Fortnightly, 26 August 2015

Fortnightly, 26 August 2015

August 26, 2015





1.1  Israeli Cabinet Approves Gas Outline Agreement
1.2  Israel and US Sign Space Collision Prevention Pact
1.3  High Court Rules Deputy Minister Cannot Act As Minister, Sparking Shake-Up


2.1  Adama Shareholders Contemplating Combination with Chinese Sanonda
2.2  Elbit Systems Wins $27 Million Command & Control Contract to an Asia-Pacific Country
2.3  World’s Largest Shipping Company to Begin Docking In Haifa
2.4  Siklu Secures Additional $18 Million to Expand mmWave Technology Markets
2.5  StoreDot Raises $18 Million for 5 Minute Car Battery Charger
2.6  American Airlines Plans on Ending Tel Aviv – Philadelphia Route
2.7  Israel Says Heinz Ketchup Doesn’t Contain Enough Tomato to Be Called Ketchup
2.8  Israeli Design College ‘Fifth Most Influential’ Fashion School Worldwide


3.1  Middle East ‘has the Youngest Cars in the World’
3.2  Apple Said to Win Exemption From UAE Foreign Ownership Laws
3.3  Johnny Rockets Opens New Restaurant In Riyadh, Saudi Arabia
3.4  Energy Recovery Inc. Awarded $1.8 Million for Desalination Deal in Morocco


4.1  TopUp System Reduces Evaporation While Cooling the Water


5.1  Unemployment in Arab Countries Highest in the World
5.2  Lebanon’s Cabinet Fails on Trash Crisis Amid New Protests
5.3  Lebanese Deflationary Pressures Persist by July 2015
5.4  Lebanon’s Trade Deficit Plunged by 18.78% in First Half of 2015
5.5  Jordan Expects $1.5 Billion in Grants & Loans Until June 2016’
5.6  Jordanian Industry Losses now at JD200 Million as Iraqi Border Remains Sealed

♦♦Arabian Gulf

5.7  Bahrain to Remove Meat Subsidies as Cheap Oil Hits Budget
5.8  UAE Says VAT Plan Delayed By Disagreement in Region
5.9  UAE Issues New Law to Encourage Public – Private Partnerships
5.10  UAE has Most International Schools in the World
5.11  Oman Posts Almost $5 Billion Deficit in First Half as Cheap Oil Bites

♦♦North Africa

5.12  Egypt’s Unemployment Rate Falls to 12.7% in Second Quarter
5.13  Egyptian Passenger Car Sales Worth EGP 16.5 Billion in First Half of 2015
5.14  Egypt Invests in its Regional Airports
5.15  3.5 Million Tourists Visited Morocco During First Five Months of 2015
5.16 Rabat Unveils Scholarships for Moroccan Students to Study Abroad


6.1  Turkey’s Unemployment Rate Falls to 9.3%
6.2  Greek Lawmakers Back Rescue Package After All-Night Session
6.3  Greek Prime Minister Alexis Tsipras Announces His Resignation
6.4  Greece & Lenders Clinch Bailout Deal After Marathon Talks
6.5  Greek Deflation Steady in July As Prices Fall for 29th Month
6.6  Greece Expects Product Shortages in September Due to Import Drop
6.7  ELSTAT Chief Steps Down
6.8  Consumption Plunge Starves Greek State Coffers



7.1  Winners of Chinese Science Contest Choose Israel Visit as Prize
7.2  Two Israeli Universities Ranked Among World’s Top 100


7.3  UAE President Announces 30 November as Martyr’s Day
7.4  First Female Voters Register for Medina & Mecca Elections
7.5  Turkish Prime Minister to Begin Forming Provisional Government


8.1  US FDA Accepts Teva’s NDA Application for SD-809 for the Treatment of Huntington Disease
8.2  Integrity Applications Submits Pre-Submission Documents to FDA
8.3  BioLight Announces First IOPtiMate System Sale in Peru
8.4  Fix Your Posture Problems Instantly And Consistently Using UpRight
8.5  Evogene to Establish Validation Capabilities for Soybean Cyst Nematodes
8.6  BioLineRx Starts Phase 2b Trial for Novel AML Consolidation Treatment
8.7  Kadimastem Proves Efficacy of Its Unique ALS Treatment in Pre-Clinical Trials


9.1  OriginGPS Nano Hornet Module Helps TobyRich Gaming Drones Take Flight
9.2  SQream Technologies Wins Best New Product of the Year – the Stevie Award
9.3  Anywhere Software’s New B4J Developer’s Tool Takes Up Where Visual Basic Left Off
9.4  Magal to Secure 200+ Kilometers of Pipeline With Long Range Fiber Optic Sensor
9.5  Step Ahead Brings Big Brother to Work
9.6  dapulse Secures $2.6 Million in Series A Funding


10.1  Israel’s Inflation Increases by 0.2% in July
10.2  Unemployment in Israel Unchanged in July
10.3  Israeli Exports Fall by 6% During First Half
10.4  Israel Second Quarter Growth Slows to 0.3%
10.5  Israel Railways Passenger Traffic Up 6%
10.6  Study Finds Free Buses Worth More to Neediest Than 0% VAT


11.1  ISRAEL: The State of Startups in Israel
11.2  LEBANON: 2014 Lebanon Country Report
11.3  IRAQ: IMF Executive Board Concludes 2015 Article IV Consultation
11.4  KUWAIT: Ratings Affirmed At ‘AA/A-1+’ Despite Low Oil Prices; Outlook Stable
11.5  SAUDI ARABIA: IMF Executive Board Concludes 2015 Article IV Consultation
11.6  TURKEY: Turkey Treads Carefully on New Gas Pipeline With Russia
11.7  TURKEY: Turks Turn to Dollar As Lira Hits Low
11.8  TURKEY: After 500 Years, Turkish Coffee Percolates in Popularity


1.1  Israeli Cabinet Approves Gas Outline Agreement

On 16 August, the Netanyahu government approved the natural gas plan.  All the ministers voted in favor except for Minister of Environmental Protection Gabai.  Minister of the Economy Deri voted in favor, but had not decided whether to take responsibility for using Section 52 of the Restrictive Trade Practices Law authorizing him to enforce approval of the agreement.  The plan submitted to the cabinet included two key changes, in comparison with the original plan.  These were added during the public hearing on the plan, and at the request of the State Comptroller and the Governor of the Bank of Israel.

The plan, an outline for development of offshore natural gas fields, was presented by Minister of Energy, Dr. Yuval Steinitz, with the support of the prime minister.  The deal that is to be signed with private developers will increase the amount of gas produced from the Tamar field, and make possible the quick development of gas fields Leviathan, Karish and Tanin, among others.  The plan will now head for the Knesset, where its fate is far from clear.

The deal, which has undergone considerable modification since negotiations began, will allow Noble Gas and Israel’s Delek Group to keep ownership of Leviathan but require the sale of other assets, including stakes in the Tamar deposit.  It sets a price ceiling for gas sales to Israeli companies and commits the consortium to invest $1.5b into developing Leviathan over the next two years.  The huge field contains about 22T cf of gas, and is expected to provide billions of dollars in revenue to Israel.  (Various 16.08)

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1.2  Israel and US Sign Space Collision Prevention Pact

Israel Defense Ministry Space Administration and the US Strategic Command (USSTATCOM) signed a new cooperation arrangement to prevent satellites and other objects colliding in space.  Under the terms of the agreement, known as the Space Situational Awareness (SSA) data-sharing agreement, the two countries will have an agreed coordination mechanism and arrangements that will ensure safety in spaceflight operations.

In the event that the US identifies a potential collision between satellites or “space refuse,” they will provide a warning on the matter to the country operating the craft.  The US will give Israel about 96 hours warning of any possible collisions, allowing the diversion of a satellite and saving it.  In space there are about 1,200 satellites operating and 5,000 satellites that are no longer operating and are in effect space garbage.  Israel’s Defense Ministry stressed that the agreement was of major importance due to the growing traffic of space craft. Israel operates several surveillance satellites (for military use) hundreds of kilometers out in space as well as communications satellites at dozens of kilometers in space.  (Globes 18.08)

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1.3  High Court Rules Deputy Minister Cannot Act As Minister, Sparking Shake-Up

On 23 August, Israel’s High Court of Justice ruled that Deputy Health Minister Yaakov Litzman, the head of the ultra-Orthodox faction United Torah Judaism, cannot legally serve as de facto health minister as he has been doing since May this year, following the March election.  The ruling, a result of a petition filed by Yesh Atid, will force Litzman either to step down as deputy minister or accept the official title of health minister.  Litzman’s party has thus far resisted joining the cabinet, barring its members from serving as ministers in the government, arguing that they do not wish to cooperate with a secular government.  Officially, Prime Minister Benjamin Netanyahu holds the title of health minister, but in practice it is Litzman who fills the role of minister, despite not having the authority that a minister would have.

The High Court justices ruled that the fact that Litzman has been functioning as a de facto minister since the last election, reprising his role from the 2009-2013 term as deputy health minister, does not make it legal.  In its ruling, the High Court stressed that “there is no dispute today that the ‘historical’ political institution of ‘deputy minister with the status of minister’ has no legal standing and is in conflict with the Basic Law: The Government, both in terms of the status of the minister and the status of the deputy minister.  Since the coalition agreement dictates a 20-minister limit to the cabinet, if Litzman is officially appointed minister, that will mean no Likud MK will be named to replace Danny Danon as science, technology and space minister now that Danon has been appointed ambassador to the U.N.  (Israel Hayom 25.08)

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2.1  Adama Shareholders Contemplating Combination with Chinese Sanonda

Adama announced that its shareholders are exploring a potential combination with Hubei Sanonda, a leading Chinese crop protection manufacturer traded on the Shenzhen Stock Exchange, which, if implemented, will allow the combined company to achieve full integration as well as public listing.  As a result, Adama is expected to be able to achieve two key pillars of its strategy – integration with Chinese agrochemical businesses that are part of the ChemChina group, and flotation on one of the world’s largest stock exchanges.  The combination will allow Adama to accelerate its China integration, which it has been pursuing in recent years.  The potential transaction is intended to be accomplished through the issuance of new shares by Sanonda to the existing owners of Adama – CNAC, ChemChina’s strategic business division the controlling shareholder of Adama, and Koor of Israel’s IDB Group – in exchange for their ownership stakes in Adama. Sanonda is currently controlled by CNAC, which owns approximately 20.15% of the shares of Sanonda.  Adama also holds an approximately 10.6% stake in Sanonda, which it acquired during 2013.

The process of negotiating and approving the contemplated transaction is expected to take several months, during which all relevant aspects of the transaction are to be considered.  There is still uncertainty as to whether the negotiations will result in binding agreements, the exact structure and terms of such agreements and their implications for the Company.

Airport City’s ADAMA Agricultural Solutions is the leading off-patent crop protection solutions company in the world.  The Company’s comprehensive range of high-quality, differentiated and effective herbicides, insecticides and fungicides help farmers worldwide to increase yields by preventing or controlling weeds, insects and disease that harm their crops.  (Adama 16.08)

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2.2  Elbit Systems Wins $27 Million Command & Control Contract to an Asia-Pacific Country

Elbit Systems was awarded an approximately $27 million contract for the supply of command and control systems and ATMOS long-range artillery systems to an Asia-Pacific country.  This contract is a follow-on contract for this customer and will be performed over a three-year period.  The contract calls for the supply of a complete solution for an artillery unit, including self- propelled artillery, command stations, forward observation stations and target acquisition systems, as well as command and control systems, in an integrative solution to connect all systems.  The solution, mounted on various wheeled – platforms, enhances mission flexibility, reaction speed and survivability of both the crew and the system.

Haifa’s Elbit Systems 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 16.08)

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2.3  World’s Largest Shipping Company to Begin Docking In Haifa

The Haifa Port will begin serving the world’s largest shipping alliance in October, serving as a stop on a line that begins in East Asia and continues on into the Adriatic Sea in Europe.  The 2M shipping alliance, which consists of shipping giants Maersk and MSC, will make its first stop in Israel on 15 October, when a ship called The Gustav will become the largest to ever dock at an Israeli port.  Haifa Port says it has been working furiously to boost efficiency, and reached an internal productivity record last month.  In July, American regulators cleared the way for the alliance to begin operating in Israel, Saudi Arabia and Russia, indicating that 2M was not a barrier to competition.  The Haifa stop on the shipping route will follow a stop at Egypt’s Port Said.  (Various 17.08)

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2.4  Siklu Secures Additional $18 Million to Expand mmWave Technology Markets

 Siklu has closed $18 million in Series-D funding to further accelerate the company’s already impressive growth and market leadership.  The new investor in this round, Taiwan’s Sercomm Corporation, was joined by existing investors Argonaut Private Equity, Evergreen Venture Partners, DFJ Tamir Fishman Ventures, Qualcomm Ventures, The Tamares Group and Amiti Ventures.

According to research firm MarketsandMarkets, the global millimeter wave technology market is expected to grow by 42.7% CAGR to $1.7 billion by 2020.  Siklu is poised to capture this market through a range of competitively-priced solutions in areas such as video surveillance, Wi-Fi backhaul and access to residential Multi-Dwelling-Units (MDU).  Siklu’s mmWave solutions and technology already provide thousands of fiber extensions for 3G/LTE telecommunication networks and business connectivity.  With this new funding and partnership, Siklu will continue to disrupt the mmWave market with technology not only capable of carrying out the ambitious goal to provide Gigabit To The Home (GTTH), but also of providing important building blocks for 5G mobile access deployed in the millimeter wave spectrum.

