Fortnightly, 26 July 2016

Fortnightly, 26 July 2016

July 26, 2016


26 July 2016
20 Tammuz 5776
21 Shawwal 1437




1.1  Netanyahu Government Unanimously Approves 2017/8 Budget
1.2  PM Netanyahu Meets Cyprus President Anastasiades in Jerusalem


2.1  Cockpit & JetBlue Launch Navigator Program for Aviation & Travel Startups
2.2  Vensica Medical Completes $500,000 Finance Round
2.3  GuardiCore Raises $20 Million in Series B Funding for Data Center Protection
2.4  ImpactNetwork Launches Israeli Startup Operations
2.5  SCADAfence & Gigamon Partner to Provide Cybersecurity for Industrial Networks
2.6  Pixie Raises $18.5 Million to Enhance Its Location Of Things Platform
2.7  Capriza Raises $23 Million to Enable Growing its Mobile Enterprise
2.8  Skycure Raises $16.5 Million
2.9  NNG Acquires Automotive Cyber Startup Arilou Technologies
2.10  Emefcy Raises $23.6 Million
2.11  Entera Bio Raises $7.5 Million


3.1  Telepizza Signs a Master Franchise Agreement to Open in Malta


4.1  UK Funding Israel-Arab Research Programs on Water Problems


5.1  Lebanon’s Consumer Prices Dropped 2.51% in First Half of 2016
5.2  Lebanese Balance of Payments Deficit Increases to $1.76 Billion in 12 Months ending May 31 2016
5.3  Number of Registered New Cars in Lebanon Reached 19,749 in 12 Months Ending June 2016
5.4  Lebanon to Issue Offshore Gas Exploration Permits

♦♦Arabian Gulf

5.5  World Bank Offers Jordan $1.4 Billion Over Six Years for Syria Response
5.6  IMF Raises MENA Growth Forecasts for 2016 Despite Brexit
5.7  BMI Says GCC Banking Sector Has Entered ‘Protracted Period of Contraction’
5.8  Bahrain Says No Minimum Wage Plan for Domestic Workers
5.9  US Approves $785 Million in Munitions, Sustainment and Support Sales to the UAE
5.10  Abu Dhabi’s Economy Said to be Worth $53.4 Billion at End-2015

♦♦North Africa

5.11  Egypt’s Economy Drops to Third Place in Africa Rankings
5.12  Tourist Arrivals to Egypt Fall by Half During May
5.13  Egypt’s Zohr Gas Reservoir Estimate Keeps Growing
5.14  Suez Canal Introduces Cheaper Tolls for Empty US Oil Vessels Travelling to Gulf
5.15  Algeria Loses $58 Billion of Foreign Exchange Reserves in 2 Years


6.1  World Bank Says Turkey Sees Slower GDP Growth Than in 2015
6.2  Turkey Sees Drop in Unemployment in April



7.1  Israel & Republic of Guinea Sign Agreement Renewing Diplomatic Ties
7.2  Israel Joins UNESCO Battle Against Homophobic Bullying in Schools


7.3  Kuwait Swelters Under Record 54 C Heatwave
7.4  Saudi Cleric Renews Edict Against Playing ‘Pokemon Go’
7.5  Morocco Ranks as 33rd Happiest Country, Ahead of the US & UK
7.6  Turkey Declares State of Emergency


8.1  Israeli Surgery Technique Removes Shaking due to Parkinson’s Disease
8.2  PamBio Raises $7 Million
8.3  AV Medical Begins Initial Experience in the US with Its Chameleon PTA Balloon Catheter
8.4  CIOReview Names MedyMatch among 100 Most Promising Big Data Solutions 2016
8.5  Syneron Candela’s PicoWay Picosecond Laser Receives US FDA Clearance
8.6  DreaMed Diabetes Raises $3.3 Million from Norma Investments and a Strategic Investor
8.7  Can-Fite Completes Phase II Study for CF102 in the Treatment of NASH/NAFLD
8.8  LifeBond Receives FDA IDE Approval for LifeSeal GI Surgical Sealant Clinical Trial


9.1  Mellanox Simplifies RDMA Deployments with Enhanced RoCE Software
9.2  Optimal+ Selected by Renesas to Enhance Global Manufacturing Operations
9.3  AfricaOnline Deploys RADWIN JET PtMP to Deliver Mega-Capacity
9.4  Nano Dimension Files Patent Application for New Nanometric Conductive Ink
9.5  Gauzy Announces Collaboration with Mercedes-Benz
9.6  FST Biometrics Surpasses 1.5 Million Monthly User Identifications
9.7  Angola Deploys Hundreds of RADWIN 5000 Point-to-MultiPoint in 2.2-2.3 GHz Band
9.8  illusive’s New Family of Deceptions Targeting Advanced Ransomware Threats (ARTs)


10.1  Israel’s Consumer Price Index Rises By 0.3% in June
10.2  Israel’s First Quarter Growth Figures Revised Upwards Once Again
10.3  Israel’s Labor Productivity 14% Lower Than OECD Average
10.4  OECD Says Israeli Roads the Most Congested in Developed World


11.1  ISRAEL & SAUDI ARABIA: Riyadh’s Diplomatic Dance With Israel
11.2  SAUDI ARABIA: Oil Reserves: A Riddle, Wrapped in a Mystery, Inside an Enigma
11.3  EGYPT: Egypt’s Ad Hoc Economy
11.4  EGYPT: Egyptians Ditch Daylight Saving Time
11.5  MOROCCO: IMF Executive Board Approves $3.47 Billion for Morocco
11.6  TURKEY: Foreign Currency Ratings Lowered To ‘BB/B’; Outlook Negative
11.7  TURKEY: Moody’s Reviews for Downgrade Ratings of 17 Turkish Banks


1.1  Netanyahu Government Unanimously Approves 2017/8 Budget

On 17 July, Israel’s cabinet unanimously approved the two-year 2017-2018 state budget, as agreed in the coalition agreements when the government was formed.  At the demand of Minister of Finance Kahlon, the current budget includes a mechanism to ensure that if there is a deviation from the forecasts, adjustments will be made to preserve the budget framework.  Under this mechanism, an assessment will be made at the end of the first year.  Any difference between the approved framework and the up-to-date forecasts will required the government to cut its spending in 2018.  If the measures demanded by the Minister of Finance are not taken, the cabinet will have to submit a new budget, and if this is not approved by the legal deadline, the result will be new elections.  (Globes 17.07)

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1.2  PM Netanyahu Meets Cyprus President Anastasiades in Jerusalem

Prime Minister Netanyahu and President of Cyprus Anastasiades, held wide ranging discussions on 24 July, reflecting the close and very important relations both countries enjoy.  In the course of the discussions, both leaders emphasized their shared interests in regional stability and expressed their agreement to continue countering sources of extremism and terrorism.  The two sides continued their talks about emergency response cooperation.  Both leaders encouraged their teams to conclude these talks as soon as possible.

The two sides discussed the unitization issue regarding the Aphrodite and Yishai gas fields, and concluded that by September 2016 the two Energy Ministers will seek to finalize these discussions.  In the context of the exploration and development of energy resource in the eastern Mediterranean, both leaders concluded that there is no question that resolving the outstanding issues between Cyprus and Turkey would greatly facilitate the pace of the development of future projects, which will proceed according to international law, as well as greatly enhance stability in the region.  Therefore, Israel has a strong interest in the resolution of this issue.

Both leaders stressed the importance of the trilateral framework between Israel, Cyprus, and Greece and reconvening together by the end of the year, as was agreed between the parties at the Nicosia Summit, on 28 January 2016.  (MFA 25.07)

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2.1  Cockpit & JetBlue Launch Navigator Program for Aviation & Travel Startups

Cockpit, the innovation center established by EL AL, and JetBlue Technology Ventures, the investment arm of JetBlue, announced the launch of Navigator, an accelerator program for Israeli and international startups working in the fields of aviation and travel.  The Navigator program will include exposure to strategic partners, initial funding and ongoing close guidance for startups in all aspects of their business development.  The first global innovation center of its kind, Navigator will specialize in identifying and nurturing ground-breaking technologies, and in applying their inherent potential for use in the aviation and travel industries.  Navigator will also provide the startups with the potential opportunity to present and test in real time the products they have developed.

