launches to Help Strengthen Countries’ Cyber Defenses
2.8  Radiflow Raises $18 Million Venture Round
2.9  Photomyne Closes $5 Million A Round and Reaches 1 Million Monthly Active Users
2.10  Orbit Wins $29.8 Million USAF Contract for KC-135 Audio Systems Sustainment
2.11  Maniv Mobility Raising $80 Million Second Auto-Tech VC Fund
2.12  Proggio Investment Round to Disrupt the Project Management Market


3.1  POSRocket Secures $1.5 Million in Funding
3.2  UAE’s Gulftainer Gets Approval to Run the Port of Wilmington
3.3  Jacobs Engineering Group Selected to Oversee Construction of UAE Rail Network
3.4  Chinese Tourism to Dubai More Than Doubles Since 2014
3.5  Emaar to Build MidEast’s Largest Chinatown in Dubai Creek Harbor
3.6  US Hedge Fund Said to Enter Race to Buy Abraaj Assets
3.7  Pica8 Expands in Middle East with Distribution Agreement with Dubai’s Distilogix
3.8  Filipino Retailer Jollibee Plans 25 UAE Stores by 2020
3.9  Tint World Franchise Opens its First Store in UAE Capital
3.10  UAE Retail Giant Lulu to Invest $270 Million in Saudi Expansion by 2020


4.1  Egyptian President Sisi Inaugurates ‘Largest Wind Farm in the World’
4.2  Clear Blue’s Smart Off-Grid System Powers 800 Solar/Wind Street Lights in Morocco


5.1  Lebanon’s Trade Deficit Declined to $6.64 Billion in May 2018
5.2  Jordan Sees Annual 5.1% Inflation Increase for June 2018
5.3  IMF Says 17% of Jordan’s GDP in Shadow Economy

♦♦Arabian Gulf

5.4  EU & US Complain over GCC Duty on Energy and Carbonated Drinks
5.5  Higher Crude Prices & Output Hike to Boost UAE Economic Growth
5.6  UAE Space Agency Signs Agreement with NASA on Space Exploration
5.7  IMF Raises Saudi Growth Forecast on Higher Oil Prices
5.8  Saudi Construction Sector Hardest Hit by Expat Exodus

♦♦North Africa

5.9  Egypt’s Parliament Approves Law Creating Sovereign Wealth Fund
5.10  Libya’s Largest Offshore Gas Field Comes Onstream
5.11  MENA Youth and Women Most at Risk from Job Crisis
5.12  Morocco’s Trade Deficit Grows as Foreign Investment Plunges
5.13  Morocco Touts Economic Zones for Aerospace Investment
5.14  Unemployment Rate Rises in Morocco


6.1  Turkey’s Unemployment Rate Falls to Single Digits in April
6.2  Turkey Establishes Halal Accreditation Agency
6.3  Cyprus’ June Harmonized Inflation Reaches 1.7%
6.4  Cyprus Sets New Record in Tourist Arrivals
6.5  Cyprus & Israel Talk Fire and Water
6.6  S&P Raises Outlook on Greece, Affirms Ratings
6.7  Greece Unlikely to Pay Off Debts to Suppliers by the End of August
6.8  Greek Employment Rose in First Quarter of 2018



7.1  Third Chinese City to Open Economic Mission in Israel


7.2  Jordan’s Birth Rate has Fallen Significantly Since 1990’s
7.3  Deal Signed to Implement New Health Policy in Dubai Schools
7.4  Egypt’s Population Officially Numbers 96.3 Million at Beginning of 2018


8.1  PlantArcBio Completes $3 Million Funding & Agreement with the University of Wisconsin
8.2  BioSight Clinical Trial of BST-236 as a First-Line Treatment of Acute Myeloid Leukemia
8.3  NewStem Announces $4 Million Seed Investment
8.4  Aspect Imaging Receives ISO 13485:2016 Certification
8.5  Evogene & IMAmt Collaborate in the Field of Insect Resistance Traits in Cotton
8.6  CyberMDX Raises $10 Million Series A to Expand Medical Cybersecurity to Hospitals
8.7  Can-Fite Granted Australian and Chinese Patents for Erectile Dysfunction Drug
8.8  Therapix Biosciences Reports Positive Pre-clinical Data for THX-160 for Treatment of Pain
8.9 Raises $21 Million in Series A Funding to Increase Patient Access to Proven Therapies
8.10  PainReform Gets FDA Approval for Phase III Post-Operative Pain Relief Study
8.11  K Health Launches Free Primary Care App & New Provider Network in New York
8.12  Laminate Medical Technologies Announces First Forearm Fistula Cases in Germany
8.13  Kalytera Enters Medical Cannabis Market With Focus on Psoriasis & Menstrual Cramp Treatment
8.14  Biogal-Galed Labs Commercializes PCRun Canine Distemper Molecular Detection Kit
8.15  Netafim Launches the World’s Most Innovative Digital Irrigation System
8.16  OrthoSpin Completes $3 Million Raise for Orthopedic Robotic External Fixation System
8.17  Ology & RAFA Get FDA Approval of Atropine Autoinjector as Countermeasure for Nerve Agents


9.1  Israel to Launch Historic Moon Mission from Cape Canaveral this December
9.2  Trigo Vision Unveils Advanced Retail Automation Platform with $7 Million Seed Funding
9.3  NanoLock Security wins Gold as Startup of the Year in the 13th Annual 2018 IT World Awards
9.4  Elbit Systems’ Hermes 900 StarLiner: an Unmanned Aircraft to Operate in Civilian Airspace
9.5  Luminate Announces Microsoft Azure Integration Offering Access to Hosted Corporate Apps
9.6  Adrian Kenya Selects New GenCell Solution to Provide Green Power to Telecom Base Stations
9.7  Presenso Announces the Production Release of Its Predictive Maintenance Solution
9.8  VodafoneZiggo Selects AudioCodes for Business Voice Services
9.9  VodafoneZiggo Selects AudioCodes for Business Voice Services
9.10  Aero Vodochody & IAI Introduce Multirole F/A-259 Striker Aircraft for Combat Missions
9.11  RFOptic is Rolling out its Optical Delay Line Solutions Worldwide
9.12  Cato Transforms SD-WAN With Identity-aware Routing
9.13  Gooper Hermetic Chosen for a NASA Space Technology Development Program
9.14  Illusive Networks Recognized on 2018 Emerging Security Vendors List


10.1  OECD Says Israel Should Liberalize and Spend More On Infrastructure


11.1  ISRAEL: Moody’s Changes Israel’s Outlook to Positive From Stable, Affirms A1 Rating
11.2  ISRAEL: Israeli Tech Exits – 2 Mega Deals But Basic Trend Down
11.3  ISRAEL: Summary of Israeli High-Tech Company Capital Raising – Q2/18
11.4  JORDAN: Arabian Gulf Has Designs on Jordan’s Foreign Policy
11.5  BAHRAIN: IMF Executive Board Concludes 2018 Article IV Consultation with Bahrain
11.6  QATAR: Moody’s Changes Qatar’s Rating Outlook to Stable, Affirms Aa3 Rating
11.7  UAE: $8 Billion Tech Industry Presents Growth Opportunities for Chinese Businesses
11.8  EGYPT: Egypt Moving Forward – IMF’s Key Challenges & Opportunities
11.9  SAUDI ARABIA: IMF Executive Board Concludes 2018 Article IV Consultation
11.10  TURKEY: Fitch Downgrades Turkey to ‘BB’; Outlook Negative
11.11  TURKEY: A Crisis Presidency?
11.12  TURKEY: Turkey Ends State of Emergency, but Introduces Restrictive New Rules


1.1  Jerusalem Approves Second Israeli Stock Exchange

The Israeli Government hopes to pass shortly a bill to set up a second stock market for small and medium-size businesses.  On 15 July, the Netanyahu government approved the bill, which is in line with the recently published recommendations of the joint team of the Israel Securities Authority, the Ministry of Justice and other bodies.  The Ministry of Justice hopes to introduce the bill for first reading in the current session of the Knesset, and to see it through second and third readings in the coming winter session.  Government sources stress, however, that even after the legislation is passed, it will take time to set up the second stock exchange.

The bill provides for substantial relaxations for small and medium-size businesses as far as trading in their shares is concerned, in the hope of providing a better solution for high-tech companies in their early stages.  The bill is jointly sponsored by Minister of Finance Kahlon and Minister of Justice Shaked.  (Globes 16.07)

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1.2  Finance Committee Allows State 10 Months to Sell Bank Leumi Shares

On 16 July, the Knesset Finance Committee approved the sale of the state’s shares in Bank Leumi (5.8%), valued at some NIS 2 billion at current prices.  Ministry of Finance Accountant General Hizkiyahu said that the state’s holding in Bank Leumi do not represent a controlling interest and is not being sold as such.  The step is merely a financial investment.  The state will also abide by its commitment to the bank’s employees in the sale and would offer them 10% of the shares being sold at a discount of 25% on the market price.

The state requested a year in which to sell the shares, but because of Finance Committee chairman Gafni’s view, which coincides with that of the bank’s workers committee, that this was too long a period, it was decided that ten months would be allowed for the process.  The expectation is that the sale be used to reduce the state’s debt, which currently stands at NIS 750 billion, representing 60% of Israel’s annual GDP.  The state is expected to hold a competitive auction and to distribute the shares on the market to investors.  The Bank of Israel recently relaxed its rules to allow investment institutions to raise their holdings in bank shares to 7.5% of any bank (up from 5% previously), so that the capital market is not expected to have any problem in absorbing the shares.  (Globes 16.07)

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1.3  Israeli Government Supports National Biotech & Healthcare With Significant Grants

The Israel Innovation Authority, the Israeli government’s support arm in the country’s development of industrial R&D, has announced the approval of a NIS 120 million (roughly $33 million) grant to three healthcare-related companies as part of a six-year program to expand R&D centers of multinational companies in biotechnology and medicine in Israel.

The three companies, medical device firm Medtronic, US General Electric subsidiary GE Healthcare, and healthcare business and tech solution Change Healthcare were approved after a competitive process by the Israel Innovation Authority that included a review of a number of proposals over several months as well as a marketing campaign with the Foreign Investment and Industrial Cooperation Authority at the Israel Ministry of Economy and Industry.  The program is a significant boost to the digital health field, supporting the March 2018 Israeli government resolution to approve a NIS 1 billion (roughly $300 million) national digital health plan to establish Israel as a leading international digital health hub.  The program also hopes to help establish the presence of important international medical leaders that will have an effect on the Israeli market and generate significant income through new intellectual property to Israel.  (IIA 18.07)

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2.1  Aurora Labs Raises $8.4 Million Series A for Self-Healing Automotive Software

Aurora Labs closed an $8.4 million A round of financing led by Fraser McCombs Capital, along with previous investor MizMaa Ventures. Aurora Labs, which already has three paying global OEM customers, will use the funds to expand its international presence beyond its new German offices and advance R&D activity.

In an industry where vehicle innovation is software driven, automakers are faced with ever-shortening development cycles and frequent and unpredictable software issues, resulting in increased rates of costly recalls.  Fifteen million vehicles were recalled in 2017 for software flaws, costing the industry billions of dollars, and with the number of lines of code in vehicles projected to grow, so too are the costs.  Aurora Labs offers an advanced Predictive Maintenance Solution for connected cars and autonomous vehicles. Their machine learning algorithms uniquely address all three stages of vehicle maintenance: The platform detects faults in software behavior and predicts downtime events; it fixes flaws on-the-go in the electronic control unit (ECU) software, guaranteeing a seamless user experience; and finally, Aurora Labs’ OEM-verified, clientless Over-the-Air (OTA) update solution provides cost-effective and swift ECU updates with zero downtime, without requiring dual memory. In short, Aurora Labs’ technology future-proofs software-driven connected cars.

Launched in 2016, Tel Aviv’s Aurora Labs is a leader in on-the-go automotive software fixes and predictive maintenance for connected vehicles, paving the way for the age of the self-healing car.  Aurora Labs’ Line of Code Maintenance™ technology uses machine learning algorithms to uniquely address all three stages of an automotive maintenance system to detect, repair, and seamlessly implement OTA updates to faults in the software.  With the rising cost and frequency of software-driven recalls, Aurora Labs’ Self-Healing Software™ enables reliable and cost-effective rollouts of new automotive features at a time of fundamental change in the industry.  (Aurora Labs 11.07)

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2.2 Raises $50 Million in a Series C Funding Round raised a $50 million Series C funding round, led by New York-based growth equity firm, Stripes Group, with participation from earlier investors Insight Venture Partners and Entre Capital. wanted to build a platform that is the first thing you check when you come into the office in the morning, that manages your every workplace process, and that at the end of the day, makes you smile.  To keep doing that, we’re excited to bring on a new partner in Stripes Group that shares our vision.

We have big plans for the product and for you, our beloved community of users. With your constant support and feedback, we’re able to improve a product that we all really believe in—a workplace tool that you actually love to use. To that effect, we’re launching three transformative features today to help you work even better together:

The Column Center: We’re super excited about this! You know all of the columns that you already love on  Well, we’ve added 15 new ones and they’re awesome. The columns facilitate any sort of data input you could imagine including time tracking, a creation log, location views, and many more.

Board Views: We’re launching a brand new way for you and your teams to visualize, interpret, and extract data from the platform. You can now experience your boards and see your information from a variety of different perspectives. Charts to maps, calendars to files, the opportunities are endless.

Founded in 2012 and launched as an independent startup in February 2014, Tel Aviv’s is a tool that transforms the way teams work together.  Their mission is to help teams build a culture of transparency, empowering everyone to achieve more and be happier at work.  ( 12.07)

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2.3  Foresight Increases Ownership in Rail Vision Becoming Largest Shareholder

Foresight Autonomous Holdings has increased its ownership in Rail Vision and is now the largest shareholder.  Foresight exercised $2.24 million of warrants, raising their ownership stake to approximately 35% of issued and outstanding shares and 34% on a fully diluted basis.

Ra’anana’s Rail Vision is a developer and market leader of unique solutions and vision-based systems for advanced safety, asset and fleet management in the rail industry.  In December 2017, Rail Vision completed a successful trial of its unique vision-based system with a leading European railway company.  The trial was conducted under harsh winter conditions with minimal light and demonstrated the system’s real-time capabilities to detect and classify obstacles at distances of several hundred meters.

Ness Ziona’s Foresight Autonomous Holdings, founded in 2015, is a technology company engaged in the design, development and commercialization of stereo/quad-camera vision systems and V2X cellular-based solutions for the automotive industry.  Foresight’s vision systems are based on 3D video analysis, advanced algorithms for image processing and sensor fusion.  The company, through its wholly owned subsidiary Foresight Automotive, develops advanced systems for accident prevention which are designed to provide real-time information about the vehicle’s surroundings while in motion.  (Foresight 12.07)

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2.4  Arbe Robotics Raises $10 Million in Additional Capital

Arbe Robotics has raised $10 million in additional capital.  The investment will expedite the development of the Company’s next-generation imaging radar for the autonomous vehicle industry, the expansion of its customer-facing US operations, and enhanced focus on expanding its presence in the Chinese automotive market.  This investment brings Arbe Robotics’ total funding to date to $23 million.  The $10 million investment was led by 360 Capital Partners, a European venture capital firm with significant investments and experience in the global automotive space. Arbe’s existing shareholders – Canaan Partners Israel, iAngels, Manic Mobility, OurCrowd, O.G. Tech Ventures the VC arm of Eyal Ofer and Taya Ventures – also participated in the funding, illustrating their continued confidence in Arbe Robotics’ future development.

Arbe Robotics’ proprietary, patented, radar processing method is a full-stack 4D imaging system, which provides a cost-effective, long-range, high-resolution radar solution, providing improved products for level 2 automation at a lower cost, enabling level 3 automation as well as level 4 and 5 fully autonomous driving for the automotive industry.  The Company’s platform implements two advanced technologies to create a full, comprehensive sensing solution for vehicle autonomy: ultra-high-resolution radar and Simultaneous Localization and Mapping (SLAM).

Tel Aviv’s Arbe Robotics is the world’s first company to demonstrate ultra high-resolution 4D imaging radar with post processing and Simultaneous Localization and Mapping (SLAM).  It is disrupting autonomous vehicle sensor development by bridging the gap between radar and optics with its proprietary imaging solution that provides optic sensor resolution with the reliability and maturity of radar technology for all levels of vehicle autonomy.  (Arbe Robotics 11.07)

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2.5  Salesforce Signs Definitive Agreement to Acquire Datorama

Salesforce has signed a definitive agreement to acquire Datorama, the leading cloud-based, AI-powered marketing intelligence and analytics platform for enterprises, agencies and publishers.  Salesforce is excited to welcome Datorama’s incredible team to the Salesforce family.

Datorama enables more than 3,000 leading global agencies and brands – including PepsiCo, Ticketmaster, Trivago, Unilever, Pernod Ricard and Foursquare – to optimize marketing campaigns, automate reporting and make data-driven decisions faster.  Salesforce’s acquisition of Datorama will enhance the power of Marketing Cloud with expanded data integration and intelligence, enabling marketers to unlock insights across all of their marketing channels and data sources.  With one unified view of data and insights, companies can make smarter decisions across the entire customer journey and optimize engagement at scale.  Datorama customers will be able to leverage the power of the world’s #1 CRM to take action on data and insights, delivering smarter engagement across the entire customer journey.

The announcement strengthens Salesforce’s ability to empower brands worldwide to deliver smarter, more personalized and connected customer experiences.  It complements recent innovations including our integration with Google Analytics 360 and Marketing Cloud Einstein capabilities.

Tel Aviv’s Datorama is a software-­as-a-­service big data management platform for advertisers and ad agencies.  Datorama integrates and tracks data from different advertising data channels, mash them up and provide advanced analytics / predictive analytics.  By easily integrating marketing channels and creating a Marketing specific data models, we offer a new way of Marketing Data management allowing the Advertiser to seize ownership of the data and increase visibility and control.  It allows better ROI optimization based on a holistic view, discovery of new revenue streams, suggestions for action and discovery of wasted budget.  (Salesforce 16.07)

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2.6  Mantis Vision Announces $55 Million Funding and Luenmei Quantum Joint Venture

Mantis Vision announced the closing of its Series D round of $55 million, with a total investment of $84 million to date.  The new funds will serve to extend the company’s technological edge, accelerate Mantis Vision’s go-to-market strategy, expand its international workforce and support external growth opportunities.  The Series D investment was led by Luenmei Quantum Co., a new investor in Mantis Vision, and Samsung Catalyst Fund, an existing shareholder of the company.  Mantis Vision and Luenmei Quantum also announced the formation of a new joint venture, MantisVision Technologies, to further strengthen Mantis Vision’s position and growth in the Greater China Market.

Under this new round of funding, Mantis Vision will be able to extend its R&D efforts by advancing today’s state of conventional 3D technology to new heights with its 3D sensing technology.  Mantis Vision is planning to double its global workforce with an additional 140 employees in Israel, U.S., China and Slovak Republic by the end of 2020.  As part of the latest series funding,  Mantis Vision will expand its pool of talent engineers for advanced R&D algorithmic research in computer vision and deep learning,  advanced optics experts, mobile camera engineers, 3D apps developers and 3D Volumetric studio experts among other open positions in program management and business development.

Petah Tikva’s Mantis Vision puts 3D image and video capturing into the hands of every consumer, application developer, game designer and industry professional.  Turning people, objects and places into high resolution 3D content, in real-time, has never been easier.  (Mantis Vision 11.07)

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2.7  Toka Launches to Help Strengthen Countries’ Cyber Defenses

Toka has raised $12.5 million in seed funding to help governmental agencies tasked with keeping their citizens and government institutions safe transform their cyber-defenses.  Toka will design and help these agencies build a unique cyber strategy and suite of software products.  The investors include: Andreessen Horowitz, Dell Technologies Capital, Entre Capital, Launch Capital and Ray Rothrock, CEO of cyber analytics firm RedSeal.

Toka will design, build, and manage a tailored ecosystem of cyber capabilities and software products for governmental, law enforcement, and security agencies tasked with keeping the digital landscape and their people safe.  By working across strategic, operational, and tactical levels — and with deep, hands-on technical experience — Toka can address the full breadth of its clients’ defensive cybersecurity needs, including developing new technologies when required.

Tel Aviv’s Toka is a cyber capacity-building company that helps design, build, and manage a tailored ecosystem of cyber capabilities and software products for governmental, law enforcement, and security agencies.  By working across the strategic, operational and tactical levels, and with deep, hands-on technical experience, Toka can address the full breadth of its clients’ cybersecurity needs, including developing new technologies when required.  (Toka 16.07)

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2.8  Radiflow Raises $18 Million Venture Round

Radiflow announced that the company has closed an $18 million investment round.  This investment round was led by Singapore’s ST Engineering Ventures, the corporate venture capital unit of ST Engineering.

Radiflow is experiencing strong demand for its industrial cybersecurity solutions across all critical infrastructure sectors and has more than doubled the sales of its threat detection tools and services over the past year.  Radiflow will use the investment proceeds to extend its sales network to support the growing market demand, strengthen its brand globally and continue developing its innovative solutions to meet evolving customer needs.  The investment and partnership enables ST Engineering to access Radiflow’s detection and prevention tools, which has been integrated with its Rail Command, Control and Communications (C3) Systems (SCADA) – in this instant the rail supervisory control and data acquisition (SCADA) system.  The combining of these two technologies has resulted in the development of the region’s first end-to-end cybersecurity solution for the rail transport industry

Tel Aviv’s Radiflow is a leading provider of cybersecurity solutions for ICS and SCADA networks in critical infrastructure, including tools for NERC CIP and EU NIS compliance.  Radiflow’s industrial cybersecurity solutions are protecting the operation technology networks of over 50 operators of critical infrastructure, including power generation, electricity supply, water facilities and others, in four continents around the world.  Radiflow’s Industrial Threat Detection System passively learns and maps an OT network, providing in-depth Visibility and situational awareness, and alerts in real-time for any anomalies in unexpected network behaviors.  (Radiflow 11.07)

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2.9  Photomyne Closes $5 Million A Round and Reaches 1 Million Monthly Active Users

Photomyne has reached new milestones of user acquisition and content generation through the app.  To date, Photomyne’s Photo Scanner (available on iOS, Android, and online) has been downloaded by 7 million people, 250,000 of which are paying subscribers.  The company’s service, which started as a photo scanning utility app for individual use, is turning into a unique integrated platform serving all family members, regardless of their primary technological device.  With a single tap of a button, anyone using the app can instantly create a family website showcasing the photos they scanned. It is the easiest, most satisfying way to celebrate and share precious life memories with others – family, high school friends, the local community or simply, the world.