Petah Tikva’s Siklu delivers Gigabit capacity millimeter wave wireless connectivity operating in the 60, 70/80 GHz bands.  Its millimeter wave technology is the prime choice of leading integrators and network operators worldwide.  With maximal availability and minimum footprint, thousands of carrier-grade units delivering interference-free performance have been successfully deployed.  (Siklu 19.08)

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2.5  StoreDot Raises $18 Million for 5 Minute Car Battery Charger

Israeli specialty materials innovator StoreDot has raised $18 million for its new Electric Vehicle (EV) business unit.  Investors in this round include existing investors such as Norma Investments Limited, representing Roman Abramovich, Samsung Ventures, and Moshe Hogeg’s Israeli Singulariteam fund.  Although the Herzliya based company is best known for its attempts to develop a battery that can fully charge a smartphone in 30-90 seconds, this latest financing is focused on the development and commercialization of the EV business unit.  One of the company’s immediate goals is to build the first ever instantly-charging car prototype.  This funding will also allow new hiring and additional labs for the new business unit.  The new business unit will allow future electric vehicles to fully charge in only five minutes as opposed to the long hours it currently takes.  With StoreDot’s proprietary FlashBattery technology, drivers will be able recharge in five-minutes which could make a dramatic impact on global EV adoption.  In addition to perfecting the FlashBattery itself, the funding will support the development of a powerful charging station, a fast charging standard, and an integrated FlashBattery management system.  (Globes 19.08)

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2.6  American Airlines Plans on Ending Tel Aviv – Philadelphia Route

American Airlines announced that it plans to halt its flights between the United States and Israel in January 2016, based on mounting financial losses.  According to the carrier’s financial reports, the route has noted $20 million in losses in its six years of operations.  American Airlines’ Philadelphia-Tel Aviv service was a legacy of US Airways Group, with which it merged in December 2013.  American Airline’s service to Tel Aviv from Philadelphia is scheduled to end on 4 January, with the last US-bound return flight a day later.  Tel Aviv and Philadelphia have been sister cities since 1966.  (Various 23.08)

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2.7  Israel Says Heinz Ketchup Doesn’t Contain Enough Tomato to Be Called Ketchup

In Israel, where condiments are held to a higher standard, Heinz ketchup is no longer legally ketchup.  The Israeli health ministry has ruled that Heinz brand ketchup, doesn’t contain enough “tomato solids” to qualify as ketchup, and must now be referred to as “tomato seasoning” on its Hebrew packaging.  The source of the ketchup crackdown is Heinz’s top local competition.

Israeli food manufacturer Osem produces about two thirds of the ketchup consumed in Israel and have been lobbying hard against Heinz.  In January, Osem said it had taken Heinz ketchup to a “leading European external laboratory,” and found it “only contains about 21% tomato concentrate,” below the 41% tomato concentrate required by Israeli trading standards.  Heinz said the problem isn’t their product, but rather Israel’s overly rigid definition of ketchup, which “has yet to be brought in line with US and European accepted international standards.”  The Osem statement also began a war of words between Osem and Diplomat, the company that distributes Heinz ketchup in Israel.  Now Diplomat is currently petitioning to change the Health Ministry’s standards in order to allow Heinz to qualify as ketchup once more.  (Various 24.08)

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2.8  Israeli Design College ‘Fifth Most Influential’ Fashion School Worldwide

Shenkar College’s Fashion Design Department in Ramat Gan is among the five most influential fashion schools in the world and the 11th-best overall, according to rankings released by the influential Business of Fashion publication.   The ranking examined dozens of leading fashion institutions from all over the world based on several criteria, including curriculum, alumni’s success and industry influence after graduation, international awards , students’ level of satisfaction, and students’ grades.  At number five, Shenkar was designated the most influential fashion school outside of New York or London.   The website did, however, criticize the lack of business and marketing education in the college, despite the fact students said they left the department “feeling equipped for a profession in the fashion industry.”  (Ynet 25.08)

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3.1  Middle East ‘has the Youngest Cars in the World’

Cars in the Middle East are the newest of any region in the world, according to an analysis by classifieds website Carmudie.  The average car in the Middle East is 5.1 years old, compared to 11.5 years in the US, 6.5 years in Asia and 12.8 in Africa, the company said.  Saudi Arabia has the newest cars in the world, at an average 3.8 years, while the UAE is actually lower than the regional average, at 5.2 years.  The Democratic Republic of Congo (DRC) has the oldest cars of the countries analyzed by Carmudie, at 16.5 years.  The global financial crisis and recession in multiple countries, as well as improvements in car manufacturing, has seen drivers change their vehicles less often.  (Carmudie 14.08)

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3.2  Apple Said to Win Exemption From UAE Foreign Ownership Laws

Apple has reportedly been granted an exemption from foreign ownership laws in the UAE, giving the green light to plans to set up shops in the country.  It was reported that Apple will be allowed to retain 100% control of operations in the emirates.  The dispensation was a condition for the world’s largest listed company to set up in the UAE.  Apple will open its first Arabian Gulf store in Dubai this year and then Abu Dhabi after securing the privileges.  Under local regulations, all businesses operating in the UAE must be 51% owned by Emiratis or a company wholly owned by them unless they are based in free-zones.  (AB 19.08)

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3.3  Johnny Rockets Opens New Restaurant In Riyadh, Saudi Arabia

Aliso Viejo, California’s Johnny Rockets recently opened its third restaurant in the Saudi Arabian capital of Riyadh.  This is the brand’s fifth restaurant in Saudi Arabia, opened by current franchisee Haidar Al-Naqeeb.  Johnny Rockets is known for its world famous fresh, cooked-to-order hamburgers, sandwiches, salads and hand-spun shakes.  Kharafi Global has operated Johnny Rockets restaurants since 2004 and has opened multiple locations in Saudi Arabia, Kuwait, Qatar and Bahrain.  The company’s newest restaurant opened on Exit 10 in Riyadh and is approximately 3,700 sq. ft. and seats about 132 guests.  Johnny Rockets is an international restaurant franchise that offers high quality, innovative menu items including fresh, never frozen 100% beef cooked-to-order hamburgers, Veggie Boca burger, chicken sandwiches, fries and shakes and malts.  (Johnny Rockets 13.08)

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3.4  Energy Recovery Inc. Awarded $1.8 Million for Desalination Deal in Morocco

San Leandro, California’s Energy Recovery Inc., a leader in pressure energy technology for industrial fluid flows, announced a $1.8 million deal to supply its PX Pressure Exchanger technology for a desalination plant in Morocco.  The Company expects the order to ship in Q4/15.  The Pressure Exchangers will be installed by Morocco’s National Power Drinking Water Office (ONEE), which will process 100,000 cubic meters of water per day. They will be using PX-Q300 units, the highest-performing energy recovery devices available on the market.  The plant is being developed under ONEE as the first public-private partnership system, and will produce water for 500,000 people. The plant’s capacity could potentially be doubled in the future.  Energy Recovery estimates that the plant will save 10.5 MW in power equivalent to 92 GWh per year in energy savings.  The plant will also reduce its CO2 footprint by 54,200 tons per year.  (ERI 17.08)

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4.1  TopUp System Reduces Evaporation While Cooling the Water

Israel’s NeoTop Water Systems manufactures modular covers for water reservoirs that work in harmony with the environment.  The aim is to decrease evaporation of reservoirs, save precious water while preserving its quality.  The company’s solution, an innovative, carefully designed sphere which fills halfway when released into water has undergone extensive testing and has been proven to have many attributes that render it a superior solution over alternative products currently available.  The company’s technology is also applicable to other fields, including fish farming, aquariums and microalgae cultivation.  The unique and innovative design of the TopUp System allows for significant reduction of evaporation while cooling the water, maintaining high water quality, reducing growth of algae and preserving a healthy ecosystem. The system also serves as an effective bird deterrent.  NeoTop’s balls have undergone extensive testing by Mekorot, Israel’s national water company. The Israeli team has been researching and developing the innovative product since 2011.  NeoTop needs just 10 balls per square meter.

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5.1  Unemployment in Arab Countries Highest in the World

A new report released by the Arab Monetary Fund (AMF) states that 28% of young people in the Arab world are unemployed.   According to the report, which collected figures from the International Labor Organization (ILOT), the rate of unemployment in young people in the Arab countries is the highest in the world, representing more than double the global rate of unemployment which is set at 12%.  Those with an education represent up to 40% of the unemployed in the region.  Similarly, the female population represents 43.4% of the unemployed in the Arab countries, which is more than three times the world rate set at 12.7%.

The “Youth Unemployment in Arab Countries” also reported that in addition to other factors, the wide gap between the requirements of the job market and the outcomes of the education systems accentuates unemployment.  The report identified the recent decline in economic growth in Arab countries as well as the global growth which remains “insufficient” as challenges facing youth employment in the Arab countries.  As for measures taken to face these challenges, the report said that Arab governments have invested enormous efforts in the past two decades to decrease unemployment rates by implementing programs and new measures in order to achieve economic stability and job offers.  (AMF 17.08)

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5.2  Lebanon’s Cabinet Fails on Trash Crisis Amid New Protests

Lebanon’s cabinet ended an acrimonious meeting on 25 August with no solution to a trash crisis that has sparked violent protests and calls for the government’s resignation.  The cabinet meeting came as people continued to gather in central Beirut for demonstrations that began over a trash crisis but evolved into an outlet for deep-seated frustrations over government impotence.  After more than five hours of talks, the cabinet decided to reject a list of tenders for waste management contracts across Lebanon and refer the problem to a ministerial committee.  The decision came after a session that saw six ministers from one political bloc walk out.  For months, the 18-month-old government has been paralyzed by political disagreements between its two main blocs, rendering decision-making virtually impossible.

Large crowds carrying Lebanese flags and chanting gathered for spontaneous protests in Riad al-Solh Square near the premier’s office.  It came as Prime Minister Tammam Salam ordered the removal of a concrete blast wall at the site, which Lebanese had dubbed the “wall of shame”.  The wall was erected after recent protests turned violent.

The core of the crisis, which erupted after the 17 July closure of the landfill serving Beirut and its surroundings, remains unaddressed.  When the Naameh landfill closed, the government failed to identify sites for new landfills or alternative arrangements.  Trash began piling up until local municipalities found temporary solutions — dumping in empty lots, river beds and even forests.

Lebanon has been without a president for more than a year, and parliament has twice extended its own mandate since the last elections in 2009.  The country has long suffered chronic electricity and water problems and has seen its resources stretched yet further by an influx of more than a million Syrian refugees.  (AFP 25.08)

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5.3  Lebanese Deflationary Pressures Persist by July 2015

According to Lebanon’s Central Administration of Statistics (CAS), the consumer price index (CPI) remained on its downtrend, dropping from 100.77 in July 2014 to 96.89 in July of this year, registering a 3.86% year-on-year (y-o-y) deflation.  Since “water, electricity, gas & other fuels” and “transportation” constitute two of the major weights in the CPI with a cumulative share of 25%, it’s expected that consumer prices will fall on the back of bearish trend of the international oil prices.  Furthermore, the appreciating dollar versus the Euro also contributed to the price decrease as a major part of Lebanon’s imports is from Europe.  In terms of the CPI’s components, “Food and non-alcoholic beverages” (20.6% of CPI) decreased by 1.92% y-o-y by July 2015.  “Transportation” (13.1% of CPI) and “Water, electricity, gas & other fuels” (11.9% of CPI), experienced yearly falls of 9.92% and 19.13%, respectively.  In addition, “Health” (7.8% of CPI) and “Communication” (4.6% of CPI), recorded a 7.77% and a 0.02% y-o-y decline in July.  (CAS 22.08)

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5.4  Lebanon’s Trade Deficit Plunged by 18.78% in First Half of 2015

Lebanon’s trade deficit dropped by 18.78% year-on-year (y-o-y) in H1/15 to record $7b due to a 16.77% decrease in overall imports outpacing the 6.34% decline in total exports.  This was mainly due to the prominent trend of the depreciating Euro and falling international oil prices, over the same period.  Total imports, in the first six months of the year, tallied $8.56b compared to $10.28b during the same period last year.

The three major product categories that were imported to Lebanon by June were mineral products (16.2% share of total imports), “machinery and electrical instruments” (12.2% share of total imports) and  “products of the chemical or allied industries” (11.5% share of total imports).  The yearly change in imported mineral products, displayed a substantial drop of 42.10% from June 2014 to $1.38B.  With demand for that commodity being inelastic, the nose dive in mineral imports goes hand in hand with the average 45% decrease in the price of international oil since June of last year.  In addition, “machinery and electrical instruments” went down by 8.32% y-o-y by June, despite the increase in tonnage imported from 119 tons by June 2014 to 376 tons this year.  Notably, the three major countries that Lebanon imported goods from were China, Germany and France with corresponding weights of 11.63%, 6.56% and 6.83%.

Similarly, total exports fell yearly by 6.34% to $1.55B by June 2014 despite the 1.42% increase in volume of overall exports to 969 tons.  Lebanon exported “prepared foodstuffs, beverages, and tobacco” (16.33% share of total exports) experienced a yearly detraction of 4.62% by June as the volume exported declined from 181 tons to 167 tons.  Furthermore, exported “pearls, precious stones, and metals”, constituting 15.29% of total exports, went down by 21.59% y-o-y partially due to the average 6.81% y-o-y fall of international price of gold to 1,180.37 $/ounce.  In contrast, “Machinery and electrical instruments” (14.75% share of total exports) underwent a 1.38% improvement in the value of exports due to the rise in export prices. In terms of the major destinations of the Lebanese exports,  Saudi Arabia, UAE and Iraq grasped respective weights of 12.78%, 10.29% and 7.34%.

In June alone, total exports dropped by 4.08% from June 2014 to $281.30M this year. In parallel, overall imports down ticked by 7.04% to $1.46B. In turn, the trade deficit narrowed from $1.289B to $1.18B in June.  (Blominvest 14.08)

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5.5  Jordan Expects $1.5 Billion in Grants & Loans Until June 2016’

Amman expects to receive about $1.5 billion in financial assistance, grants and loans between July of this year and June 2016.  This figure was also included in an International Monetary Fund (IMF) report that was recently issued after the completion of the seventh and final review under the Stand-By Arrangement.