Navigator targets startups from all over the world that deal with aviation and travel.  The companies accepted will receive funding, office space in Israel and the United States, and hands-on mentoring that will include access to the broad global network of EL AL and JetBlue.  The program also includes ongoing guidance in a wide variety of business activities, especially in the realms of sales and marketing, technology and legal issues. In addition, each startup selected for the program will gain exposure to leading professionals and customers in the global aviation and travel industries.  The companies will work for three months in Israel and an additional month in Silicon Valley.  They will get an opportunity to present their developments to key players in the global aviation industry.  After the four-month international program, alumni may be offered follow-up support for a further eight months in terms of a workspace and business development mentoring aimed at actualizing the partnerships that will be created.

Tel Aviv’s Cockpit Innovation Hub helps early stage startups and disruptive technologies aim high and do big things in Travel and Aviation by providing all the tools startups need to put their company in the cockpit and fly to success.  Located in the startup incubator GSVlabs in Silicon Valley, JetBlue Technology Ventures invests in, incubates and partners with early stage startups at the intersection of technology, travel and hospitality.  (JetBlue Technology 13.07)

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2.2  Vensica Medical Completes $500,000 Finance Round

Vensica Medical, a portfolio company of Trendlines Medical, announced the completion of a financing round of $500,000 from a private foreign investor.  Vensica is developing a needle-free, painless procedure for the delivery of Botox to treat overactive bladder.  The company was founded in August 2014 and will use this investment for R&D and completion of device design.  Leveraging the known properties of ultrasound (opens pores and “pushes” drugs through them), Vensica is developing VensiCare, an ultrasound-catheter used to deliver Botox into the bladder wall.  The procedure, performed in the doctor’s office or clinic – without anesthesia – is painless and eliminates the use of needles.

Misgav’s Vensica Medical is a start­up company founded in 2014 that is developing the ‘VensiCare, a platform for effectively delivering drugs to the bladder wall.  The VensiCare leverages therapeutic ultrasound technology to increase bladder wall permeability and to drive medicament at high concentrations and deep into the bladder wall.  Vensica focuses on the delivery of Botox to the bladder wall for the treatment of overactive bladder.  The VensiCare platform can be used to treat other indications as well, such as bladder cancer and interstitial cystitis.  (Vensica Medical 19.07)

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2.3  GuardiCore Raises $20 Million in Series B Funding for Data Center Protection

GuardiCore has raised $20 million in Series B funding.  The latest round is led by existing investors Battery Ventures and 83North (formerly Greylock IL) and joined by Cisco Investments, bringing the company’s total funding raised to date to $33 million.  GuardiCore will use the funds to address growing demand for its GuardiCore Centra Security Platform, invest in additional product research and development, expand its commercial reach through its global ecosystem and channel partners, and to fuel its overall sales and marketing efforts.  The participation of GuardiCore’s existing investors – Battery Ventures and 83North – in this latest round of funding demonstrates a strong degree of confidence in the company’s current market traction, and its continued development of the industry’s broadest solution for data center security.

Tel Aviv’s GuardiCore is an innovator in internal data center security focused on delivering more accurate and effective ways to stop advanced threats through real-time breach detection and response. Developed by the top cyber security experts in their field, GuardiCore is changing the way organizations are fighting cyber-attacks in their data centers.  (GuardiCore 18.07)

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2.4  ImpactNetwork Launches Israeli Startup Operations

ImpactNetwork is launching activities in Israel, by partnering with TechForGood and Impact First Investments.  ImpactNetwork, powered by Le Comptoir de l’Innovation is the world largest network of green and social startups, including over 500 startups in 10 countries through 13 programs and a €100 million impact investment fund.

Since its founding, ImpactNetwork’s aim has been to mobilize global cross-sector partnerships toward the common vision of recognizing and celebrating excellence in social innovation.  Le Comptoir de l’Innovation, through its ImpactNetwork, is now uniquely situated to enter Israel’s startup eco-system through its newly formed partnership with TechForGood and Impact First Investments, two pioneer organizations in the field.  TechForGood participants will have the opportunity to tap into ImpactNetwork and learn from like-minded international peers. They will have access to a large range of services available – from Jump Seat programs, which allow entrepreneurs to work from another hub available in the network, to exchanging with mentors and experts to develop their projects.  (Globes 17.07)

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2.5  SCADAfence & Gigamon Partner to Provide Cybersecurity for Industrial Networks

SCADAfence has joined Gigamon’s ecosystem partner program to provide a joint cybersecurity solution.  SCADAfence’s Industrial Continuous Network Monitor solution is fully interoperable with Gigamon’s GigaSECURE and provides IT and OT security personnel with a holistic view of their industrial network, as well as advanced detection capabilities.  The joint solution restores control of the industrial environment and mitigates risks, such as operational downtime, product manipulation and theft of intellectual property.

The joint solution leverages Gigamon’s capability to provide visibility of network traffic from across the ICS/SCADA environment, ensuring continuous traffic monitoring.  The network traffic is passively gathered by Gigamon, deduplicated, aggregated into scalable traffic streams and then passed to SCADAfence’s continuous monitoring solution which analyzes the internal communications, including industrial protocols deep packet inspection (DPI).  Comprehensive understanding of the industrial environment improves OT, IT and security teams’ capability to minimize operational and cyber risk on the production floor.

Beer Sheva’s SCADAfence is a pioneer in securing smart manufacturing industries such as chemical, pharmaceutical, food & beverage and automotive. In such industries, traditional security solutions are inadequate due to the unique requirements, technologies and components found in industrial networks.  SCADAfence offers a solution designed to ensure the operational continuity of industrial networks by providing increased visibility and detection of operational and security threats.  (SCADAfence 19.07)

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2.6  Pixie Raises $18.5 Million to Enhance Its Location Of Things Platform

Pixie Technology closed its Series B round of funding at $18.5 million.  The funding was led by Spark Capital, an early & growth stage venture capital firm that has supported the likes of Twitter, Oculus, Slack and Medium.  This round brings Pixie’s funding total to $24 million, with $5.5 million raised in 2013.  Other investors in the round include Cedar Fund, OurCrowd and private investors.

Designed to help people easily track and find their favorite everyday items, Pixie Technology combines augmented reality navigation with innovative signaling technology.  It began shipping Pixie Points, its first product, to pre-order customers last year and will use this latest investment to launch new advanced product capabilities and scale production to bring Pixie to even more customers.  It is also investing in further expanding its Location of Things platform and ecosystem and has opened its Software Development Kit to allow developers and third parties to create new applications, building its signaling technologies into other products, devices and services.

Pixie Points are an ingenious tool to give every day physical items a digital identity that can be instantly located.  Pixie Point tags affix to everything from keys, wallets, remotes to toys and pets and allow consumers to track and find them with their smart device.  Once activated, Pixie Points continually communicate with each other, creating a digital map that can be viewed and managed with the Pixie app.  The Pixie app guides people to their lost item, providing an augmented reality overlay over a phone’s camera display that places an X exactly where the lost item is located even if it is behind a cushion or the other side of a wall.  As a result of the funding, Pixie will be rolling out new functionality from Q3 onwards and in due course will make further announcements around advanced features such as:

Herzliya Pituah’s Pixie Technology is the creator of the Location of Things (LoT) technology platform that makes location an exact science by allowing anyone to create a digital map of their things on the fly.  Pixie uses beautifully designed tags called Pixie Points to establish a personal digital map of all tagged items so that it can help users locate lost items within inches.  (Pixie Technology 19.07)

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2.7  Capriza Raises $23 Million to Enable Growing its Mobile Enterprise

Capriza has raised $23 million in new funding to support its growing momentum and rapid customer adoption.  The round, led by existing investor Andreessen Horowitz, included existing investors Charles River Ventures, Harmony Partners and Tenaya Capital, and new investors Entre Capital and Vintage Investment.  The new funding, a Series C extension bringing the total capital Capriza has raised to $73 million, will be used to meet soaring demand for smart, mobile business apps that empower users at the edges of the enterprise to take the actions based on relevant, real-time information, needed to run an effective, competitive, and efficient organization.