Bnei Brak’s Photomyne facilitates the way people around the world save, share, and enjoy their life memories, by harnessing the power of Machine Learning/AI technology to bridge between the past, present, and future of one’s personal legacy. With its mobile application on iOS/Android and supporting cloud services, Photomyne aims to create the largest indexed photo collection of the pre-digital era through its easy to use photo scanning app.  (Photomyne 17.07)

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2.10  Orbit Wins $29.8 Million USAF Contract for KC-135 Audio Systems Sustainment

Orbit Communication Systems has been awarded a $29.8 million requirements contract for systems sustainment by the United States Air Force (USAF).  The five-year framework agreement includes upgrades and service for the several thousand ADAS units currently installed on USAF KC-135 aircraft, with staged delivery expected to begin in 2018 and end in 2023.  The upgrade, which is part of a massive USAF project to refurbish its fleet of tankers, calls for the front panels of the audio systems to be made water-resistant for improved operability and reliability under harsh flight conditions. Work will be performed by Orbit in its Deerfield Beach, Florida facility.

Orbit’s ADAS (Airborne Digital-controlled Audio System) was designed to meet the specific needs of advanced, large-crew mission aircraft. It integrates the routing and distribution of audio between crew members, maintenance personnel and technicians, with the cabin phone and recording systems.  Supporting 8 radios, 8 navaids and 8 warnings, ADAS delivers secure, reliable intercommunications in high-noise environments.

Netanya’s Orbit Communications Systems is wholly-focused on precision tracking-based communications – in the areas of satcom, telemetry and remote sensing – and provides an innovative solution for airborne audio management.  With certification by defense, government and commercial agencies, Orbit delivers tailor-made, turnkey solutions at sea, on land and in the air.  (Orbit 18.07)

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2.11  Maniv Mobility Raising $80 Million Second Auto-Tech VC Fund

Globes reported that venture capital firm Maniv Mobility is raising a new $80 million fund for investment in the sector, according to documents filed with the US Securities and Exchange Commission (SEC).  The fund is Maniv Mobility’s second after raising $40 million last year for investment in companies and ventures in the seed and A rounds.  One likely participant in the fund is believed to be Renault-Nissan-Mitsubishi, one of the world’s largest auto corporations.  The global company has set up a billion-dollar fund for global investments in auto-tech companies and technologies, which it announced last year.  The investment in Maniv Mobility’s fund will be one of the first direct investments by a major auto manufacturer in an Israeli venture capital fund.

Maniv Mobility, Israel’s first venture capital fund dedicated exclusively to the new mobility future, has deep connections throughout the global automotive industry, as well as in the policy and technology communities. Investing primarily in early-stage Israeli startups, we seek out ideas around automotive connectivity and data, autonomous vehicle technologies such as sensors and software, and novel business models.  (Globes 19.07)

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2.12  Proggio Investment Round to Disrupt the Project Management Market

Proggio announced a $2 million investment round led by Mangrove Capital Partners.  The fund will enable Proggio to take on traditional Gantt-based tools such as Microsoft Project and Smartsheets.  Proggio utilizes a unique project diagram called “Projectmap,” which enables building clear visual timeline with integrated team task management.  Proggio shifts the paradigm, focusing on people and on the way project teams intuitively operate together to drive a project to success.  The solution was introduced a year ago to the market, and customer interest has put Proggio on an accelerated growth path.  The company says it will utilize the funding to further develop its product market fit, accelerate development, and build its acquisition engine.

Since its Beta launch in 2017 and following its GA in 2018, Proggio has experienced significant customer growth and is managing thousands of projects worldwide.  Customers from enterprises across virtually every industry segment are using Proggio’s unique approach and accessing the platform’s latest innovations.  Proggio customers are making over 300,000 project changes monthly – a number projected to hit 1,000,000 by the end of 2018.

Founded in 2016, Kfar Saba’s Proggio is an innovative project management solution built for teams.  By providing clear project visuals, ensuring coordination, and keeping the team in focus, Proggio creates the dynamic of successful project teams for its users.  (Proggio 19.07)

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3.1  POSRocket Secures $1.5 Million in Funding

POSRocket, a Jordanian cloud-based POS systems startup, has announced $1.5 million in a funding round led by Algebra Ventures, with participation from KISP Ventures, Arzan VC, Financial Horizon Group, and two angel investors.  Founded in 2016, POSRocket develops cloud-based POS software for restaurants and retailers.  The software supports growing businesses by optimizing staffing, regulating inventory, generating sales reports, and allowing owners to remotely monitor all operations in real time.  POSRocket’s business and team did not go unnoticed by regional VCs and angel investors.  The company initially raised funds from Jabbar Internet Group and Jordan-based accelerator, Propellor Inc.  The company plans to use the acquired investment to continue its MENA-wide expansion.  (ArabNet 09.07)

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3.2  UAE’s Gulftainer Gets Approval to Run the Port of Wilmington

UAE-based Gulftainer has announced that the US Federal Government has completed a review of the agreement that grants the port operator the rights to operate and develop the Port of Wilmington in Delaware for 50 years.  Currently owned and operated by the Diamond State Port Corporation (DSPC), the Port of Wilmington is a fully serviced deep water port and marine terminal, located on 308 acres at the confluence of the Delaware and Christina Rivers.  The announcement follows an earlier preliminary agreement between Gulftainer and the State of Delaware to grant its subsidiary, GT USA Wilmington, the exclusive concession rights.  As part of the deal, Gulftainer said it is planning significant investments in developing the port’s cargo terminal capabilities to enhance its overall productivity.  In addition, the deal will include the construction of a new 1.2 million TEU container facility at DuPont’s former Edgemoor site that DSPC acquired in 2016.

Established in 1976, Gulftainer is a privately owned independent port management and 3PL logistics company based in Sharjah. In the UAE, Gulftainer operates three main ports on behalf of the Sharjah Port Authority – the Khorfakkan Container Terminal (KCT), Hamriyah Port and the Sharjah Container Terminal (SCT).  In the US, Gulftainer currently operates the Canaveral Cargo Terminal in Port Canaveral in Florida after winning a 35-year concession in 2015.  (AB 17.07)

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3.3  Jacobs Engineering Group Selected to Oversee Construction of UAE Rail Network

US-based Jacobs Engineering Group has been selected by Etihad Rail to deliver critical technical and program consulting services for the UAE’s largest national freight and passenger railway network.  Jacobs announced that it will deliver engineering and design services for the 900 km. network, review and provide critical oversight for the detailed designs to be prepared by a network of design and build contractors, and provide construction supervision for the entire project.  The project will be built in phases to link the principal centers of population and industry of the UAE and will form a vital part of the planned GCC railway network.

In January 2016, it was announced that Etihad Rail had suspended the tendering process for stage 2 of the UAE’s railway network as it reviewed the project investment.  At the time, Etihad Rail said in a statement that it was reviewing options for the timing and delivery of the project’s second phase.  Upon completion, the Etihad Rail network will span approximately 1,200km across the UAE, providing both freight and passenger services.

In May, French firm Egis was awarded a project management consultancy contract for the UAE’s railway network.  The company will assist Etihad Rail in developing stages 2 and 3.  The existing and currently operated network of 264km will be expanded between now and 2024 by over 600km in stage 2 and 250km in stage 3, it added.  (AB 14.07)

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3.4  Chinese Tourism to Dubai More Than Doubles Since 2014

The number of Chinese tourists to Dubai have more than doubled in the past four years, according to new figures released on the eve of a visit by President Xi Jinping.  Dubai Tourism reported growth of 119% in overnight Chinese visitors since 2014 and a year-on-year increase of 41.4% from 2016 to 2017.  Combined with a number of key agreements signed with major players in China, Dubai Tourism has confirmed its continued focus on its fourth top source market.  China closed the first five months of 2018 with a record 400,547 visitors and this growth is predicted to continue in 2018.

Earlier this year, Dubai Tourism signed an agreement with Huawei, one of China’s leading smartphone manufacturers, in January which preloads devices with both user-generated and official cinematographic content of Dubai.  In May, the agreement was expanded further, with Huawei Mobile Services agreeing to offer useful and accessible content about Dubai, in particular through the company’s newly-updated SkyTone travel and roaming apps.  Additional milestones include an MOU with Fliggy, Alibaba’s online travel platform, and strategic alliance with China’s mega internet conglomerate Tencent to elevate the positioning of Dubai as the preferred destination for Chinese travellers and to launch an audio guide feature on WeChat.  In addition through Dubai College of Tourism, an entity of Dubai Tourism, tour guide training in Mandarin has taken place with over 200 guides trained to date.  (AB 18.07)

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3.5  Emaar to Build MidEast’s Largest Chinatown in Dubai Creek Harbor

Emaar on 18 July announced a landmark development in Dubai that will further strengthen UAE-China relations, coinciding with the historic visit of President Xi Jinping to the UAE.  Emaar said it will develop the Middle East’s largest Chinatown within the retail district of Dubai Creek Harbor, its six-square kilometer mega-development.  The retail precinct will occupy a central location within Dubai Creek Harbor.  The company also announced that it will open three dedicated pavilions in China – Beijing, Shanghai and Guangzhou, all cities served by direct daily flights to Dubai on Emirates Airline.  The three offices will promote tourism, education, trading and investment between UAE and China.

Emaar’s new China-focused initiatives build on the strong Chinese investment in the UAE as well as the continued growth of Chinese visitors to the country, especially following the visa-on-arrival status granted to Chinese nationals by the UAE in 2016.  China is the fourth largest visitor source market for Dubai, with tourist and business traveler arrivals at 401,000 between 1 January and 31 May 2018, a growth of 9% over the same period in 2017.  (AB 18.07)

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3.6  US Hedge Fund Said to Enter Race to Buy Abraaj Assets

York Capital Management is the latest party to join the race to buy the asset-management platform of embattled Dubai private-equity firm Abraaj Group.  The New York-based firm is offering $45 million for the platform, including about $20 million in severance payments for staff.  Abraaj is currently under a court-supervised liquidation, and that liquidator would keep managing the assets in the funds. No final agreements have been reached and the deliberations may not lead to a deal, the people said.

A unit of Abu Dhabi Financial Group made a $55 million bid for the asset-management platform, challenging a rival offer from Cerberus Capital Management.  An earlier proposal from Tom Barrack’s Colony Capital was rejected by the liquidators, despite the firm making an offer for Abraaj’s limited-partnership stakes as well.

At its peak, Abraaj owned stakes in companies in most of the major emerging markets outside of China.  The collapse of Abraaj, once one of the developing world’s most influential investors, came months after some of its stakeholders began an investigation into mismanagement of money in its healthcare fund.  The 16-year-old buyout firm filed for a court-supervised restructuring last month.  (AB 18.07)

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3.7  Pica8 Expands in Middle East with Distribution Agreement with Dubai’s Distilogix

Palo Alto, California’s Pica8, a leading provider of advanced, open networking software, signed an agreement with Dubai-based VAD (value-added distributor) Distilogix that licenses them to sell Pica8’s PICOS® Linux-based network operating system (NOS) and PicaPilot white box switch automation and management software in the Middle East and Africa.  Distilogix specializes in bringing a variety of software-defined technologies to customers in the MEA region that are interested in breaking away from their decades-old expensive legacy networking architectures.

The agreement will allow Distilogix to sell PicaPilot and both the PICOS Enterprise Edition (which includes an unmodified Debian Linux kernel, OpenFlow Version 1.5 SDN, L2/L3 switching and routing features), Pica8’s industry-leading CrossFlow (a dual-control-plane technology that allows all switch ports in a network to be both L2/L3 and OpenFlow controlled at the same time), as well as the OpenFlow-only PICOS SDN Edition.  (Pica8 18.07)

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3.8  Filipino Retailer Jollibee Plans 25 UAE Stores by 2020

Jollibee, the Philippines-based fast food chain, has announced plans to expand across the UAE to reach 25 outlets in the country by 2020.  In line with its plans, the brand has opened its 12th store in Al Ain Mall and it is set to open two more outlets over the next quarter at Abu Dhabi’s Al Wahda Mall and Dubai’s Deira City Centre.  The company said that the UAE plays a significant role in the company’s regional development plan.  In an aim to further cater to the Gulf, Jollibee has also widened the scope of its menu options to ensure it satisfies the diverse palates of the UAE.

Jollibee said it has introduced new offerings that include the double patty beef burger, the spicy chicken burger and spicy chicken tenders, in addition to its regular serving of their flagship products Chickenjoy and Jolly spaghetti.  An area of growth for the fast food chain is the soon-to-be launched chatbot ordering under the brand name of Bee Talks.  Customers will be able to place their orders with the ease of a click via Jollibee’s Facebook Messenger or through their mobile browsers for home deliveries.

The expansion plan comes as the GCC food and beverage industry is expected to continue to grow at 7.1% annually, reaching $196 billion by 2021, according to MENA Research Partners.  Jollibee was launched in 2015 in the UAE, where it operates under Golden Bee restaurants.  The Filipino chain has 39 outlets in the GCC.  (AB 13.07)

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3.9  Tint World Franchise Opens its First Store in UAE Capital

Florida’s Tint World Automotive Styling Centers, a leading auto accessory and window tinting franchise, has entered the growing United Arab Emirates market with its first store in Dubai, owned and operated by entrepreneur and education advocate Khalil Hijazi.  The Dubai location marks the second store in the Arabian Gulf, with the first being in Saudi Arabia.  Tint World® is seeking franchise master partners to continue to develop Tint World® in the area, specifically in Bahrain, Kuwait, Oman and Qatar.

Tint World® Automotive Styling Centers™ offer sales and installation of auto accessories, mobile electronics, audio video equipment, security systems, custom wheels and tire packages, window tinting, vehicle wraps, paint protection films, detailing services, nano-ceramic coatings, maintenance and repair services, and more. Tint World® is also the leading provider of residential, commercial and marine computerized window tinting and security film services with locations throughout the U.S. and abroad, with franchise opportunities available worldwide.

Founded in 1982, Tint World has grown to become an award-winning franchised provider of automotive, residential, commercial and marine window tinting and security film services.  With Automotive Styling Centers in the U.S. and abroad, each franchise location houses approximately 20 profit centers, ranging from in-store accessory installations to off-site sales and installation of residential, commercial and marine window tinting and security films.  (Tint World 20.07)

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3.10  UAE Retail Giant Lulu to Invest $270 Million in Saudi Expansion by 2020

UAE hypermarket giant Lulu has announced plans to invest SR1 billion ($270 million) in Saudi Arabia by 2020.  The retailer said it will open another 15 hypermarkets in the next 18 months, of which five will open by the end of this year.  These include three hypermarkets in Riyadh and one each in Tabuk and Dammam.  Lulu chairman Yusuff Ali made the comments at the opening of the company’s 150th hypermarket in the Saudi capital.  The hypermarket, which is Lulu’s biggest of 13 in the country, is located in the newly launched Atyaf Mall in Yarmouk, and is spread across 220,000 square feet.  Lulu currently employs more than 3,000 Saudi nationals, with the goal to give employment to 6,000 Saudi nationals by the end of 2020.  Lulu is also investing another SR200 million in setting up a 1 million sq. ft. wholesale and logistics center in King Abdulla Economic City (KAEC) to support the retail expansion help in ensuring food security.  (AB 22.07)

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4.1  Egyptian President Sisi Inaugurates Largest Wind Farm in the World

Egypt’s President Abdel-Fattah El-Sisi inaugurated a number of new electricity mega projects in the country, including the Gabal El-Zeit wind farm, which is considered the largest in the world, according to the Egyptian presidency.  Launched in 2015 in the Red Sea governorate, the Gabal El-Zeit wind farm will have a total of 300 wind turbines with an overall capacity of 580 MW.  Sisi will also inaugurate three electricity power plants constructed by German company Siemens in the new administrative capital, Beni Sweif and Burlus.  The new power plants will produce 14.4 gigawatts, boosting Egypt’s power generation by 50%.

Siemens signed an €8 billion ($9.4 billion) deal in June 2017 to supply gas and wind power plants to Egypt.  Egypt also said earlier this month that construction on its first nuclear power plant, which will be built by Russia, will begin in the next two to two-and-a-half years.  The 4,800 MW plant at Dabaa in should be up and running by 2026, according to a spokesman for the energy and electricity ministry.  Egypt has set a goal of obtaining 20% of its power from renewable resources by 2022, and 42% of its electricity from renewables by 2025.  (Ahram Online 23.07)

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4.2  Clear Blue’s Smart Off-Grid System Powers 800 Solar/Wind Street Lights in Morocco

IDSUD Energies, a renewable energy company, has installed Smart Off-Grid technology from Toronto’s Clear Blue Technologies International to power 800 IDSUD Energies solar and wind powered street lights (NHEOLIGHT) for Logintek Morocco.  Logintek Morocco, a project by Zinafrik Development Group, is the first national private network of integrated logistics and industrial cities, designed as transit hubs for Morocco and to the rest of Africa.  This is phase 1 of a multi-phase project expected to total almost 5,000 Smart Off-Grid streetlights.

With extensive management and control capabilities, automated monitoring and alerts, proactive weather forecasting, and the ability to optimize systems remotely, Smart Off-Grid technology keeps off-grid systems running, prevents outages, and enables remote maintenance and troubleshooting when needed to quickly resolve any issues.  The result is unmatched reliability, long-lasting system performance, and a reduction of up to 80% in installation and maintenance costs.  Using Smart Off-Grid, Clear Blue will manage, control, and maintain all 800 of IDSUD’s solar and wind-powered lighting systems.

IDSUD Energies engages in the research and development of small 3D proximity wind turbines and outdoor lighting solutions to transform wind and solar energies into public lighting. It also offers self-reliant wind powered lampposts; telemetering solutions that simplify.  (IDSUD 24.07)

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5.1  Lebanon’s Trade Deficit Declined to $6.64 Billion in May 2018

Lebanon’s trade deficit dropped by 1.1% year on year (y-o-y) hitting $6.64B by May 2018 as an outcome of a 9.7% annual increase in exports to $1.32B, which outweighed the 0.5% increase in imports touching $7.96B.  The leading imported goods to Lebanon were Mineral Products (17.17% of total imports) which decreased by 15.65% y-o-y to $1.36B on the back of a 45.17% y-o-y decline in the imported quantity of Mineral Fuels to 2.27M tons by May 2018.

It is worthy to note that the lower oil imports for the period could have been justified by the large amounts imported in 2017 (totaling 16M tons) prior to the increase of the VAT rate to 11%, effective January 2018.  However, the customs data on oil imports for 2017 and 2016 were revised, such that the total volume of mineral fuels in 2017 now stands at 9.08M tons instead of 16M tons and 9.24M tons for 2016 instead of 7.68M tons.

In their turn, Products of Chemical or Allied Industries (11.84% of total imports) increased by 8.31% y-o-y to $942.76M, followed by Machinery & Electrical instruments (11.39% of total imports) which increased by 15.56% y-o-y to $907.25M. As for Vehicles and Transport Equipment (8.47% of total imports), they decreased by 10.33% y-o-y to $674.22M.

By May, the 3 main import destinations were China, Italy and Greece with shares of 11%, 9% and 8%, respectively.

In terms of exported goods, Pearls, Precious stones and Metals (grasping 25.96% of total exports) rose by a yearly 22.98%, reaching $343.96M by May 2018.  This increase may be attributed to the 12.5% y-o-y uptick recorded in the volume of Pearls, Precious stones and Metals to 27 tons over the same period.  Moreover, Base Metals and Article of Base Metal (13.86% of total exports) increased by 37.37% y-o-y to $183.66M.  This is mainly justified by the 12% increase in steel volume to 192,472 tons in 2018 and to the 27% average price rise to $796.93 in 2018, contributing to a 50% hike in steel value which stroked $60.60M in 2018.  However, Prepared Foodstuffs, Beverages and Tobacco (13.81% of total exports) decreased by 10.10% y-o-y to $182.91M, this was mainly due to the weakened economy in the UAE and Saudi Arabia.  Lebanon’s top export destinations were UAE, South Africa, Saudi Arabia and Switzerland with contributions of 13%, 10%, 7% and 7%, respectively.  (BLOM 15.07)

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5.2  Jordan Sees Annual 5.1% Inflation Increase for June 2018

The monthly report on inflation in Jordan issued by the Department of Statistics indicates that the Consumer Price Average (Inflation) reached 125.1 in June 2018 against 119.0 during June 2017, marking a 5.1% increase.  The main commodities groups, which contributed to this increase, were Transport 1.59%, Cereals and its Products 1.09%, Tobacco and cigarettes 0.62%, Fuel and lighting 0.41% and Rents 0.40%.  Meanwhile, the main commodities groups which witnessed a decrease in their prices were Meats and Poultry 0.21%, Clothes 0.06%, Foot wear 0.01% and Spices and flavor enhancers and other foods 0.01%.

The Consumer Price Average for June 2018 has increased by 0.1% compared with the previous month (May) 2018.  The main commodities groups which contributed to this increase were Rents 0.46%, Clothes 0.14%, Personal Care 0.06%, Fruits and Nuts 0.02% and Foot Wear 0.02%.  Meanwhile, the main groups which witnessed a decrease in their prices were Meat and poultry 0.32%, Vegetables, Dried and Canned Legumes 0.27%, drinks and beverage 0.03% and Cereals & its products 0.01%.  (DoS 15.07)

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5.3  IMF Says 17% of Jordan’s GDP in Shadow Economy

The shadow economy in Jordan accounted for 17.38% of the GDP between 1991 and 2015, according to the International Monetary Fund (IMF).  In a paper titled “Shadow Economies around the World”, the IMF showed that the Kingdom’s shadow economy’s part in the GDP ranged between 13.44% and 21.12% during the 20 years targeted in the study.  The paper, which covered 158 countries, also showed that the ratio of the informal economy to the GDP took a downtrend starting from 2004.

However, the real volume of the shadow economy might be higher than that shown in the study in some countries like Jordan, Lebanon and Turkey as the impact of hosting refugees was not measured.

At the Arab countries level, the study indicated that the shadow economy in Qatar reached 15.93%, 16.56 in Saudi Arabia and 19.58 in Syria.  The ratio was found to be significantly higher in Egypt (34.24%), Morocco (34.1%), Lebanon (31.58%), Algeria (30.86%) and the UAE, where it reached 26.54% in the same time span.  (JT 14.07)

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►►Arabian Gulf

5.4  EU & US Complain over GCC Duty on Energy and Carbonated Drinks

The European Union, Switzerland and the United States have complained at the World Trade Organization about an excise tax imposed by three Gulf states on carbonated and energy drinks.  Concerns were raised earlier this month about the 100% excise duty on energy drinks and a 50% duty on other carbonated drinks.  The EU, Switzerland and US claimed that there is no rationale for applying duties on these products and no indication that the measures would be modified to make them consistent with the WTO.

GCC countries, particularly Saudi Arabia, the UAE and Bahrain, were asked to explain the rationale for targeting only carbonated soft drinks, with and without sugar, as well as energy drinks and why excise tax was applied instead of a tax-based on the volume or quantity of the relevant ingredients.  On behalf of the three GCC members, Saudi Arabia said that the tax aims to protect human health and the environment, and is not intended to protect the local industry.  The tax was introduced in 2017 and aims to promote healthy lifestyles in countries where there are high rates of diabetes and obesity.