In the first seven months of this year, the volume of grants and soft loans committed to Jordan by donor partners was $1.061 billion, according to the Ministry of Planning and International Cooperation.   The value of grants was $632 million, while low-interest loans amounted to $429 million.  In addition, the government will issue a $500-million non-guaranteed Eurobond in the fourth quarter of this year, likely in October.  In June, Jordan issued US-guaranteed bonds worth $1.5 billion on the international market, $1 billion of which is for a seven-year term, due in 2022, and the $0.5 billion for a 10-year term, due in 2025.  (JT 18.08)

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5.6  Jordanian Industry Losses now at JD 200 Million as Iraqi Border Remains Sealed

The Amman Chamber of Industry (ACI) estimated that initial losses to the industrial sector because of Iraq’s border closure more than a month ago at more than JD 200 million.  The chamber said that 20 factories have closed as a result, citing a study it has conducted.  The partial closure of production lines for hundreds of factories amounted to 70% of their total production capacity while raw materials, which were meant to be manufactured and exported to Iraq, accumulated at industrial companies’ warehouses.  The ACI recently formed a committee of industrialists to study the repercussions of the Iraqi border closure on Jordanian exports.  The ACI also demanded the activation of trade agreements signed with Iraq, exempting Jordanian goods exported to the Iraqi market through new alternate routes from all fees.  (JT 16.08)

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►►Arabian Gulf

5.7  Bahrain to Remove Meat Subsidies as Cheap Oil Hits Budget

Bahrain will remove government subsidies on meat from 1 September, allowing domestic prices to rise as the government seeks to save money as low oil prices pressure its budget.  Like other oil exporting Gulf states Bahrain has for many years subsidized goods and services such as meat, fuel, electricity and water, keeping prices ultra-low in an effort to buy social peace.  Since last year, the subsidies have become increasingly difficult for governments to afford as oil prices have plunged, slashing export revenues. Bahrain, with much smaller oil and financial reserves than its Gulf neighbors, has been particularly hard hit.  So Bahrain has been examining possible subsidy cuts and the removal of subsidies from meat could eventually be followed by similar moves on other goods and services.

However, Bahraini citizens will be compensated for the higher meat prices, Commerce Minister Zayed bin Rashed Al Zayani said.  Zayani did not specify how much prices might rise by or give details of the compensation for citizens.  Previously officials have said citizens would receive cash payments; foreigners, who comprise about half of Bahrain’s population of roughly 1.3 million, would not be compensated.  Zayani added that the removal of subsidies would help to stimulate meat imports into Bahrain by encouraging more importers to get involved.  (AB 16.08)

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5.8  UAE Says VAT Plan Delayed By Disagreement in Region

The United Arab Emirates is still studying a proposal to impose value-added tax but its introduction has been delayed by a lack of agreement among neighboring countries on rates and exemptions, the Ministry of Finance said.  The six oil exporting states of the Gulf Cooperation Council have been studying the introduction of VAT for years.  The plunge of oil prices since last year has slashed governments’ income, making it more urgent for them to find new revenue; the UAE is expected this year to post its first budget deficit since 2009.  But VAT has been delayed partly because it is politically sensitive and partly because GCC governments have been unable to agree on details.  Analysts believe that to limit smuggling and damage to the competitiveness of economies, the tax would probably have to be introduced regionally rather than by individual countries at different times.

Once a decision to impose VAT is made, the public will be given “a time horizon of no less than 18 months to prepare for the implementation and discharge the obligations towards the tax requirements”, the UAE ministry said.  Separately, the ministry said it was still studying reforms to increase taxation of corporations in the UAE and that the tax rate was under study.  Businesses will be given at least one year to prepare for any changes, it added.  At present there is little corporate taxation outside the oil sector, apart from a 20% levy on foreign banks in Dubai.  The government has been considering whether to impose a broad corporate tax across the economy.

Though the UAE is one of the financially strongest countries in the GCC, it has been the most aggressive in reforming its finances to save money.  This month it cut state gasoline subsidies, allowing prices paid by consumers to rise, and in January Abu Dhabi reduced electricity and water subsidies.  The IMF has been advising the UAE to impose taxes gradually to limit any disruption to the economy and gain experience operating a tax collection regime.  (Reuters 18.08)

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5.9  UAE Issues New Law to Encourage Public – Private Partnerships

The UAE has issued a new law to encourage more partnerships between the public and private sectors on projects in the country.  Sheikh Mohammed bin Rashid Al Maktoum, the UAE’s Vice President, Prime Minister and ruler of Dubai, issued the legislation which also allows the government to implement its strategic projects effectively and efficiently.  It also allows government bodies to harness financial, administrative, technical and technological expertise of the private sector.  The new law also aims to increase productivity and improve the quality of public services, transfer of knowledge and experience from the private to the public sector, as well as training and qualifying Emirati public employees in the areas of management and operation of projects.

It specifies terms for partnerships between the public and private sectors, stipulating that the project has to be economically, financially, technologically and socially feasible.  A government body’s director general or their deputy can approve a project as long as the total cost that will be incurred by the body through the partnership agreement does not exceed AED200 million.  The Department of Finance will be responsible for approving larger projects that have a total cost above AED200 million ($54) to AED500 million.  Projects valued at more than AED500 million will be approved by the Supreme Financial Policy Committee.  (AB 18.08)

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5.10  UAE has Most International Schools in the World

The UAE has the most international schools in operation in the world, with six new schools opening since February, new research has revealed.  International schools are still on a growth trajectory in the MENA and South Asia regions, according to the latest data published by ISC Research, part of The International Schools Consultancy (ISC).  The report shows that Asia, to which the Middle East and South Asia belong as a geographical region, has the highest number of English-medium international schools by geography, with a total of 4,346

By country, the UAE leads the world with 511 international schools, followed by China (480), Pakistan (439) and India (411).  Three other countries from the region figured prominently in the world’s top 15, with Saudi Arabia (245), Egypt (183) and Qatar (152) in 5th, 9th and 14th position respectively.  English-medium international schools now provide education for over 4 million students around the world. This number has risen dramatically in recent years.  Just 15 years ago there were fewer than 1 million students.  (AB 22.08)

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5.11  Oman Posts Almost $5 Billion Deficit in First Half as Cheap Oil Bites

Oman posted a budget deficit of OR1.92 billion ($4.98 billion) in the first half of this year against a OR250 million surplus a year earlier, because of lower oil export prices, provisional Finance Ministry data showed.  Oman’s 2015 budget plan envisages government expenditure of OR14.1 billion and a deficit of OR2.5 billion, assuming an average oil price of $75 per barrel.  The plunge of crude prices is a serious blow to Oman, which lacks the ample fiscal and hydrocarbon reserves of its wealthier Gulf neighbors.  In April, the World Bank estimated the decline in crude prices could cost the Gulf Cooperation Council (GCC) countries – Saudi Arabia, Kuwait, the United Arab Emirates (UAE), Qatar, Oman and Bahrain – $215 billion, or 14% of their combined gross domestic product this year.  Consequently, the region may record a fiscal deficit for the first time in four years, it said.  (AB 19.08)

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►►North Africa

5.12  Egypt’s Unemployment Rate Falls to 12.7% in Second Quarter

Egypt’s unemployment rate for Q2/15 in the 15-64 age range fell to 12.7%.  These latest figures compare to the 12.8% registered in Q1/15 and 13.3% registered during Q2/14.  The number of unemployed individuals reached 3.5 million, marking 12.7% of the total labor force.  This number has decreased by 25,000 compared to the previous quarter, and by 141,000 compared to the same quarter in 2014.  The labor force volume reached approximately 27.8 million, marking a 0.2% increase (or 66,000 individuals) compared to Q1/15 and an increase by 212,000 person marking 0.8% for Q1/14.

CAPMAS also showed that the unemployment rate amongst males recorded 9.3% in Q2/15, whereas it reached 24.1% amongst females.  Moreover, unemployment in cities decreased to 14.9%, compared to 16% in both the previous quarter and the same quarter of2014.  However, unemployment in rural areas has increased to record 11%, compared to 10.3% in each of Q1 of 2015 and Q2 of 2014.  The report has further elaborated that 83.2% of unemployed individuals in the 15-64 years age-range have completed secondary or higher education.

However, unemployment amidst educated young people marked 38.2% of the total labor force with the same age range, of which 44.6% held a university education or higher.  Of this figure, 35.7% had achieved secondary education, and 33.6% held university or higher education.  (CAPMAS 16.08)

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5.13  Egyptian Passenger Car Sales Worth EGP 16.5 Billion in First Half of 2015

The passenger-car market in Egypt witnessed the sale of more than 95,000 cars during H1/15.  The value of sales reached approximately EGP 16.5b.  The Korean car market topped the list of best-selling cars in Egypt, with 28,530 sold cars since January to end of June.  Japanese cars came in second place with 27,709 sold cars. In third place is the European car market that sold about 17,511 cars.  The US car market sold 12,266 cars and came in the fourth place on the best-selling cars list.  Chinese-made cars took fifth place with 8,559 sold cars.  The Malaysian automobile Proton came in sixth place with 480 sold cars.  (DNE 10.08)

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5.14  Egypt Invests in its Regional Airports

Egypt is investing in regional airports in a bid to help boost tourism.  The Egyptian Airports Company (EAC) has chosen SITA to help it modernize IT systems at five regional airports.  The airports will be fitted with a range of solutions to help improve the passenger experience and increase operational efficiency.  Around 10.5 million passengers currently use the airports (located in Sinai and Upper Egypt), and traffic is expected to grow around 14% every year as tourism recovers.  SITA’s airport operational database and resource manager will provide EAC with an integrated view of operations and present active dashboards to monitor and manage both flights and resources.  This should help, in turn, to reduce costs and improve both turnaround times and on-time performance.  SITA BagManager will incorporate reconciliation, tracking, tracing and messaging features to ensure more effective baggage management and fewer lost or late items.  (ABME 23.08)

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5.15  3.5 Million Tourists Visited Morocco During First Five Months of 2015

The tourism sector in Morocco recorded a slight decline in the number of tourists who visited the Kingdom during the first five months of 2015.  According to a report by the Ministry of Tourism, nearly 3.5 million foreigners visited Morocco in the first five months of 2015, marking a fall of 1.1% compared to the same period last year.  The report said that the majority of tourists who visited the Kingdom in that period were mainly from France, Spain, Germany and Britain.  Italians ranked fifth, followed by Belgians, Dutch and Americans.  Despite the slight drop in the number of foreign tourists, the number of domestic tourists reached 199,000, with an increase of 6.8% compared to the same period last year.  The government is continuing to encourage domestic tourism, which is important revenue for the sector.  As the second largest sector of Morocco’s economy, tourism accounts for around 8% of GDP, employing some 500,000 people.  (MWN 15.08)

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5.16  Rabat Unveils Scholarships for Moroccan Students to Study Abroad

Morocco’s Higher Education Ministry has announced four scholarships for Moroccan students to study in four foreign countries.  The Higher Education Ministry said Moroccan students willing to follow their studies abroad can now apply for scholarships in four countries: Tunisia, Senegal, Germany and the United States.  Senegal’s government has also allocated seven scholarships to Moroccan undergraduate students in the academic year of 2015-2016, on top of the four scholarships the Moroccan government plans to offer.  These scholarships include different branches, mainly medicine, dental surgery, engineering, agricultural engineering, applied economics, information technology and archives and documentations.  (MWN 20.08)

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6.1  Turkey’s Unemployment Rate Falls to 9.3%

Month-on-month unemployment in Turkey fell slightly in the May period – made up of April, May and June – but the non-seasonal jobless rate increased slightly, according to data released by the Turkish Statistics Institute (TUIK) on 17 August.   The jobless rate fell to 9.3% from 9.6% in April 2015.  This is still higher than the May 2014 figure of 8.8%.  The non-seasonal jobless rate rose by 0.3% to 10.2% in May 2015 compared to the same period of 2014.  The rise in the non-seasonal jobless rate showed that the general decline in the unemployment rate was due to the rise in employment in the seasonal agricultural and tourism sectors, according to analysts.

The number of unemployed people in Turkey aged 15 years and over was 2.78 million, an increase of 238,000 in the May 2015 period compared to the same period of last year.  In the same period, the non-agricultural unemployment rate was 11.4%, a 0.7%age point increase from last year.  The employment rate rose slightly over the year to 46.9% in May.  The labor force participation rate remained steady at 51.7%, with 29.86 million people in work.  The proportion of women in work rose to 32.1%, marking a 1.1%age point increase over the year to May.  The rate for men remained the same at 71.8%.  (TUIK 17.08)

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6.2  Greek Lawmakers Back Rescue Package After All-Night Session

Greek legislators approved a bailout package that may unlock as much as €86 billion and help the nation avoid a default when it has to make a payment to the European Central Bank.  After an all-night debate in Athens, Prime Minister Tsipras had to rely on opposition votes to secure parliament’s backing on 14 August for a deal that includes sweeping economic reforms and budget cuts mandated by Greece’s creditor institutions.

The IMF said that the agreement reached in Athens was a “very important step forward” that “puts in place far-reaching policies to restore fiscal sustainability, financial sector stability, and sustainable growth.”  It also urged Greece’s European partners “to make decisions on debt relief that will allow Greece’s debt to become sustainable.”  The bailout package, Greece’s third since 2010, spells out the details of the economic overhaul the government committed to in exchange for the loans.  Measures include a clampdown on early retirement, state asset sales, the recapitalization of Greece’s banks and changes to the regulation of pharmacies and bakeries.  (Bloomberg 14.08)

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6.3  Greek Prime Minister Alexis Tsipras Announces His Resignation

Prime Minister Alexis Tsipras resigned on 20 August, hoping to strengthen his hold on power in snap elections after seven months in office in which he fought Greece’s creditors for a better bailout deal but had to cave in.  Tsipras submitted his resignation to President Pavlopoulos and asked for the earliest possible election date.  Government officials said the aim was to hold the election on 20 September, with Tsipras seeking to quell a rebellion in his leftist Syriza party and seal public support for the bailout program, Greece’s third since 2010, which he negotiated.  His decision to return to the ballot box deepens political uncertainty on the very day Greece began receiving funds under its €86 billion ($96 billion) bailout program with foreign creditors.  But a snap election should allow Tsipras to capitalize on his popularity with Greek voters before the toughest parts of the program begin to bite, and may allow him to return to power in a stronger position without anti-bailout rebels in Syriza to slow him down.  (Various 20.08)

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7.1  Winners of Chinese Science Contest Choose Israel Visit as Prize

Nineteen Chinese teenagers who won a prestigious science competition visited Israel as their prize.  The winning group was given its choice of travel destinations and chose to attend a special 10-day workshop hosted by the Weizmann Institute of Science.  The teenagers were accompanied by teachers, journalists and Beijing government officials.  They attended the Smart-Up Science Youth Camp, a collaboration between the Weizmann Institute’s Davidson Institute of Science Education and Shirat Enterprises, which promotes joint high-tech ventures between Israeli and Chinese companies.  A similar science summer camp was held in 2014.  The program includes nationwide activities involving science and technology sites, such as the Israel National Museum of Science, Technology and Space in Haifa.  (Various 13.08)

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7.2  Two Israeli Universities Ranked Among World’s Top 100

The Hebrew University of Jerusalem and the Technion — Israel Institute of Technology are the only Israeli academic institutions to appear in the top 100 of the 2015 Academic Ranking of World Universities, released by the Center for World-Class Universities at Shanghai Jiao Tong University.  The Hebrew University ranked 67th, up three places from last year’s rankings, while the Technion was ranked 77th, up one place from 2014.