With a Hod HaSharon R&D center, Capriza mobile-enables your core applications to make it easy to do business inside and outside your organization.  Capriza’s enterprise mobility platform empowers IT and business units to mobile-enable critical business workflows in a matter of days without any coding, APIs or integration.  Capriza disrupts the speed and economics of the enterprise mobility journey by extending the capabilities of existing applications from SAP, Oracle, Salesforce as well as custom-built solutions in a simple and useable way, onto any smartphone or tablet.  (Capriza 19.07)

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2.8  Skycure Raises $16.5 Million

Skycure announced that it completed a $16.5 million series B investment led by Foundation Capital.  Skycure will use the funds to expand the company’s presence in EMEA and APAC, broaden its foothold with Global 1000 customers, and invest in further developing the company’s award winning mobile threat defense platform.  This round brings Skycure’s total funding to $27.5 million.  All of the company’s previous investors participated in this round, including Shasta Ventures, Pitango Venture Capital, Skycure customer New York Life and private investors.

Tel Aviv’s Skycure offers the most complete, accurate and effective mobile threat defense solution, delivering unparalleled depth of threat intelligence to predict and detect the broadest range of existing and unknown threats.  Skycure’s predictive technology uses a layered approach that leverages massive crowd-sourced threat intelligence, in addition to both device- and server-based analysis, to proactively protect mobile devices from malware, network threats, and app/OS vulnerability exploits.  (Skycure 19.07)

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2.9  NNG Acquires Automotive Cyber Startup Arilou Technologies

NNG, the developer of the iGO navigational app, acquired a controlling interest in Bnei Brak’s Arilou Technologies, which provides cyber protection for vehicles.  The deal, whose amount was undisclosed, is based on the acquisition of shares from existing shareholders and an injection of capital into the company.  Arilou will continue its business as before, led by its current management.  The acquired company is developing systems that provide protection against cyber-attacks on computerized auto systems.  Arilou’s technology is designed to prevent a remote takeover of the car’s computerized systems (multimedia and locking systems, for example) that could enable a burglar to open the car’s locks, turn off the motor, and even disconnect the brakes.

Smart cars connected to the internet are unquestionably the wave of the future.  But as soon as they are connected, they become exposed to hacker attacks.  In contrast to break-ins in which passwords are stolen, which are liable to end in invasions of privacy and loss of money, break-ins into smart cars are liable to have much more serious consequences.  Arilou wants to relieve drivers of these worries by producing a defense system that will enable drivers to be both connected to the internet and protected.

Hungary based NNG, with a development office in Tel Aviv, is a global company that develops the next generation of navigation and infotainment systems for the biggest automotive companies around the world.  They work with the best map and content providers to improve the lives of people in as many countries as possible.  (NNG 23.07)

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2.10  Emefcy Raises $23.6 Million

Emefcy has raised A$31.6 million (US$23.6 million) on the Sydney Stock Exchange after closing a placement of shares.  The company raised the money from investors that included funds and institutional bodies from the US, Hong Kong, China, Australia and Singapore but not from Israel.

Caesarea’s Emefcy develops, manufactures and markets new, energy-efficient wastewater treatment solutions suitable for municipal and industrial plants.  The company was founded in 2008 with a vision to improve the energy efficiency of wastewater treatment.  With several global innovation awards, the company is at the forefront of the next generation of wastewater treatment solutions.  Operating out of its offices in Caesarea and its manufacturing facility in Or Akiva, Israel, Emefcy (ASX: EMC) is a public company traded on the Australian Stock Exchange.  (Globes 25.07)

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2.11  Entera Bio Raises $7.5 Million

Entera Bio, a subsidiary of DNA Biomedical Solutions, has raised $7.5 million in a loan convertible into shares.  Pontifax led the round, with participation from private investors, many of whom are identified with immunotherapy company Kite Pharma.  Following the announcement, DNA Biomedical’s share price jumped, adding NIS 42 million to the company’s market cap.  DNA owns 51% of Entera Bio.

Entera Bio is developing orally administered drugs as a replacement for injectables and IVs. Its leading drug is a product for the treatment of hypoparathyroidism (not to be confused with hypothyroidism) – an orphan disease that can result from an operation, tumor, or degenerative brain disease.  It affects the level of calcium in the body, and in particular prevents recovery from a lack of calcium. It can be treated with Vitamin D or calcium, but these treatments have side effects.  Entera Bio believes that the material it previously began to develop as an orally administered drug for treatment of osteoporosis can also be effective in treating the results of hypoparathyroidism.  The company’s drug, PTH, is based on an existing drug for treatment of osteoporosis, but with addition of Entera Bio’s technology, which makes it possible to take the drug orally.  Entera Bio hopes to begin Phase III trials for PTH soon, after the product was tested in Phase II trials.

Jerusalem’s Entera Bio is developing novel oral drugs by utilizing its proprietary cutting edge delivery technology.  This technology protects large molecules and peptides in the GI tract.  Oral drug delivery is the most straight forward and user friendly approach to medical treatment.  Entera Bio has key personnel with the relevant know how, experience and networks working together to enable rapid development of its products.  The company has an experienced management team with more than 50 years of combined drug development experience.  (Globes 24.07)

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3.1  Telepizza Signs a Master Franchise Agreement to Open in Malta

Madrid’s Telepizza, the largest non-U.S.-based pizza delivery company in the world by number of stores, advances its international strategy and announces its first master franchise agreement to start operations in Malta.  The move follows recently announced Saudi Arabia and UK opening plans.  Telepizza brings its expertise and proven track record in marketing, technology, and supply chain that in addition with its partner operating strength and local management, positioned Telepizza to take full advantage of this opportunity.

Telepizza’s international strategy is focused on growth in markets where it is currently operating, exploring new business opportunities, and entering new markets, either organically, through acquisitions of local companies or via master franchises.  Approximately 35% of Telepizza stores worldwide are owned and operated by Telepizza, while around 65% are owned by its business partners.  Currently, the company is present in 15 countries and its international sales exceed 30% of the total sales.  (Telepizza 19.07)

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4.1  UK Funding Israel-Arab Research Programs on Water Problems

The UK has been funding two initiatives to facilitate cooperation between Israeli and Palestinian scientists.  The Stream program finances joint studies by Israeli, Palestinian, and UK researchers on water problems and joint studies by Israelis with residents of Arab countries all over the Middle East and North Africa.  The joint research, which lasts for 10-18 months, is aimed at finding practical solutions in the field.  The pilot stage of the program led to the financing of five projects of this type during the past year.

The Growth program provides UK funding to enable academics from universities in the Palestinian Authority to learn in advanced study programs in laboratories in Israel in water technologies and medicine.  Participants in the program attend professional conferences in the UK in order to deepen their connection with UK researchers.  This project was initiated by the UK Science and Innovation Network, in cooperation with the British Council Israel and research entities in the region.  (Globes 22.07)

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5.1  Lebanon’s Consumer Prices Dropped 2.51% in First Half of 2016

According to the Lebanese Central Administration of Statistics (CAS), average consumer prices decreased by 2.51% y-o-y in H1 2016, where the average Consumer Price Index (CPI) dropped from 97.62 points by June 2015 to 95.17 points in the same period of 2016.  As for the CPI’s components, prices of food and non-alcoholic beverages (20.6% of CPI) decreased by 1.87% y-o-y by June 2016.  Transportation (13.1% of CPI) and water, electricity, gas & other fuels (11.9% of CPI) witnessed yearly drops of 5.59% and 14.53%, respectively.  Such noticeable falls in value can be attributed to the lower oil prices between June 2015 and June 2016.  The other sub-indices that observed a decline in value were health (7.8% of CPI) and communication (4.6% of CPI), posting a 2.94% and 0.36% y-o-y declines, respectively.  However, the education sub-index, constituting 5.9% of the CPI, increased by 1.49% y-o-y by June 2016.  Moreover, average restaurants & hotels prices (2.6% of CPI) increased by 2.73% y-o-y by June 2016.  Also, the actual rent sub-index for households (old and new rent), with a weight of 3.4% of the CPI, went up 2.34%.  (CAS 21.07)

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5.2  Lebanese Balance of Payments Deficit Increases to $1.76 Billion in 12 Months Ending  May 31 2016

According to Lebanon’s Balance of Payments (BoP), there was a significant deficit increase from $525M by May 2015 to $1.76B by May 2016.  Net Foreign Assets (NFA) of both BDL and commercial banks dropped $1.36B and $403.1M by May 2016, respectively, compared to a surplus of $2.18B in BDL’s NFA and a drop of $2.71B by May 2015.  This broad deficit is justified by the fact that cash outflows are tremendously exceeding cash inflows in Lebanon.  Specifically, trade deficit increased 14.64% y-o-y by May 2016 to $6.67B, where exports fell and imports rose.  Furthermore, lower Foreign Direct Investments (FDI) and remittances, as oil-dependent Arab countries face slow economic activity, are widening the BoP’s deficit.  Moreover, the Balance of Payments accounted for an $861.6M deficit in May 2016 compared to a surplus of $189.2M in May 2015.  (BDL 17.07)

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5.3  Number of Registered New Cars Reached 19,749 by June 2016

According to the Association of Lebanese Car Importers, the number of newly registered commercial and passenger cars increased by 3.01% year-on-year (y-o-y) to 19,749 cars by June 2016.  This rise in the number of registered cars was mainly due to the 2.20% yearly increase in the number of newly registered passenger cars from 18,047 to 18,444 and the 16.10% growth in newly registered commercial vehicles to 1,305 by June 2016.