The Gulf’s soft drink market, which also includes Qatar, Kuwait, and Oman, was worth $8.4 billion last year, according to market researchers Euromonitor.  The tax would hit brands such as Coca-Cola, Pepsi and Red Bull.  (AB 18.07)

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5.5  Higher Crude Prices & Output Hike to Boost UAE Economic Growth

The Institute of International Finance (IIF) has raised the projected UAE real GDP growth from 2.1% to 2.4% for 2018 and maintained 2.7% forecast for the next year.  Similarly, it increased Saudi Arabia’s GDP growth projection for this year to 2.7%, an increase of 0.4% from its earlier forecast. Overall, it sees the GCC’s projected growth rate of 2.5% for 2018 and 2.9% for the next year.  Fiscal deficits will narrow as oil earnings climb, which will more than offset the high levels of public spending – an average increase of 13% for the GCC in 2018.

Opec members recently agreed to hike output by one million barrels per day amidst rising global crude prices.  The GCC countries – namely Saudi Arabia, the UAE and Kuwait – would the biggest beneficiaries of this hike output as they have spare capacities.  These GCC countries increasing their output above their Opec quota levels in H2/18, supporting real GDP growth in their oil sectors.  Moreover, oil revenue will be supported by oil prices remaining high as the overall November 2016 output agreement remains intact.  The IIF analysts expect Brent prices to average $72 per barrel in 2018 and $65 in 2019.

The UAE earlier this month said it would increase production by 0.2 million barrels per day to 3.5m bpd by the end of 2018 to help meet any oil shortage and will also adhere to the conformity level.  Moreover, the UAE has also announced a host of new measures such as Dh50 billion stimulus by Abu Dhabi, reduction in certain fees by the government and the free zones across the country.  (KT 16.07)

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5.6  UAE Space Agency Signs Agreement with NASA on Space Exploration

The UAE Space Agency has signed a letter of intent with the National Aeronautics and Space Administration (NASA) that covers cooperation in the exploration of space and the UAE’s astronaut program.  The agreement was signed at the Farnborough International Airshow, and was signed by the director-general of the UAE Space Agency a NASA administrator.  The signing comes as the UAE’s space sector enters a new phase of activities, with the UAE Astronaut Program having recently announced the selection of nine candidates who will undergo a period of assessment and training.  Following the selection of the final team of astronauts, the first Emirati astronaut is scheduled to launch and arrive at the International Space Station in April 2019.  (AB 22.07)

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5.7  IMF Raises Saudi Growth Forecast on Higher Oil Prices

On 16 July, the International Monetary Fund raised its growth forecast for the world’s top crude exporter Saudi Arabia, citing higher oil prices.  In its World Economic Outlook update, the IMF said the Saudi economy – which contracted by 0.9% last year — would grow by 1.9% in 2018, up 0.2%age points from its April projections.  This is the third time since October that the IMF has raised its growth forecasts for the kingdom, reflecting soaring oil revenues which make up more than 70% of Saudi income.  However, it maintained its Saudi growth projections for 2019 at 1.9% on predictions that oil prices would moderate.

Oil prices have more than doubled since early 2016, when major producers struck a deal to cut output.  Last month, they agreed to boost output again to compensate for key supply disruptions in Venezuela and Libya, and in a bid to ease prices that have hit $80 a barrel.

Riyadh-based Jadwa Investment estimated Saudi Arabia would boost its oil output to 10.3 million barrels per day for 2018, up from 9.9 million bpd for the first six months.  To achieve that, the kingdom must pump around 10.6 million bpd until the end of 2018.  This will sharply cut Saudi Arabia’s budget deficit to around $30 billion (26 billion euros) from the projected $52 billion, Jadwa said in a report.  Riyadh has posted a budget deficit for the past four consecutive years, borrowing from domestic and international markets and hiking fuel and power prices to finance the shortfall.  It also introduced a 5% value-added tax at the start of 2018.  Since 2014, Saudi budget deficits have totaled $260 billion.  (Various 16.07)

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5.8  Saudi Construction Sector Hardest Hit by Expat Exodus

Saudi Arabia’s construction sector was hardest hit by an outflow of expat workers during the first three months of 2018, according to new research.  Jadwa Investment’s latest update on the Saudi labor market said the largest number of foreign workers leaving the Gulf kingdom were unskilled and on low wages.  It said the number of foreigners leaving the market in Q1/18 was not equally met by the number of Saudis hired, probably due to the wage gap between Saudis and expats.  Overall, Saudi Arabia’s inched up to 12.9% in the first three months of 2018, according to official figures from the General Authority for Statistics.

During Q1/18, the labor market saw the implementation of expat levies, which raised expat labor costs, six months after the implementation of expat dependent fees.  The total number of foreigners in the Saudi labor market has declined by around 796,000 since the start of 2017, with about 221,000 leaving the market during Q1, Jadwa said.  At the same time, a new wave of Saudization was announced, by enforcing Saudi employment in 12 retail sectors by September.  (AB 22.07)

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►►North Africa

5.9  Egypt’s Parliament Approves Law Creating Sovereign Wealth Fund

Egypt’s House of Representatives on 16 July passed a law presented by the government to set up a sovereign wealth fund to manage state companies.  According to the new law, the EGP 200 billion fund is named the Egypt Fund and will be headquartered in Cairo.  Finance Minister Maeit said that the draft law was presented to parliament as an answer to the house’s request to use Egypt’s misused sources of wealth in the best way.  Speaker of parliament Abdel Aal also stated that no sovereign wealth fund had ever failed and that sovereign wealth funds had two types, which one was for natural sources of wealth while the other was to attract investments.  The fund will focus on fields like petrochemicals, mining, tourism and pharmaceutical industries.  (Ahram Online 16.07)

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5.10  Libya’s Largest Offshore Gas Field Comes Onstream

Libya’s National Oil Corporation (NOC) and Eni announce that Mellitah Oil & Gas, an Eni and NOC joint venture company (50/50), has started production in the first well of the offshore Bahr Essalam Phase 2 project.  This comes just three years after the final investment decision.  Two further wells will begin production within a week. An additional seven wells will come onstream by October 2018.

Phase 2 of the project completes the development of the largest offshore producing gas field in Libya, increasing production by 400 million cubic feet of standard gas per day (MMSCFD).  Phase 2 will complete between September and October, bringing total field production to 1,100 MMSCFD.  Bahr Essalam, located about 120 kilometers northwest of Tripoli, contains over 260 billion cubic meters of gas. This is delivered through the Sabratha platform to the Mellitah onshore treatment plant before principally being used to supply the national network.

Eni has been present in Libya since 1959, where it currently produces around 350,000 barrels of oil per day.  (National Oil Corporation 12.07)

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5.11  MENA Youth and Women Most at Risk from Job Crisis

The International Labor Organization (ILO) ranks North Africa as having the worst regional unemployment rate in the world, with women and youth especially at risk.  The ILO states that in 2018, North Africa will remain at a steady 8.7 million.  It also mentions that five million Middle Easterners will face unemployment and one-third of those unemployed will be women.  People aged 15 to 30 in the Middle East and North Africa make up 60% of the region’s entire population, according to IMF.

Saudi Arabia, which is the Middle East’s largest economy and nineteenth overall in the world according to GDP, has an estimated youth unemployment rate of 32.6% by the ILO.  The IMF reports that the unemployment rate for young women is 62%.  The Middle East and North Africa’s gender gap is triple the size of other developing economies in the world; women are three times less likely to be working than men.

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5.12  Morocco’s Trade Deficit Grows as Foreign Investment Plunges

Morocco’s trade deficit hit MAD 100.832 billion in the first six months of 2018, representing an increase of 7.8% compared to the same period in 2017.  Morocco’s trade deficit of was estimated at MAD 93.507 billion in the first six months of 2017.  Morocco’s imports increased by 9.9% to reach MAD 240.974 billion and exports saw an increase of 11.4%.  .

Equipment imports, which rose 10.8%, led to the growth of Morocco’s trade deficit.  Consumer goods imports increased by 8.6%, while energy imports increased by 15.7%.  There was also a 9.5% surge in food imports, reaching MAD 25.541 billion.

The automotive industry led the list of increases in Morocco’s exports with an increase of 19.1%.  The automotive sector was followed by agriculture and agri-food exports, with a 3.9% increase.  Phosphates and derivatives exports increased by 16.5% to MAD 24.919 billion.

Tourism, one of the pillars of Morocco’s economy, increased by 15.5%.  A year earlier tourism receipts fell by 5.8%, according to the foreign exchange regulator.  There was an increase of 8.5% in remittances from Moroccan expats in the first six months of 2018 against 0.2% in the same period of 2017.  Despite many multinational companies operating in Morocco, foreign direct investments (FDI) declined by 33.1% against a rise of 24% in 2017.  (MWN 17.07)

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5.13  Morocco Touts Economic Zones for Aerospace Investment

Morocco has achieved significant growth in the aeronautical sector since attending its first Farnborough Airshow in 2010.  Morocco’s Investment Development Agency (AMDI) will attend Farnborough Airshow to present the advantages Morocco has as a manufacturing destination for the aerospace industry.

Morocco has been successful in touting its inexpensive labor force and political stability to motivate international investments.  China, more than other countries, has benefited from Morocco’s advantages of investment in various sectors.  In an April 2017 statement, the AMDI expected “the arrival of 200 Chinese companies operating in a variety of areas including the manufacturing of cars, the aeronautics industry, aviation replacement parts, electronic information, textiles, the manufacturing of machines, and many more.  Total investment by companies in the [free economic] zone after 10 years is expected to reach $10 billion.”  Since the aviation sector is developing, especially in the manufacture of ancillary and spare parts, Morocco could be an attractive destination for companies seeking to invest in the aerospace industry.

In addition to more than 110 international aeronautical and aerospace companies operating in Morocco, it has nearly 11,500 aviation professionals, of whom 50% are women.  Morocco’s aerospace industry plans to double its capacity and number of operators and create 23,000 new jobs by 2020.  The Casablanca Free Zone in Nouaceur is a designated industrial integrated platform with special support for investors in the aerospace sector.  (ANDI 18.07)

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5.14  Unemployment Rate Rises in Morocco

In Morocco, the unemployment rate rose from 10.2 to 10.5% from January 2018 to March 2018.  The highest rates of unemployment in Morocco are held by women and young people.  Unemployment rates for women stand at 14.1% and the rates for young people, aged 15 to 24, are estimated at 35.1% by the ILO.  Morocco’s youth makes up about 17% of the country’s entire population yet stands as the front runners for the rate of unemployment.

From 2017 to 2018 in Morocco, the estimated number of working-age people set to join the labor-force was 245,000.  A recent study reported Morocco would have to add 115,000 additional jobs each year as well as maintain its current opportunities to just remain at only 47% of the current population in the workforce.

The Middle East and North Africa need workforce opportunities to grow, or else by 2030, unemployment levels may reach 14%.  The most common reasoning for an increase in unemployment is rapid population growth combined with only a steady or slow creation of jobs.  By 2020, Morocco is projected to grow by another one million people. If the nation does not want unemployment rates to rise, it will have to create jobs for its people at an expeditious rate.  (MWN 16.07)

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6.1  Turkey’s Unemployment Rate Falls to Single Digits in April

Turkey’s unemployment rate fell to 9.6% in April, dropping 0.9% year-on-year, the country’s statistical authority announced on July 16.  The unemployment rate was 10.1% in March.  Thus, the country’s unemployment rate declined to single digits again for the first time since May 2016.

Over the past five years, the highest unemployment rate was 13% in January 2017, while the lowest was seen in June 2013 with 8.1%.  Data from the Turkish Statistics Institute (TUIK) also showed on 16 July that the seasonally adjusted unemployment rate was 10.3% in April with a 0.4% increase.  The number of unemployed persons aged 15 years and over declined by 201,000 on a yearly basis in April, amounting to 3.09 million in April.  TUIK also noted the number of employed people rose by 850,000 to around 29 million over the same period, taking the employment rate to 47.9% with a 0.7% annual increase.

According to the distribution of employment by sector, 18.3% was employed in agriculture, 19.5% was in industry, 7.4% was in construction and 54.8% was in services, TUIK data showed.  The labor force participation rate (LFPR) was 52.2%, a 0.3-percentage point annual rise, while the number of people in the labor force totaled nearly 32.1 million – rising 650,000.  Official figures showed the LFPR for males was 72.4% with a 0.1% increase and 34% for females with an annual hike of 0.6-percentage point.  The TUIK also reported that the rate of unregistered employment – people working without social security related to their principal occupation – was 33.3% in April, marking a 0.6% decrease year-on-year.  (TUIK 16.07)

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6.2  Turkey Establishes Halal Accreditation Agency

Turkey has established a new halal certification body, the Halal Accreditation Agency (HAK).  The HAK, established with a presidential decree, will strengthen Turkey’s central position in the field of halal certification and accreditation.  It will allow the country to be a gold standard in terms of rulemaking, take steps moving forward and capitalizing on the growing global halal market.  The agency, in the form of a public entity, will be responsible for accrediting halal-compliance evaluation institutions and ensure their operations are in compliance with national and international standards.  HAK will also operate to ensure the acknowledgment of the documents prepared by the halal-compliance evaluation institutions on national and international platforms.

Operating under the Trade Ministry, it will be the only institution that would provide halal accreditation services in Turkey.  The agency will also offer halal accreditation services for halal-compliance auditing firms in and outside Turkey, as well as determine and implement benchmark and measures regarding halal accreditation.  The agency will represent Turkey at international and regional accreditation associations and organizations. It will also take part in their boards or serve as the center of such institutions.

In 2010, Turkey took some important steps regarding halal certification within the framework of the Organization of Islamic Cooperation (OIC).  Regulations, including the Halal Food Standard and the Halal Accreditation Standard, were approved by the OIC, leading to the establishment of the Standards and Metrology Institute for Islamic Countries (SMIIC), which is headquartered in Turkey.  It currently has 35 members.  Global trade in halal products and services is currently valued at around $3.9 trillion.  (Daily Sabah 17.07)

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6.3  Cyprus’ June Harmonized Inflation Reaches 1.7%

The harmonized consumer price index rose in June 1.7% compared to the respective month of 2017 mainly on higher energy prices, Cystat announced.  Energy prices rose last month an annual 9.8%.  Prices for food, alcoholic beverages and tobacco rose 2.3% while services became 1.5% more affordable.  Prices for non-fuel industrial products fell last month 1.3%.  In the first six months of the year, the harmonized inflation was 0%, Cystat said.  (Cystat 18.07)

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6.4  Cyprus Sets New Record in Tourist Arrivals

More than 1.6 million tourists visited Cyprus in the six months to June, the largest number ever for the first half of the year, Cystat said on 17 July.  Tourist arrivals in January-June rose 12.4% to 1.64 million from 1.46 million in the same period last year.  An influx of tourists from main market Britain and an upswing from Sweden helped Cyprus mark another record as arrivals in June broke the 500,000 barrier.  Arrivals reached 511,073 in June, an increase of 8.2% from last year’s 472,450.  However, the statistical department noted a 5.1% drop in the number of Russian tourists, as well as a 15.1% decrease in arrivals from Israel and an 11.3% decline from Germany.  Year-on-year tourist arrivals from number one market the United Kingdom rose by 9.9% in June to 164,477, while there was a 20.2% increase in tourists from Sweden.  Sweden has now become the island’s third largest tourist market, with Russia still holding second place.

Industry officials argue that arrivals from Russia are down due to fluctuations of the ruble and the renewed popularity of Turkey — a destination made more attractive by a weak Turkish lira.  The tourism boom has helped Cyprus return to growth following a €10-billion bailout in March 2013 to rescue its crumbling economy and insolvent banks.  Income from tourism now accounts for about 15% of the eastern Mediterranean island’s gross domestic product and is credited with underpinning a quick recovery.  A record 3.65 million tourists took holidays in Cyprus last year, spending an unprecedented €2.6 billion.  (Cystat 17.07)

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6.5  Cyprus & Israel Talk Fire and Water

Israel and Cyprus agreed to develop further their cooperation in water management and firefighting, two areas in which both countries face similar challenges.  Cypriot Agriculture Minister Kadis met with the Ambassador of Israel Revel in Nicosia, where the two men agreed to plan for a Cypriot delegation to visit Israel in an effort to enhance cooperation in water management.  Kadis is also expected to visit Israel in order to exchange views on agricultural cooperation matters, following an invitation extended to him by his Israeli counterpart.  Lately planes from Greece and Israel have been landing in the Republic of Cyprus as a precaution or to take part in aerial firefighting, with several of the fires being blamed on human factor and the success of most operations typically judged in the very early stages of a fire breaking out.  (CNA 12.07)

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6.6  S&P Raises Outlook on Greece, Affirms Ratings

S&P Global Ratings said on 20 July that it raised its outlook on Greece to positive from stable while affirming its B-plus/B ratings.  The outlook reflects a potential upgrade if Greek authorities were to boost competition in product markets, strengthen property rights, ease bankruptcy procedures and improve the enforcement of contracts, S&P said.

The ratings agency said it sees an enhanced policy stability supporting Greek banks and the economy, adding that the country’s growth projections will improve, driven by private investment in tourism and logistics due to large public infrastructure projects.  Real growth in gross domestic product is projected at 2% to 2.5% over the next three years, S&P said.

Last month, S&P raised its long-term debt rating on Greece, based on reduced debt risks due to the creation of cash buffers and the extension of maturity on its debts.  Eurogroup Chairman Mario Centeno said recently that Eurozone countries are set to disburse a final €15 billion bailout loan to Greece in August.  Greece has been living primarily on money borrowed from Eurozone governments in three bailouts since 2010, when it lost market access because of a ballooning budget deficit, huge public debt and an inefficient economy and welfare system.  (Reuters 21.07)

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6.7  Greece Unlikely to Pay Off Debts to Suppliers by the End of August

The Greek state’s overdue arrears to its suppliers remain at particularly high levels even though they posted a slight decline over the first five months of the year.  The state’s obligations amounted to €2.974 billion in the January – May period, compared to €3.364 billion at the end of April, a €390 million decline.  Crucially, the arrears are supposed to drop to zero by the end of August, according to the deal between Athens and its creditors.

Attaining that target is seen as almost impossible, not only because the state does not have the necessary resources to do so, but also because it finds it hard to channel the cash into the market.  The data released by the State General Accounting Office for May put the expired debts of ministries, social security funds, hospitals, local authorities and other public entities to suppliers at €2.38 billion.  Pending tax rebates were at €589 million.  (eKathimerini 23.07)

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6.8  Greek Employment Rose in First Quarter of 2018

The employment rate in Greece grew to 54.1% of the working population aged 15-64 in the first quarter of 2018, from 53.8% in the fourth quarter of 2017 and 52.8% a year earlier, the Organisation for Economic Cooperation and Development (OECD) has said in a report.  The employment rate among men was 63.8% in the first quarter of 2018, from 63.3% in the fourth quarter of 2017 and 61.8% in the first quarter of 2017, while among women it was 44.5%, unchanged from the fourth quarter of 2017, and 44.0% in the first quarter of 2017.  The employment rate in the OECD member-states grew 0.2% to 68.2% in the first quarter, with 28 out of the 36 members of the OECD recording an increase.  In the Eurozone, the employment rate rose 0.1% to 66.9%.  (AMNA 17.07)

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7.1  Third Chinese City to Open Economic Mission in Israel

Next month, Xiamen, a port city on China’s southeast coast, will open a trade mission to Israel, becoming the third Chinese city to do so this year.  The other two are Beijing and Dongguan, an industrial center in southern China.  All three initiatives are designed to help facilitate business ties between Chinese companies and Israeli entrepreneurs offering technological innovation.

Traditionally, Israeli businesses have looked to strike partnerships and market products in the U.S. and Europe where linguistic and cultural barriers are minimal compared to China.  But a global realignment of economic and political interests and the growing reputation of Israel’s tech sector have combined to open up new opportunities in East Asia.  The scale of Chinese cities—even modestly sized ones like Xiamen have millions of residents – means that that country’s municipal governments are large enough to provide the foreign commercial aid usually supplied by the embassies of national governments.

Starting in August, representatives of the Xiamen Torch Hi-Tech Development Zone will scout for technological innovation for the Chinese city’s largest companies from an office of Tel Aviv.  (Calcalist 23.07)

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7.2  Jordan’s Birth Rate has Fallen Significantly Since 1990’s

The average birth rate per woman in Jordan dropped from 5.6 births in 1990 to 2.7 in 2018, the Department of Statistics’ (DoS) 2017-2018 health and population survey showed.  The DoS indicated that the rate increased from 3.7 in 2002 to 3.5 in 2012 for each woman aged between 15 and 45 years old.  According to the 2015 national census figures, the average Jordanian family comprises 4.8 members.

Regarding nationalities, Syrian women give birth to 4.7 children on average, compared with 2.6 for Jordanian women and 1.9 for other nationalities.

As for birth by teenagers between 15 and 19 years old, the results showed that 5% of these young women gave birth at least twice, 3% already had one child and 2% were pregnant for the first time during the implementation of the survey.  Mafraq also topped the Kingdom’s governorates in the number of children by teenage mothers, which reached 13%, while Syrian women recorded the highest rate of teen births (28%) compared to Jordanians and other nationalities.

The mortality rate of children below five amounted to 19 for every 1,000 children during the five years that preceded the survey, most of which occurred during the first year.  The figure is way below the international rate.  According to UNICEF, the global under-five mortality rate dropped from 93 deaths per 1,000 live births in 1990 to 41 in 2016.  The DoS’ data indicated that 98% of pregnant women received healthcare from a doctor, nurse or midwife during 2013-2017 and that 86% of children between 12 and 32 months old received basic vaccinations.

The survey is the seventh on demographics and health implemented in the Kingdom.  It aimed to collect data on birth and death rates, family planning, and the health and nutrition of mothers and children in urban and rural areas, which noted that more detailed statistics will be published in 2019.  (DoS 16.07)

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7.3  Deal Signed to Implement New Health Policy in Dubai Schools

Dubai Health Authority (DHA) and the Knowledge and Human Development Authority (KHDA) have signed an agreement to help implement a new Dubai school health policy.  DHA has developed the 5 year policy after extensive consultation with stakeholders with an aim to create a safe, healthy and motivating school environment for pupils.  The agreement with KHDA will support the implementation of the policy, including screenings and school health clinics.

KHDA will cooperate with the DHA to implement the policy across private schools in Dubai. Some of the areas of collaboration include encouraging schools to increase physical activity to 150 minutes a week.  DHA will train healthcare professionals on its comprehensive screening program that includes vision, dental, obesity and mental health screening and will also train school health professionals and academicians on early detection of children with developmental and behavioral issues.  Health chiefs will also collaborate with KHDA to ensure that all schools in Dubai follow the same standards for health clinic set up.  (AB 18.07)

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7.4  Egypt’s Population Officially Numbers 96.3 Million at Beginning of 2018

CAPMAS announced on 11 July that Egypt`s population increased to reach 96.3 million at the beginning of 2018.  The CAPMAS added that the population increased from 72.8 million in 2006 (last census) to reach 76.1 million at the beginning of 2009.  It then rose at the beginning of 2017 to reach about 94.8 million, before it increased again by 1.5 million in the beginning of 2018 to reach 96.3 million.