In the field of engineering, the Technion, the top engineering school in Israel, was ranked 44th in the world.  In the field of computer sciences, the Technion finished 18th in the world for the fourth consecutive year. Tel Aviv University was ranked 20th in this field, but did not place in the overall top 100.  Also outside of the top 100 were the Weizmann Institute (in the 101-150 grouping), Tel Aviv University (151-200) and Ben-Gurion University and Bar-Ilan University (401-500).  The Shanghai rankings began in 2003 with the goal of improving the level of Chinese universities by comparing them to the top 500 universities across the globe. The rankings are based on objective criteria and various factors, among them the number of Nobel Prize recipients.  (Israel Hayom 16.08)

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7.3  UAE President Announces 30 November as Martyr’s Day

UAE President Sheikh Khalifa bin Zayed Al Nahyan announced that 30 November will be observed as Martyr’s Day in memory of those who have died while serving their country.  The President also ordered that this national event be declared a public holiday.  Sheikh Khalifa said the day is “in tribute to the sacrifices offered by the nation’s martyrs and its loyal people, who offered their lives so as to keep the UAE flag flying aloft while they were performing their national duties within and outside the country, in civilian, military and humanitarian fields”.  He added that national ceremonies and events will be organized where all state institutions, nationals and non-nationals will be engaged to promote, mark and remember the values of sacrifice, dedication and loyalty.

Three soldiers from the United Arab Emirates were killed in August while taking part in a Saudi-led military campaign against Yemen’s dominant Houthi group.  Saudi Arabia and a coalition of other Sunni Muslim states have been fighting since March to restore Yemen’s exiled government and to repel the Iran-allied, Shi’ite Houthis, who took control of the capital Sanaa in September.  At least two other Emirati soldiers have been killed in Yemen since the offensive began.  (AB 19.08)

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7.4  First Saudi Female Voters Register for Medina & Mecca Elections

Jamal Al Saadi and Safinaz Abu Al Shamat have become the first two Saudi women to register as voters for the upcoming third municipal elections in Medina and Mecca respectively.  Voter registration began in the two holy cities a week earlier than the rest of the Gulf kingdom.  Both women said they had thoroughly prepared all the documents they would need so that nothing would stop them from participating in elections for the first time.  Saadi is a businesswoman, and she has chaired the real estate committee of the Medina Chamber of Commerce and Industry.  In Mecca, Shamat is a teacher at one of the city’s girl’s schools.  In addition to Shamat, four other women in Mecca also registered on Sunday to vote.  (AB 18.08)

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7.5  Turkish Prime Minister to Begin Forming Provisional Government

On 25 August, Turkish Prime Minister Davutoglu was given the task of forming a provisional administration in the run-up to a general election to be held on 1 November.  Davutoglu, who heads the Justice and Development (AK) Party, had been appointed to form a government under Article 114 of the Turkish constitution.  On 24 August, President Erdogan decided on a repeat of the election, which saw no party gain enough seats to form a majority government after 13 years of AK Party rule.  Attempts by the AK Party to form a coalition government failed and the president declined to offer the second-placed Republican People’s Party (CHP) the chance to form a government.

The CHP and Nationalist Movement Party (MHP) have both said they will not take part in an interim “election” government, leaving the pro-Kurdish Peoples’ Democratic Party (HDP) as the only parliamentary partner for the AK Party.  The provisional government must be formed within five days of the decision to hold a new election being announced in the official gazette, which has not yet happened.  Due to the CHP and MHP’s refusal to take part, the ten ministries they would have been allocated will likely go to independent figures, leaving 12 portfolios for the AK Party and three for the HDP.  Another three vital ministries – interior, transport and justice – were originally intended for independents.  (AA 25.08)

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8.1  US FDA Accepts Teva’s NDA Application for SD-809 for the Treatment of Huntington Disease

Teva Pharmaceutical Industries announced that the New Drug Application (NDA) for SD-809 (deutetrabenazine) has been accepted by the US FDA for the treatment of chorea associated with Huntington disease (HD), a rare and fatal neurodegenerative disorder caused by the progressive breakdown of nerve cells in the brain that affects about five to seven people per 100,000 in western countries, according to the World Health Organization.  The NDA filing is based on positive results from two Phase-III studies, FIRST-HD and ARC-HD. In the placebo-controlled, randomized FIRST-HD study, SD-809 reduced chorea in patients with HD.  Positive top-line data from the Phase-III, open-label ARC-HD study demonstrated that patients were able to safely convert from tetrabenazine, currently the only approved HD treatment, to SD-809 overnight with continued control of chorea.

SD-809 was granted Orphan Drug Designation for the treatment of HD by the FDA in November 2014 and became part of Teva’s CNS portfolio with the acquisition of Auspex Pharmaceuticals in May 2015.  The FDA designates orphan status to drugs and biologics that are intended for the treatment of rare diseases affecting fewer than 200,000 people in the US

Teva Pharmaceutical Industries is a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions to millions of patients every day.  Headquartered in Israel, Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,000 molecules to produce a wide range of generic products in nearly every therapeutic area.  (Teva 12.08)

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8.2  Integrity Applications Submits Pre-Submission Documents to FDA

Integrity Applications submitted pre-submission documents to the US FDA in connection with its proposed future application for FDA approval of its US clinical trial protocol.  The pre-submission documentation has been submitted to the FDA in order to obtain the Agency’s guidance regarding the US regulatory pathway for the GlucoTrack model DF-F, the proper approach to refining the trial protocol and endpoints, and preparing the pre-marketing application.  The FDA’s Pre-Submission Program is intended to allow applicants the opportunity to obtain targeted FDA feedback in response to specific questions related to product development, including planned non-clinical evaluations, proposed clinical study protocols, or data requirements, prior to making a submission to the Agency.

If the clinical trial protocol is approved by the FDA, the Company expects to begin clinical trials in the United States in early 2016.  Although a final agreement has not been reached, the Company is currently in advanced discussions with a well-known hospital and university to conduct such clinical trials.  The GlucoTrack model DF-F is an investigational device in the United States and accordingly it is not available for sale in the United States.

GlucoTrack features a small sensor that clips to the earlobe and measures the wearer’s glucose level by taking measurements using three technologies.  The measurements are analyzed using a proprietary algorithm and displayed on a small handheld device, the size of a mobile phone. The derived glucose measurement is also announced verbally, making it suitable for the elderly and vision-impaired diabetes patients.

Ashkelon’s Integrity Applications is a medical device company focused on the design, development and commercialization of non-invasive glucose monitoring devices for use by people with diabetes.  Integrity Applications has developed the GlucoTrack model DF-F non-invasive glucose monitoring device, which is designed to help people with diabetes obtain glucose level measurements without the pain, inconvenience, incremental cost and difficulty or discomfort of conventional (invasive) spot finger stick devices.  (Integrity Applications 13.08)

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8.3  BioLight Announces First IOPtiMate System Sale in Peru

BioLight Life Sciences Investments announced the first sale of the IOPtiMate system to a medical center located in Peru.  The IOPtiMate system is based on CO2 laser technology that enables the performance of a unique filtration surgery to treat glaucoma without penetrating the inner part of the eyeball, thus allowing for substantial reductions in post-operative complications and use of eye drops compared with alternatives.  Up until recently, the IOPtiMate system has been marketed primarily to leading physicians and medical centers in Asia and Europe.  These marketing efforts have resulted in recent first sales of the IOPtiMate™ system in Hong Kong, Poland, Hungary and Romania.  Moving forward, and in keeping with the Company’s focus on markets with unmet needs for better solutions to treat glaucoma, BioLight  is now also negotiating additional distribution agreements in South and Central America.

Tel Aviv’s BioLight invests in, manages and commercializes biomedical innovations grouped around defined medical conditions – ophthalmology and cancer diagnostics. The ophthalmic technologies include IOPtiMate, a laser-based non-invasive surgical treatment for glaucoma; TeaRx, a point-of-care multi-parameter diagnostic test for dry eye syndrome; Eye-D®, a controlled release drug-delivery insert platform and a new technology a drug-delivery platform for the improvement of ocular molecule transmission; and OphRx, a drug delivery technology platform for ocular uses. The cancer diagnostic technologies include proprietary tests that are designated for bladder, cervical, multiple myeloma and other cancers.  (BioLight  13.08)

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8.4  Fix Your Posture Problems Instantly And Consistently Using UpRight

Tel Aviv’s UpRight designed a training tool for achieving better posture in a world where many of us slouch over our keyboards for hours each day.  The CEO of UpRight was always trying to help his mother, and himself, to stop slouching.  Her poor posture caused her back pain and this troubled him to the point that he founded a startup and invented a device to cure a problem shared by millions.  The UpRight wearable training device, embedded with dual sensors, attaches to your lower back with hypoallergenic adhesive strips and gently vibrates every time you slouch.  The company claims that wearing UpRight less than an hour a day will train your muscles and mind to sit and stand upright after only two or three weeks of use.  (Israel21c 14.08)

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8.5  Evogene to Establish Validation Capabilities for Soybean Cyst Nematodes

Evogene intends to establish transformational and validation capabilities for biotechnology soybean.  Activities will initially focus on soybean cyst nematode resistance with certain knowhow to be obtained from Syngenta pursuant to a recently signed amendment to the collaboration agreement targeting soybean cyst nematodes initially signed by the two companies in 2009, and extended in 2013.

To date, under Evogene’s multiple collaboration agreements with leading seed companies worldwide, Evogene has utilized its unique predictive discovery infrastructure and model plant validation systems, to undertake all of the first stage discovery responsibilities.  The resulting candidate genes are then provided to its partners for transformation and validation in the target crop (such as soybean and corn), allowing further development under milestone and royalty bearing licenses from Evogene.

Under the amendment, validation activities for the candidate genes, which have already been discovered by Evogene under the nematode collaboration, will now be undertaken by Evogene, at its expense and under Syngenta’s guidance, with enhanced commercial terms for Evogene.  Moving into the area of gene transformation and validation in soybean represents an important capability for Evogene, in addition to its existing discovery capabilities, with respect to both its internal research efforts and future collaboration arrangements.

Rehovot’s Evogene is a leading company for the improvement of crop productivity and economics for the food and feed industries.  The Company has strategic collaborations with world-leading agricultural companies to develop improved seed traits in relation to yield and a-biotic stress (such as tolerance to drought), and biotic stress (such as resistance to disease and nematodes), in key crops as corn, soybean, wheat and rice, and is also focused on the research and development of new products for crop protection (such as weed control).  In addition, the Company has a wholly-owned subsidiary, Evofuel, developing seeds for second generation feedstock for biodiesel.  (Evogene 17.08)

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8.6  BioLineRx Starts Phase 2b Trial for Novel AML Consolidation Treatment

BioLineRx began a Phase 2b trial for BL-8040 as a novel consolidation treatment for acute myeloid leukemia (AML).  The Phase 2b study will examine BL-8040 as part of a second stage treatment, termed consolidation therapy, to improve outcomes for AML patients who have achieved remission after the standard initial treatment regimen, known as induction therapy.  The consolidation therapy is aimed at eliminating the minimal residual disease left in the bone marrow after induction therapy that can lead to relapse.  This study is the first of three clinical studies in additional indications for BL-8040 which BioLineRx plans to commence during 2015, thus significantly expanding its unique BL-8040 oncology platform.

The Phase 2b trial, which is conducted in collaboration with the University of Halle as sponsor and with the participation of two large leukemia study groups in Germany, is a double-blind, placebo-controlled, randomized, multi-center study aimed at assessing the efficacy of BL-8040 in addition to standard consolidation therapy in AML patients.  The primary endpoint of the study is to compare the relapse free survival (RFS) time in AML subjects in their first remission during a minimum follow-up time of 18 months after randomization.  In addition, pharmacodynamic measurements will be conducted in order to assess the minimal residual disease, and biomarker analyses will be performed to identify predictors of BL-8040 response.  The study will enroll up to 194 patients at up to 25 sites in Germany. AML patients between 18 and 75 years of age with documented first remission will be randomized in a 1:1 ratio to receive high dose Cytarabine, either with BL-8040 or with a matching placebo, as consolidation therapy.

BL-8040 is a clinical-stage drug candidate for the treatment of acute myeloid leukemia, as well as other hematological indications.  It is a short peptide that functions as a high-affinity antagonist for CXCR4, a chemokine receptor that is directly involved in tumor progression, angiogenesis (growth of new blood vessels in the tumor), metastasis (spread of the disease to other organs or organ parts) and cell survival.

Jerusalem’s BioLineRx is a publicly-traded, clinical-stage biopharmaceutical company dedicated to identifying, in-licensing and developing promising therapeutic candidates.  The Company in-licenses novel compounds primarily from academic institutions and biotech companies based in Israel, develops them through pre-clinical and/or clinical stages, and then partners with pharmaceutical companies for advanced clinical development and/or commercialization.  (BioLineRx 17.08)

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8.7  Kadimastem Proves Efficacy of Its Unique ALS Treatment in Pre-Clinical Trials

Kadimastem reported success in a pre-clinical trial for the treatment of ALS in another animal model.  The results of the trial demonstrate the efficacy of Kadimastem’s cell-based treatment for ALS.  In light of the successful conclusion of the proof of efficacy stage and the considerable advancement of the product’s development, the company intends to take another step in its process with the FDA, and file a Pre-IND in the upcoming weeks.  The trial tested the efficacy of injecting the brain supporting cells (astrocytes) produced through the company’s unique technology from pluripotent stem cells.  Pluripotent stem cells are cells which have the ability to differentiate into any type of cells in the body.  The astrocytes were injected into the spinal fluid of ALS rat model, and have shown a significant improvement in the rats’ life expectancy.