In details, Japanese model cars occupied the largest market share of 37.22% in total passenger cars, since the beginning of the year up to June 2016.  Korean cars followed, with a market share of 35.62% by June 2016, while European cars ranked third with a market share of 20.43%.  Moreover, both European and Korean cars increased their sales with a rise of 4.49% and 2.29% y-o-y, respectively, while Japanese cars’ sales decreased 1.42% from 6,963 by June 2015 to 6,864 by June 2016.

In terms of car brands, Kia attained the largest share of newly registered passenger cars, 19.67%, followed by Hyundai, Toyota and Nissan with respective shares of 15.78%, 13.94%, and 10.17%.  (ALC 16.07)

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5.4  Lebanon to Issue Offshore Gas Exploration Permits

Lebanon will open its waters for new oil and gas exploration permits.  One of the permits Lebanon intends to issue is still being contested by Israel.

In March 2013, Lebanon initiated a preliminary vetting process for gas companies which want to operate in the country.  Twelve international operators have passed this stage as well as 34 more non-operator firms.  While Lebanon intended to provide ten offshore permits, the state’s regulatory and political instability has led to delays with their issuing.  According to the reports, Lebanon plans to initially issue permits for four blocks, including 1, 4, 9 and 10, and later publish the rest.  The exact boundaries of Bloc 9 remain unclear, and the issue is subject to a dispute with Israel.  In 2010, Lebanon turned to the UN with an appeal stating that Israel’s exclusive economic zone (EEZ) in fact extends into Lebanon’s EEZ.  Israel provided its response to the UN one year later.  The US has attempted to mediate between the parties in order to reach a compromise, but Israel rejected this proposal.  (Globes 18.07)

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5.5  World Bank Offers Jordan $1.4 Billion Over Six Years for Syria Response

The World Bank (WB) has endorsed the 2017-2022 country partnership framework, offering up to $1.4 billion of financing to Jordan for the coming six years.  Recognizing pressure on the Kingdom’s economy and service facilities from hosting a large number of refugees and the impact of closure of Jordan’s borders with Syria and Iraq, the WB’s commitment to continuous support is expressed for the country.  The framework is very focused on addressing the short-term vulnerabilities of Jordan to respond to the Syria crisis, adding that Jordan also needs to focus on the priorities set in the Jordan 2025 economic blueprint.

The country framework takes into consideration two aspects.  The first of which is related to enhancing the growth of the private sector and increasing its competitiveness, improving the investment climate and securing micro, small and medium enterprises access to financing.  The second pillar has to do with enhancing the government services all across Jordan.

The International Finance Corporation (IFC) program has grown from $70 million in 2007 to almost $1.4 billion now, which makes it the second largest program in the region after Egypt.  Jordan has been pushing for a change in international assistance policy, pushing the World Bank and the global community to allow it to borrow under the same easier conditions applied to low-income countries, although the Kingdom falls under the category of middle-income states.

In the coming months, the WB and Amman will be discussing a number of projects to be launched in support of the implementation of the new Country Partnership Framework (CPF) in the education, energy, water, private sector development, local development and access to finance sectors.  (AMMONNEWS 24.07)

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►►Arabian Gulf

5.6  IMF Raises MENA Growth Forecasts for 2016 Despite Brexit

A rebound in the price of oil is set to improve economic growth in the Middle East and North Africa from 3.1% to 3.4% this year, a revised forecast from the International Monetary Fund (IMF) has said.  However, the global body also downgraded the region’s forecast for 2017 from 3.5% to 3.3%, citing “geopolitical tensions, domestic armed strife, and terrorism”.  The IMF also said that the oil price slide would cost almost $450 billion in lost energy exports to Algeria and the GCC countries, while their cumulative budget shortfalls would hit $900 billion by 2021.  For Saudi Arabia, the IMF retained its forecast of 1.2% growth for this year, and raised its forecast for 2017 by 0.1% to 2.0% growth.  (AB 20.07)

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5.7  BMI Says GCC Banking Sector Has Entered ‘Protracted Period of Contraction’

The GCC banking sector has entered a period of contraction with asset growth set to slow to 6% year-on-year between now and 2020.  It represents a significant decline from an average of 17% year-on-year over the past decade, as banking sectors across the Gulf suffer from fiscal retrenchment brought about by the prolonged slump in global oil prices, BMI Research notes.  As well, the Fitch Group company’s latest GCC banking report states the sector has entered a “protracted period of slower growth”.

GCC banks will be hit on two fronts: governments will continue to draw on funds deposited in their domestic banking sectors to cover large fiscal deficits, while declining government spending will serve to create fewer lending opportunities.  However, the slowdown will be less pronounced in Lebanon, Jordan and Egypt, with the average growth rate declining from 10% between 2006 and 2015, to 6% in the next four-to-five years.

Within the GCC, the slowdown will be unequal. Qatar and Kuwait possess greater financial buffers to fund large-scale government projects, and are expected to hold up better than Oman and Bahrain, which are most at risk because of their government’s low reserves and reliance of domestic banks on public deposits.  BMI Research forecasts Brent to trade at $60 per barrel on average over the next five years, compared to $102 per barrel between 2010 and 2014.  BMI said: “Commercial banks across MENA have entered a protracted period of slower growth. In the GCC, fiscal retrenchment amid low oil prices is impacting deposit and lending growth, while liquidity is tightening.

“In Egypt, Lebanon and Jordan, political instability and lackluster macroeconomic environments will continue to weigh on banks’ performances.  “Throughout the region, governments will issue domestic debt to cover rising or recurring fiscal deficits, providing some respite for their respective banking sectors.  (BMI 24.07)

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5.8  Bahrain Says No Minimum Wage Plan for Domestic Workers

Bahrain will not set a minimum wage for its domestic workers due to the free-market nature of its economy, according to officials.  The subject was discussed following the decision by Kuwait to set a $200 minimum wage for domestic workers and approved rights such as a weekly day off, 30 days of annual paid leave, a 12-hour working day with rest, and mandatory overtime pay.  It became the first Gulf country to legally standardize the working conditions for its domestic workers.  Bahrain has a minimum wage of BD300 ($795) for citizens in the public sector, but not for nationals in the private sector.

The number of domestic workers in Bahrain has risen from 44,586 in 2004 to 111,002 at the end of 2015, according to the Labour Market Regulatory Authority.  However, the number is much lower in Kuwait, where there are approximately 660,000 domestic workers.  (AB 24.07)

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5.9  US Approves $785 Million of Munitions, Sustainment and Support Sales to the UAE

On 19 July, the US State Department has made a determination approving a possible Foreign Military Sale to the United Arab Emirates for munitions, sustainment, and support.  The estimated cost is $785 million.  The Defense Security Cooperation Agency delivered the required certification notifying Congress of this possible sale on 15 July.