Cairo is considered the largest governorate in terms of population number, at 9.7 million, followed by Giza governorate with about 8.8 million in January 2018.  The CAPMAS explained that the Egyptian society is considered a young one, as those less than 15 years old constitute one-third of the population by 34.2%, while the elderly (65 and above) constituted 3.9% at the beginning of 2018.  Meanwhile, the CAPMAS stated that the percentage of urban population was 42.6% and rural population was 57.4%.  (CAPMAS 11.07)

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 8.1  PlantArcBio Completes $3 Million Funding & Agreement with the University of Wisconsin

PlantArcBio recently completed a funding round that raised $3 million from private investors and Israel Innovation Authority grants.  PlantArcBio signed an agreement with the University of Wisconsin-Madison, under which genes that improve drought tolerance will be tested by the university’s scientists in soybean greenhouses and fields in the United States.  The genes were discovered by the company using its patented platform.

The newly discovered genes have shown excellent results in model plants in greenhouses, improving their drought tolerance by tens of percentages.  Trait development in plants, like drug development, includes three experiment stages: experiments in model plants (plants that are relatively easy to grow and have short life cycles); experiments in a target plant (corn, soybeans, etc.); and extensive field trials in the target plant.  After successfully completing the first stage, PlantArcBio has moved on to the second stage.  Based on the results of the soybean trials, PlantArcBio will be able to accelerate the commercialization of the genes, which will be sold to seed companies for use in soybean, corn, canola and other crops worldwide.

Climate change in general, and drought specifically, is one of the major causes of crop yield reduction worldwide.  A UW-Madison study estimated that U.S. soybean farmers alone have lost $11 billion over the past 20 years due to changes in weather patterns.  After averaging nationwide data, researchers found that U.S. soybean yields fell by around 2.4% for every one-degree rise in temperature.  Activities associated with the soybean transformation and testing will be led by UW-Madison’s Wisconsin Crop Innovation Center (WCIC), which includes a state-of-the-art biotech plant laboratory and highly advanced greenhouses.

Givat Hen’s PlantArcBio is a leading biotechnology company for the improvement of crop productivity and performance for global food security.  The Company developed and proved a unique, highly innovative Direct In Plant (DIP™) gene discovery platform.  The company works to improve seed traits for both conventional and biotech applications.  PlantArcBio focuses on four key market segments: yield and abiotic stresses (environmental stresses); insect resistance; herbicide tolerance; and disease control.  (PlantArcBio 11.07)

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8.2  BioSight Clinical Trial of BST-236 as a First-Line Treatment of Acute Myeloid Leukemia

BioSight announced that it has received the FDA and the Israeli Ministry of Health clearance to launch a Phase 2b clinical trial of BST-236 for treatment of Acute Myeloid Leukemia (AML).  The trial, which will be launched in the upcoming month, will be conducted in 25 medical centers in the US and Israel.  BST-236 will be administered as a single agent treatment for newly-diagnosed AML patients, either de novo or secondary to myelodysplastic disorder (MDS) who are unfit for standard chemotherapy due to its severe toxicity.  This population is estimated to account for a third to half of the AML patients.

In the Phase 1/2 study, presented at the Annual American Society of Hematology (ASH) Meeting and Exposition on December 2017, 26 acute leukemia patients were treated with BST-236 as a single agent.  The study enrolled mainly older patients with poor prognosis baseline characteristics, including prior treatment with hypomethylating agents for MDS.  BST-236 was found to be safe and well tolerated at high doses, with no neurological or gastrointestinal toxicities or renal failure, all of which are life-threatening toxicities associated with the existing chemotherapy and which often attenuate or prevent its use in older patients.  This encouraging safety profile allowed the treatment of older and medically unfit patients with high doses of BST-236 and led to 2-3-fold higher response rates compared to currently approved treatments for this patient population.  The aim of the Phase 2b study is to repeat the results of the Phase 1/2 study in a larger number of patients in the US and Israel.

Airport City’s BioSight is a private Israeli clinical-stage pharmaceutical development company.  BioSight focuses on the development of novel caner-targeted pro-drugs. BioSight’s lead product BST-236 is under clinical development for acute leukemia.  (BioSight 11.07)

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8.3  NewStem Announces $4 Million Seed Investment

NewStem announced a $4 million seed financing from a publicly-traded US-based company to be named NovelStem International Corp.  NewStem is a spinoff of Yissum, The Technology Transfer Company of The Hebrew University.  NewStem’s technology can predict patients’ resistance to chemotherapy allowing for better, targeted cancer treatments and the potential to reduce resistance to chemotherapy.

Drug resistance is a major cause of treatment failure in cancer chemotherapy.  In present clinical practice, resistance to chemotherapy is only recognized after the first course of treatment has been completed, once no major clinical response is observed.  In nearly 50% of all cancer cases, resistance to chemotherapy already exists in the tumors before initiation of the treatment.  Treatment of patients with ineffective chemotherapy results in major health hazards, unnecessary suffering and increased costs.

In addition to NewStem’s in-house development activities of chemotherapy resistance diagnosis, the company plans to leverage its unique haploid technology and enter into multiple collaborations for the development of therapeutics for genetic disorders as well as for reproductive purposes with leading pharmaceutical companies or promising start-ups.

Yissum is the technology transfer company of The Hebrew University of Jerusalem.  Founded in 1964, it is the third company of its kind to be established and serves as a bridge between cutting-edge academic research and a global community of entrepreneurs, investors and industry.  (Yissum 16.07)

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8.4  Aspect Imaging Receives ISO 13485:2016 Certification

Aspect Imaging, the developer and manufacturer of Embrace – the world’s first FDA-cleared and CE-approved MRI for neonatal brain and head imaging inside the neonatal intensive care unit (NICU), announced that it has received ISO 13485:2016 certification for its Quality Management System.  The company received the certification based on a comprehensive audit by BSI, a global business standards firm specializing in assisting organizations comply with ISO standards.  ISO 13485:2016 requires that organizations demonstrate the ability to provide medical devices and related services that consistently meet customer and applicable regulatory requirements.  Aspect’s new ISO 13485:2016 certification complies with the requirements of ISO 13485:2016 and EN ISO 13485:2016, and includes design, manufacture, control of sales, installation, service and support of MRI systems.  Aspect was previously certified according to the 2003 version of the Standard, which will become obsolete in February 2019, and made the transition this year in order to be ready ahead of the transition deadline.

Shoham’s Aspect Imaging is a world leader in the design and development of complete, compact MRI and NMR systems using permanent magnet at 1 and 1.5 Tesla.  Their unique technology platform is the basis for a wide range of products, spanning medical, preclinical, oil & gas and advanced industrial markets.  In the medical market, Aspect Imaging has several medical programs underway, including Embrace Neonatal MRI system and WristView point-of-care hand and wrist MRI system which are in full production, and a dedicated Stroke MRI for the ER which is under development.  In the preclinical research market, the M-series compact MRI delivers a wide variety of in vivo and ex vivo applications. Advanced industrial applications include rheological analysis of both food products and industrial drilling mud with Aspect Imaging’s Flowscan.  (Aspect Imaging 16.07)

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8.5  Evogene & IMAmt Collaborate in the Field of Insect Resistance Traits in Cotton

Evogene and Brazil’s Instituto Mato-grossense do Algodo (IMAmt), a leading developer and marketer of cotton seeds, signed a research and validation agreement in the field of insect resistance traits in cotton, primarily focusing on the Cotton Boll Weevil but also on the Fall Armyworm.  Evogene will identify genes predicted to be effective against Cotton Boll Weevil and Fall Armyworm, and IMAmt will validate the candidate toxins in cotton.  Following successful validation, the parties intend to enter negotiations for a commercial license agreement.

Brazil is the fourth largest producer of cotton in the world.  Cotton Boll Weevil and Fall Armyworm are among the most devastating pests threatening the viability of the cotton industry. It is estimated that the Cotton Boll Weevil inflicts annual costs of $468m in Brazil alone, due to insecticide procurement and crop losses, with this pest seriously affecting all territories in which cotton is grown.  Moreover, with insecticides being only marginally effective, this pest has made entire geographies inaccessible for cotton cultivation.

As part of the agreement, Evogene will screen its extensive, already tested insecticidal gene data base and select genes with predicted activity against Cotton Boll Weevil and Fall Armyworm.  Following the identification of such genes IMAmt will validate these genes in lab assays directly against the target pests. Evogene will receive R&D funding for the initial discovery phase.

Rehovot’s Evogene is a leading biotechnology company developing novel products for major life science markets through the use of a unique computational predictive biology (CPB) platform incorporating deep scientific understandings and advanced computational technologies.  This platform is utilized by the Company to discover and develop innovative ag-chemical, ag-biological and ag-seed products (GM and non-GM), and by two subsidiaries; Evofuel, focused on castor seeds, and Biomica, focused on human microbiome therapeutics.  (Evogene 17.07)

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8.6  CyberMDX Raises $10 Million Series A to Expand Medical Cybersecurity to Hospitals

CyberMDX announced the completion of a $10 million Series A financing.  The round was led by Pitango Venture Capital, with participation from OurCrowd Qure.  CyberMDX delivers a non-intrusive solution that provides visibility and risk management, along with threat prevention and detection functionality for medical devices and other Internet of Medical Things (IoMT).

CyberMDX sheds light on security blind spots in the healthcare management landscape that security professionals otherwise struggle with.  The solution automatically lets users know what medical devices are on the network, what they’re connecting to, and what the risk level is for each connected asset.  This not only helps protect the hospital network, but also helps them save time and money with a friction-free solution.  CyberMDX’s multidisciplinary team consists of veterans of Israeli Intelligence’s elite cyber units, medical device experts, and AI academic leaders with focus on the healthcare vertical.

Tel Aviv’s CyberMDX, a leading provider of medical cybersecurity, delivers zero touch visibility and threat prevention for medical devices and clinical assets. CyberMDX delivers a scalable, easy to deploy cybersecurity solution, providing unmatched visibility and protection of medical devices ensuring their operational continuity as well as patient and data safety. CyberMDX multidisciplinary team consist of veterans of Israeli Intelligence’s elite cyber units, medical devices experts, and AI academic leaders.  (CyberMDX 17.07)

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8.7  Can-Fite Granted Australian and Chinese Patents for Erectile Dysfunction Drug

Can-Fite BioPharma announced that the Australian and Chinese patent offices have granted the Company a patent for the utilization of A3 adenosine receptor ligands in the treatment of sexual dysfunction, in a patent.  The Company has been investigating compounds that target the A3 adenosine receptor (A3AR) and the Company’s CF602 drug candidate previously demonstrated a robust positive effect in the treatment of erectile dysfunction in preclinical studies.  Can-Fite has been granted a similar patent in the U.S. for both the method for treating erectile dysfunction with different A3 adenosine receptor (A3AR) ligands and a composition of matter for allosteric compounds.

Petah Tikva’s Can-Fite BioPharma is an advanced clinical stage drug development company with a platform technology that is designed to address multi-billion dollar markets in the treatment of cancer, inflammatory disease and sexual dysfunction.  The Company’s lead drug candidate, Piclidenoson, is currently in a Phase III trial for rheumatoid arthritis and is expected to enter a Phase III trial for psoriasis in 2018.  Can-Fite’s liver cancer drug, Namodenoson, is in Phase II trials for hepatocellular carcinoma (HCC), the most common form of liver cancer, and for the treatment of non-alcoholic steatohepatitis (NASH).  Namodenoson has been granted Orphan Drug Designation in the U.S. and Europe and Fast Track Designation as a second line treatment for HCC by the U.S. FDA.  Namodenoson has also shown proof of concept to potentially treat other cancers including colon, prostate and melanoma.  CF602, the Company’s third drug candidate, has shown efficacy in the treatment of erectile dysfunction in preclinical studies and the Company is investigating additional compounds, targeting A3AR, for the treatment of sexual dysfunction.  (Can-Fite 17.07)

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8.8  Therapix Biosciences Reports Positive Pre-clinical Data for THX-160 for Treatment of Pain

Therapix Biosciences announced positive results in its pre-clinical studies evaluating THX-160, a novel pharmaceutical CB2 Receptor agonist for the treatment of pain.  This innovative CB2 receptor agonist, which was found to be superior out of two candidates the company had tested, was synthesized by Raphael Mechoulam, Ph.D., Professor of Medicinal Chemistry at the Hebrew University, and a member of the Therapix Scientific Advisory Board.  To date, prescription opioids are considered to be the most effective treatment for moderate-to-severe pain, but their abuse has been identified by the U.S. FDA and the Centers for Disease Control (CDC) as a significant public health issue.

In the preclinical studies, THX-160 was well tolerated and did not cause any significant adverse clinical effects.  In addition, efficacy studies demonstrated the analgesic superiority of THX-160 over control and were comparable to high-dose morphine analgesic effects and in some instances exerted greater potency.  The efficacy and safety of THX-160 was shown for both acute and chronic pain.

Givatayim’s Therapix Biosciences is a specialty clinical-stage pharmaceutical company led by an experienced team of Senior Executives and Scientists.  Their focus is creating and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals.  With this focus, the company is currently engaged in the following drug development programs based on repurposing an FDA-approved cannabinoid (Dronabinol).  (Therapix Biosciences 17.07)

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8.9 Raises $21 Million in Series A Funding to Increase Patient Access to Proven Therapies secured $21 million in Series A funding led by Kleiner Perkins, with participation from GV, formerly Google Ventures.  The company will use the funding for market expansion and to extend their product portfolio beyond stroke.  Worldwide, more than 6 million stroke-related deaths occur every year and strokes are the number one cause of long-term disability in the nation.  Outcomes are predicated on timely diagnosis and early access to neurological specialists.  With, CT scans are automatically analyzed by advanced deep learning algorithms, which look for large vessel occlusion strokes and alert a neurological specialist. This happens in minutes, enabling prompt action.

Tel Aviv’s is emerging as the leader in applied artificial intelligence in healthcare.  Their mission is to fundamentally improve how healthcare is delivered in the world, through intelligent software that promises to reduce time to treatment and improve access to care.  Their flagship product, Viz LVO, leverages advanced deep learning to communicate time-sensitive information about stroke patients straight to a specialist who can intervene and treat.

In February 2018, the U.S. FDA granted a De Novo clearance for Viz LVO, the first-ever computer-aided triage and notification platform.  Most recently, announced its second FDA clearance for Viz CTP through the 510(k) pathway, offering healthcare providers an important tool for automated cerebral image analysis.  ( 18.07)

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8.10  PainReform Gets FDA Approval for Phase III Post-Operative Pain Relief Study

PainReform has received FDA approval to conduct two pivotal Phase III clinical trials for post-operative pain relief in soft and hard tissue.  The trials will use PRF-110, a proprietary extended release version of ropivacaine (Naropin) which provides long relief of post-surgical incision pain.  In a Phase II study, PRF-110 demonstrated pain relief for up to 72 hours – ten times longer than the current standard of care.  PRF-110 has the complete set of attributes, including efficacy, safety, physical properties and low-cost, to position it as the leading candidate to carve out the biggest share of this very large market.  PainReform is currently raising $15 million to conduct the trials.

Established in 2007, Herzliya’s PainReform is a venture-capital-backed, specialty pharmaceutical company.  Investors include Medica Venture Partners, XT High-Tech and V Partners.  (PainReform 18.07)

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8.11  K Health Launches Free Primary Care App & New Provider Network in New York

K Health announced the launch of K, a free, first-of-its-kind primary care app along with a new provider network available in New York.  K is the first app to use AI and the experience of thousands of doctors to provide free personal health information based on “People Like Me.”  This more accurate, proprietary approach delivers insights drawn from how similar people were diagnosed and treated in a clinical setting.  Leading independent New York City-based primary care providers have partnered with the company to deliver same-day care to users.  The company also announced $12.5 million in financing from Mangrove Capital Partners, Lerer Hippeau, Primary Venture Partners, BoxGroup, Max Ventures, Bessemer Venture Partners and Comcast Ventures.

K Health is creating an enormous paradigm shift in personal health, demonstrating the power of AI to provide relevant health information drawn from real clinical insights.  Fueled by a unique data set of over one billion health interactions, including physician notes, lab results, treatments and prescriptions, K is the first completely data-driven health app to be available to the consumer market.  Now, instead of reading overly generic or outright misleading information online, people can simply use K to look up how doctors treated people like them when they had the same symptoms.  Through K, users understand what people like them had and how they were treated before seeking care from a provider, cutting down costs and unnecessary time spent on research, appointments, in-person visits and more.

Tel Aviv’s K Health is the first health tech company to empower people with access to personalized health information based on “People Like Me”. Founded in 2016, K Health has built the first HIPAA compliant AI primary care app 100% fueled by data, empowering users worldwide to take control of their health.  By working with a unique data set of over a billion health interactions, K Health is able to generate better and more accurate insights based on PLM (a.k.a. “People Like Me”), a new approach to understanding our health that looks at other people like us who have had similar experiences.  (K Health 17.07)

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8.12  Laminate Medical Technologies Announces First Forearm Fistula Cases in Germany

Laminate Medical Technologies (Laminate), a privately-held start-up developing VasQ, an implanted blood vessel external support device for patients requiring arteriovenous fistula as vascular access for hemodialysis, announced the first forearm fistula cases in Germany.  The first surgeries were performed at six hospitals, by seven surgeons.

Developed by Laminate, VasQ is intended for patients suffering from kidney failure and in need of dialysis, which requires vascular access.  The most common and preferred method of vascular access is an arteriovenous fistula, created by surgically connecting an artery to a vein, usually in the region of the wrist or the elbow.  This allows for increased blood flow to pass through the vein which is necessary for successful dialysis.  Following a successful creation of an arteriovenous fistula, two needles are inserted through the vein to remove the patient’s blood for filtration by the dialysis machine, and then return it.

Unfortunately, narrowing and blockage of the vein occur in more than half of newly created fistulae in response to increased pressure and thickening of the vein wall, making the fistula unusable for dialysis.  As a result, the patient must undergo repeated interventions to salvage the fistula or, in cases where the fistula cannot be salvaged, use less common vascular access alternatives, affecting the ability to receive dialysis and creating a burden on hospital resources.

VasQ is an external scaffold placed over the fistula, creating an optimal geometric configuration with the artery and reducing the tension in the vein.  This allows proper blood flow during dialysis while reducing vein blockage created by thickening of the vein wall.  Studies show VasQ has significant success. VasQ is a CE Marked device already in use in hospitals in Europe and in Israel, with impressive results.

Laminate Medical Technologies was founded in 2012, beginning in the Rad-Biomed incubator.  Laminate has developed VasQ, a blood vessel support device for patients receiving dialysis.  VasQ is CE Marked and used in hospitals in Europe and Israel.  (Laminate 20.07)

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8.13  Kalytera Enters Medical Cannabis Market With Focus on Psoriasis & Menstrual Cramp Treatment

Kalytera Therapeutics has entered into an agreement with Beetlebung Pharma (BPL) for an option to acquire all rights to medical cannabis products in development by BPL for the treatment of both dermatologic diseases and women’s health.  Under this agreement, Kalytera will have the option to license from BPL certain proprietary medical cannabis formulations, which can initially be brought to market in jurisdictions that have already approved access to cannabis for medical purposes.  Kalytera believes that this will provide a more near-term path to revenues, compared with the lengthier process required for commercialization following FDA approval.

The collaboration with BPL will bring together Kalytera’s expertise in clinical pharmaceutical development, with BPL’s proprietary cannabis technology.  Kalytera is a leader in the development and commercialization of cannabinoid pharmaceuticals with a late-stage clinical program in the prevention and treatment of acute graft versus host disease, and BPL is an Israeli-based pharmaceutical discovery company conducting world-class research and development in the field of cannabinoid and cannabis-based therapeutics, with specific expertise in the development of novel formulations of cannabis extract.

The strategic aim of the alliance is to expedite development and commercialization of efficacious and low cost medical cannabis products that can be marketed in jurisdictions such as Australia, Canada, Germany and Israel, where access to medical cannabis has been legalized.

Kalytera and BPL are already collaborating in the development of a novel cannabinoid-based compound for the treatment of acute and chronic pain.  Patents for this compound have been filed in the U.S. and other jurisdictions, and Kalytera has obtained an exclusive, worldwide license for this compound from BPL.

Kalytera Therapeutics is pioneering the development of CBD therapeutics.  Through its proven leadership, drug development expertise, and intellectual property portfolio, Kalytera seeks to establish a leading position in the development of CBD medicines for a range of important unmet medical needs, with an initial focus on acute graft versus host disease and treatment of acute and chronic pain.

Beetlebung Pharma Limited (BPL), an Israeli affiliate of the Salzman Group, focuses on the discovery and development of novel cannabis-related pharmaceutical therapeutics.  The Salzman Group provides clinical management and other services to Kalytera in connection with Kalytera’s programs evaluating CBD in the prevention and treatment of graft versus host disease.  (Kalytera 19.07)

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8.14  Biogal-Galed Labs Commercializes PCRun Canine Distemper Molecular Detection Kit

Biogal Galed Labs has announced the commercialization of a new PCRun Veterinary Molecular Detection kit, the PCRun Canine Distemper RNA Molecular Detection Kit.  This is now in addition to the ten previously commercialized PCRun® molecular detection test kits for Canine Pathogenic Leptospira, Canine Ehrlichia canis, Canine Leishmania infantum, Canine Anaplasma platys, Canine Babesia canis and gibsoni, Canine/Feline Parvovirus (CPV/FPLV), Canine Distemper virus, Feline Mycoplasma haemofelis, Feline Leukemia Virus (DNA and RNA).  Clinical diagnosis of early canine distemper is difficult due to the broad spectrum of signs that may be confounded with other respiratory and enteric diseases for dogs.

Kibbutz Galed’s Biogal was established in 1986. Biogal’s various veterinary diagnostic products are available in over 35 countries.  Biogal developed the patented ImmunoComb technology for detecting antibody levels in blood or serum.   (Biogal 19.07)

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8.15  Netafim Launches the World’s Most Innovative Digital Irrigation System

NetBeat – the first irrigation system with a brain – is an irrigation and fertigation management system that integrates monitoring, analysis and automation into a single platform, enabling farmers to maximize productivity any time, from anywhere.  Netafim chose Agritech 2018 to launch NetBeat.  NetBeat provides farmers with real-time recommendations based on data pertaining to plant, soil and weather conditions obtained from both sensors in the field and external sources.  This data is analyzed in the cloud, according to proprietary Dynamic Crop Models, developed by Netafim based on 50 years of unique experience and research in the field of agronomy and hydraulics.  Based entirely on Israeli technology, NetBeat was developed in collaboration with mPrest, developers of the Command & Control platform used in the Iron Dome air-defense system.  NetBeat is the first platform of its kind to integrate monitoring, analysis and automation in one system, controlled by the farmer through a friendly and simple user interface, which provides optimization and smart recommendations throughout all stages of the crop lifecycle, saving water, fertilizer and other inputs and improving profitability.