Kadimastem’s unique technology enables the production of the astrocytes which will serve as the treatment for the patients, as an off-the-shelf product for the treatment of large patient populations.  The injection of cells into the spinal fluid is a standard procedure performed routinely in hospitals worldwide.  The company found that such injections into the spinal fluid enable the cells to disperse throughout the central nervous system, and it thus established this method of cell penetration in the future treatment of patients.  The injecting of healthy and functioning astrocytes into the nervous system of patients may provide systemic support for the damaged motor neurons, thereby inhibiting disease progression and improving the patients’ life quality and expectancy.

Ness Ziona’s Kadimastem is a biotechnology company, operating in the field of regenerative medicine – a groundbreaking field in which the malfunctioning of organs which leads to diseases is repaired by external cells, tissues or organs.  The company specializes in the development of human stem cell-based medical solutions for the treatment of diabetes and neurodegenerative diseases, such as ALS and Multiple Sclerosis.  Kadimastem employs 32 people, of which 11 are PhDs, and its 1,700m2 offices and labs are located in the Ness Ziona Science Park.  Kadimastem was founded based on patent protected technology that was developed at the Weizmann Institute of Science.  (Kadimastem 18.08)

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9.1  OriginGPS Nano Hornet Module Helps TobyRich Gaming Drones Take Flight

OriginGPS announced that Bremen, Germany’s TobyRich has integrated OriginGPS’ Nano Hornet into the first smartphone controlled gaming drone line, to extend its range and enhance its directional capabilities.  By leveraging the Nano Hornet, the world’s smallest GPS module with an integrated antenna, TobyRich was able to design a smaller, sleeker form factor for its innovative drones while taking advantage of OriginGPS’ outstanding performance and low power consumption features.  The agile drones blend realistic flight maneuvers with innovative interactive gameplay and are designed to resemble an airplane rather than a quadcopter to extend flight time and carry more payload than traditional drones without compromising on functionality or performance.  The drones can easily be controlled within a range of 90 meters via the mobile app, which is available on iOS and Android.

With the help of OriginGPS, a TobyRich drone knows exactly where it is in relation to a user’s smart device, with unprecedented accuracy, allowing it to respond immediately and precisely to gesture controls or on-screen joysticks.  OriginGPS’ location capabilities ensure that a drone will automatically return to its point of origin or a pre-programmed destination if it strays too far from its corresponding smart device or flight path, which reduces user frustration, minimizes human error and increases safety.

Measuring just 10 by 10mm, the OriginGPS Nano Hornet module powers TobyRich’s flight management system by achieving a rapid time to first fix (TTFF) of less than one second, with approximately one meter accuracy and -163dBm tracking sensitivity, and it utilizes OriginGPS’ proprietary Noise Free Zone technology to increase sensitivity and minimize interference.  It achieves a state of near continuous availability, while consuming mere microwatts of battery power, ensuring maximal power is devoted to increasing drone flight times.  Because OriginGPS’ modules are complete, plug and play solutions, they significantly shorten time to market and dramatically reduce engineering risks.

Airport City’s OriginGPS is a world-leading designer, manufacturer and supplier of miniaturized GNSS modules (“Spider” family), antenna modules (“Hornet” family) and antenna solutions.  OriginGPS introduces unparalleled sensitivity and noise immunity by incorporating its proprietary Noise Free Zone technology for faster position fix and navigation stability even under challenging satellite signal conditions.  (OriginGPS 13.08)

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9.2  SQream Technologies Wins Best New Product of the Year – the Stevie Award

SQream Technologies announced that GenomeStack – the company’s latest addition to its product portfolio – was named the winner of a bronze Stevie Award in the Best New Product of the Year – Big Data Software Solution category in the 2015 International Business Awards.  GenomeStack, a big data software platform designed to automate genome researchers’ workflow, replaces the old-school file-based, highly time-consuming manual process for storing and analyzing genome sequenced data.  The platform enables a simultaneous post-sequence sample querying across many BAM files, with a click of a button.  GenomeStack delivers previously unseen levels of speed, simplicity and scalability that helps speed up research timetables by up to 100 times.

Tel Aviv’s SQream Technologies provides organizations with an extremely rapid, petabyte-scale big data analytics SQL database available on the market today.  With SQream, organizations are able to get the answers they are looking for, quickly, and gain significant industry leadership advantage.  SQream introduces the first patent-pending award-winning technology that boosts analytics performance through massive parallel computing, using a GPU-based technology (Graphic Processing Unit).  (SQream Technologies 14.08)

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9.3  Anywhere Software’s New B4J Developer’s Tool Takes Up Where Visual Basic Left Off

Anywhere Software has enhanced its B4X Rapid Application Development (RAD) suite with the addition of a new developer’s tool for desktop and server applications.  Known as B4J, this free tool was designed to meet vocal market demand for a modern alternative to Visual Basic 6 (VB6), which was discontinued by Microsoft eight years ago.  Similar to VB6, B4J is a simple and powerful cross-platform tool designed to take the learning curve out of desktop app development.  The compiled apps can run on Windows, Mac, Linux and ARM boards (such as Raspberry Pi).

Based on the same B4X language and concepts as its B4A (Android) and B4i (iOS) counterparts, B4J offers an IDE with a full set of features.  These include a visual designer, debugger, compiler, hundreds of libraries, and a packager that creates self-contained installers with no dependencies.  Another advantage of B4J is that the code developed for the desktop can be easily reused to build similar applications for Android or iOS platforms, and vice versa.

Specializing in mobile development since 2005, Moshav Yodfat’s Anywhere Software develops and markets developers’ tools for mobile and desktop platforms.  Their comprehensive B4X suite of feature-rich Rapid Application Development tools enables both novices and experts to develop high-performance native apps for Android (B4A) and iOS (B4i), as well as desktop and server applications (B4J).  (Anywhere Software 17.08)

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9.4  Magal to Secure 200+ Kilometers of Pipeline With Long Range Fiber Optic Sensor

Magal Security Systems received an order to secure 200+ km of buried pipeline with its fiber optic sensor system.  The system is based on Magal’s state-of-the-art COTDR long range fiber solution, which uses standard single mode communication fiber to detect any attempt to dig close to the pipeline – be it for terror or criminal tapping.  The ranging fiber optic sensor is based on a standard single mode fiber optic cable buried along a pipeline with a processor that can cover tens of kilometers, and detect digging close to the pipeline with accurate location within 10 meters.

Yehud’s Magal S3 is a leading international provider of solutions and products for physical and cyber security, as well as safety and site management.  Over the past 45 years, Magal S3 has delivered tailor-made security solutions and turnkey projects to hundreds of satisfied customers in over 80 countries – under some of the most challenging conditions.  (Magal S3 17.08)

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9.5  Step Ahead Brings Big Brother to Work

An Israeli startup, Ramat HaSharon’s Step Ahead, has developed a tech alternative which analyzes the social ties between workers and provides managerial conclusions to employers, all through the monitoring of emails sent among the staff.  Step Ahead’s technology is based on studies from within an old discipline in employment research, institutional network analysis, which examines an organization’s human capital and the ties both beneficial and otherwise which it creates during the work flow.  Step Ahead’s system creates data sets of the organization’s emails and analyses the social network by monitoring email communication, studying the frequency and volume of messages between personnel.  The monitoring data is combined with an interactive questionnaire on each employee’s mobile phone which examines the levels of friendships in the company. An analysis of the big data provides processed information of institutional issues which can be used by management to make better informed decisions.  (Globes 24.08)

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9.6  dapulse Secures $2.6 Million in Series A Funding

dapulse has secured $2.6 million in the first part of its Series A funding from Genesis Partners and Entree Capital, with additional capital being raised.  The company has experienced significant growth over the last 18 months, growing its customer base from six to over 1,700, including two significant customers Discovery and WeWork.  dapulse’s SaaS solution differs from classic project management software by eliminating a separate view of “what needs to be done” for each user.  Instead, dapulse creates a big picture of the whole process for everyone to see, therefore unifying teams and helping them complete tasks quicker and more efficiently.

Tel Aviv’s dapulse is the new generation of Project Management software.  It’s a team collaboration tool that’s focused on ease of use and a visual representation of your workflow.  The company’s rapid growth is attributed to it being a tool that people actually love using, rather than a traditional Project Management software that hinders their progress.  dapulse was founded in 2012 and currently serves more than 1,800 customers.  (dapulse 24.08)

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10.1  Israel’s Inflation Increases by 0.2% in July

Israel’s Consumer Price Index (CPI) rose by 0.2% in July, the Central Bureau of Statistics announced.  The pundits forecast a 0.1 – 0.2% increase.  After a period of negative inflation, the CPI has now risen for five successive months, including 0.3% in June.  However, the CPI has fallen 0.3% over the past 12 months and is unchanged since the start of 2015.  There were notable price rises in fresh vegetables (3.9%), housing costs (1%), and transport 90.5%).  There were notable price falls in clothing and footwear (6.6%), fresh fruit (1.8%), and furniture and household equipment (0.8%).  (CBS 14.08)

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10.2  Unemployment in Israel Unchanged in July

The Central Bureau of Statistics announced that Israel’s unemployment rate in July remained unchanged from the preceding month at 5.3% in annual terms, adjusted according to seasonal factors.  There are reportedly 205,000 unemployed in Israel in July 2015 and 3,630,000 people employed.  The employment rate among people aged 25-64 fell from 76.6% in June to 76% last month, while the participation rate in the labor force among people aged 25-64 fell from 80.1% in June to 79.6% in July.  Among people aged 25-64, the unemployment rate in the labor force rose to 4.6% in July 2015, compared with 4.4% in June 2015.  Among those employed 1.939 million were male (compared with 1.924 million in June 2015) and 1.691 million were female (compared with 1.717 million in June 2015).  (CBS 24.08)

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10.3  Israeli Exports Fall by 6% During First Half

Israeli exports fell 6% to $23 billion in dollar values in H1/15, compared with the corresponding period last year, according to the Israel Export and International Cooperation Institute.  The Export Institute’s economists attribute the decline mostly to the negative effect of lower global oil prices.  When that factor is eliminated, exports were 1.5% higher.

An analysis by the Export Institute shows that despite the ongoing downtrend in Chinese imports, Israeli exports to China were up 10% to $1.2 billion, excluding exports of chemicals and minerals, which were affected in the first half of the year by oil prices, the prolonged strike at Israel Chemicals and a general drop in prices in these sectors.  Israeli exports to Turkey were down 34% to $960 million in the period, including a 25% slide in chemical exports to that country.  The downtrend in exports to Russia also continued, with exports totaling $380 million in H1/15, 29% less than in the corresponding period in 2014.  (IEICI 13.08)

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10.4  Israel Second Quarter Growth Slows to 0.3%

The Central Bureau of Statistics announced that Israel’s economy grew only 0.3% in Q2/15 compared with 2% in Q1/15 (revised downward from the earlier 2.1% estimate) and 6% in Q4/14 (revised downward from 6.5%).  Growth lagged behind the forecasts by the Ministry of Finance and the Bank of Israel, which predicted that the economy would grow by 3.2%.  GDP grew by 2.6% in H1/15 in annualized terms, compared with 2.5% and 2.4% in the second and first halves of 2014, respectively.  Excluding net import taxes, GDP grew 3.1% in the first half of the year, compared with 2.3% and 2.4% in the second and first halves of 2014, respectively.  The slight increase in GDP in the second quarter reflects moderate annualized rises of 0.9% in private consumption, 0.4% in public consumption, and annualized declines of 3.8% in investments in fixed assets and 12.5% in exports of goods and services.  (CBS 16.08)

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10.5  Israel Railways Passenger Traffic Up 6%

Israel Railways reported a 6% increase in passenger traffic in the first half of 2015.  Israel railways carried 25.9 million passengers in the first half of 2015, compared with 23.7 million in the corresponding period of 2014.  In its financial report for H1/15, Israel Railways said that it is now for the first time carrying more than 200,000 passengers each day, up 11% from 180,000 per day in the corresponding period of 2014.  Israel Railways reported revenue of NIS 375.5 million from passengers in the first half of 2015 compared with NIS 345 million in the corresponding period.  In the first half of 2015, Israel Railways transported 3.7 million tons of cargo, up 3% from 3.6 million tons in the corresponding period.  (Globes 25.08)

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10.6  Study Finds Free Buses Worth More to Neediest Than 0% VAT

Instituting a policy of subsidized public transportation could save twice as much for the most disadvantaged socioeconomic sectors than a zero-VAT plan for basic products, according to a study conducted by the Tel Aviv Municipality and the Social Economic Academy.  The study predicts that free bus rides would not drastically increase the number of passengers but would benefit the neediest segments of society.  The work was based on data from the Central Bureau of Statistics, the Swedish KTA Royal Institute of Technology, OECD studies, and a case study from Tallinn, Estonia.

The premise of the study is that inequality eventually hurts production, and inequality in transport is a central component of the perpetuation of societal gaps.  According to the OECD, the rise in income inequality between 1985 – 2005 led to a 4.7% average drop in the growth rate between 1990 – 2010 among its members.  However, a look into the free public transport offered by the Tallinn metropolitan in 2012 shows that use rates only increased by an average of 1.2% (with a top limit of 3%).  The sharpest increase in use rates following the change was in a district hit by relatively-high unemployment rates, where usage rose by 10%.

Free public transport may not increase the number of users, but it will benefit disadvantaged demographics, said Omer Groman, one of the report’s authors.  “While the top decile only spends 0.3% of its income on public transport, the bottom decile spends around 5%.  Israel already subsidizes bus operations by some NIS 2 billion.  A full subsidy of bus rides, which are the main mode of transport for the lower deciles, will require additional subsidies of NIS 1.5 billion per year.  Meanwhile, zero-VAT for basic goods will cost the economy some NIS 2 billion.”  The researchers compared the expected savings for each decile from the outset of a public transport policy to those from zero-VAT on basic goods and found that the bottom decile would save 3.37% of its income from the former and only 1.45% from the latter.  (Globes 17.08)

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11.1  ISRAEL:  The State of Startups in Israel

On 22 August, The Next Web News released their review of Israeli start up activity.  In the face of myriad studies, statistics, funding and exits among Israeli startups and venture capitalists in the past couple of years, TNW decided to undertake an in-depth analysis.  Here, they examined the data in a more comprehensive way to understand the trends and where the industry is headed in the coming years.