The Government of the United Arab Emirates (UAE) requests approval to procure seven thousand seven hundred (7,700) GBU-10 guidance kits with seven thousand seven hundred (7,700) Mk-84/BLU-117 bombs, five thousand nine hundred forty (5,940) GBU-12 guidance kits with five thousand nine hundred forty (5,940) Mk-82/BLU-111 bombs, five hundred (500) GBU-31V1 guidance kits with five hundred (500) Mk-84/BLU- 117 bombs, five hundred (500) GBU-31V3 guidance kits with five hundred (500) BLU-109 bombs, and fourteen thousand six hundred forty (14,640) FMU-152 fuses.  This sale also includes non-MDE munitions items. The total estimated value of MDE is $740 million.  The overall total estimated value is $785 million.

This proposed sale contributes to the foreign policy and national security of the United States by helping the UAE remain an active member of the OPERATION INHERENT RESOLVE (OIR) coalition working to defeat the Islamic State in Iraq and the Levant (ISIL).  These munitions will sustain the UAE’s efforts and support a key partner that remains an important force for political stability and economic progress in the Middle East.  The proposed sale provides the UAE additional precision guided munitions to meet current and future threats.  The UAE continues to provide host-nation support of vital U.S. forces stationed at Al Dhafra Air Base and plays a vital role in supporting U.S. regional interests.  This notice of a potential sale is required by law and does not mean the sale has been concluded.  (USDoS 19.07)

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5.10  Abu Dhabi’s Economy Said to be Worth $53.4 Billion at End-2015

Abu Dhabi’s economy saw robust performance in the final quarter of 2015, with official estimates indicating that its GDP reached AED196.1 billion ($53.4 billion), up 7.7% compared to the same period in 2014.  Non-oil sectors enhanced economic growth in Abu Dhabi during the period, growing by 8.8% compared to an oil GDP growth rate of 7.1%, according to a new report issued by the Abu Dhabi Department of Economic Development.  The contribution of non-oil activities to Abu Dhabi’s GDP increased to 50.7% in Q4 2015, it added, reflecting the emirate’s efforts to diversify away from oil revenues.

Abu Dhabi, sitting on 6% of the world’s oil reserves, slashed spending when crude prices plummeted to below $30 a barrel.  It drew the attention of the International Monetary Fund, which said in May that the emirate, home to the world’s second-largest sovereign wealth fund, could afford a more gradual fiscal consolidation.  (AB 22.07)

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►►North Africa

5.11  Egypt’s Economy Drops to Third Place in Africa Rankings

Bloomberg has rated the Egyptian economy third on the African continent, pushing it back from second place after just two months, basing its assessment largely on shifting GDP figures.  On 11 May, Bloomberg put Egypt in second position behind Nigeria, with South Africa in third place.  However, in the latest Bloomberg report South Africa was said to have regained second place after a period of slippage due to currency liberalization measures which led to a decline in GDP.

Bloomberg did not give up-to-date GDP figures for Egypt, but the World Bank puts GDP at $330.8 billion for 2015.  In December, Egypt’s planning minister said that he expected GDP growth during the first quarter of 2015-2016 to be around 5%, according to Reuters.  (Various 15.07)

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5.12  Tourist Arrivals to Egypt Fall by Half During May

Tourist arrivals to Egypt declined by 51.7% year-on-year in May, with just 431,800 visitors compared to 894,600 in the same month last year, according to the latest figures from CAPMAS.  Visitors also spent less time in the country.  Egypt recorded only 2.5 million tourist nights during the month, down by 71.4% compared to May 2015.  May’s dismal numbers follow a string of weak months for the industry. April arrivals were down by 54% year-on-year.  As a result, tourism revenue is in a major slump, amounting to just US$550.5 million in the first quarter of 2016 — a drop of more than 62% compared to the same period in 2015, according to Central Bank figures.  For the first time, more tourist dollars flowed out of the country than came in, with Egyptians spending some $1.2 billion on outbound travel during the quarter.  (Mada Masr 13.07)

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5.13  Egypt’s Zohr Gas Reservoir Estimate Keeps Growing

The estimates for the Egyptian gas reservoir Zohr keep growing, but development will   be problematic because of sulfur deposits.  Following the fourth drilling operation carried out by Italian company Eni, which discovered the field, estimates are that Zohr contains 32 trillion cubic feet (TCF) of natural gas, rather than 30 TCF as estimated previously.  At the same time, and despite optimistic announcements by Eni and Egypt’s EGAS saying that gas from the field will begin flowing by late 2017, there are still obstacles to overcome.

In August 2015, after reports on the field’s discovery, various consulting firms, including HIS, estimated that the actual amount of gas that could be extracted from the field would amount to 77%, with an accuracy level of 25%. Therefore, the extractable reserves were estimated at a wide range of 17-27 TCF.  However, Eni has since completed three further drilling operations, which provide more reliable and comprehensive data regarding the reservoir its size, depth and the quality of the gas contained therein.  As such, the company’s current estimates regarding gas quantities significantly surpass the initial report.  However, the company has failed to report on the extremely high percentage of sulfur in the field, which would make development more complicated.  The high percentage of sulfur may require separate development for its extraction, raising costs.

An additional difficulty would be to find a strategic partner for the reservoir.  For several months, Eni has been unsuccessfully trying to find another gas company which will share the risks and costs of development, the first stage of which is estimated at $5 billion.  (Globes 25.07)

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5.14  Suez Canal Introduces Cheaper Tolls for Empty US Oil Vessels Travelling to Gulf

The Suez Canal Authority has announced a decision to reduce the toll on empty US oil vessels sailing through the canal to the Arabian Gulf by between 20 and 45%.  The new toll was introduced on 25 July and will continue for six months, ending in December, at which point it will be reviewed and possibly extended.  The authority said that ships with a capacity of 200,000 tons or more will be entitled to the cheaper rate of passage.  To pay the reduced toll, companies will have to file a request in advance of their vessel’s passage through the canal, officially confirming the port it departed from, the date of departure, the contents of the ship, intended date of arrival, and any ports stopped in en route.  Companies should present a certificate showing the reason for any stopovers.  The toll must be paid in full by any ship-owner who fails to submit the relevant documents with full details of their ship’s journey and stops.  (Al-Masry Al-Youm 25.07)

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5.15  Algeria Loses $58 Billion of Foreign Exchange Reserves in 2 Years

Collapse of oil revenues and sharp increase in importations have caused a huge dent in Algeria’s foreign reserves with figures pointing at $58 billion loss since 2014; year of exceptional growth.  Prime Minister Abdelmalek Sellal said that Algeria can no longer afford to rely on its mineral resources to boost economic growth.  Algeria’s economy since 2014 has taken a downward direction due to collapse of international crude oil price.  The decrease in the country’s oil revenues was coupled with a significant increase of importations.  Current foreign exchange reserves now stand at $137 billion against $195 billion in March 2014.

With its economy largely based on oil revenues, Algeria knew a profitable foreign exchange reserve cushion when the oil revenues were in their heydays, with figures pointing at $77.8 billion in 2006, $ 110.2 billion in 2007, $162.2 billion in 2010, $190.6 billion end of 2012, and $194 end of 2013.  Aside from the drying of foreign exchange reserves, the North African country is also facing a cute depreciation of its national currency, plunging the country further into economic social and financial crisis.  Algeria’s trade deficit at the first quarter of this year is estimated at $5.6 billion as compared to $3.4 billion at the same period last year.  (MEC 06.07)

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6.1  World Bank Says Turkey Sees Slower GDP Growth Than in 2015

Despite a pick-up in domestic consumption, the gross domestic product (GDP) growth in Turkey slowed in the first quarter because of slower inventory build-up, according to the July edition of the World Bank’s Turkey Regular Economic Brief, issued in Ankara on 15 July.  The seasonally and working day adjusted GDP growth slowed to an annualized rate of 3.3% quarter-on-quarter in the first quarter, as compared with 4% in 2015 as a whole, it said.  Inventory accumulation that led growth in the previous quarter slowed significantly in the first quarter, bringing growth down, it added.