Tel Aviv’s Netafim is the global leader in smart irrigation solutions for a sustainable future.  Since introducing the world’s first drip irrigation solutions in 1965, they have led the way by developing products that help our customers optimize results.  (Netafim 21.07)

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8.16  OrthoSpin Completes $3 Million Raise for Orthopedic Robotic External Fixation System

OrthoSpin completed an investment round of $3 million for its smart, robotic external fixation system for orthopedic treatments.  Johnson & Johnson Innovation led the investment round.

External fixation devices are a common treatment choice for bone lengthening, setting complex fractures, and correcting deformities.  The OrthoSpin system makes pre-programmed adjustments automatically and continuously – without the need for patient involvement. Integrated software enables physicians to chart patient progress, and, when required, immediately adjust treatment programs.  The accurate OrthoSpin system eliminates the need for weekly follow-up and is generally expected to improve patient experience resulting from smaller incremental adjustments with reduced soft tissue damage.

Misgav’s OrthoSpin was founded in December 2014, to offer a new robotic treatment system for use in orthopedics, specifically external fixation.  OrthoSpin’s innovative system has the potential to change the outcomes of various orthopedic treatments, such as bone lengthening, setting complex fractures, and correcting deformities.  Trendlines is an innovation commercialization company that invents, discovers, invests in, and incubates innovation-based medical and agricultural technologies to fulfil its mission to improve the human condition.  (OrthoSpin 23.07)

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8.17  Ology & RAFA Get FDA Approval of Atropine Autoinjector as Countermeasure for Nerve Agents

Alachua, Florida’s Ology Bioservices, a biologics contract development and manufacturing organization (CDMO), and Rafa Laboratories announced that on 9 July 2018, they received full approval from the U.S. FDA for the Atropine Injection, 2mg/0.7mL, Single-Dose Autoinjector.  The Atropine Autoinjector initially received Emergency Use Authorization from the FDA in April 2017.  Atropine is one of the most commonly used drugs for the treatment of chemical nerve agent poisoning.  With the approved autoinjector, U.S. troops can rapidly inject atropine into the thigh muscle following nerve agent exposure.

This FDA approval decreases reliance on a sole source drug product and device manufacturer and ensures that the Department of Defense (DoD), U.S. Government stakeholders and international partners can quickly and cost-effectively procure the Atropine Autoinjector in the event of a nerve agent threat.  There is substantial potential for a public health emergency involving nerve agents and certain insecticides.  The usage of these agents can affect national security as well as the health and security of U.S. citizens living abroad.

The Joint Project Management Office for Medical Countermeasure Systems (JPM-MCS) Chemical Defense Pharmaceuticals (CDP) Project Management Office, funded and led the collaboration for development of the Atropine Autoinjector, which also included the FDA, Centers for Disease Control and Prevention (CDC) and Battelle.

Jerusalem’s Rafa Laboratories, incorporated in 1937, is one of Israel’s leading pharmaceutical companies.  The company specializes in marketing, manufacture and distribution of proprietary and generic formulations, prescription and over-the-counter medicines, as well as therapeutic products in various medical fields such as pain, gastroenterology, respiratory diseases and dermatology.  (Rafa 24.07)

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9.1  Israel to Launch Historic Moon Mission from Cape Canaveral this December

On 10 July, Israel Aerospace Industries (IAI)’s Space division in Yehud, nonprofit SpaceIL and IAI announced a lunar mission to launch from Cape Canaveral, Fla., this December, and land on the moon on 13 February 2019.  A final launch date will be announced closer to the event.

The lunar landing will culminate eight years of intensive collaboration between SpaceIL and IAI, and will make Israel the fourth country after the U.S., China and Russia to reach the moon.  The spacecraft will be launched as a secondary payload on a SpaceX Falcon 9 rocket from Cape Canaveral, Florida, and its journey to the moon will last about two months, ending on its expected landing date.  The Israeli lunar spacecraft will be the smallest to land on the moon, weighing only 1,322 lbs, or 600 kilograms.  Approximately $88 million (NIS 320 million) has been invested in the spacecraft’s development and construction, mostly from private donors.

Since SpaceIL’s establishment, the mission of landing an Israeli spacecraft on the moon has become a national project embodying educational values.  IAI, which is the home of Israel’s space activity, has been a full partner in this project from its inception.  Over the years, additional partners from the private sector, from government companies and from the academia have joined as well.  The most prominent among these are Weizmann Institute of Science; Israel Space Agency; the Ministry of Science, Technology and Space; Bezeq and others.  SpaceIL’s spacecraft will be launched on a SpaceX Falcon 9 rocket from Cape Canaveral, Florida. It will be the secondary payload, launched with other satellites.

Upon its landing on February 13, 2019, the spacecraft, carrying the Israeli flag, will begin taking photos and video of the landing site and will measure the moon’s magnetic field as part of a scientific experiment conducted in collaboration with Weizmann Institute.  The data will be transmitted to the IAI control room during the two days following the landing.

IAI is Israel’s largest aerospace and Defense Company and a globally recognized technology and innovation leader, specializing in developing and manufacturing advanced, state-of-the-art systems for air, space, sea, land, cyber and homeland security.  (IAI 10.07)

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9.2  Trigo Vision Unveils Advanced Retail Automation Platform with $7 Million Seed Funding

Trigo Vision emerged from stealth and announced $7 million in a seed funding round by UK-Israel based Hetz Ventures and Vertex Ventures Israel.  Trigo Vision’s platform combines a highly sophisticated, ceiling-based camera network with machine vision algorithms to identify and capture customers’ shopping items with exceptional levels of accuracy during their in-store journey, eliminating the need for a checkout process.  The funding will be used to acquire top talent in order to grow the company’s core R&D team and build new applications for their technology, the most precise retail automation platform available today.

Developed by world class AI and algorithmics experts, Trigo Vision’s founders have gained extensive experience working on a multitude of complex projects for Israel’s military intelligence.  The company’s highly advanced, patent-pending computer vision technology necessitates significantly fewer cameras compared to other solutions on the market today.  Coupled with a unique data collection process, Trigo Vision provides extremely precise identification of products, underlining the company’s competitive advantage.  Complementing this, the company’s platform offers retailers complete flexibility and scalability for easy and swift deployment into a store of any size, without requiring any type of change to its layout or structure.  Their system can also be customized according to cultural differences within each market.

Tel Aviv’s Trigo Vision is a computer vision startup reshaping the retail experience.  Leveraging world class AI and algorithmics experts, the company’s advanced retail automation platform identifies customers’ shopping items with exceptional levels of accuracy, creating an entirely seamless checkout process.  Trigo Vision’s technology streamlines retail operations, prevents shoplifting, provides invaluable retail insights and presents opportunities for new levels of customer engagement within retail environments.  (Trigo Vision 11.07)

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9.3  NanoLock Security wins Gold as Startup of the Year in the 13th Annual 2018 IT World Awards

NanoLock Security announced that Network Products Guide, industry’s leading technology research and advisory guide, has named the company a Gold winner in the 13th Annual 2018 IT World Awards in the Startup of the Year, formed in 2016 category.  These industry and peer recognitions from Network Products Guide are the world’s premier information technology awards honoring achievements and recognitions in every facet of the IT industry.

NanoLock Security recently unveiled its lightweight security and management platform purpose-built for the Internet of Things (IoT) and automotive ECUs ecosystem.  NanoLock’s CPU and OS agnostic approach ensures all connected and IoT devices are protected as well as the cloud managing those devices, regardless of available processor power, energy consumption and even if the CPU is inevitably hacked.  The NanoLock platform guarantees device-to-cloud integrity and mutual protection during regular operations and firmware-over-the-air (FOTA) updates, from the production line and through and after the device’s end of life.

NanoLock Security was founded in 2016 by seasoned industry executives and formed around the founders’ and senior management’s deep understanding of how to manage and secure the new generation of connected cars and IoT devices.  The company provides the industry’s only lightweight, unbreakable, low-cost security and management solution for connected cars and IoT devices.  Using virtually zero computing or power resources, NanoLock Security protects firmware and sensitive information stored on connected cars and IoT devices, preventing attacks ranging from ransomware to malicious manipulation of stored code.  (NanoLock Security 12.07)

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9.4  Elbit Systems’ Hermes 900 StarLiner: an Unmanned Aircraft to Operate in Civilian Airspace

Elbit Systems commenced global marketing of the Hermes 900 StarLiner, a powerful and trend setting Medium Altitude Long Endurance (MALE) Unmanned Aircraft System (UAS) that features adverse weather capabilities and is fully compliant with NATO’s Standardization Agreement (STANAG) 4671, qualifying it to be safely integrated into civilian airspace and fly in the same environment with manned aircraft.  Concluding an extensive year-long flying schedule, the Hermes 900 StarLiner has been performing Civil Aviation Authority certified flights in Masada National Park, Israel.  A series of the Hermes 900 StarLiner (known as Hermes 900 HFE in the Swiss program) is currently being assembled for the Swiss Armed Forces and is scheduled to be delivered and integrated into Switzerland NAS during 2019.

Meeting the strict safety and certification requirements of non-segregated airspace regulations required all the components of Hermes 900 StarLiner to be designed in full compliance with STANAG 4671 and to incorporate the most advanced aviation technologies, including: cooperative and non-cooperative Detect & Avoid Systems, Train Avoidance Warning System, Automatic Take-off and Landing in near zero visibility, redundant broad bandwidth line-of-sight (LOS) and beyond line-of-sight (BLOS) data link and adverse weather capabilities such as de-icing and direct lightning strike sustainment.  These technological enhancements allow the aircraft to operate in both visual and instrument meteorological conditions, and its powerful heavy fuel engine provides improved climb rate, extended endurance and higher ceiling and maximum speed.

Haifa’s Elbit Systems Ltd. is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world.  The company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios and cyber-based systems.  ((Elbit Systems 12.07)

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9.5  Luminate Announces Microsoft Azure Integration Offering Access to Hosted Corporate Apps

Luminate Security announced that its agentless Secure Access Cloud™ platform is fully integrated with Microsoft Azure, providing direct, secure access to applications and services deployed on Azure.  Luminate’s platform also integrates with Azure Active Directory for authentication and policy management throughout the lifetime of the user’s session.

Based on Software Defined Perimeter (SDP) principles, Luminate enables organizations to roll out corporate services with the speed, security, and agility that matches the dynamic nature of modern business and replaces network access with secure application access.  By leveraging its tight integration with Azure Active Directory as well as Azure IaaS and PaaS services, such as Virtual Machines, Container Instances, Azure Kubernetes Services, and others, Luminate Secure Access Cloud ™ allows organizations to provide secure access to any corporate IT resource in Azure.  With that, Luminate eliminates the complexities and the risks associated with direct network access to corporate datacenters, or the internet, while providing easy management that benefits from the existing investment in Azure Active Directory and Azure Active Directory Conditional Access policies.

Tel Aviv’s Luminate enables security and IT teams to create Zero Trust Application Access architecture without traditional VPN appliances. Its Secure Access Cloud™ securely connects any user from any device, anywhere in the world to corporate applications, on-premises and in the cloud, while all other corporate resources are cloaked without granting access to the entire network.  This prevents any lateral movements to other network resources while eliminating the risk of network-based attacks.  Deployed in less than five minutes, Luminate’s Secure Access Cloud™ is agentless, and provides full visibility of users’ actions as they access corporate resources, as well as real-time governance of these resources.  (Luminate Security 11.07)

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9.6  Adrian Kenya Selects New GenCell Solution to Provide Green Power to Telecom Base Stations

Petah Tikva’s GenCell Energy, the fuel cell power solution provider and manufacturer, announced that Adrian Kenya, a leading African telecom integrator, will install the new GenCell A5 Off-Grid Power Solution at 800 telecom base stations across Kenya.  Shipment and installation of the GenCell A5 fuel cell solution will begin in Q4/18.  Replacing costly, noisy and highly polluting diesel generators with green fuel cell power will enable Adrian Kenya to realize an expected savings of $84 million over 10 years and reduce its carbon footprint by 248,000 tons1.

The GenCell A5 is the world’s first affordable off-grid primary power alternative to diesel generators.  It provides cost-effective, ultra-reliable, noise-free and weather-independent power for off-grid and poor-grid telecom base stations at a lower OPEX than diesel generators.  The low maintenance of the GenCell solution further reduces its OPEX for Tower Management Companies (Towercos) and Mobile Network Operators (MNOs).  Unlike diesel generators that require time-consuming and expensive monthly fueling and maintenance at each tower, a single 12-ton tank of ammonia provides the GenCell A5 with enough fuel for a year of 24/7 operation.  In addition, the GenCell IoT Remote Manager enables remote diagnostics, monitoring, and maintenance of each fuel cell device, reducing the frequency and costs of onsite engineer visits.  (GenCell Energy 02.07)

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9.7  Presenso Announces the Production Release of Its Predictive Maintenance Solution

Presenso announced the availability of its solution’s production release.  Incorporating the latest advances in Automated Machine and Deep Learning (Auto-ML), the Presenso solution has now been tested by leading industrial manufacturers worldwide.

Initially funded by leading VCs in the renowned Israeli ecosystem and by the Israeli Innovation Authority, Presenso spent the last 2 years researching and developing its Auto-ML based solution which has 11 patents pending.  Presenso’s system collects immense amounts of data at very high speed from hundreds of machines (thousands of sensors) and streams the data to the Cloud in real-time.  Using unique, proprietary deep neural-network architectures, Presenso’s analytic engine autonomously interlinks events with components within the machines and ultimately predicts evolving failures.  In addition, it provides valuable information about the remaining time to failure and its origin within the machine.

Following this significant investment in R&D, a beta product was launched in early 2017 and was deployed at multiple customers’ sites.  As the result of extensive testing in multiple production environments, Presenso is now releasing its solution to the wider industrial market.

Haifa’s Presenso develops advanced analytical tools for Predictive Maintenance using data science innovations such as Automated Machine Learning (AutoML).  These tools are accessible to maintenance and reliability professionals without the need to hire Big Data experts.  Presenso solution is available today for both OEM’s which are now developing their Industry 4.0 offerings and to end users operating their own equipment.  (Presenso 16.07)

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9.8  VodafoneZiggo Selects AudioCodes for Business Voice Services

AudioCodes has been selected by VodafoneZiggo to supply its Mediant multi-service business routers and virtualized session border controllers for VodafoneZiggo’s all-IP communications network infrastructure.  The AudioCodes solutions enable VodafoneZiggo to connect new and existing business customers seamlessly to its SIP trunking and other hosted voice services.  AudioCodes Mediant multi-service business routers (MSBR) combine session border controller (SBC), media gateway, access router and security functionality in a single, robust hardware platform.  The Mediant MSBRs’ unique design ensures consistently high performance under all network and service conditions.  VodafoneZiggo deploys AudioCodes’ MSBRs at its customers’ premises to deliver secure connectivity with the servers at its virtualized datacenters.

VodafoneZiggo employs AudioCodes Mediant VE virtualized SBC at its datacenters to provide secure and reliable connectivity for customers of its SIP trunk service.  AudioCodes SBCs’ broad interoperability enables virtually any customer on-premises IP-PBX or unified communications platform to interconnect seamlessly with the service.  Built to meet the demands of today’s virtualized datacenter environments, the Mediant VE supports rapid scalability and service automation.

Airport City’s AudioCodes is a leading vendor of advanced voice networking and media processing solutions for the digital workplace.  AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers, and hosted business services.  AudioCodes offers a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.  (AudioCodes 16.07)

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9.9  Allot Teams With Lifeboat to Safeguard Markets With Secure Service Gateway

Allot Communications has struck an agreement with Lifeboat Distribution to supply the Allot Secure Service Gateway (SSG) unified solution to its North American Enterprise and ISP customers.  The Allot SSG solution includes real-time network intelligence, application control, DDoS protection and web security solutions across the entire network, providing end-to-end visibility of all network traffic and enhancing Quality of Service (QoS) and user Quality of Experience (QoE).  Lifeboat Distribution, an international value-added distributor with more than $417 million in sales in 2017, helps vendors recruit and build multinational solution provider networks, power their networks, and drive incremental sales revenues that complement existing sales channels.  The Allot SSG solution is available to Lifeboat partners and customers today.

Hod HaSharon’s Allot Communications is a provider of leading innovative network intelligence and security solutions for service providers worldwide, enhancing value to their customers.  Their solutions are deployed globally for network and application analytics, traffic control and shaping, network-based security services, and more.  Allot’s multi-service platforms are deployed by over 500 mobile, fixed and cloud service providers and over 1000 enterprises.  (Allot Communications 17.07)

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9.10  Aero Vodochody & IAI Introduce Multirole F/A-259 Striker Aircraft for Combat Missions

At Farnborough 2018 Aero, the largest Czech aircraft manufacturer, and Israel Aerospace Industries introduced the F/A-259 Striker is a multirole aircraft for close air support, counter-insurgency operations and border patrolling with interception capabilities.  The F/A-259 Striker combines the robustness and effectiveness of its successful predecessor, the L-159 Alca, with the latest advances in avionics and aircraft systems technology.  Powered by the same “best in its class” Honeywell F124 engine and using benefits of a wet wing, F/A-259 Striker provides superior performance, great maneuverability, and a high range.

The F/A-259 is able to operate from unpaved runways and has seven hard points for any combination of fuel, weapons, or mission equipment, allowing smart weapons integration and standoff weapon capabilities.  As an optional upgrade, the F/A-259 can be equipped by EASA radar and helmet mounted display.  Another optional upgrade is air-to-air refueling, increasing the aircraft’s range and endurance.  Advanced 4th generation avionics for the F/A-259 Striker has an open architecture concept, allowing future updates based on customer’s requirements and use of Real Time Data Link, supporting a high situational awareness capability.  The advanced digital cockpit is equipped by two large multifunctional displays, electronic flight instrument system, and other features.

IAI a world leader in both the defense and commercial markets, delivering state-of-the-art technologies and systems in all domains: air, space, land, sea, cyber, homeland security and ISR.  Drawing on over 60 years’ experience developing and supplying innovative, cutting-edge systems for customers around the world, IAI tailors optimized solutions that respond to the unique security challenges facing each customer.  IAI employs its advanced and proven engineering, manufacturing and testing capabilities to develop, produce and support complete systems – from components, sensors and subsystems all the way to large-scale, fully-integrated systems of systems.  (IAI 19.07)

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9.11  RFOptic is Rolling out its Optical Delay Line Solutions Worldwide

RFOptic is rolling out its Optical Delay Line (ODL) solutions worldwide leveraging its successful deployments in measurement of distances for radar calibration with unparalleled accuracy levels based on predefined ranges.  RFOptic’s Optic Delay Line systems (ODL) are used for transposing signals to distances ranging from a few nano sec to more than 1 msec (1,000 microsec).  The ODL system is an RF over Fiber solution with a defined delay line that is used in radar and microwave systems, e.g., for radar calibration. RFOptic’s ODL system can include several different delay lines, which are selected either manually or remotely by an external user interface.  RFOptic offers five groups of ODL solutions operating at different frequency bands starting from 10 MHz up to 40 GHz.

RFOptic tailors its solutions upon customer’s spec with almost off-the-shelf delivery time.  RFOptic offers single delay line, multi delay line ODLs as well as programmable (progressive) P-ODLs that can form up to 255 delay lines as standard, and even 4096 in special cases.  Based on customer requirements, ODL solutions can include dispersion control, automatic gain control, optical amplification (EDFA) and RF amplification (LNA).

Kibbutz Einat’s RFOptic is a leading provider of RF over Fiber (RFoF) and Optical Delay Line (ODL) solutions.  For the last 20 years, its team of industry veterans has been developing, designing and integrating superior quality technology for a wide range of RFoF and ODL solutions.  The solutions are deployed at various industries, including broadcasting, aviation, automotive, and defense.  RFOptic offers its customers and OEMs various off-the-shelf products, as well as custom-made solutions optimized for a wide range of RFoF products at affordable prices and with a quick turnaround.  (RFOptic 18.07)

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9.12  Cato Transforms SD-WAN With Identity-aware Routing

Cato Networks introduced the first identity-aware routing engine for SD-WAN.  Identity awareness abstracts policy creation from the network and application architecture, enabling business-centric routing policies based on user identity and group affiliation.  Identity awareness headlines a series of SD-WAN enhancements Cato is introducing today for Cato Cloud.

Cato implements identity-aware routing seamlessly without changing the network infrastructure or the way users work. Cato dynamically correlates Microsoft Active Directory (AD) data, across distributed AD repositories, and real-time AD login events to associate a unique identity with every packet flow.  Organizational context, such as groups and business units, is derived from the AD hierarchy.

Cato revolutionized the industry with the introduction of the first secure, cloud-based SD-WAN service.  Since then, Cato expanded the comprehensive set of converged security services in Cato Cloud with the Cato Threat Hunting System (CTHS), IPS, and more. Identity awareness and the rest of the enhancements being introduced today build on that momentum.  All features are currently available.

Tel Aviv’s Cato Networks provides organizations with a cloud-based and secure global SD-WAN.  Cato delivers an integrated networking and security platform that securely connects all enterprise locations, people, and data.  Cato Cloud cuts MPLS costs, improves performance between global locations and to cloud applications, eliminates branch appliances, provides secure internet access everywhere, and seamlessly integrates mobile users and cloud datacenters into the WAN.  (Cato Networks 18.07)

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9.13  Gooper Hermetic Chosen for a NASA Space Technology Development Program

Gooper Hermetic was chosen by Canada’s Thin Red Line Aerospace to provide key technology for a NASA project requiring the highest performance, resealable gas- and liquid-tight closure.  The Thin Red Line advanced research project seeks to develop critical containment technology for future NASA deep space missions.  Gooper Hermetic’s insights will be applied to extend the capabilities of their patented magnetic closure system to the unforgiving environment of deep space where technology reliability is critical.

Gooper’s innovative technology is now fast becoming integrated into a multitude of products where safety and reliability are of the highest concern.  In seeking to expand its business and OEM/ODM integration across a variety of market segments, Gooper Hermetic welcomes the opportunity to Co-Brand and develop new and exciting projects and products ranging from space technology through military development and high end swimwear with integrated waterproof pockets.

Michmoret’s Gooper Hermetic invented and patented the first and only “total protection” flexible, magnetic, self-sealing automatic closure that is waterproof, Thief-proof, Child-proof, Odor-proof and Gas-proof, yet easy to use and intuitively simple.  Just like many novel ideas, Gooper started in a back yard garage and its owners spent years on R&D to make it the best sealing and “all proof” system available.  Gooper Hermetic designed the sealing mechanism as a single unit with no clips or detached parts in order to ensure that the system will never break down due to loose or missing parts.  (Gooper Hermetic 23.07)

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9.14  Illusive Networks Recognized on 2018 Emerging Security Vendors List

Illusive Networks announced that CRN®, a brand of The Channel Company, has named Illusive to its 2018 Emerging Vendors List in the Security category.  This list recognizes recently founded, up-and-coming technology suppliers who are shaping the future of the IT channel through unique technological innovations.  In addition to celebrating these notable companies, the Emerging Vendors list serves as a valuable resource for solution providers looking to expand their portfolios with cutting-edge technology.