In the current report, TNW chose to review the hi-tech sectors (technology, internet, mobile, software and hardware) only, and not include life sciences.  Also, TNW did include an analysis of companies with Israeli connections operating overseas, such as companies that were founded in Israel and then moved to the United States, or founders who chose to register their company in the US for various reasons.  But most companies have an active Israeli component.

It is important to understand that TNW’s research is based on fundings, exits, and deals that were publicized in the hi-tech and technology sectors; TNW did not include companies that were sold or transferred ownership within our count of exits and funding totals.

The goal is to present the numbers as they are publicly expressed and then read between the lines.

2015: The Bubble Reaches Israel

In the past two years, we’ve seen a significant growth in the sums of capital raised by Silicon Valley startups, as well as large volumes of transactions that were rarely seen in Israel.  Several “unicorns” (companies valued at over $1 billion) have already emerged from Israel, such as Waze, Taboola and Outbrain.  But the statistics for 2015 reflect a decisive growth in the number of investments, capital raised, and the sheer average volume raised in a funding round – suggesting that the Silicon Valley phenomenon has begun to trickle over to Israel.

In the first half of 2015, Israeli startups managed to raise no less than $1.64 billion.  By comparison, this sum is 65% higher than the sums raised by Israeli startups in the first half of 2014, which totaled “only” $0.99 billion.  The number of funding rounds also grew significantly, although at a more conservative rate of “only” 38% compared to Q1 and Q2 in 2014 – 224 funding rounds in the first half of 2015 in contrast to 162 rounds in the first half of last year.

If we examine the average sum of each funding round in these two years, we can see that in the first half of 2015, the total amounted to $7.32 million, whereas in the first half of 2014 it stood at only $6.11 million.


Building the Scaleup Nation

When we examine the growth based on the startups’ stages, an even more interesting picture emerges.  The number of investments in early stage startups in the first half of 2015 (170 investments) was 26% greater than it was in last year’s equivalent time frame (134), a statistic that indicates increased investment in early stage startups – and to a greater number of startups receiving funding early on.

This insight is further strengthened when we examine the growth in overall dollars invested in early stage startups.  Whereas in 2014, the total sum raised was around $230 million, the first half of 2015 alone saw $298 million invested in these startups, a growth of 30%.


Combining these two facts indicates not just the sums of capital being invested in early stage startups has risen, but also a growth in volume occurred.

If for a moment you thought that the surge in initial funding rounds was large, it’s worth noting that in the growth funding stages, there has been a 76% increase in the number of growth funding rounds raised by companies between 2014 to 2015.

In the first half of 2015, 54 companies raised a total of $1.34 billion, whereas only 28 companies raised $760 million within the same time frame in 2014.  Although the number of growth funding rounds is significantly lower than the early funding rounds, the growth rounds have raised a very respectable amount of capital.


The greatest single funding round of the first half of 2015 was that of SimpliVity, an IT infrastructure company founded by Doron Kempel.  In the framework of the Series D funding round, the company raised $175 million after being evaluated at $1 billion before the round.  In contrast, the biggest funding round in the first half of 2014 was that of Kaltura, which raised “only” $47 million.


In terms of average investment size, we can see that between 2014 and 2015, there was an increase in the total sums raised by early stage startups, which in most cases indicates a similar increase in volume of early stage startups.

Has the Series A Crunch Also Reached Israel?

An examination of the distribution of early stage funding rounds implies further insights: In the first half of 2015, seed rounds reached a total of $99 million in 144 rounds, Series A rounds totaled $199 million in 26 rounds, and Series B rounds totaled $745 million in 37 rounds.  By comparison, a breakdown of the funding rounds in the first half of 2014 shows that 111 seed rounds raised $65 million, 23 Series A rounds raised $163 million, and 13 Series B rounds raised $145 million.



In other words, many startups that were able to entice private investors in their seed rounds were unable to demonstrate concrete results or persuade their investors about their future, which creates a sort of “chasm” in the Series A funding rounds.  On average, startups that overcome this obstacle can continue to enjoy funding from existing investors, attract new investors, and raise more funding in their consecutive Series B rounds.

This phenomenon is known as the “Series A Crunch,” and it applies to Valley startups as well, who are able to raise decent sums in their seed rounds but then discover that to raise Series As they must demonstrate buyers, traction, popularity, or need, which were normally only expected for Series B rounds.

The greatest claim in the Exit Nation versus Scaleup Nation argument gets punched in the face when viewing data from 2015.  The growth in the total number of investments in 2015 refutes one of the strongest assertions that has been levied against Israeli ventures and founders in the last several years – that they do not know how to effectively scale, and therefore sell their startups in their early stages.

Cyber Nation

Unsurprisingly, the sector that received the largest number of investments in the first half of 2015 was that of cyber technology and information security, with 16 rounds of funding totaling $152 million, followed by the enterprise and organizational platforms sector with 12 funding rounds totaling $254 million. In third place comes the ad tech sector, with 11 rounds totaling $194.6 million.


Because of its relative youth, the cyber technology sector still holds a lot of opportunities, both for attackers discovering breaches in security and weaknesses in organizational systems, as well as for security companies that aim to stave off these threats.  There is no doubt that any publicized vulnerability or information leak raises the value – and necessity – of these various security companies.

With that said, and despite the fact that cyber technology companies received the greatest number of investments, organizational software startups raised almost twice as much total funding. The reason for this is because the latter represent more established companies with a proven product, which require greater sums to expand to new markets.


Relative to the first half of 2014, the breakdown between the different sectors is quite similar, except for the fact that we see a spike both in the number of investment rounds and the scope of the investments.  Cyber technology raised 12 investments totaling $87.1 million, and ad tech raised eight investments totaling $57 million. The sectors of e-commerce, which raised $35.4 million, and enterprise software, which raised $115 million, both received the same number of investments (6).

The Exit Nation is Still Here, But It’s More Proportionate

Corresponding to the spike in the number of investments in early stage startups, we also see that Israelis are not quick to give up on the dream of a successful exit. In the first half 2015, there was a 65% spike in the number of acquisitions, with a total of 33 startup exits compared to just 20 in the first half of 2014.


In the last 18 months, we’ve seen nine Israeli hi-tech startups* issue IPOs: Three of them occurred in the first half of 2015, two in the first half of 2014, and four in the second half of 2014.

The biggest issue in the last six months was that of the SolarEdge energy company, which raised $125 million in NASDAQ based on a valuation of $500 million. In the first half of 2014, Varonis Systems had the largest IPO, raising $106 million at a $524 million valuation.

*In this study, we refer to Initial Public Offerings by Israeli startups only (excluding biotech companies and secondary offerings).  (TNW 22.08)

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11.2  LEBANON:  2014 Lebanon Country Report

Blominvest Bank’s 2014 Lebanon Country Report said Lebanon’s economic growth remained positive in 2014 despite the challenging political, security, and external environment.  The Lebanese economy went through difficult times in 2014 except for the formation of a cabinet towards the end of the first quarter.  The spillovers from the Syrian conflict were also having an ongoing negative impact on Lebanon estimated at $7.5 billion by the World Bank.

Thus, real Gross Domestic Product (GDP) registered a 2% growth rate in 2014, slightly better than the 1-1.5% growth registered in 2013.  The slowdown in domestic demand and consumption mostly lies behind the weaker GDP growth.  This was coupled with a subdued inflation rate as the consumer price index increased at an average rate of 1.86% over the year.

Disparate trends characterized the Lebanese core sectors tourism, real estate and construction.  The former managed to show a relatively better performance in the first half of 2014 mainly after the long-awaited Cabinet formation and the security plan that took place by the end of the first half.  However, the latter kept on suffering the mismatch between demand and supply with prices continuing to decline.

Business activity of the private sector, measured by the Purchasing Managers’ Index for Lebanon (BLOM PMI), remained below the 50 benchmark separating expansion from contraction for the whole year of 2014.

On the external front, the Balance of Payments (BoP) deficit broadened at a faster pace in 2014 to $1.41B.  This was mainly the result of worsening current account deficit, BOP’s largest constituent, despite the progress of the capital and financial account and that of the unrecorded transactions.  In details, the current account balance remained under the strains of the dwindling tourism activity as frail levels of receipts heavily impacted the balance of services.

As for trade balance, it managed to tighten its deficit during 2014.  This has followed a higher slump in imports’ value than that of exports.  The slight 2.0% narrowing of deficit was mainly the result of bearish oil prices hand in hand with the depreciation of the euro.  Exports covered 19.0% of imports in 2014, compared to 19.6% in the previous year.  When it comes to public finance, Lebanon’s fiscal balance significantly improved in 2014.  In details, the deficit tightened by 27% over the year following a 15.5% jump in total revenues versus a marginal 2% yearly rise in expenditures.  Thus, the share of the fiscal deficit in the GDP retracted from 9.3% in 2013 to 6.4% in 2014.

On the brighter side, the primary balance, referring to the fiscal balance excluding debt service, recovered after two years of being in the red.  Accordingly, the share of the primary balance in GDP recovered from a deficit of 0.53% in 2013 to a surplus of 2.73% in 2014.

In details, both tax and non-tax revenues boosted total budget revenues in 2014, while treasury receipts almost doubled to $1.1B.  As for expenditures, the effect of lower oil prices has not been materialized in lower transfers to EDL since the transfers of 2014 correspond to a previous consumption period.  Accordingly, the 11% annual growth in the value of interest payments along with the 18% y-o-y upturn in domestic interest payments and, to a lesser extent, the uptick in foreign interest payments constituted the main increase in public expenditures.

However, Lebanon’s gross public debt rose by 5% y-o-y compared to the 10.1% rise in 2013.  In specific, the value of domestic debt almost increased by an annual 10% in 2014 simultaneously with the 2% yearly drop of foreign debt.  In addition, interest payments on both domestic and foreign debt have increased more than the increase in the stock of debt while interest rates did not change.

To support economic growth and price stability, monetary policy has remained highly accommodative during 2014.  The central bank kept the interest rates stable as witnessed by T-bills rates, maintained the exchange rate peg at its current level, pumped money into the system through subsidized loans and added to its sizable holdings of government securities.

As security and political situations had their toll on the economy since 2011, the central bank’s aim remained to support progress toward price and exchange rate stability and economic growth. In this context, the central bank implemented an $800M economic stimulus package in 2014, which targeted start-up companies and some other sectors of the economy including housing, tourism and manufacturing.  It also initiated the “Knowledge Economy”- “an economy in which information is invested to create new and improved products and services with a high added value that constitutes a main component of the production process and generation of wealth”.

Lebanon’s financial markets kept on mimicking the political and security dynamics that characterized the country over 2014.  While both the Lebanese stocks and Eurobonds’ markets witnessed a relatively prosperous first half in 2014, the worsening developments that painted the second half of the year triggered down investors’ appeal for the Lebanese securities.  This has led to flat, yet leaning to positive, outcomes over the mentioned financial markets.

From one side, the Lebanese stock exchange revealed a 1.75% timid yearly upturn in its BLOM Stock Index.  This was coupled with an improving trade activity that totaled 38.67M shares worth $297.55M being traded over the year, compared to a volume of 93.92M shares worth $576.26M the previous year.

On the other side, Lebanon’s Eurobonds market finally took off and recovered in 2014 following 3 years of negative performance.  In fact, the relationship binding Lebanese Eurobonds to the local scene was stronger than the impact of the international trend driven by the US Treasuries.  Thus, the BLOM Bond Index (BBI) mirrored the dwindling local market’s performance and added a mere 1.7% y-o-y.  (BLOM 22.08)

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11.3  IRAQ:  IMF Executive Board Concludes 2015 Article IV Consultation

On July 29, the Executive Board of the International Monetary Fund (IMF) concluded the 2015 Article IV consultation1 with Iraq.

Iraq is facing a double shock arising from the IS insurgency and the plunge in global oil prices.  In 2014, real GDP contracted by 2.1% mainly due to the impact of the conflict, while oil production and exports increased slightly compared to 2013.  This year, overall economic activity is expected to see a modest recovery of 0.5% thanks to oil sector expansion, while non-oil activity is expected to contract further.

The decline in oil prices has driven the decline of Iraq’s international reserves (including the Development Fund for Iraq) from $84 billion at end-2013 to $67 billion at end-2014.  Fiscal pressures are intensifying, with the government deficit expected to expand from 5.3% of GDP last year to 18.4% of GDP in 2015 due to continuing weak oil prices and rising humanitarian and security spending.

The authorities have appropriately maintained the exchange rate peg.  Liberalization steps taken by the Central Bank of Iraq led to a decline in the parallel market spread to less than 2% by end-2014.  The imposition of new restrictions triggered significant market volatility and a sharply wider spread in the first months of this year, but their recent removal has helped narrow the spread back to 4% by July.

Medium term growth prospects remain positive, though less favorable than before the crisis.  Growth will be driven by the projected ramp-up in oil production and the rebound in non-oil growth supported by the expected improvement in security and implementation of structural reform.  Risks remain very high, however, arising primarily from an escalation of the conflict, political tensions, and poor policy implementation.

The Fund is supporting Iraq through a disbursement under the Rapid Financing Instrument in the amount of SDR 891.3 million ($1.242 billion), equivalent to 75% of quota.

Executive Board Assessment

Directors noted the severity of the double shock facing Iraq as a result of the continuing IS insurgency and the global oil price decline.  The risks remain very high, emanating from an extension of the conflict, political tensions, weak policy implementation, and further shocks from oil markets.  In this context, Directors noted that the steps taken by the authorities are in the right direction, but urged further determined efforts to address the large financing gap and maintain the momentum for reforms.

Directors welcomed the 2015 budget as a good step toward addressing pressures from lower oil revenues amid higher humanitarian and security spending, and commended the introduction of new revenue measures.  While recognizing that the current adjustment plans may be socially and politically challenging, Directors saw a need for additional measures to help close the large financing gap and build fiscal buffers.  Some Directors expressed disappointment over the delay in implementing the electricity tariff reform.  In this regard, Directors welcomed the authorities’ commitment to implement the reform as soon as possible or adopt compensatory fiscal measures.  They also recommended expenditure rationalization while safeguarding priority social and capital spending and making social safety nets more efficient.  Directors urged the authorities to tap domestic markets and seek further external financial support, while avoiding the buildup of domestic and external arrears.  Over the medium term, strengthening public financial and debt management will be crucial.