Exports showed signs of recovery in the first quarter, following a contraction in the previous quarter, and contributed positively.  On the other hand, private consumption strengthened thanks to a 30% rise in the minimum wage, recovery in consumer credit growth and a fall in food prices, while government spending rose considerably because of election promises.  The Central Bank loosened monetary policy against the favorable inflation backdrop.  The recovery in portfolio inflows and significantly lower headline inflation due to the fall in food prices created a favorable environment for the Central Bank to cut interest rates.  The Central Bank cut the overnight lending rate by 175 basis points (bps) to 9% between March and June, while keeping the 1-week repo and overnight borrowing rates unchanged.  (HDN 17.07)

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6.2  Turkey Sees Drop in Unemployment in April

Unemployment in Turkey fell in April, the Turkish Statistics Institute (TUIK) said on 15 July.  The unemployment rate dropped to 9.3%, from 9.6% in April last year, and also fell month-on-month from 10.1% in March.  The report said 27,638,000 people were employed in April from a potential labor force of 30,462,000.  It also showed that youth unemployment fell by 1% year-on-year.  (TUIK 15.07)

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7.1  Israel & Republic of Guinea Sign Agreement Renewing Diplomatic Ties

On 20 July, Israel and the Republic of Guinea (Guinea-Conakry) signed an agreement renewing diplomatic ties between the two nations.  This is an important moment, as Guinea renews its diplomatic relations with Israel after 49 years (having severed ties with Israel in 1967).  The renewal of ties with the largely Muslim African country of Guinea is the latest step in Israel’s courtship of the continent, and Prime Minister Netanyahu said he expected other nations to soon follow suit.  The news follows Netanyahu’s four-nation Africa tour earlier this month.  It was the first visit to sub-Saharan Africa by a sitting Israeli prime minister in nearly three decades.  (MFA 20.07)

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7.2  Israel Joins UNESCO Battle Against Homophobic Bullying in Schools

Israel’s Ministry of Foreign Affairs announced that Israel was the only Middle Eastern country to sign on to a UNESCO initiative designed to promote education against homophobia in schools.  Education ministers from various countries have pledged to support the anti-bullying initiative.  The accord, signed by Education Minister Naftali Bennett, states that Israel is committed to fighting discrimination and violence against the LGBT community, including bullying in schools.  Special attention will be afforded to training teachers to fight bullying and discrimination on the basis of sexual orientation or gender identity.  (IH 24.07)

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7.3  Kuwait Swelters Under Record 54 C Heatwave

On 21 July, a remote area of Kuwait has recorded a temperature of 54 degrees Celsius as a heat wave hit swathes of the north-western part of the Arabian Peninsula.  The temperature in Mitribah matches that witnessed in California’s Death Valley in 2013, making it the hottest day ever recorded.  The heatwave has been likely caused by the El Nino weather phenomenon.  Essa Ramadan, a consultant at the Directorate General of Civil Aviation (DGCA), told KUNA that El Nino had also been behind a similar heatwave in 1998, where a weather station at Kuwait International Airport recorded a temperature of 51.4 degrees.  He said that the temperature is expected to fall below 50 degrees for a week, although the hot weather would continue until the end of August.  The southern Iraqi city of Basra also recorded a temperature of 53.9 degrees on Thursday.  The hot weather has seen unprecedented demand on Kuwait’s electricity infrastructure, with several power outages reported last week.  (AB 24.07)

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7.4  Saudi Cleric Renews Edict Against Playing ‘Pokemon Go’

Saudi Arabia’s top clerics renewed a religious edict that warns against playing the wildly popular mobile phone application “Pokemon Go.”  First issued in 2001 when the game was played with cards, the decree says Pokemon violates Islamic prohibitions against gambling, uses devious Masonic-like symbols and promotes “forbidden images.”  The edict, or fatwa, has reappeared in a ticker on the home page of the kingdom’s portal for official religious decrees.  The edict notes that a six-pointed star in the game, for example, is associated with the State of Israel and that certain triangular symbols hold important meanings for Freemasonry.  Crosses in the game are a symbol of Christianity, while other symbols are associated with polytheism, says the edict.  Additionally, the edict states parents are using the game to punish and reward children, while warning that adults could gamble away money playing the game.  The game is popular in the Middle East and many gamers have downloaded the app, though it is not been officially released regionally.  (Various 21.07)

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7.5  Morocco Ranks as 33rd Happiest Country, Ahead of the US & UK

Morocco ranks as the 33rd most sustainably happy countries in the world today, ahead of the UK and well ahead of the US, according to, The Happy Planet Index Report, published by The New Economics Foundation.  The index measures happiness in 140 countries based on four elements: wellbeing, life expectancy, inequality of outcomes, and ecological footprint (which measures the supply of and demand on nature).  The aim of the index is to encourage people to live good lives with limited resources and without great cost to the planet.

Costa Rica topped the ranking due to its policy of sustainable development, having abolished its army in 1949 and reinvested the money in health and education programs.  The UK came in at 34 and USA was ranked way down the list at 108.  Chad, an oil producing country which suffers from a high poverty rate, inadequate infrastructure and internal instability, appears at the bottom of the ranking with a large ecological footprint.

Morocco ranked at 33, scored 32.7, reflecting a 73.4 year of age life expectancy, 5/10 in wellbeing, 1.7 in ecological footprint, and 25% in inequality.  The index does not take into account other criteria, such as social freedoms or economic strength.  (MWN 23.07)

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7.6  Turkey Declares State of Emergency

On 20 July, Turkish President Erdogan announced a three-month state of emergency after a meeting with his security council.  The state of emergency will grant Erdogan wide-ranging executive powers in the wake of a failed coup attempt on 15 July.  Approximately 50,000 public employees have been arrested or fired in purges that began after the suppression of the so-called coup.  The judiciary, which was among the first sectors to be affected by the government crackdown, has been so hard hit and the purges are moving with such speed that rights groups say laws and due process have been bypassed.  Given the evolving domestic situation, the true ramifications of the coup (which many claim to have been fabricated by Erdogan himself as a move to crack down on domestic opposition) have yet to be fully seen or adequately assessed.

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8.1  Israeli Surgery Technique Removes Shaking due to Parkinson’s Disease

In a medical breakthrough, a treatment has been found to treat Parkinson’s disease. In a rare procedure, brain surgery was performed to treat Parkinson’s and its subsequent shaking via ultrasound waves.  The surgery was done in Haifa’s Rambam Hospital, done during the annual conference International Society for Therapeutic Ultrasound (ISTU).

The complex and innovative surgery was developed by InSightec.  The procedure is performed utilizing ultrasound waves while the patient lies within a MRI machine wearing a special helmet. The surgeon uses a computer mouse instead of a knife.  After only an hour, the patient can get up and leave the hospital without shaking.  The patient can regain their quality of life which has been lost due to Parkinson’s disease.

Tirat HaCarmel’s InSightec develops and distributes the Exablate platform which provides non-invasive treatments for a variety of oncology and gynecology indications.  The Exablate platform uses revolutionary MRgFUS technology which combines high intensity focused ultrasound guided by Magnetic Resonance Imaging (MRI). Focused ultrasound waves, guided by magnetic resonance imaging are used to safely ablate targeted tissue, ensuring a high rate of effectiveness with minimal side effects. ( 17.07)

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8.2  PamBio Raises $7 Million

PamBio raised $7 million from a private investor.  The company, which has developed a treatment for hemorrhagic stroke and other kinds of bleeding, was founded by entrepreneur Prof. Abd Higazi, head of the Division of Laboratories & Department of Clinical Biochemistry at Jerusalem’s Hadassah Hospital and his spouse Dr. Nuha Higazi, a doctor of neurology, with the support of Hadasit, the Technology Transfer Company of the Hadassah University Hospitals.  Since its founding in August 2014, $3 million have been invested in the company by NGT3 and the Office of the Chief Scientist.  PamBio’s investor, who chose to remain anonymous, is an experienced private pharma investor.  Other than capital, he also owns an advanced development facility and manpower that can support the drug’s development.

Nazareth Elite’s PamBio is an innovative, pre-clinical stage biotechnology company developing drug therapy for acute bleeding conditions.  (Globes 18.07)

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8.3  AV Medical Begins Initial Experience in the US with Its Chameleon PTA Balloon Catheter

AV Medical Technologies has commenced cases in the US with its Chameleon angioplasty balloon catheter.  With its Supervision design, Chameleon is the only angioplasty balloon catheter that allows for simultaneous balloon inflation and injection of fluids in one device.  Chameleon allows physicians to visualize by injecting contrast through the catheter, whether the balloon is inflated or deflated, all while maintaining wire position.