Illusive’s deception-based technology pre-eempts attacks by depriving attackers of hidden keys they need to reach critical assets, detects attacks in their earliest stages, and enables security teams to quickly respond with actionable, real-time forensics.  Enterprise customers are rapidly adopting Illusive’s breakthrough platform to protect against insider threats, exfiltration of intellectual property, personal identity information, financial cybercrime, and other critical cyber related business risk.

Illusive is a 100% channel-committed company, selling exclusively through value added resellers (VARs), managed security service providers (MSSP), and managed detection and response (MDR) partners around the world.

Tel Aviv’s Illusive Networks is a pioneer of deception technology, empowering security teams to take informed action against advanced, targeted attacks by preempting, detecting, and disrupting attackers early in the attack life cycle.  Agentless and driven by intelligent automation, Illusive enables organizations to proactively defend critical information assets with minimal operational overhead.  Conceived by cybersecurity experts with decades of combined experience in cyber warfare and cyber intelligence, Illusive helps customers avoid significant operational disruption and business risk, while operating with greater confidence in today’s complex, hyper-connected world.  (Illusive Networks 23.07)

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10.1  OECD Says Israel Should Liberalize and Spend More On Infrastructure

Israel could benefit more than almost any other country in the world from product market liberalization and opening protected industries to competition, according to a report by the OECD entitled “The Long View: Scenarios for the World Economy to 2060”.  The report says that efficiency measures and greater competition in Israel could boost GDP by the year 2060 by 20% more than it will reach without such measures.  Another area on which it would be worthwhile for Israel to focus, according to the OECD, is public investment in infrastructure. Here too, Israel stands to gain more than other countries, and could add 10% to its GDP by 2060 through appropriate investment.

These figures for potential GDP gains are higher than for any other country except Turkey (24%).  The OECD’s recommendation represents backing for measures such as reform of the National Standards Institution and moves to make obtaining a business license easier and to boost competition in various branches of manufacturing industry that the Ministry of Finance, the Ministry of Economy and Labor and the prime minister have been trying to promote in recent years.

High growth potential is only one side of the coin, the other side being the poor current situation in comparison with other countries when it comes to competition and regulation in manufacturing and public investment.  Public investment in infrastructure in Israel is less than 2% of GDP, which compares with 6% in the five leading countries in the OECD in this respect: Hungary, Norway, Luxembourg, Slovenia, and New Zealand.  (Globes 15.07)

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11.1  ISRAEL:  Moody’s Changes Israel’s Outlook to Positive From Stable, Affirms A1 Rating

On 20 July 2018, Moody’s Investors Service (Moody’s) changed the outlook on the government of Israel’s A1 government ratings to positive from stable.  Concurrently, Moody’s affirmed Israel’s long-term issuer and senior unsecured ratings at A1, senior unsecured MTN and shelf ratings at (P)A1 and backed senior unsecured rating at Aaa.

The change in the outlook was driven by the following factors:

(1) Favorable fiscal outcomes, which, if sustained, will further consolidate the shock absorption capacity of the government’s balance sheet.

(2) Increasingly resilient economy with an expanding high tech sector, increased energy self-sufficiency and a strengthening external position.

The affirmation of the A1 ratings balances Israel’s resilient economy, robust external position, strong institutional framework and favorable fiscal dynamics against a combination of longer-term demographic challenges and material geopolitical risks.  The outlook horizon will allow Moody’s to assess whether that balance will continue to shift in Israel’s favor.

The Aaa rating on the backed senior unsecured bonds issued by the government was also affirmed.  That rating reflects the debt guarantee provided by the US government (Aaa, stable) on these instruments.

Israel’s Aa3/P-1 country ceilings for foreign currency bonds, A1/P-1 country ceilings for foreign currency bank deposits and Aa3 country ceilings for domestic currency bonds and bank deposits remain unchanged. These ceilings represent the highest possible rating that an issuer domiciled in Israel can achieve.


Rationale for the Positive Outlook

First Driver: Sustaining Favorable Fiscal Outcomes Will Consolidate Shock Absorption Capacity

The first driver of the decision to assign a positive outlook is Israel’s favorable fiscal dynamics, which, if sustained, for example by maintaining prudent budgeting, will further consolidate the shock absorption capacity of the government’s balance sheet.

In particular, the general government debt ratio has declined by more than 10% since the last upward move in Israel’s credit rating in 2008 to around 60% of GDP, reflecting in part a prudent budgetary framework and a robust growth performance.  This contrasts sharply against trends in many other advanced country peers both before and after the global financial crisis.  For example, Israel is one of only a handful of advanced economies (including Norway, Switzerland and Singapore, which are all rated Aaa with a stable outlook) with a lower debt to GDP ratio today than before the global financial crisis.  Furthermore, central government deficits have remained below 3% of GDP over the past 4 years, despite repeated upward revisions of the government’s own deficit targets.

Looking ahead, budget deficits which are likely to remain at or below 3% of the GDP will allow these gains to be preserved, with the debt burden remaining at around 60% of GDP or possibly nudging down gradually.  Furthermore, the potential for further tax windfalls from foreign purchases of large tech sector companies, proceeds from privatizations and, further ahead, fiscal revenue gains from the gas sector, should help offset ongoing pressures for higher social spending and tax cuts.

Moody’s expects that recently adopted commitment controls, such as the Numerator Rule that took effect in 2016, will continue to play an important role in increasing transparency in the budget setting process through a multi-year budget framework that limits the ability of the government to make new fiscal commitments without an identified budgetary source.  Furthermore, the approval of the 2019 budget more than eight months before the start of the year also reinforces clarity of direction around the fiscal strategy going into an election year in 2019, which should help to mitigate spending pressures and promote political stability.

The positive outlook also reflects Moody’s expectation that the government finances will remain highly resilient to shocks, benefitting from a large domestic market, exceptional access to external funding and low refinancing risks.

Israel’s steadily reduced interest payments reflect both a lower debt burden and reduction in funding costs, with around 90% of government debt taken up by a deep and highly developed domestic market.  Furthermore, the lengthening of average debt maturity should help keep annual financing requirements, which have been less 10% of GDP since 2014, low while the relatively small share of foreign currency debt will continue to mitigate exchange rate risks.

Israel’s financing will also benefit from considerable foreign demand in its Israel Bonds program aimed at the Jewish diaspora which has shown a willingness to support in times of external shocks, as well as the direct benefits from the United States (Aaa stable) guarantee loan program with approximately $3.8 billion available through to 2020.

Second Driver: Increasingly Resilient Economy Which Is Likely To Sustain More Favorable Growth Than Peers

The second driver of the decision to assign a positive outlook is Israel’s increasingly resilient economy, supported by the dynamism of the high tech sector, increased energy independence and a strengthening external position, which, if sustained, will continue to support more favorable growth rates than similarly rated peers.

Israel’s economy has demonstrated robust economic growth since the last upgrade in the sovereign credit rating in 2008, with real GDP growth averaging 3.5% over the past decade, stronger than the median of A1 rated peers (2.9%).  Growth has been supported by a well-developed and credible macroeconomic policy environment focused on maintaining economic and financial stability and in particular on lowering the government’s debt burden to around 60%, which was accomplished in 2017.  The combination of a favorable external environment and a supportive macro stance allowed the economy to reach full employment, with labor participation at around 80% among 25 – 64 years olds in 2017 and unemployment falling consistently since 2009 to below 4% this year.

Importantly, the economy has shown resiliency to a range of domestic and external shocks over this period, including domestic unrest, military conflict, and the global financial crisis without a single year’s decline in real GDP.  Notably, Israel’s economy has proven more resilient than regional peers which experienced sharp contractions during the global financial crisis, which is reflected in lower growth volatility, 1.3% over the past 10 years, compared to A1 and Aa3 rated sovereigns.

The economy’s resilience derives in large part from its diversified industries, ranging from agriculture to high-technology products and services, and a strong culture of innovation.  The latter is reflected in the increasing share of the economy’s value added from the Information and Communication Technology sector and Moody’s expects the country’s strong education standards and substantial R&D spending will likely continue to underpin the sector’s role as a key productivity driver with positive spill-overs for the rest of the economy.  This is also reflected in Israel’s third place on the World Economic Forum’s Global Competitiveness Index ranking for innovation, behind the United States and Switzerland.

The high tech sector has also contributed to Israel’s robust external position, notably growth in services exports which have supported Israel’s consistent current account surplus, averaging around 3% of GDP over the past decade.  This sector is expected to continue to be the recipient of sizeable FDI inflows, supporting official reserves (which stand at record levels, around 32% of GDP at end 2017).  As a result, the country’s net international investment position has strengthened, reaching a net creditor position equivalent of around 40% of GDP last year, materially larger than the A1 median (around 28%).

These attributes will likely support an average growth rate of 3.4% to 2022, outpacing that of most advanced industrial economies into the next decade, while the external position continues to strengthen, helping to insulate Israel’s open economy to future shocks.  Moody’s expects the completion of the first phase of development of the Leviathan gas field and the start of production with associated exports of natural gas from the end of 2019 will bolster growth, strengthen the external position, continue to improve Israel’s energy independence and, over time, support government revenues.

Rationale for Affirming the A1 Rating

Israel’s A1 rating balances its strengthening government and external balance sheets, faster growth than peers and robust institutional framework against longer term structural changes in the labor market and persistent geopolitical risks.

In particular, the increasing share of the population expected to come from Israeli Arab and Ultra-Orthodox groups who are underrepresented in the labor force due to cultural reasons will constraint its ability to grow above current estimates of potential growth (around 3.5%).  According to estimates by Israel’s Central Bureau of Statistics, these population groups are expected to comprise more than 40% of the total population by 2040 compared to around one-third currently.

Israel also faces persistent geopolitical risks, notably through ongoing tensions with Iran, the potential for Israel to be involved in low-scale conflicts in the region, as well as the risk of an escalation of tensions with Palestinians.

However, Israel has seen improvements in its security situation in recent years, benefitting not only from its strong military deterrent, military support from the United States, but also improving diplomatic and economic relations with neighboring Arab countries such as Egypt (B3 stable), Jordan (B1 stable) and most recently Saudi Arabia (A1 stable), including agreements to supply some neighboring countries with natural gas from the Leviathan fields. In addition, while defense spending still remains the government’s largest spending item, recent agreements with the civilian authorities have helped stabilize the defense budget, which has been decreasing in relative terms.

What Could Change the Rating Up/Down

Israel’s rating would be upgraded should the country’s very high economic strength, robust institutions, fiscal metrics and strong external creditor position continue to demonstrate resilience against both domestic and external risks, consistent with the characteristics of a sovereign rating in the Aa range.  Such resilience would likely include the maintenance of balanced or surplus primary fiscal positions that would keep the government debt metrics reliably below 60% and possibly falling further despite the forthcoming election period.  Continued healthy growth and current account surpluses in the face of persistent geopolitical tensions would be credit positive in this respect.  Furthermore, continued progress developing the Leviathan gas fields, which provides increased clarity on the potential size and timing of the economic and fiscal benefits, would also support an upward move in the credit rating.

The positive outlook signals that the rating is unlikely to move down over the next 12-18 months.  However, the outlook could be stabilized if geopolitical developments materially disrupted Israel’s economic stability, by deterring investment and likely requiring increased defense spending, with negative implications for the country’s external position and fiscal accounts.  Furthermore, an escalation of tensions with Palestinians which leads to increased international isolation, hurting Israel’s export orientated economy, would also place downward pressure on the rating.  Similarly, evidence that the government’s demonstrated commitment to fiscal discipline, including a low debt burden, was to wane would be credit negative.

GDP per capita (PPP basis):  $36,340 (2017 Actual) (also known as Per Capita Income)

Real GDP growth (% change):  3.4% (2017 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec):  0.4% (2017 Actual)

Gen. Gov. Financial Balance/GDP:  -1.2% (2017 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP:  3.1% (2017 Actual) (also known as External Balance)

Level of economic development: Very High level of economic resilience  (Moody’s 20.07)

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11.2  ISRAEL:  Israeli Tech Exits: 2 Mega Deals But Basic Trend Down

Exits in Israel’s high-tech industry in the first half of 2018 were worth a total of $6.22 billion in 58 deals, according to the exit report from IVC-Meitar.  This total includes two deals worth over $1 billion each: the acquisition of automated inspection equipment company Orbotech by KLA-Tencor for 3.4 billion; and the $1 billion acquisition of NDS by Permira.  These two exceptional deals raised the average exit amount to $107 million in the first half of this year, from $31 million in the first half of 2017.

Excluding these two deals, the remaining 56 exits in the first half of 2018 totaled $1.82 billion, giving an average of $32.5 million, down nearly 50% from the averages in 2015 and 2016.  The number of exits in the first half of 2018 was down 20%, continuing a downward trend that started in the first half of 2015, when there were 72 exits.  The aggregate of deal amounts in the $100 million to $1 billion range was $1.1 billion, just 30-35% of the aggregate of the amounts in the same range in each half year from the first half of 2014 to the first half of 2016.

Mergers and acquisitions (M&As) dominate exit activity in Israel, both in numbers and amounts.  In the first half of 2018, there were 53 M&As (excluding the two mega-exits) totaling $1.71 billion.  There were few such exits in the $100-500 million range, which contributed to the slowdown.  According to the IVC-Meitar report, this range usually captures the largest amounts share and is responsible for most of the returns.  The number of deals in this range has halved in the last few years, from 13 deals in the first half of 2015 to 6 in the first half of 2018.  The first half of 2018 saw only three IPOs, compared with 8 in the corresponding period of 2017.  The amounts raised by IPOs totaled $115 million the first half of 2018, compared with $247 million in the corresponding period.

“Usually, the second half is weaker compared to the first half of the year, and by now the decline both in number and amounts of exits indicates that 2018 is going to finish with poor exit performance.  However, despite the sluggish performance in H1/2018, the annual exit activity might rise in a stronger second half,” said Marianna Shapira, Research Director at IVC Research Center.

The average exits multiple (return on capital invested on average in companies that made an exit during this period), excluding the mega exits, declined in the first half of 2018, reaching only 3.06 compared with 5.4 in 2014.

The comparison between the exits amount and the amount raised by the acquired companies suggests that the continuing increase in capital raised between 2013 and 2016 is not supported by exit activity.  The average multiples have been declining since 2014; however, the decrease in non-VC-backed exits since 2014 is much steeper.

IT & Software and Life Science accounted for the largest number of exits in the first half of 2018.  Life Science companies’ share of the total number of exits soared to 21%, compared with 6% in the first half of 2014.  Three of the biggest exits in the first half of 2018 were in this sector.  There were three IPOs by Life Science companies: Sol-Gel, Entera Bio and Motus GI Medical.

The main technology clusters that stood out in the first half of 2018 are the same as in the last five years: Cyber, Adtech, AI, and Pharmatech.  AI companies led with nine exits totaling nearly $500 million.

Meitar Liquornik Geva Leshem Tal partner Alon Sahar said, “It’s important to draw attention to the connection between capital raising and mergers and acquisitions or public offerings.  In recent years, there has been an increase in the number of companies raising a significant amount of high-value capital.  In 2016, 27 companies raised capital of $30 million or more.  In 2017, the number of companies doing so increased, and in the first half of 2018 another record was broken, with 26 companies raising more than $30 million.  “In contrast to these figures, we are seeing a decline in the number of merger and acquisition transactions in general (and, in particular, in values exceeding $100 million), and a decline in the number of companies operating in the direction of an IPO on NASDAQ.

“To justify the investment, and provide reasonable returns for investors, the industry will have to produce a much larger number of sales or deals at a price range of hundreds of millions of dollars.  The gap between the price of companies for purposes of raising capital and the number and value of exit events can serve as an explanation to the decline in the number of merger and acquisition transactions in recent years.  More and more companies want to or can be construed as significant companies, a phenomenon that ‘distances’ the exit date and reduces the number of transactions.  However, with respect to some of the companies, the gap between the cost of raising capital and exit prices can become a serious problem to bridge and will require transactions at lower prices than the cost of the capital raising.  We have no choice but to follow the above-noted link, which will have a major impact on the entire industry.”

Fellow partner at Meitar Liquornik Geva Leshem Tal Dan Shamgar said, “There are many instances where local companies play in the same field and vie for talent they want to recruit, technology they are developing, and customers.  If we want to build larger companies and bridge the gaps as presented by Adv. Alon Sahar, we will need to see more domestic deals and cooperation in the face of the challenges outside Israel.”

IVC Research Center is the leading online provider of data and analyses on Israel’s high-tech, venture capital and private equity industries.  IVC owns and operates the IVC-Online Database which showcases over 16,000 Israeli technology startups and includes information on private companies, investors, venture capital and private equity funds, angel groups, incubators, accelerators, investment firms, professional service providers, investments, financings, exits, acquisitions, founders, key executives and R&D centers.  (IVC-Meitar 11.07)

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11.3  ISRAEL:  Summary of Israeli High-Tech Company Capital Raising – Q2/18

The IVC Research Center and ZAG S&W Zysman, Aharoni, Gayer & Co. reported on 23 July that Israeli high-tech companies raised $1.61 billion in 170 deals in Q2/18.

In Q2/18, Israeli high-tech companies raised $1.61 billion in 170 deals.  The $300 million raised by Landa Digital Printing captured 19% of the total amount in Q2/2018.

Israeli high-tech companies raised an all-time record amount of $3.2 billion in H1/18 – higher than the annual total capital raised in 2010–2013.  Excluding the Landa financing round, the overall amount raised in H1/2018 is still the highest since the beginning of the decade.

Chart 1: Israeli High-Tech Capital Raising Q1/2012–Q2/2018

According to IVC findings, in Q2/2018, 94 VC-backed deals accounted for 55% of the total number of deals.  The capital raised in VC-backed deals totaled $841 million.  Non-VC-backed capital raising reached $765 million.  Due to the Landa financing round, the capital share of the non-VC-backed rounds soared to 48% of the total capital raised, higher compared to the historical quarterly benchmark.

Following a remarkable first quarter for A rounds companies, $200 million was raised in 39 deals in Q2/2018.  Medium range rounds (B and C) attracted $857 million in 47 deals, 53%% of the total capital raised.  The C round increase was the result of the large round by Landa ($300m).  Excluding this deal, the amount raised in C round decreased dramatically to $117 million.  The notable increase in total capital raised by B rounds was attributable to several high-value deals as well as the increase in number of transactions.  According to IVC, companies with revenues (initial revenue and revenue growth levels) accounted for $1.3 billion (81%) of all the capital raised in this period.

Adv. Shmulik Zysman, managing partner at Zysman, Aharoni, Gayer & Co. (ZAG-S & W), says: “The trend of growth in investments in Israeli high-tech continues to stand out.  After a particularly strong first quarter, the amount of capital raised in Q2/18 continues to rise.  With the exception of the Q2/16, this quarter represents the most successful quarter in the last six years.  We are also seeing an increase in capital raised from foreign investors. In our opinion, this growth is also due to an increase in investments from China, as well as from European investors who are interested, among other things, in automotive technology.”

Zysman added: “This quarter, along with a certain decline in the volume of investment in companies in the early maturity stages (Seed and R&D) compared to the previous quarter, we saw the continued increase in the amount of investment in late stage companies.  Our optimism continues at the start of the second half of the year. Following the breaking of records in Q1, the amounts of capital raised in Q2/18 increased.  We expect these trends to continue, both in terms of capital raising and foreign investors entering into the Israeli high-tech industry.”

After a year of steep declines in early stage deals, IVC data indicates the trend is changing – 186 early stage deals (seed and A rounds) were counted by end of H1/18.  The number of early stage deals peaked in 2016 at 384 transactions before dropping nearly 18% in 2017.  If the capital raising activity will continue in the same levels, 2018 forecasted to end as a good year for early stage capital raising.

Marianna Shapira, research director at IVC Research Center presented analysis of investors: “Since 2012, the number of investors involved in the Israeli high-tech market, has grown exponentially, reaching a peak in 2017.  In H1/18 the number has already reached 60% of this number”.  According to Shapira: “IVC findings showed that 65% of the investors in H1/18 were VC funds and corporate investors.  The number of investment companies has also increased over the past four years.  Lately, we have seen a wider variety of investors actively taking part in the Israeli high-tech industry, enlarging their portfolios with innovative Israeli companies. Israeli startups have never enjoyed such a vibrant and diverse investor community as it is right now.”

Capital Raising By Sector and Industry Verticals

Life science companies have lately attracted more attention in the Israeli high-tech industry. In Q2/18, life science deals amounted to $267 million in 39 deals.  The capital raised by life science companies decreased slightly compared to the previous and corresponding last year’s quarter.  Software companies led capital raising in Q2/18 with $584 million in 65 transactions, 36% of the total capital raised in Q2/18.

Looking at the industry verticals, artificial intelligence (AI) companies headed the leading verticals in Q2/18, raising $426 million in 45 deals.  Cyber security capital raising remained high with 30 deals accounting for $394 million. In Q2/18, the number of cyber security deals in B round peaked, and attracted most of the capital, soaring to 62% of all capital raised by cyber companies.  As a result, the cyber vertical contributed to the notable rise of B round amounts. Both IoT ($214 million) and fintech ($150 million) capital raising slowed down this quarter, following a hefty Q1/18.

Chart 2: Number of Israeli High-Tech Capital Raising Deals by Deal Size Q1/2012–Q2/18


US Capital raising by high-tech companies – H1/2018

US numbers are no less impressive and offer additional evidence of the availability of capital in the start-up landscape worldwide.  A record $57.5 billion was raised by 3,912 high-tech companies in the US in H1/18 – the highest amount since the dotcom bubble.  In Q2/18, the amount grew considerably, while the number of deals remained stable.

According to MoneyTree Q2/18 global report, an increase of 13% in European capital raising – $5.7 billion was raised in 659 deals.

Methodology:  This Survey reviews capital raised by Israeli high-tech companies from Israeli and foreign venture capital funds as well as other investors, such as investment companies, corporate investors, incubators and angels.  The Survey is based on reports from 408 investors of which 59 were Israeli VC management companies and 349 were other entities.

IVC Research Center is the leading online provider of data and analyses on Israel’s high-tech, venture capital, and private equity industries. Its information is used by all key decision-makers, strategic and financial investors, government agencies, and academic and research institutions in Israel.

IVC-Online Database ( showcases over 8,000 Israeli technology startups, and includes information on private companies, investors, venture capital and private equity funds, angel groups, incubators, accelerators, investment firms, professional service providers, investments, financings, exits, acquisitions, founders, key executives, and R&D centers.

ZAG-S&W (Zysman, Aharoni, Gayer & Co.) is an international law firm with offices in Israel, the United States, China and the United Kingdom.  The firm’s attorneys specialize in all disciplines of commercial law for both publicly held and private companies, with particular expertise in hi-tech, life science, international transactions, and capital markets. ZAG-S&W provides result-driven legal and business advice to its clients, addressing all aspects of the clients’ business activities, including penetration into new markets in strategic locations.  (IVC 23.07)

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11.4  JORDAN:  Arabian Gulf Has Designs on Jordan’s Foreign Policy

Sada posted on 17 July that Arabian Gulf economic aid has averted Jordan’s debt crisis for now, but further support may require concessions regarding the kingdom’s previously independent foreign policy.