Directors noted that indirect central bank financing of the government is necessary at this juncture given the lack of other sources of financing, but stressed that this should not become a recurring source of financing.  They, therefore, welcomed the authorities’ intention to firmly limit such support and clarify the terms of the related financial operations between the central bank, the state-owned banks, and the government.  Directors supported the authorities’ commitment to maintain the exchange rate peg, which has served as a sound nominal anchor for Iraq.  They also welcomed the steps taken to liberalize the foreign exchange market and urged the removal of remaining exchange restrictions and multiple currency practice as external conditions evolve.

Directors underscored the risks from rising tensions in the banking system arising from the impact of the crisis on the assets and activity of private banks, and the increasing role of state-owned banks in financing the government.  In this regard, they welcomed the steps taken to strengthen banking supervision and the authorities’ commitment to press ahead with the restructuring of Rasheed and Rafidain banks.  Directors emphasized the importance of bringing Iraq’s frameworks for combating corruption, money laundering, and terrorism financing in line with international standards and implementing them effectively.

Directors welcomed the authorities’ recognition of the need to maintain the momentum on restructuring the economy despite the current difficulties, and emphasized the importance of staying committed to reforms.  They highlighted the need to diversify the economy and improve the resilience and inclusiveness of economic growth.  They supported the focus on strengthening fiscal institutions, completing the transition to a market economy through further private banking sector development and state-owned enterprise restructuring, and improving the business environment, governance, and the labor market.  In this context, they noted the need for Fund technical assistance in strengthening Iraq’s institutions.  Recognizing the difficult circumstances, Directors agreed that a realistic implementation timeline is important, while pressing ahead with high-priority reforms.  Looking ahead, a forward-looking policy framework could help the adjustment process and allow the authorities to build a track record of strong policy implementation.  (IMF 18.08)

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11.4  KUWAIT:  Ratings Affirmed At ‘AA/A-1+’ Despite Low Oil Prices; Outlook Stable

Rating Action

On 14 August, Standard & Poor’s Ratings Services affirmed its ‘AA/A-1+’ long- and short-term foreign and local currency sovereign credit ratings on Kuwait.  The outlook is stable.


Prices for crude oil have fallen by around 50% in the last year.  We now forecast an average Brent oil price of $55/bbl in 2015 and $67.5/bbl in 2015-2018.  The sharp fall in oil prices over the past year has significantly affected Kuwait’s fiscal and current account (flow) positions.  Nevertheless, our ratings on Kuwait remain unchanged as they continue to be supported by the sovereign’s high levels of accumulated wealth and very strong external and fiscal asset (stock) positions – the Kuwaiti government, via the Kuwait Investment Authority (KIA), has accumulated substantial assets through oil and gas production over the years, saving its oil wealth in what we consider to be a prudent manner.  The government’s large net asset position, which we estimate at over three times GDP at the end of 2015, is a significant ratings strength providing a substantial buffer to lower oil prices.  Nevertheless, the ratings are constrained by a very heavy reliance on oil, as well as domestic political risk and regional geopolitical tensions.

Our base-case scenario assumes that, despite the sharp fall in the oil price, OPEC will chose to broadly maintain its current oil production levels to undermine shale-oil production.  Consequently, Kuwaiti oil output will remain at least 2.7 million barrels per day until 2018.  Kuwait’s production is also likely to increase if OPEC choses to increase production and if Kuwait’s planned investment in the sector comes to fruition.

The general government budget has averaged a surplus of around 35% of GDP for the past decade, if we include investment income from funds held by the Kuwait Investment Authority (KIA).  Fiscal surpluses in past years have contributed to the build-up of the significant net general government (and external) asset stocks.  Even in the lower oil price environment, the Kuwaiti government will continue to run surpluses of around 14% of GDP for the budget years 2015-2018, when we include investment income from KIA funds.

The 2015/16 budget has a reduced spending plan of Kuwaiti dinar (KWD) 19 billion (compared to a budgeted allocation of KWD23.2 billion in 2014/15) and a planned deficit of KWD8.2 billion.  Kuwait typically spends below its proposed budgetary allocations and with lower average oil prices in 2015/16 onward it will likely generate significant automatic savings on the fuel subsidy bill.  In addition, some large one-off costs incurred in 2014/15, such as social security fund top-ups, are unlikely to repeat in 2015/16.  When investment income is included, we forecast that Kuwait will still run a surplus in 2015/16.

We estimate that strong oil exports led to current account surpluses averaging more than 37% of GDP in 2008-2014.  We forecast these surpluses will fall to an annual average of 15% in 2015-2018. Given the government’s policy of investing a large portion of its surpluses abroad, we estimate Kuwait had a net external asset position of more than 300% of current account receipts (CARs) in 2014.  We believe the government will maintain this large asset position given ongoing external surpluses and reinvestment – but we note a distortion in the ratio due to a sharp decline in the denominator because of the fall in current account receipts (owing to lower oil prices).  At the same time, we project that gross external financing needs will remain relatively low, averaging around 75% of CARs plus usable reserves in the next four years.

Kuwait had increased its annual contributions to the KIA’s Future Generations Fund (FGF) from 10% to 25% of total revenues in the last few fiscal years including in 2014/15, because higher oil prices had produced very strong revenues.  Now that oil prices are sharply lower, transfers to the fund from 2015/16 are planned to revert back to 10% from 2015/16 onward.  The fund will still continue to grow on reinvested earnings and ongoing, albeit lower, contributions.  Disclosure about the size and structure of the FGF and KIA’s assets is limited but the Sovereign Wealth Fund Institute and other sources estimate total assets at $592 billion at end-2014.

We estimate real GDP growth to average about 2.1% in 2015-2018, but GDP per capita growth to contract by about 1% annually, partly because of high population growth, which is to an extent linked to large numbers of expatriates.  Nevertheless, Kuwait’s high wealth–we estimate GDP per capita at $44,500 in 2015–means that its weak economic growth performance (on a per capita basis) does not currently affect our ratings.

Kuwait’s exchange rate is pegged to an undisclosed basket of currencies, with a large US dollar component, which limits its monetary flexibility.  We view its monetary flexibility as limited although we acknowledge that the exchange rate regime is consistent with Kuwait’s reliance on US dollar-based oil revenues and that Kuwait has sufficient resources to defend the peg. Kuwait’s financial system remains fairly stable, in our view; its banks maintain healthy capital levels.

Geopolitical risks are high, with the so called IS militant group in Iraq and Syria posing a potential threat to the wider region and Kuwait.  In June 2015, an IS militant detonated a bomb at a Shia mosque in Kuwait City; excluding the Gulf war it was the first terrorist attack on Kuwaiti soil since the 1980s.  Nevertheless, it has so far not had wider repercussions or fueled tensions between the Sunni and Shia communities.

Domestically, the political system is dominated by a powerful government and vocal parliament, which have previously clashed on many issues.  Kuwait held its third parliamentary election in 18 months in July 2013 and, owing to the boycott of the election by several opposition groups, a more government-friendly parliament was elected.  Unlike the previous administration, it is more cooperative with the executive and this has led to more progress on long-planned projects.  We have factored Kuwait’s political and geopolitical framework into the current rating.


The stable outlook reflects our expectation that Kuwait’s fiscal and external positions will remain strong, backed by a significant stock of financial assets and significant oil reserves.  We expect these strengths to offset risks related to the current volatile oil price, Kuwait’s undiversified oil economy, and what we assess as an unpredictable political environment, in addition to geopolitical tensions in the region.

We could lower the ratings if a continued fall in oil prices were to undermine Kuwait’s wealth levels, if Kuwait’s domestic political stability were to significantly deteriorate, or if geopolitical risks were to escalate.

We could raise the ratings if political reforms were to enhance institutional effectiveness and improve long-term economic diversification, if geopolitical risks fade significantly, and prospects for the oil sector improve.  (S&P 14.08)

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11.5  SAUDI ARABIA:  IMF Executive Board Concludes 2015 Article IV Consultation

On July 29, 2015, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV Consultation1 with Saudi Arabia.

Saudi Arabia has been one of the strongest growing economies in the G-20.  Rising oil prices and production resulted in large external and fiscal surpluses and strong government spending led to robust private sector activity.  Over the past year, however, the global oil market environment has changed substantially with oil prices dropping by close to 50%.

Real GDP growth is projected to slow to 2.8% this year, and then further to 2.4% in 2016 as government spending begins to adjust to the lower oil price environment.  Over the medium-term, growth is expected to be around 3%. Inflation is likely to remain subdued.

The decline in oil prices is resulting in substantially lower export and fiscal revenues.  A central government fiscal deficit of 19.5% of GDP is projected in 2015, and while the deficit will decline in 2016 and beyond as one-off spending ends and large investment projects are completed, it will remain high over the medium-term.  Nevertheless, government debt is very low and was 1.6% of GDP at end-2014.  The current account surplus declined to 10.9% of GDP in 2014. It is expected to move into a small deficit in 2015 but return to surplus during 2016-20.  Deposit inflows to banks and private credit growth have slowed in recent months. Nonetheless, the banking system is well positioned to weather lower oil prices and the growth slowdown.

The decline in oil prices has increased the importance of structural reforms to switch the focus of growth away from the public sector and toward the private sector.  With unemployment of nationals still high and the working-age population growing strongly, the government is continuing to focus on reforms that aim to increase the employment of nationals in the private sector and diversify the economy away from its reliance on oil.

Executive Board Assessment

Executive Directors welcomed Saudi Arabia’s strong economic performance while noting that the large decline in oil prices is likely to dampen growth in the period ahead.  Directors considered that uncertainties about future oil prices and possible escalations of regional tensions are the main risks to the outlook.  They commended Saudi Arabia’s commitment to promoting stability in the global oil market and to providing financial support for developing countries in the region.

Directors noted that the sharp drop in oil revenues and continued expenditure growth would result in a very large fiscal deficit this year and over the medium term, eroding the fiscal buffers built up over the past decade.  Against this background, they underscored the need for a gradual, but sizable multi-year fiscal adjustment based on a mix of expenditure and revenue measures.  These measures should include comprehensive energy price reforms, firm control of the public sector wage bill, greater efficiency in public sector investment, and an expansion of non-oil revenues, including by introducing a VAT and a land tax.  Directors agreed that issuing debt to finance part of the deficit is appropriate and would help promote the development of private capital markets.

Directors concurred that a stronger fiscal framework would support fiscal consolidation.  The annual budget should be set within a medium-term fiscal framework that clearly establishes the authorities’ policy intentions, fully integrates the expenditure priorities from the national development plan, and delinks expenditures from short-term volatility in oil revenues while ensuring that spending adjusts to longer-term price trends. Directors welcomed the authorities’ plan to establish a macro fiscal unit and publish fiscal data in GFSM2001 format.

Directors agreed that the banking system is in a strong position to weather lower oil prices and weaker growth and supported continuing efforts to strengthen financial sector regulation and supervision.  They saw merit in formalizing the macro-prudential policy framework to ensure coordination among key agencies and to build on the existing use of macro-prudential tools in a countercyclical manner.

Directors agreed that the exchange rate peg to the US dollar remains appropriate.  They emphasized the need for fiscal consolidation to support the peg over the long term and saw merit in periodically reviewing the peg in coordination with other GCC countries to assess the impact of labor market and other structural reforms.

Directors supported ongoing policies to increase the employment of nationals in the private sector and diversify the economy.  They welcomed efforts to strengthen the business environment, develop infrastructure, invest in education and training, and increase employment opportunities for women.  Directors emphasized, however, that achieving the authorities’ goals will require realigning the incentives facing firms and workers to encourage tradable rather than non-tradable production and employment in the private rather than public sector.

Directors noted the continued progress that Saudi Arabia is making in improving the quality and availability of key economic statistics and welcomed the authorities’ plan to subscribe to SDDS in 2016.  (IMF 17.08)

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11.6  TURKEY:  Turkey Treads Carefully on New Gas Pipeline With Russia

On 12 August, Al Monitor noted that a new world seemed to be in the making when Russian President Vladimir Putin visited Turkey on 1 December.  Putin, with his Turkish counterpart Recep Tayyip Erdogan at his side, announced that Russia and Turkey would boost their multibillion dollar trade by building a new natural gas pipeline, Turkish Stream.  Fed up with the European Union’s foot-dragging, the Russian president canceled the South Stream project, which would have carried Russian natural gas under the Black Sea directly into the European Union via Bulgaria.

Putin hoped to accomplish several objectives through Turkish Stream: to enlist Erdogan as an ally in Moscow’s natural gas negotiations with EU members Greece, Italy and Austria, and to steer Turkey away from the West and in a more pro-Russian direction.  Putin’s visit appeared so promising and the two leaders so defiant that one columnist talked about the “two Rambos, Putin and Erdogan,” and how they “were taking on the West.”

But despite initially optimistic analyses, Ankara and Moscow have yet to finalize a deal on Turkish Stream.  Significant disagreements have slowed down the talks between the Turkish Ministry of Energy and Russia’s state-owned Gazprom.  In fact, the treacherous nature of the international energy trade could wreck the proposed project.

Part of the problem lies in the conception of Turkish Stream.  If completed, the new route would comprise four strings of pipelines, each carrying 15.75 billion cubic meters (556 billion cubic feet) of natural gas per year.  Turkey expects to meet its growing domestic demand from one of the pipelines.  The remaining three pipelines would carry 47.25 billion cubic meters into European markets through Greece.

One point of discord between Ankara and Moscow is the price of natural gas.  During Putin’s December visit, the Russians promised a discount of 10.25% for the gas they were already selling to Turkey.  The Turks want to get an official commitment from Russia on the discount first.  Moscow, however, is reluctant to lower gas prices for existing exports before Ankara signs off on all four pipelines for Turkish Stream.  Under current agreements, Turkey has a right to take its case to international mediation, which likely would rule in its favor because of the decrease in global gas prices since the 2008 economic crisis.

At any rate, the Turkish Ministry of Energy is interested in only one of the pipelines and wants Gazprom to find its own customers in Europe for the other three strings.  Gazprom, however, wants Ankara to sign off on all four and help negotiate with European buyers.  Economically dynamic but resource-poor, Turkey produces about 45% of its electricity from natural gas, nearly 60% of which comes from Russia.  Unwilling to assume additional risks and worsen their already excessive dependence on Russia, the Turks are cautious about Turkish Stream.