Tel Aviv’s AV Medical Technologies, a privately held medical device company headquartered in Israel, is dedicated to the development of advanced and efficient solutions in catheter-based interventions. The company is now focusing on its flagship catheter, the Chameleon, targeted for dialysis patients undergoing routine angioplasty procedures.  (AV Medical 19.07)

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8.4  CIOReview Names MedyMatch Among 100 Most Promising Big Data Solutions 2016

MedyMatch Technology has been ranked in the list of “100 Most Promising BigData Solution Providers” by CIOReview.  The companies selected for the 100 Most Promising BigData Solution Providers 2016 list are an elite group of companies whose products and solutions are changing their respective industries.  MedyMatch addresses the needs of healthcare providers and patients by utilizing deep vision, advanced cognitive analytics, and artificial intelligence to deliver real time decision support tools to improve clinical outcomes in acute medical scenarios.

Tel Aviv’s MedyMatch utilizes advanced cognitive analytics and artificial intelligence to deliver real-time decision support tools to improve clinical outcomes in acute medical scenarios.  The foundation of clinical discovery and value creation lies in the deep clinical understanding of how to diagnose disease, utilizing the right data (electronic medical record, medical imaging, and genomic data).  The MedyMatch team of artificial intelligence, machine learning, deep learning and algorithmic experts along with its medical and science advisory boards are achieving breakthroughs in standards of cost and care.  (MedyMatch 21.07)

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8.5  Syneron Candela’s PicoWay Picosecond Laser Receives US FDA Clearance

Syneron Medical announced that the PicoWay picosecond laser received US FDA clearance for a new ultra-short 785nm wavelength, which is the third FDA cleared wavelength for PicoWay.  The new ultra-short 785nm wavelength is the first of its kind in the aesthetic market, utilizing a titanium sapphire laser for the removal of blue and green inks, and will be available to new and existing PicoWay customers in the U.S. market in the fourth quarter 2016.  The FDA clearance of the new ultra-short 785nm wavelength was supported by a 15 patient study, covering 22 tattoos, of which 18 contained blue and green inks.  Blinded evaluation of tattoo clearance, by independent board-certified physicians, showed that 83% of the treated blue/green tattoos had “good” to “complete” treatment response after 2 PicoWay treatments with the 785nm wavelength.  Moreover, investigator assessments of tattoo clearance showed similar results to blinded evaluation findings.  There were no treatment complications, and PicoWay treatments were generally associated with no discomfort to mild discomfort for the majority of treatments.

Founded in 2000, the corporate, R&D, and manufacturing headquarters for Syneron Candela are located in Israel. Syneron Candela also has R&D and manufacturing operations in the U.S.  Syneron Candela is a leading global aesthetic device company with a comprehensive product portfolio and a global distribution footprint.  The Company’s technology enables physicians to provide advanced solutions for a broad range of medical-aesthetic applications including body contouring, hair removal, wrinkle reduction, tattoo removal, improving the skin’s appearance through the treatment of superficial benign vascular and pigmented lesions, and the treatment of acne, leg veins and cellulite.  (Syneron Medical 25.07)

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8.6  DreaMed Diabetes Raises $3.3 Million from Norma Investments and a Strategic Investor

DreaMed Diabetes initiated a new investment round, out of which it has already raised $3.3 million from Norma Investments Limited and a strategic investor.  The funds will be used mainly for the further development of Advisor, the Company’s decision support technology platform for determining the optimal patient-specific insulin treatment plans leading to balanced glucose levels in people with diabetes.  The system uses event-driven machine learning and fuzzy logic technology in order to process multiple personalized parameters, such as insulin delivery data, glucose readings, meal data and more into an informed and optimized insulin dosing treatment plan.

In February 2016, DreaMed Diabetes was selected from amongst 70 applicants, including leading multinational companies, as the winner of the Leona M. and Harry B. Helmsley Charitable Trust Award for the Type 1 Diabetes Decision Support Initiative.  DreaMed was awarded a $3.4 million grant towards an international clinical study, along with Glooko, a leader in mobile and web applications for diabetes management, to generate preliminary data on the safety, reliability and efficacy of the DreaMed Advisor system for Type 1 diabetes patients treated with insulin pumps.

Founded in 2014, Petah Tikva’s DreaMed Diabetes develops health solutions and decision support tools using algorithms for the optimization of intensive insulin therapy for the benefit of people with Type 1 and Type 2 diabetes.  The Company’s first product, GlucoSitter, was developed for closed-loop insulin therapy and was licensed to Medtronic.  The Company’s latest product, Advisor, is a system for the optimization of patient specific intensive insulin therapy decisions.  (DreaMed Diabetes 25.07)

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8.7  Can-Fite Completes Phase II Study for CF102 in the Treatment of NASH/NAFLD

Can-Fite BioPharma completed the protocol design for its upcoming Phase II trial of its drug candidate CF102 in the treatment of non-alcoholic fatty liver disease (NAFLD), the precursor to non-alcoholic steatohepatitis (NASH).  NAFLD is characterized by excess fat accumulation in the form of triglycerides (steatosis) in the liver.  NAFLD includes a range of liver diseases, with NASH being the more advanced form, manifesting as hepatic injury and inflammation.  CF102 is currently being evaluated in a Phase II study for the treatment of hepatocellular carcinoma (HCC). Recent preclinical studies of CF102 revealed its capability to improve liver pathology in a NAFLD animal model of NASH including data showing a statistically significant reduction in NAFLD activity score compared to placebo.

Petah Tikva’s Can-Fite BioPharma is an advanced clinical stage drug development Company with a platform technology that is designed to address multi-billion dollar markets in the treatment of cancer, inflammatory disease and sexual dysfunction.  The Company’s lead drug candidate, Piclidenoson, is scheduled to enter Phase III trials in 2016 for two indications, rheumatoid arthritis and psoriasis.  The rheumatoid arthritis Phase III protocol has recently been agreed with EMA.  Can-Fite’s liver cancer drug CF102 is in Phase II trials for patients with liver cancer and is slated to enter Phase II for the treatment of non-alcoholic steatohepatitis (NASH).  CF102 has been granted Orphan Drug Designation in the U.S. and Europe and Fast Track Designation as a second line treatment for hepatocellular carcinoma by the U.S. FDA.  (Can-Fite 25.07)

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8.8  LifeBond Receives FDA IDE Approval for LifeSeal GI Surgical Sealant Clinical Trial

LifeBond received a U.S. FDA Investigational Device Exemption (IDE) approval to initiate a clinical study of the LifeSeal Surgical Sealant Kit, which includes a unique gastrointestinal (GI) sealant specifically designed to minimize staple-line leakage in gastrointestinal resection procedures.  This news follows the recent receipt of CE marking in Europe early this year and an Expedited Access Pathway (EAP) designation status from the FDA for LifeSeal in the U.S in 2015.  The EAP designation highlights the medical importance of LifeSeal and provides for expedited review by the FDA.  Commercialization has already been initiated in several countries in Europe.

The FDA trial is designed to be a multicenter, multinational, randomized, double arm, single-blind study that will evaluate the safety and efficacy of the LifeSeal Surgical Sealant Kit.  The study will be conducted at leading medical centers in the US and Europe. Patient enrollment is currently open at the clinical sites in Europe, with additional sites to be initiated in the US in the coming months.