Framed as an act of goodwill and regional support, the 10 June renewal of the Gulf Aid Package to Jordan – after new economic austerity measures ignited mass protests – may spell trouble for the kingdom.  As the Gulf countries, especially Saudi Arabia and the United Arab Emirates (UAE), move toward a more aggressive regional policy, it is likely that this most recent infusion of aid will come with political strings.  The Gulf countries see Jordan as a lynchpin in their Israel – Palestine strategy and as a potential ally in the ongoing Gulf crisis with Qatar.  Facing mounting economic pressure at home, Jordan may have few options other than to make such political concessions in exchange for the much-needed financial relief.

Jordan is in a dire economic state with no easy solution.  Public debt has reached 94% of the country’s GDP, unemployment remains high at 18.5%, and the ongoing refugee crisis is exacerbating current economic challenges.  In response to these concerns and to pressure from the International Monetary Fund (IMF), which has extended the kingdom $723 million in loans, the Jordanian government drafted far-reaching austerity measures in May, sparking public protests that forced the government to restructure and walk back on its proposed increases to income taxes and cuts to subsidies for electricity, fuel and bread.  This has left Jordan yet again reliant on foreign aid to support its economy.  The fellow monarchies of Saudi Arabia, the UAE, and Kuwait quickly convened the Mecca Summit on 11 June to offer a five-year, $2.5 billion aid package to Jordan.

The aid package, however, provides neither immediate aid nor holistic long-term support and can be withdrawn at any time.  The package is comprised mainly of loans in the form of deposits (which includes a deposit in the Jordanian Central Bank to reinforce currency reserves), guarantees of World Bank loans, annual budget support and funding for infrastructural investments.  The Saudis, Emiratis and Kuwaitis can renege on the deposits to the Central Bank and infrastructural investments at their discretion, meaning these two loans can be used as leverage to extract political concessions – a distinct possibility as Jordan’s foreign policy strays further from the Saudi–Emirati line.

In 2017, at the tail end of the 2012 five-year Gulf aid package, Saudi Arabia decided not to renew it despite Jordan’s continued financial need.  Jordanian officials have said the decision was punishment for taking positions inconsistent with those of Saudi Arabia on regional matters, mainly its continued support of a Palestinian state, its failure to ban the Muslim Brotherhood and its refusal to sever diplomatic ties with Qatar in June 2017.  King Abdullah II even said in January 2018 that the kingdom has been financially pressured to mute its opposition to the U.S. decision to move its embassy from Tel Aviv to Jerusalem.  As the Qatar crisis deepens and the Trump administration’s potential Israel–Palestine peace deal continues to dominate headlines, the Saudi–Emirati bloc now has even more motivation to use the aid package to capitalize on Jordan’s latest instability and constrain the country’s ability to act independently of its donors.

In recent months, the Arab Gulf countries have been rumored to be more actively supporting the Trump administration’s aspirations of making a peace deal between Israel and the Palestinian territories, hoping this means they can get U.S. and potentially Israeli assistance to counter Iran.  As custodian of Jerusalem’s holy sites, home to millions of Palestinians in diaspora and neighbor to Israel and the Palestinian territories, Jordan is a crucial party to any future deal and, to the dismay of the Arab Gulf countries, has been outspokenly divergent from their policy decisions on the matter.  Additionally, Saudi Arabia is eyeing taking over Jordan’s custodianship of Jerusalem’s holy sites as a way to facilitate the Trump administration’s peace deal.  The Jordanian government has reportedly been increasingly concerned about Saudi Arabia’s expanding commercial and religious ties in Jerusalem, its rejection of Jordan’s assertion as custodian of these sites in recent months, and numerous diplomatic spats with Riyadh over the Jerusalem question.

For Jordan, acquiescing to the rumored Israel–Palestine peace agreement would, most notably, eliminate the right of Palestinian refugees to return to the Palestinian territories.  This would likely also ignite anger among East Bank Jordanians who see the government as allowing Jordan to become an alternative country for Palestinians.

Amman has also been caught in the middle of the diplomatic war between Qatar and Saudi Arabia, the UAE and Bahrain.  When the blockade was initiated in June 2017, Saudi Arabia and the UAE asked many countries in the region to cut diplomatic ties with Qatar, but Jordan opted to downgrade relations instead.  It is likely that the coalition viewed the kingdom’s response as an act of defiance, which Jordanian officials speculated was a major reason Saudi Arabia declined to renew its aid in 2017.  This had a considerable impact on Jordan’s ability to cope with its latest round of economic woes.

As the blockade continues with no apparent end in sight, it is likely that Saudi Arabia and the UAE will use this most recent aid package as leverage to force Jordan’s to take positions consistent with that of Riyadh and Abu Dhabi, including severing financial ties with Qatar.  This would cut Jordan off from one of its most consistent donors and sources of foreign income.  Qatar, a popular work location for Jordanian nationals, is the third-largest investor in Jordan, with an estimated $2 billion in investments and the volume of trade between the two countries is valued at over $400 million.  Following the most recent protests, Qatar also extended its own financial support package, pledging $500 million in economic aid, including 10,000 job openings for Jordanian nationals in Qatar and investments in infrastructure and tourism in Jordan.

The Gulf monarchies would not let a fellow monarchy and a country as strategically located as Jordan collapse.  But their generous aid package (3.5 times larger than the current IMF loan) buys them not just stability but also leverage.  The popular protests drove the government to defer critical economic reforms, leaving it further reliant on foreign aid.  However, accepting the Gulf aid package with all its potential foreign policy concessions could add to the turmoil and may force a complete re-evaluation of its foreign relations in the region, most especially the neutrality that has allowed the small kingdom to withstand a tumultuous regional political environment.

Rachel Furlow and Salvatore Borgognone are Amman-based independent Middle East analysts.  (Sada 17.07)

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11.5  BAHRAIN:  IMF Executive Board Concludes 2018 Article IV Consultation with Bahrain

On July 9, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the Kingdom of Bahrain.

The decline in oil prices since 2014 and absence of buffers have led to a rise in fiscal and external vulnerabilities. Public debt increased to 89% of GDP, with large fiscal and external current deficits persisting. Reserves remain low, covering only 1.5 months of prospective non-oil imports at end 2017.

Output grew by 3.8% in 2017, underpinned by a resilient non-hydrocarbon sector, with robust implementation of GCC-funded projects as well as strong activity in the financial, hospitality, and education sectors.  The banking system remains stable with large capital buffers. Growth is projected to decelerate over the medium term.  Despite planned fiscal consolidation measures, fiscal and external deficits are projected to continue over the medium term, due to the large and growing interest bill.  Delays in implementing a credible fiscal plan and changes in market sentiment as global financing conditions tighten present downside risks to the baseline.

Executive Board Assessment

Executive Directors welcomed the resilience of growth in Bahrain, while noting downside risks to the outlook stemming from the rise in fiscal and external vulnerabilities, tighter global financing conditions, delays in fiscal adjustment, and lower energy prices.  Against this background, Directors called for additional sustained efforts to improve Bahrain’s fiscal and external positions, preserve financial sector resilience, and support diversified, inclusive growth.

Directors welcomed the authorities’ continued fiscal reform efforts, but observed that public debt is expected to increase further over the medium term and reserves are projected to remain low.  In this regard, they agreed that a comprehensive package of reforms is needed to reduce fiscal deficits over the medium term.  Directors welcomed the authorities’ commitment to continue subsidy reforms, cut non-productive spending, and raise non-oil revenues by introducing a value added tax by 2019.  They considered that additional steps are needed to put public finances on a sustainable trajectory, striking the right balance between revenue and expenditure measures while protecting the most vulnerable.  In this context, Directors emphasized the need to introduce direct taxation, including a corporate income tax, while containing the public wage bill and targeting subsidies to the poorest.  They looked forward to the newly established debt management office developing a contingent financing strategy to mitigate financing risks and costs.  Directors also encouraged the authorities to strengthen their macro-fiscal framework and increase fiscal transparency and accountability, securing public support and awareness, and enhancing market confidence.

Directors agreed that the exchange rate peg remains appropriate for the economy, and delivers a clear and credible policy anchor, keeping inflation low and stable.  They underscored the importance of fiscal adjustment in supporting the peg and rebuilding international reserves, and ensuring external sustainability.  In this context, Directors recommended gradually unwinding central bank lending to the government.

Directors welcomed the central bank’s continued efforts to implement the 2017 FSAP recommendations to further strengthen the regulation and supervision of the financial sector.  They emphasized the need to develop a well-defined emergency liquidity assistance framework, deepen the interbank market, and enhance the supervision of Islamic banks and insurance companies.  Directors also encouraged close monitoring of the build-up of household debt.  They welcomed Bahrain’s initiatives to promote fintech, while underscoring the importance of monitoring risks.  Continued efforts to strengthen the AML/CFT framework were also encouraged.

Directors commended the authorities’ initiatives to streamline business regulations to promote private sector development, diversification, and job creation.  They welcomed recent developments in enhancing SMEs’ access to finance, as well as recent labor market reforms to increase flexibility and promote employment in the private sector.  They called for further structural reforms to boost productivity and competitiveness through more privatization plans and public/private partnerships, and measures to strengthen the education system and support greater female labor force participation.  (IMF 15.07)

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11.6  QATAR:  Moody’s Changes Qatar’s Rating Outlook to Stable, Affirms Aa3 Rating

On 13 July 2018, Moody’s Investors Service (Moody’s) changed the outlook on the Government of Qatar’s long-term issuer ratings to stable from negative and affirmed the long-term issuer and foreign-currency senior unsecured debt ratings at Aa3.

The key driver of the outlook change to stable is Moody’s assessment that Qatar can withstand the economic, financial and diplomatic boycott by the three neighboring Gulf Cooperation Council (GCC) countries and Egypt (B3 stable) in its current form, or with possible further restrictions, for an extended period of time without a material deterioration of the sovereign’s credit profile.  This assessment is in part based on evidence of broad resilience of Qatar’s credit metrics to the economic and financial blockade over the past 13 months.

The rating affirmation at Aa3 takes into account a number of credit strengths embedded in Qatar’s credit profile which, in Moody’s view, remains supported by the large net asset position of Qatar’s government, exceptionally high levels of per-capita income, very large hydrocarbon reserves and relatively low fiscal and external break-even oil prices – all of which will continue to provide a significant shock absorption capacity to the sovereign.

The senior unsecured rating of SoQ Sukuk A Q.S.C. was affirmed at Aa3. According to Moody’s the debt obligations of SoQ Sukuk A Q.S.C. represent debt obligations of Qatar’s government.

Qatar’s long-term foreign-currency bond and deposit ceilings remain unchanged at Aa3 and the short-term foreign-currency bond and deposit ceilings remain unchanged at P-1.  Qatar’s long-term local-currency bond and deposit country risk ceilings also remain unchanged at Aa3.

Rationale for Changing the Outlook to Stable from Negative

Evidence of Credit Resilience to the GCC Boycott:  The stable outlook reflects Moody’s view that Qatar’s credit metrics will likely remain consistent with a Aa3 rating as the boycott continues.  The stable outlook also makes provision for some additional restrictions and is supported by Moody’s view that a quick resolution or a significant escalation of the regional dispute materially affecting Qatar’s credit metrics are a low-probability event.

The boycott by Saudi Arabia (A1 stable), the United Arab Emirates (UAE, Aa2 stable), Bahrain (B1 negative) and Egypt started in June 2017 and caused a sudden closure of established land and maritime trade routes for Qatar’s imports, a sharp drop in its goods and services exports to the four countries and a large outflow of foreign funding from the Qatari banking system.

The rapid recovery in imports, with initial levels restored in less than four months, illustrates the economy’s flexibility and policy effectiveness in rerouting supplies.  This involved arranging an “air bridge” for food and other staples in the early weeks of the blockade and increasing capacity of a newly completed Hamad Port to prevent macroeconomic disruptions and preserve social stability.

According to Moody’s estimates, the economic impact of the boycott has been modest and largely temporary.  The only sectors that have been visibly impacted by the boycott are tourism, with visitor arrivals from the GCC countries that accounted for close to half of the total arrivals in 2016, falling by 40% and unlikely to recover in the foreseeable future, and transportation, namely the national carrier Qatar Airways, which has been blocked from flying to 18 destinations in the Middle East and has said earlier this year that it has made a “substantial loss” during the past financial year.

Rather than a direct economic impact, the main credit implication of the boycott through a permanent loss in tourism and transportation revenues and potential is that it will hamper the government’s economic diversification efforts.  However, in Moody’s view, these constraints on economic diversification do not materially affect the sovereign’s credit profile.

Moreover, the effective mobilization of funds from the central bank’s reserves and the sovereign wealth fund’s foreign assets preserved financial and macroeconomic stability in the face of significant outflows from the Qatari banking system.  While the interventions came at the cost of a material erosion in the central bank’s reserves buffers, they also demonstrate effective coordination and crisis management capacity among the public sector institutions including the central bank, the ministry of finance and the sovereign wealth fund.

The outflows were equivalent to $30 billion or 18% of GDP during the second half of 2017, as GCC clients repatriated their deposits and GCC banks withdrew funding.  The foreign outflows stabilized towards the end of 2017 and about a third of the cumulative outflows has reversed in the first five months of 2018.  This has allowed the central bank and the Qatar Investment Authority (QIA, the sovereign wealth fund) to move back some of their assets offshore. Meanwhile, the foreign exchange reserves of the central bank increased to $23.3 billion in May 2018 from $13.2 billion at the end of last year (excluding gold and SDRs), albeit still well below their $33.7 billion level before the boycott.

The demonstrated financial and institutional capacity to use the sovereign wealth fund’s (SWF) foreign assets mitigates Qatar’s external vulnerability stemming from the economy’s large external debt repayments in relation to the level of the central bank’s foreign exchange reserves.  That being said the lack of transparency about the exact size of the QIA assets and their composition prevents a detailed assessment of Qatar’s financial capacity to stem potential balance of payments pressure.

On the fiscal side, the direct fiscal costs of the GCC blockade have so far been very small and limited to the funding of the “air bridge” during the first two months of the blockade (less than 0.1% of GDP).  A more significant fiscal cost has been indirect due to the delayed implementation of planned new revenue measures, including utility tariff and public service fee hikes that were scheduled for mid-2017.  These measures were put on hold to give the private sector additional room to adjust to the blockade, leading to an estimated loss of government revenue of 1.5-2.5% of GDP.  However, this revenue shortfall was fully offset by lower capital expenditure.  Moody’s expects that the delayed revenue measures will be implemented during 2018.  Similarly, Moody’s expects that the 5% value-added tax, which the authorities were supposed to implement at the be beginning of 2018 and which would yield up to 0.9% of GDP in additional non-hydrocarbon revenue for the budget, will be implemented by early 2019, putting fiscal reform back on track.

Meanwhile, any revenue shortfalls this year will be more than offset by higher oil prices which the 2018 budget assumed at $45/barrel, most likely well below the average level in 2018 and underscoring the authorities’ prudent approach to budgeting.

Contingent liabilities that could potentially crystallize on the sovereign balance sheet in relation to the extended losses of Qatar Airways, which is fully owned by the QIA, would be comfortably absorbed by the SWF.  Moody’s estimates that the SWF had assets worth close to 190% of GDP at the end of 2017, compared with 3.3% of GDP in Qatar Airways’ debt obligations, only a fraction of which would plausibly crystallize.

Rationale for Affirming the Rating at Aa3

Qatar’s Aa3 rating remains supported by a very large net asset position of the Qatari government, that Moody’s estimates at 137% of GDP at the end of 2017; exceptionally high levels of per-capita income ($61,282 in current US dollars and $124,529 on a purchasing power parity basis); and very large hydrocarbon reserves (including more than 140 years of natural gas production at the current rate).

Qatar’s rating is also supported by its moderate fiscal and external break-even oil prices, the oil price levels that would balance the government’s budget and the current account respectively.  According to the IMF, Qatar’s fiscal breakeven price is around $47/barrel for 2018 (when income from the SWF assets is included in revenue), while its external breakeven price is $57/barrel, both below current oil price levels and in line with Moody’s medium-term assumptions (around $45-65/barrel).

Furthermore, Moody’s expects that the fiscal breakeven price will decline by up to $20 over the medium term as the government halves its capital spending after the 2022 FIFA World Cup and raises LNG production by close to 30% from the new gas development in the North Field during 2023-2024.  As a result, Qatar’s government budget is likely to be broadly balanced or, in the medium term, in surplus, leading to a gradual decline in government debt from just under 50% of GDP in 2017 towards 40% of GDP early next decade.

What Could Move the Rating Up/Down

The stable outlook reflects Moody’s view that risks to Qatar’s credit profile are balanced.  A sustained and material reduction in external vulnerabilities through a combination of a decrease in external debt and a re-building of foreign exchange reserves would likely prompt Moody’s to upgrade the rating, especially if also accompanied by improved transparency about the size and the composition of the government’s financial assets.

Conversely, an escalation of the regional tensions that would (1) threaten to disrupt Qatar’s hydrocarbon exports on a prolonged basis, (2) put material pressure on the government’s financial position, including through crystallization of wider public sector liabilities on the government’s balance sheet, and (3) lead to a further significant depletion of the external buffers would likely lead Moody’s to downgrade the rating.  Furthermore, a material slowing or reversal of fiscal consolidation that would point to a sustained rise in the government’s debt burden would put downward pressure on the rating.  (Moody’s 13.07)

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11.7  UAE:  $8 Billion Tech Industry Presents Growth Opportunities for Chinese Businesses

With a thriving technology sector, deepening bilateral ties with China, and recent announcements by the UAE Cabinet to allow 100% foreign ownership in certain onshore industries, Dubai is an increasingly attractive trade and investment destination for Chinese investors looking for an opportunity in the city’s rapidly evolving tech industry – especially with the value of trade between UAE and China at almost $53.3 billion last year, according to the Ministry of Economy.

Valued at nearly $8 billion, the UAE’s domestic IT market is expected to grow at an average of 5% annually in the period between 2017 and 2022, reports the International Data Corporation (IDC).  This, along with a high quality of life, strong educational opportunities, career growth prospects, and supportive business legislations are causing an increase in student migration and tourism from Chinese nationals to Dubai.  According to the Dubai Statistic Centre, the number of Chinese visitors rose to 573,000 in the third quarter of 2017, up 49% from the same period in 2016 – highlighting a significant possibility to connect Dubai’s growing Chinese community to opportunities in the local tech sector.

As the region’s leading specialized technology and business community, Dubai Internet City (DIC) – whose partners include leading Chinese companies such as Huawei, UnionPay, China Telecom Middle East and Oceanblue Cloud – is at the forefront of this development.

According to Ammar Al Malik, Executive Director of Dubai Internet City: “China has long been one of the UAE’s most important international trading partners.  As our local tech industry matures amid game-changing reforms in our trade and investment laws, we are confident that Chinese citizens will find a wealth of investment and employment opportunities to explore here in Dubai.”

He added: “The next few years will define Dubai’s journey to becoming a global powerhouse of innovation, supported by several government efforts that are driving the industry to the next stage of growth – from the roll-out of ultra-fast 5G mobile internet networks in 2019, to the announcement of the Dubai Blockchain Strategy, which aims to move half of all government transactions to the blockchain by 2021 – and we look forward to leveraging these opportunities in partnership with our Chinese counterparts.”

For global ICT infrastructure and smart device manufacturing giant Huawei, the UAE’s progressive tech policies are a key enabler in its drive to provide inclusive, intelligent solutions that create a more connected world.

Li Xiangyu (Spacelee), Vice President, Public Affairs and Communications, Huawei Middle East said: “At the heart of the Huawei ethos is our dedication to innovation and knowledge sharing, and we could not have asked for a better environment than the Emirates to fulfill these ideals.  The UAE government, as well as our local partners and customers, have demonstrated that they share our relentless drive for innovation and exploration, and thanks to them we are making huge strides in our vision to bring digital to every person, home and organization for a fully connected, intelligent world.  We are committed to assisting the UAE’s leadership in achieving the ambitious targets outlined in UAE Vision 2021 by bringing the world’s most cutting-edge technology to the country and continuing to invest in unearthing and developing local ICT talents, and we look forward to our continued collaboration for many years to come.”

According to Hang Wang, General Manager of UnionPay International Middle East, a global business focused on bank cards services: “China has been the largest trading partner of the UAE for three consecutive years.  The economic and trade exchanges between China and UAE continues to grow, generating greater demands for cross-border payment.  This has brought more opportunities for UnionPay in the UAE.  UnionPay International will continue to strengthen collaboration with the major institutions in UAE, promoting the large-scale issuance of UnionPay cards in the UAE based on UnionPay’s extensive acceptance in the market, while also actively rolling out UnionPay innovative products and services including UnionPay mobile QuickPass and QR code payment, to build a safe and convenient payment bridge between China and UAE.”

Alexann Zhang, Founder and CEO of Oceanblue Cloud, a leading SD- WAN provider, believes Dubai is the destination of choice for international businesses looking to establish their regional head offices to expand their operations in the Middle East and North Africa region – a sentiment that is shared by Mr. Liu ChangHai, Managing Director of China Telecom (Africa and Middle East) Limited, who says their offices in Dubai Internet City have become “a major hub” for business development with partners and customers in the Middle East region since they first established the company in 2008.

Dubai’s comprehensive business infrastructure, coupled with the announcement of 100% foreign ownership laws, is expected to create significant growth opportunities for private firms as the UAE leverages its diversification efforts to focus on the development of non-oil sectors.  Businesses can expect to find increased foreign investment within the country’s evolving tech industry, especially since the recent launch of the China New Era Technology Fund – a $15 billion fund aiming to invest or acquire firms across China and around the world – which would garner interest among businesses and in turn, influence sizeable investments in local projects.  (AETOSWire  20.07)

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11.8  EGYPT:  Egypt Moving Forward – IMF’s Key Challenges & Opportunities

The most important issues that face Egypt over the coming years are tied to a rapidly growing population, the modernization of its economy, and how best to ensure a modern social safety net to protect the most vulnerable in society.  Below, IMF Mission Chief for Egypt Subir Lall discusses these three issues in detail.

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1. Take advantage of the rapidly growing population: Over the next five years, around 3.5 million young Egyptians are projected to join the labor force. Absorbing these new entrants into the labor market will be a challenge.  However, this also creates a tremendous opportunity for faster growth – if Egypt can support the emergence of a strong and vibrant private sector to productively employ this emerging generation of workers.

Over the past several decades, the private sector in Egypt has been less dynamic and outward-oriented than in peer countries, with a small share of firms able to compete outside the domestic market.  To foster greater private sector development and export-led growth, the authorities have broadened the structural reform agenda under their program, initiating reforms to improve the efficiency of land allocation, strengthen competition and public procurement, improve transparency of state-owned enterprises, and tackle corruption.