But even if it were implemented fully, Turkish Stream would be born into a very complicated and treacherous global energy market.

First of all, Russia faces serious competition from Qatar.  The Gulf emirate, with the third-largest gas reserves in the world, has built extensive facilities to ship liquefied natural gas to international markets. As a result, global prices have remained stable even as demand increased.  At a time when Russia deals with decreasing gas revenues, its ability to finance projects such as Turkish Stream becomes questionable.

Geopolitical hurdles are even more serious than market challenges to Turkish Stream.  Russia exports a majority of its natural gas through pipelines in Belarus and Ukraine.  But because of its troubles with Kiev, Moscow has signaled its intent not to renew transit agreements with Ukraine, set to expire in 2019.  Moscow wants to bypass land routes to reach lucrative markets in Europe and beyond.

Nord Stream is one such pipeline that allows Russia to circumvent Ukraine and Belarus and obviates the need for Turkish Stream.  With a capacity of 55 billion cubic meters per year, Nord Stream sends Russian natural gas directly into Germany through a pipeline under the Baltic Sea.  Because the system is still not working at full capacity, Germany hopes to become the main conduit through which Russian gas would flow into Western European markets.  Plans are in place to build Nord Stream II, which would completely destroy the purpose of the four-string version of Turkish Stream.

An official with knowledge of the Turkish-Russian negotiations and their international dimensions told Al-Monitor that Berlin is already trying to get the United States to put pressure on Greece and Turkey to scrap Turkish Stream.  Meanwhile, he argues, Russia is signaling how it could strike a new transit deal with Ukraine to straighten up the capricious Germans and Turks.  The official speaking to Al-Monitor on condition of anonymity compared the complicated geopolitical games of Russian natural gas to a “raging orgy” because “it’s never clear who’s screwing who.”

Indeed, many experts are bearish about the fortunes of Turkish Stream. Edward Chow and Zachary Cuyler of the Center for Strategic and International Studies (CSIS) wrote in a recent article on the CSIS website, “There are many reasons to doubt the feasibility of the third and fourth strings of Turkish Stream and the South European Pipeline” that would carry Russian gas into the EU.  Chow and Cuyler pointed out that “Russia and Europe will continue to be tied together by the gas trade” and “it is foolhardy to attempt to supplant Russian gas in Europe with alternatives from the United States and elsewhere, as some who look at energy through a geopolitical lens have proposed.”  It would be best, they say, for Russia to use existing infrastructure and focus on its established markets in Europe.

Volkan Emre, an international energy expert based in Washington, does not dispute Chow and Cuyler’s assessment.  He thinks Western countries — especially the United States — “are too hung up on Turkish Stream” and the 47.25 billion cubic meters per year that might flow into Europe via Turkey.

Still, Emre raises one important disagreement with Chow and Cuyler. He says Russia has a good shot at reaching customers beyond Western Europe.  “The big bonanza for Russia,” he told Al-Monitor, “would be selling gas to Pakistan, India, China and Japan.”

Regarding Turkey’s energy needs, Emre argues that it should diversify its supplies with pipelines from Azerbaijan, Turkmenistan, Iran and Iraq.  In order to do so, he recommends Turkey to be “more actively involved in the diplomatic attempts to solve the legal disputes in the trans-Caspian gas transits.”  He also warns that Turkey should “support the infrastructure developments in Iranian and Iraqi natural gas sectors.”  “Even if only some of these projects play out,” he said, “Turkey would become less reliant on Russia and come closer to becoming the energy hub at the intersection of Europe, Asia and Africa.”  (Al Monitor 12.08)

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11.7  TURKEY:  Turks Turn to Dollar As Lira Hits Low

On 17 August, Al Monitor observed that worried by political, military and security risks, the Turkish people are devising their own economic and monetary survival measures.  Rapid shifting to dollars from Turkish lira (TL) is a not only an expected response to continuing devaluation of Turkish currency, but also the people’s way of preserving their savings.  Growing political turmoil and violence has pushed the dollar to TL 2.86, an 18% loss of value in a short period.

Monetary data released by the Banking Regulatory and Supervision Agency (BDDK) draws attention to a critical situation. BDDK says individuals and companies see the US dollar as the most robust insurance and are rapidly converting their savings to dollars.  Latest figures released for August confirm that foreign currency accounts are increasing in numbers as depositors continue to convert their TL savings to dollars.

According to Banking Sector Indicators, the ratio of foreign currency deposits to overall deposits has reached 43%, the highest in the last 10 years.

One factor that’s encouraging the shift to US dollars is the limited capacity of the Central Bank to adjust interest rates.  The vitriolic debate that raged between the Central Bank and President Erdogan over interest rates was dissipated by the dollarization of the economy.  Erdogan was a fervent proponent of low interest rates to invigorate the economy and was a harsh critic of any move to increase the interest rates, even minimally.

At the end of July, foreign currency deposits in banks have reached $185 billion.  The process accelerated after the 7 June elections, and foreign currency deposits increased by $416 billion.  Last year, the foreign currency ratio in total deposits was 37%.  That has gone up 6% to 43%.

The Central Bank, which was not able to cope with the inflationary pressures and influence the inflation rate, has not been able to make any changes in interest rates for months.  Depositors are aware of the situation and find it more attractive and safer to move to the dollar, Euro and other foreign-currency accounts instead of staying with the devaluing Turkish lira.

Another interesting feature is that the shift to dollar accounts is highest in east and southeast Anatolia provinces, such as Diyarbakir, Siirt, Kars and Hakkari, where terror acts and clashes are heaviest.

The latest balance of payments and current deficit figures released by the Central Bank show that in addition to dollarization, there are also risks of a shift to foreign currencies.  The monthly current deficit in June exceeded predictions with $3.356 billion.  The annual current deficit level is $44.691 billion.

There are other warning indicators.  In June 2015, direct foreign investments diminished by $307 million, while foreign currency transfers from Turkey went up by $147 million, as compared to June 2014, and reached $822 million.  Foreign portfolio investors made sales of $661 million and left the Turkish market.

While Turkish citizens are descending on the US dollar by abandoning their Turkish lira savings, foreign investors are selling off their portfolios and leaving.  It came as no surprise when the Central Bank announced a $783 million decline in its foreign currency reserves last month.

In addition to fears about the Turkish currency and savings, there are also growing concerns in the retail sector.  Because of the loss of confidence in the Turkish currency and economy, domestic investors are converting their capital to foreign currency and investing abroad.  This trend is gaining momentum.

Increasing demand for foreign currencies and deposit accounts is endangering the repayment of $166 million short-term debts that are due this year.  Private-sector debt obligations, of which 58% belong to the banking sector, have risen dangerously with the increasing value of the dollar.  Rapid dollarization of the Turkish economy is making debt repayments difficult while raising concerns about financing the current deficit, which has gone up $44 billion.  (Al Monitor 17.08)

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11.8  TURKEY:  After 500 Years, Turkish Coffee Percolates in Popularity

Sibel Utku Bila posted on 20 August in Al Monitor that technology often destroys tradition.  For Turkish coffee, though, it seems to have worked the other way around.  Coming back from the brink of oblivion, a five-century-old culture has taken on a new life, driven by the long-overdue arrival of Turkish coffee machines and a new generation of coffee-savvy young urbanites.

On the brink of oblivion about a decade ago, Turkey’s ancient coffee culture is revived by a vibrant new generation of entrepreneurs and young consumers.

In the chronicles of coffee, Ottomans take credit for introducing the great stimulating drink to Europe in the 17th century.  By that time, coffeehouses — arguably the first centers of public opinion — were thriving in Istanbul, unnerving the Sublime Porte.  Ottomans of all walks of life mingled in the coffeehouses, discussing anything from religion to politics, long before the Parisian cafes became the meeting point of writers and revolutionaries.  In the 20th century, however, coffee was overtaken by tea as prices soared, and Turks became the world’s top tea drinkers.

About a decade ago, coffee enthusiasts were so alarmed over the fate of Turkish coffee that an association was born to revive and promote the beverage.  International coffee chains were storming in, threatening a deadly blow.  Turkish coffee was already in a steep decline on the eatery scene, as its arduous brewing method led restaurants — and many households — to adopt instant coffee.  But voila!  The fears did not materialize.

“Two parameters proved crucial,” Osman Serim, a gastronomy guru and board member of the Turkish Coffee Culture and Research Association, told Al-Monitor.  “First, modern, high-performance Turkish coffee machines were manufactured …  Second, the global revival of coffee triggered Turkish coffee’s own renaissance.  And, in one very decisive factor, young people embraced Turkish coffee.”  “Today,” he proclaims confidently, “Turkish coffee is saved.”

The arrival of international chains spurred the birth of ambitious Turkish competitors, and hundreds of coffee chain shops mushroomed across cities.  While readily embracing mocha and Americano, Turks sought after the local brew as well.  With the new machines in place, Turkish coffee orders were no longer such a nuisance.

The new coffee-shop scene, expanding further with smaller local establishments, provided a modern venue for what coffee had been in these lands for centuries, namely a conduit to socialize, converse and confide.

Serim notes that a unique Turkish addition to the scene — the very popular “fortune telling cafes” — came as another boost.  The only coffee type served with grounds, Turkish coffee is inseparable from fortunetelling, based on interpreting shapes in the coffee remains.  Given the Turkish propensity to superstition, many “professional” clairvoyants remain in business today, but very often cups are read casually between friends as a means to extend conversation and intimacy.

In 2013, UNESCO inscribed Turkish coffee culture on the List of the Intangible Cultural Heritage of Humanity, recognizing it as a social institution “favoring dialogue” and “reinforcing social cohesion and openness.”

A symbol of friendship, hospitality and refinement, coffee has left indelible marks on Turkish language, arts, handcrafts, customs and social life.  If the proverb is to be believed, “a cup of coffee has a credit [of friendship] for 40 years.”  Turkish coffee is a key element in a premarital social ritual when relatives of the groom-to-be visit the family of the future wife to ask for her hand.  In a tradition that continues today, though somewhat lightheartedly, the bride-to-be makes the coffee for the occasion to demonstrate her skills.

Making Turkish coffee is not duck soup.  What makes it “Turkish” is not the plant type but the distinct brewing technique.  To start with, it requires a superfine grind, virtually a powder.  A fresh grind is a must to preserve the aroma.  Turkish coffee can be “plain,” that is, without sugar, or “a little sweet,” “medium sweet” and “very sweet.”  The sugar is added to the mix of coffee and water before brewing begins.  This means a separate brew for each preference.  On crowded occasions, you’d better pray your guests show mercy and agree on a single type.

Brewed on a low flame in a long-handled copper pot called a “cezve,” the coffee begins to rise in several minutes.  For the true virtuoso, this is the moment of skill.  Foam being its sacred hallmark, Turkish coffee with little or no foam is a culinary disgrace and a potential heartbreak if you are a bride-to-be.  To get the best result, the pot is lifted from the flame and the foam is spooned into the cups.  The pot is then put back on the flame and the procedure repeated.  Letting the coffee boil is a no-no.

With so much subtleties and hassle involved, Turks may deserve some forgiveness for lagging a whole century behind in making the Turkish coffee machine.

One of the pioneers in the field is Murat Kolbasi, the CEO of home appliances maker Arzum, and — no wonder — a Turkish coffee aficionado himself.

In an interview with Al-Monitor, Kolbasi said that Turkish coffee accounts for less than 10% of 1.2 billion cups consumed daily around the world today, but he voiced optimism that things could finally be taking off.  “The advent of automated solutions in the early 1900s drove the spread of espresso, filtered coffee and instant coffee around the world … The fast-food era impeded further the popularization of Turkish coffee, given its arduous brewing method.  Turkish coffee was confined to its present geography, which further delayed the machine,” Kolbasi said.

“In 2003, Arzum made the first electric pot, and the following year another local brand put out its own product.  [Since then] a serious automation process has been underway,” he said.

For die-hard traditionalists, machine-brewed Turkish coffee remains a culinary crime.  But the electric pot quickly took hold as it replicated the authentic taste rather successfully.  Yet, it was a partial solution. Kolbasi wanted a device that would pour the coffee directly into the cups.  His team spent four years and $2 million to develop the machine, which hit the market in September 2014, he said.

According to company info, it is the first machine that pours the coffee, foam and grounds automatically into the cups, detects altitude for ideal brewing temperature, has a slow mode replicating the old “ember brew” and a self-cleaning function.  The machine is already exported to 24 countries, mostly in Europe and the Middle East but also to some unlikely destinations.  “Shipping Turkish coffee machines to Indonesia, for instance, came as a surprise and delight,” Kolbasi said.

As engineers sweat to blend old and new, young consumers seem to do it rather easily.  In a mid-range cafe in downtown Ankara, machine-brewed Turkish coffee arrives to the tune of rock-and-roll, on a copper tray complete with Turkish delight and the traditional cups of sorbet and water.  Occupying two floors, the unusual all-in place offers live music, booze, a small library, snooker tables, a tattoo parlor and … fortune tellers.

The “chief” fortune teller is not a seasoned lady, as one may expect, but a 28-year-old lad, Cengiz, who, online forums suggest, is one of Ankara’s most popular coffee readers.  Sporting a stylish haircut and earrings, he solemnly reads this reporter’s future, scribbling the key dates on a notepad.  His prophecies alternate with admonitions, life coaching and friendly chitchat.  For the past decade, Cengiz has earned his life as a coffee reader, an unwitting foot soldier in the tide that salvaged the ancestral drink.

For Serim, the revival of Turkish coffee is on an irreversible path.  “I can already see that more is coming,” he says, pointing to local coffee chains debuting abroad and fledgling exports of Turkish coffee machines and vacuum-sealed grinds.

He sees a promising market for Turkish coffee, including sizable Turkish migrant communities in Europe, Middle Eastern and Balkan nations, who share the tradition from Ottoman times, and their respective diaspora in the United States.

The goal, he says, is to get Turkish coffee on menus in global urban centers. The enthusiasts in Serim’s association are working on ideas to promote the beverage abroad, including plans to open offices in New York and Hong Kong, far beyond where their Ottoman forebears had reached.

Sibel Utku Bila is a freelance journalist based in Ankara who has covered Turkey for 15 years.  She was a correspondent for Agence France-Presse (AFP) from 1999 to 2011, and articles she wrote during that period have been published in many newspapers around the world.  (Al Monitor 20.08)

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