2. Modernize the economy: With nearly 100 million people and a geographic location that provides excellent access to important foreign markets, Egypt has immense potential. However, economic development has been constrained by the legacy of inward-oriented economic policies, weak governance, and a large role for the state in economic activity that has resulted in significant misallocation of resources.

With the economy now stabilizing, Egypt’s challenge is to modernize its economy to better take advantage of its potential.  An essential element of that process is to ensure the best allocation of resources to generate higher growth, and remove price distortions that impede markets from functioning efficiently.

Energy subsidies have been among the most significant price distortions.  They keep fuel costs well below the market price, which encourage inefficient use of energy and overinvestment in capital intensive industries to take advantage of low fuel costs.  Energy subsidies are costly and inequitable, tending to benefit the well-off who are disproportionately large energy consumers.

Pricing energy correctly will help improve economic efficiency so that investment is not channeled to capital intensive and heavy energy-use sectors.  Rather, investment should be made into job creating sectors that benefit small and medium-sized businesses that take advantage of Egypt’s strengths, and help integrate the country into global supply chains.  Reducing energy subsidies also frees up resources for health and education – critical to long-term economic growth and societal progress.

3. Provide a modern social safety net to protect the vulnerable: As Egypt begins to modernize its economy and make it more competitive, it will also need to continue to bring down public debt to a level consistent with long-term sustainability. The challenge is to ensure that the most vulnerable segments of society are protected during this process, and that fiscal resources are safeguarded for spending on health and education.

The shift away from a social protection system based on energy subsidies is crucial in moving toward a better-targeted and more effective social safety net.  The 2018/19 budget will continue to replace poorly-targeted energy subsidies with programs that directly support the poorest households through expanded cash transfer and food subsidy programs.  The authorities have strengthened programs like food smart cards, and more than doubled the amount of assistance provided through these cards.

The government has also strengthened social solidarity pensions, and the Takaful and Karama cash transfer programs.  Takaful is an income support program for families with children, and Karama is a social inclusion program for persons who cannot work, specifically the elderly and people with disabilities.

These efforts are also being supported by reforms to improve the efficiency of government spending and tax collection to ensure that pro-poor spending and investments in health and education are protected.  More broadly, the faster creation of private sector job opportunities and the integration of women into the labor force as part of the authorities’ inclusive growth strategy is expected to steadily improve living standards, including for lower-skilled workers.  (IMF 17.07)

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11.9  SAUDI ARABIA:  IMF Executive Board Concludes 2018 Article IV Consultation

On 16 July 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation with Saudi Arabia.

Real GDP growth is expected to increase to 1.9% in 2018, with non-oil growth strengthening to 2.3%.  Growth is expected to pick-up further over the medium-term as the reforms take hold and oil output increases.  Risks are balanced in the near-term.  The employment of Saudi nationals has increased, especially for women, but the unemployment rate among Saudi nationals rose to 12.8% in 2017.

CPI inflation has increased in recent months with the introduction of the value-added tax (VAT) and higher gasoline and electricity prices, and is forecast at 3% in 2018, before it stabilizes at around 2% over the medium-term.  The fiscal deficit is projected to continue to narrow, from 9.3% of GDP in 2017 to 4.6% of GDP in 2018 and then further to 1.7% of GDP in 2019.  With oil prices implied by futures markets declining over the medium-term, the deficit is then projected to widen.  The deficit is expected to continue to be financed by a combination of asset drawdowns and domestic and international borrowing.

The current account balance is expected to be in a surplus of 9.3% of GDP in 2018 as oil export revenues increase and remittance outflows remain subdued.  The Saudi Arabian Monetary Authority’s (SAMA) net foreign assets are expected to increase this year and over the medium-term.

Credit and deposit growth remain weak, but both are expected to strengthen due to higher government spending and non-oil growth.  Bank profitability should increase as interest margins widen, and banks remain well capitalized and liquid.

The authorities are continuing with their fiscal reforms including through the introduction of the value-added tax and further energy price increases at the beginning of 2018.  Reforms are also ongoing to improve the business environment, develop a more vibrant small and medium enterprises (SME) sector, deepen the capital markets, increase the involvement of women in the economy, and develop new industries with high potential for growth and job creation.

Executive Board Assessment

Executive Directors commended the authorities for the progress made in implementing their reform agenda.  Directors welcomed the broadly positive outlook and emphasized that higher oil prices should not slow the reform momentum.  They agreed that continued commitment to implementing wide‑ranging reforms will help achieve the fiscal objectives and promote non-oil growth.

Directors welcomed the ongoing fiscal consolidation efforts and agreed that aiming for a balanced budget by 2023 is appropriate.  They emphasized the importance of fully implementing the revenue reforms and limiting the future growth of government spending to achieve this objective. In the event oil prices exceed those assumed in the budget, most Directors recommended saving the additional revenues to begin to rebuild fiscal buffers.

Directors welcomed the new revenue measures, particularly the introduction of the VAT.  They encouraged the authorities to continue their preparations to lower the VAT registration threshold in 2019.  Directors welcomed the authorities’ intention to continue to gradually increase energy prices, but saw scope for more communication about the future price increases.  They emphasized the importance of ensuring that the payments through the citizens’ accounts are adequate to compensate low and middle-income households for the impact of the price increases.

Directors encouraged the authorities to anchor fiscal spending in a medium-term expenditure framework.  They supported the ongoing civil service review, which should help identify reforms to contain the wage bill.  Directors welcomed recent efforts to strengthen the medium-term fiscal framework, increase fiscal transparency and develop macro-fiscal analysis, and encouraged further progress in these areas.  They emphasized the importance of an integrated asset-liability management framework to guide the government’s borrowing and investment decisions.

Directors welcomed the progress in implementing structural reforms, and emphasized that these should continue in consultation with the private sector.  They noted the progress with the privatization and public-private partnerships plans and believed this program should be accelerated.  Directors agreed that the public sector could be a catalyst for the development of new sectors, but emphasized that this should not crowd-out the private sector.

Directors highlighted that policies to create jobs for nationals in the private sector should focus on leveling the playing field between Saudis and expatriates.  In addition to the ongoing reforms, they believed that setting clear expectations about employment prospects in the public sector, reforming the visa system for expatriate workers, strengthening education and training, and addressing remaining constraints to female employment would be key.

Directors welcomed the authorities’ focus on financial development and inclusion.  They agreed that increasing SME finance, improving financial sector access, particularly for women, and developing the debt market are priorities.  They welcomed SAMA’s efforts to strengthen liquidity management.  Directors encouraged the authorities to continue to strengthen the effectiveness of their Anti-Money Laundering/Countering the Financing of Terrorism framework.

Directors agreed that the exchange rate peg to the U.S. dollar continues to serve Saudi Arabia well given the structure of the Saudi economy.  (IMF 24.07)

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11.10  TURKEY:  Fitch Downgrades Turkey to ‘BB’; Outlook Negative

On 13 July 2018, Fitch Ratings has downgraded Turkey’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘BB’ from ‘BB+’.  The Outlook is Negative.

Key Rating Drivers:  The downgrade of Turkey’s IDRs and Negative Outlook reflects the following key rating drivers and their relative weights:

High:  Fitch believes downside risks to macroeconomic stability have intensified owing to the widening in the current account deficit (CAD), more challenging global external financing environment, jump in inflation and the impact of the plunge in the exchange rate on the private sector, which has significant foreign currency-denominated debt.  In Fitch’s opinion, economic policy credibility has deteriorated in recent months and initial policy actions following elections in June have heightened uncertainty.  This environment will make it challenging to engineer a soft landing for the economy.

Fitch expects the CAD to widen to 6.1% of GDP in 2018, driven by higher fuel prices, and in 1H, higher household consumption.  The fall in the lira, combined with Fitch’s forecast of lower oil prices and the ongoing tourism recovery, will cause the deficit to narrow to 4.1% in 2019.  FDI is forecast to remain around 1% of GDP, meaning that the deficit will be largely debt financed.  Fitch forecasts net external debt to rise to 35% of GDP at end-2018, compared with the current ‘BB’ range median of 8%.

Turkey’s large gross external financing requirement leaves it vulnerable to shocks.  For 2018, Fitch estimates it at $229 billion, comprising a CAD of $54 billion, medium and long-term amortization of $57 billion and short-term debt of $118 billion.  Fitch assumes that gross international reserves will decline to $96 billion by end-2018, reducing Turkey’s liquidity ratio to 70%.  Net reserves are less than half of gross reserves.

Headline inflation jumped to a 15-year high of 15.4% (up 2.6% mom) in June, in the aftermath of the sharp depreciation of the lira (by 27% year to date).  Although we expect the cumulative 500bp hike in the policy interest rate by the central bank (CBRT) since April to ease inflationary pressure, Fitch forecasts annual average inflation to be more than double the current ‘BB’ range median, at 13% in 2018 and 10.8% in 2019.

Notwithstanding the simplification of interest rate setting around the one week repo rate announced in June, monetary policy credibility has been damaged by comments by President Erdogan suggesting a greater role of the presidency in setting monetary policy after the elections.  Subsequent amendments to the central bank’s articles of association appear to strengthen the president’s influence, notably over key appointments.  Monetary policy has persistently been unable to bring inflation near its 5% target and inflation expectations have become unanchored.

In Fitch’s view, a sustained reduction of inflation would require an increase in the credibility and independence of monetary policy and tolerance of a period of weaker economic growth.  The prospects for this as well as structural economic reform are uncertain.  Key figures from the previous administration with reformist credentials were excluded from a new cabinet, appointed on 9 July, while the son-in-law of the president was appointed as Minister of Treasury and Finance.

The significant tightening of financial conditions will cause GDP growth to slow.  After a buoyant 2% qoq in Q1 (7.4% yoy) and reasonable April, it is likely that the economy has contracted and Fitch expects it to continue to shrink until Q4.  Fitch’s base case is for GDP growth of 4.5% in 2018 and 3.6% in 2019, supported by healthy external demand, a continued recovery in tourism, infrastructure spending and employment growth.  A period of growth below trend (estimated by Fitch at 4.8%) may allow a partial unwinding of imbalances. However, the risk of a hard landing for the economy has increased.

Currency weakness poses a test to the private sector, given its open net FX position of $221 billion at end-April, while tighter financial conditions test its large external financing requirement.  The private sector has regularly demonstrated capacity to cope with adverse financing and exchange rate shocks, but a series of recent corporate debt restructurings point to the crystallization of risks stemming from high corporate borrowing in recent years.

Tougher financing conditions and a weaker economy will likely hit the performance of the banking sector, heightening pressure on asset quality, capitalization and liquidity and funding profiles.  External debt rollover rates for banks have held up, and banks generally have sufficient foreign currency liquidity to meet foreign currency wholesale liabilities maturing within a year.  However, the cost of financing has gone up and market demand for some instruments has tailed off.

Headline NPLs remain stable at around 3%, but the volume of at-risk restructured loans and watch-list loans continues to rise, although the switch to IFRS9 complicates the assessment.  Banks may not be able to fully pass on higher CBRT rates, putting pressure on margins, and the high loan-to-deposit ratio (127%; 152% TRY) and weaker demand for foreign currency lending will likely constrain credit growth.  Fitch placed 25 banks on Rating Watch Negative on 1 June reflecting heightened risks following increased market volatility.

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

Fiscal performance has deteriorated modestly at the central government level over the first five months of the year, but this does not yet capture a pre-election economic support package; the largest item of which was a bonus for pensioners that cost TRY21 billion (0.6% of GDP).  Although spending growth is likely to ease after the elections, the slowing economy will hit fiscal revenues.  As a result, Fitch forecasts the general government deficit to widen to 2.9% of GDP in 2018 from 2.1% in 2017.  A tightening of policy is assumed from 2019 in line with the completion of the electoral cycle.

Moderate general government debt is a rating strength and is forecast to remain so despite the deterioration in headline fiscal performance.  At 28.1% of GDP at end-2017, general government debt/GDP is well below the current peer median of 44.5%.  Debt/revenue of 83.8% was almost half the current peer median, reflecting the large revenue base.  Contingent liabilities, which are rising from a low base (driven primarily by PPPs), are unlikely to have a material impact on public finances over the forecast period, but pose a risk over the medium term.  Significant infrastructure projects, likely to be PPP financed, are being discussed ahead of the centenary of the formation of the Turkish Republic in 2023.

President Erdogan secured a new term with 52.6% of the vote in the presidential election on 28 June, which completed the transition to an executive presidency under a new constitution that was approved by a narrow margin in 2017.  The ruling AKP won 42.6% of the vote at the concurrent parliamentary election and the dynamics of its coalition with the nationalist MHP are to be tested.  Local elections, due in March 2019, will complete the electoral cycle and are expected to be keenly contested.

Political and geopolitical risks weigh on Turkey’s ratings and World Bank governance indicators have fallen below the ‘BB’ median.  Tolerance of dissenting political views is reducing in the opinion of independent observers.  The state of emergency is expected to be lifted in July, but the President has significant capacity to rule by decrees under the new constitution and a purge of followers of the group that the government considers responsible for the coup attempt in July 2016 continues.

There are a number of active pressure points in relations with the US and EU.  The conviction of an employee of a state-owned bank for evading Iranian sanctions in January 2018 brings the risk of fines for the institutions implicated, which could have broader implications for the external financing of the financial sector.  Turkey remains involved in active conflict in neighboring Syria.  The composition of the ruling coalition suggests progress toward the resolution of the conflict in the south east is unlikely.

Turkey is a large and diversified economy with a vibrant private sector.  Human Development and Doing Business indicators as measured by the World Bank, are in excess of the ‘BB’ median.  GDP per capita is double the peer median, although the volatility of economic growth is well in excess of peers reflecting a vulnerability to regular domestic and external shocks.  (Fitch 13.07)

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11.11  TURKEY:  A Crisis Presidency?

Marc Pierini wrote on 9 July in Diwan that as a stronger Recep Tayyip Erdogan begins his new presidential term, Turkey will face a number of difficult challenges.

On 9 July, Turkish President Recep Tayyip Erdogan took his oath of office for a new five-year presidential term, after a first term of nearly four years.  This time, he became a super-executive president.  Most powers are concentrated in his hands, there will no longer be a prime minister and almost none of the checks and balances of liberal democracies will be present.  In other words, Turkey will be an institutionalized autocracy.

This systemic evolution has been carefully nurtured by Erdogan for years.  Despite his vast powers, however, he will have to cope with two unwanted matters.  The larger one is an impending economic and monetary crisis, largely self-provoked through his government’s monetary policies and its policies on interest rates, which had Western markets extremely worried for months, especially concerning the independence of the central bank.  The other matter is the strong electoral showing of Erdogan’s ally in parliament, the Nationalist Movement Party, or MHP, which may want to weigh in on foreign policy issues according to its own anti-Western propensities.

As a result, the foreign and security policy that Erdogan will be able to conduct is difficult to predict.  It will almost certainly prove to be a delicate juggling act, with vast implications for the United States, Russia, the European Union and the Middle East.

By far the most delicate foreign and security policy question currently is Turkey’s simultaneous procurement of a Russian S400 missile defense system, with associated radar systems and of 100 U.S.-made F35 stealth aircraft.  The technological incompatibility of the two systems has long been explained to Turkey’s specialists, but it may only have dawned recently on the political leadership that there is no way for the systems to operate simultaneously without putting at risk the high-tech features of the stealth aircraft, which is deployed by the United States, Israel and many European forces.  To put it bluntly the purchase of S400 missiles, if it takes place, will raise a “whose side are you on?” question from the U.S. and NATO.

A second delicate issue is the war in Syria and the political process intended to end the conflict in the country.  Ankara’s policy and military moves have created difficulties with the anti-Islamic State coalition, the United States, Russia and rebel movements on the ground.  Among these difficulties, the Kurdish issue remains by far the most sensitive one. U.S. and French forces operating east of the Euphrates River continue to rely on the Syrian Kurdish fighters of the People’s Protection Units (YPG), an organization regarded by Ankara as an offshoot of the Kurdistan Workers Party, which it considers a terrorist organization.

On the ground, the next moves of Turkish forces around Manbij and in Idlib Governorate will be of critical importance for Ankara’s relations with Washington and Moscow.  While Erdogan did his utmost to rally Turkish and international public opinion around the Euphrates Shield and Olive Branch operations in northern Syria, it is not entirely certain that committing more troops (therefore potentially generating more casualties) in the area between the Euphrates and Tigris Rivers, or indeed in the Qandil Mountains of Iraq, would be popular.

In Turkey’s regional environment, the stalemates in a comprehensive settlement over Cyprus and the normalization process with Armenia are still solidly in place.  While a Turkish move to make even limited progress on those questions would go a long way toward improving Erdogan’s image in the West, the presence of the MHP in parliament will probably prevent any initiative on these fronts.

Finally, the multifaceted relationship with the European Union is another major hurdle that Erdogan will face.  There is no doubt in Europe (and possibly in Ankara too) that the bridges between Turkey and the EU have been burned – both on substance, with the massive deterioration of the rule of law in Turkey, and at the personal level, with Erdogan’s repeated assaults on EU leaders in the past year and a half.  Erdogan’s first words after the 24 June election, to the effect that “Turkey has given a lesson to the entire world on democracy …” were not likely to endear him to European leaders, who may have interpreted his statement as being partly, albeit implicitly, directed against them.

However, Turkey and the EU have several vital reasons to keep talking to each other.  On the economic front, Turkey’s economy relies heavily on European markets, technology, and capital flows and there is simply no alternative to that.  Similarly, a collapse of the Turkish economy, which provides a strong production base for European manufacturers under the EU Customs Union as well as representing a vast market for service providers, would have a negative effect on EU businesses.  On the security front, the presence on Turkish soil of 1,000 – 2,000 returning jihadis with EU passports makes it imperative for some European countries to cooperate with Ankara on counterterrorism issues.  The “EU-Turkey deal,” through which Turkey has shielded Europe from larger refugee flows, is another strong reason for both sides to continue cooperating.

On the other hand, the EU accession process of Turkey has moved closer to political termination. Given the positions taken by the Austrian, Dutch, and German coalitions, and by the French president, as well as the conclusions of the 26 June EU Council meeting, there is simply no way the process can be rekindled.  Despite formal protests, one can sense some relief in Ankara since the EU’s policy stance rids the Turkish president of strong political conditionality.  However, it is not as simple as that, since both the modernization of the Customs Union and negotiations over visa liberalization have their own intrinsic conditionalities.  It will therefore take more than just photo opportunities and a lifting of the Turkish state of emergency for Ankara to patch things up with Europe.  (Diwan 09.07)

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11.12  TURKEY:  Turkey Ends State of Emergency, but Introduces Restrictive New Rules

Ayla Jean Yackley posted on 19 July in Al-Monitor that President Recep Tayyip Erdogan’s government finally allowed a two-year state of emergency to expire on 19 July, but opposition parties and rights groups say the new measures introduced to replace it are no different.

A two-year state of emergency in Turkey during which hundreds of thousands of people have been jailed or lost their jobs officially expired on 19 July, bringing an end to a regime that rights groups and the United Nations said was rife with abuse.  The government has promised to realign its security laws to meet universal standards, but the European Union warned the legal changes it is proposing remain far too restrictive.  Opposition parties dismissed the legislative package as a ruse to create a permanent state of emergency.

President Recep Tayyip Erdogan imposed emergency rule in the days following an abortive military coup on 15 July 2016, when rogue soldiers commandeered fighter jets to bomb parliament and used tanks to trample his supporters, killing some 250 people.

Emergency rule allowed Erdogan to bypass parliament and largely rule by decree — a power that has now been enshrined for his office following changes to the constitution that he designed and won approval for in a referendum last year.  Erdogan made ending the unpopular emergency rule a campaign promise in a June election, which he handily won.  The protracted emergency rule has dragged down Turkey’s economy, scared off investors and unleashed international condemnation.  Earlier this year, the UN accused Turkey of “profound human rights violations” including torture, arbitrary arrests and curtailment of civil liberties.

On 19 July, the government allowed emergency rule to lapse at 01:00 a.m. local time rather than renew it for another three months as it had seven times previously.  Instead, the ruling Justice and Development Party (AKP) submitted to parliament a package of legal changes that retains for three more years some measures used during the clampdown, including the power to purge members of the civil and security services.  More than 150,000 of people have been sacked from their jobs since the coup attempt.

State-appointed governors can restrict access to parts of their provinces for security reasons, and terrorism suspects can be detained without charge for up to 12 days.  Nearly 80,000 people have been imprisoned since the coup attempt.  “The end of emergency rule does not mean our struggle against terrorism ends,” Justice Minister Abdulhamit Gul said this week.  “All terrorist groups that seek to strangle Turkey will be fought with persistence and determination until the end, especially FETO.”  FETO is the government’s abbreviation for followers of the Islamic cleric Fethullah Gullen, whom it says masterminded the failed coup.  Gulen, who lives in Pennsylvania, denies involvement.

The AKP said its new security proposals meet EU standards.  “We prepared a bill that includes measures envisaged by international institutions as universal law, especially Europe,” said Bulent Turan, the AKP’s group deputy chairman.  The EU, which all but froze Turkey’s accession process during the state of emergency, welcomed its end but warned that the planned security measures mean that basic democratic values are not being restored.  “We believe the adoption of new legislative proposals granting extraordinary powers to the authorities and retaining several restrictive elements of the state of emergency would dampen any positive effect of its termination,” said Maja Kocijancic, spokeswoman for the EU’s foreign affairs office.  The EU expects Turkey to reverse measures that harm the rule of law, the separation of powers and basic freedoms, she said in a statement.

Opposition parties said the new security proposals infringe upon both Turkey’s constitution and the European Convention on Human Rights by codifying the spirit of emergency rule into Turkey’s legal system.  “We face an attempt to give legal status to open-ended regulations that are more restrictive than martial law,” Ayhan Bilgen, a deputy from the Peoples’ Democratic Party, parliament’s third-largest group, said at a news conference.

More than 4,500 people accused of having a direct role in the coup have either been convicted or remain on trial, according to the Justice Ministry.  Bilgen said the government has failed to redress the grievances of the thousands of others who have been penalized in the last two years.

Allowing the state of emergency to lapse will not “lift the suffocating climate of fear that has engulfed the country,” said Fotis Filippou, Amnesty International’s deputy Europe director, adding, “Over the last two years, Turkey has been radically transformed with emergency measures used to consolidate draconian powers, silence critical voices and strip away basic rights.  Many will remain in force following the lifting of the state of emergency.”

Among those voices that have been muzzled are Amnesty’s honorary Turkey chairman, Taner Kilic, who has been in prison for more than a year on coup-related charges.  Hundreds of journalists, civil society activists and opposition politicians — many of them not charged with coup-related offences — also remain behind bars.  Even as the state of emergency lapsed, a court sentenced a journalist to more than two years in prison for targeting counter-terrorism officials in her reporting.

Ayla Jean Yackley is a freelance journalist who has covered Turkey for nearly two decades. She previously worked as a correspondent for Reuters and Bloomberg News and writes mainly about politics and the economy, with a focus on minority and human rights. Her reporting has also taken her to Iraq, Iran, Syria, Afghanistan, Russia, Germany and Cyprus.  (Al-Monitor 22.07)

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