Caesarea’s LifeBond is a leader in the development and manufacturing of bio-surgical medical devices for tissue repair intended to improve the recovery of patients following surgery and to create an environment that supports the body’s natural healing process.  Of natural origin, elastic, adhesive, durable and yet absorbable, the company’s devices have the potential to fill a long list of unmet surgical needs.  LifeBond’s first product, LifeSeal, is designed to provide staple-line reinforcement in GI surgery.  Anastomotic (point of surgical connection) leakage after a colorectal resection is associated with significant mortality and morbidity.  Once applied over colorectal staple-lines, LifeSeal forms an elastic yet firm protective layer designed to maintain sealing during the critical post-operative period.  Reducing leakage has the potential to save patient lives, improve patient recovery and avoid re-admissions and repeated surgeries.  (LifeBond 21.07)

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9.1  Mellanox Simplifies RDMA Deployments with Enhanced RoCE Software

Mellanox Technologies announced the availability of new software drivers for RoCE (RDMA over Converged Ethernet).  The new drivers are designed to simplify RDMA (Remote Direct Memory Access) deployments on Ethernet networks and enable high-end performance using RoCE, without requiring the network to be configured for lossless operation.  This enables cloud, storage, and enterprise customers to deploy RoCE more quickly and easily while accelerating application performance, improving infrastructure efficiency and reducing cost.  RDMA over Converged Ethernet (RoCE) is a mechanism that provides highly efficient data transfer with very low latencies on Ethernet networks. RoCE can be implemented in hardware as well as in software.  Soft-RoCE is the open source software implementation of the RoCE standard and compatible with any ordinary Ethernet network cards that lack hardware support for RDMA.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage. Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability. Mellanox offers a choice of fast interconnect products: adapters, switches, software, cables and silicon that accelerate application runtime and maximize business results for a wide range of markets including high-performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services.  (Mellanox 13.07)

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9.2  Optimal+ Selected by Renesas to Enhance Global Manufacturing Operations

Optimal+ announced the deployment of its full suite of software solutions from the company’s Semiconductor Operations Platform at Japan’s Renesas Electronics Corporation.  The solutions include: Global Ops, for product yield and efficiency improvement; Escape Prevention and Outlier Detection, for quality and RMA management; and TTR, to increase overall test efficiency through adaptive test.  Collectively, these solutions will enable Renesas to enhance their global manufacturing operations to maximize equipment utilization and efficiency while delivering the highest quality products to their customers.

Optimal+ delivers the industry’s leading enterprise solution that measurably improves semiconductor and electronics product yield, productivity and quality through early detection.  The company’s solutions enable a paradigm shift in the manufacturing data infrastructure of semiconductor and electronics companies to provide rapid, actionable intelligence that can be used to optimize every measurable link in the global manufacturing supply chain.

Holon’s Optimal+ is a global supplier of Manufacturing Intelligence software solutions, enabling any semiconductor or electronics company to seamlessly aggregate, organize and act upon the global manufacturing data generated across their distributed supply chains to measurably improve yield, quality and productivity.  The company’s real-time, big data analytics solutions are deployed in virtually every major foundry and OSAT currently serving the semiconductor ecosystem, processing over 35 billion chips every year on behalf of its customers and is ushering in an era of unprecedented supply chain visibility that translates into strong and measurable ROI.  (Optimal+ 12.07)

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9.3  AfricaOnline Deploys RADWIN JET PtMP to Deliver Mega-Capacity

RADWIN announced that AfricaOnline Ghana, a subsidiary of the PAN African based internet service provider, iWayAfrica, and part of Gondwana International Networks – a leading ISP based in Accra – has selected and deployed RADWIN’s groundbreaking JET 3.5 GHz Point-to-Multipoint solution.  Designed with smart Beam-Forming antenna technology, RADWIN 5000 JET provides long-range access connectivity with secured SLA to enterprise customers.  During the first phase of deployment the RADWIN JET-based network will cover the capital city of Accra and in the second phase will extend to the outlying cities of Kumasi, Takoradi and Tamale.

Tel Aviv’s RADWIN is a leading provider of Point-to-Multipoint and Point-to-Point sub-6 GHz broadband wireless solutions that are deployed in over 150 countries.  (RADWIN 14.07)

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9.4  Nano Dimension Files Patent Application for New Nanometric Conductive Ink

Nano Dimension announced today that its wholly owned subsidiary, Nano Dimension Technologies, has filed a patent application with the U.S. Patent and Trademark Office for the development of a new nanometric conductive ink, which is based on a unique synthesis.  The new nanoparticle synthesis further minimizes the size of the silver nanoparticles particles in the company’s ink products.  The new process achieves silver nanoparticles as small as 4 nanometers.  The innovative ink has the potential to accelerate printing speeds and save ink for the 3D printing of electronics such as printed circuit boards, antennas and others.  Furthermore, the ink enhances the capabilities of the company’s DragonFly 2020 3D printer, and may improve the conductivity of the printed lines.  The company intends to commercialize its ink products as supplementary products to its 3D printers and as separate and independent products.

Ness Ziona’s Nano Dimension, founded in 2012, focuses on development of advanced 3D printed electronics systems and advanced additive manufacturing. Nano Dimension’s unique products combine three advanced technologies: 3D inkjet, 3D software and nanomaterials. The company’s primary products include the first 3D printer dedicated to printing multi-layer PCBs (printed circuit boards) and advanced nanotechnology-based conductive and dielectric inks.  (Nano Dimension 14.07)

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9.5  Gauzy Announces Collaboration with Mercedes-Benz

Gauzy recently announced that it has been working in collaboration with Mercedes-Benz Cars Daimler AG for the past three years.  The announcement came during a prestigious automotive high-tech competition held in Stuttgart, Germany, during which Gauzy was also selected among the final ten.  The event, Start-up Autobahn, is a global hardware and mobility innovation platform intended to connect top mobility start-ups with resources from corporations, investors, and universities.  It was sponsored by Plug and Play tech center in Silicon Valley, Daimler and the University of Stuttgart.

Gauzy has created technology using unique liquid crystal film which can be embedded into raw materials—with a current focus on glass—to perform a vast array of functions including, inter alia, providing users the ability to control its levels of transparency and opacity.

Founded in 2009, Tel Aviv’s Gauzy is currently a leading provider of turnkey liquid crystal glass projects, installing laminated LC films in different applications such as home appliances, architecture, construction, automotive industry and many other segmented markets.  Their patent pending innovative control technologies enable us to handle glass like never before – Dim glass with numerous stages of transparency, create in-glass blinds, insert transparent solar cells into glass windows, and achieve various glass related innovations in the automotive and aviation industries.  (Ynet 19.07)

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9.6  FST Biometrics Surpasses 1.5 Million Monthly User Identifications

FST Biometrics announced that more than 1.5 million successful identifications are taking place each month around the world with its IMID access system.  In addition, the company announced that it has increased its customer base by 30% in the past 12 months from the financial, corporate, health and real estate markets.  The last 12 months have also been a time of significant feature additions for IMID Access, FST’s core product.  These new features have readied the product for the enterprise markets, and these large customers are already moving forward with implementations.

Rishon LeTzion’s FST Biometrics is a leading identity management solutions provider.  The company’s IMID product line offers access control through its proprietary In Motion Identification technology.  This provides the ultimate security and convenience for users, who are accurately identified without having to stop or slow down.  IMID solutions integrate a fusion of biometric and analytic technologies that include face recognition, body behavior analytics and voice verification, for a variety of venues including large corporations, office buildings, educational institutions, government bodies in addition to health and recreation centers.  (FST Biometrics 19.07)

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9.7  Angola Deploys Hundreds of RADWIN 5000 Point-to-MultiPoint in 2.2-2.3 GHz Band

RADWIN announced that service provider Internet Technologies Angola (ITA) has deployed a national network using RADWIN’s Point-to-MultiPoint solutions in the 2.2-2.3 GHz band. ITA provides business-class services to many of Angola’s largest corporations.  ITA sought a solution in the unique 2.2-2.3 GHz band that could coexist with the high transmit power of the 3G cellular network in Luanda and other cities.  They evaluated several technologies including WiMAX and realized that RADWIN’s carrier-grade wireless broadband was the solution for their needs.  RADWIN tailored a solution to fulfill our requirements and today we can provide high-speed connectivity of 50 Mbps and upwards with low latency and guaranteed SLAs to corporate clients.

Tel Aviv’s RADWIN is a leading provider of Point-to-Multipoint and Point-to-Point sub-6 GHz broadband wireless solutions. Incorporating the most advanced technologies such as a Beam-forming antenna and an innovative Air Interface, RADWIN’s systems deliver optimal performance in the toughest conditions including high interference and obstructed line-of-sight. Deployed in over 170 countries, RADWIN’s solutions power applications including backhaul, broadband access, video surveillance transmission and broadband for trains and metros.  (RADWIN 21.07)

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9.8  Illusive’s New Family of Deceptions Targeting Advanced Ransomware Threats (ARTs)

illusive networks unveiled a new family of deceptions that detects, alerts and neutralizes ransomware in real-time.  illusive’s Advanced Ransomware Guard is the only solution that deploys ransomware-specific deceptions across the entire network, endpoints and servers and neutralizes ransomware activity at the source hosts.  The new family of deceptions is able to detect the specific action of attempted encryption, deletion or removal of assets and neutralization is triggered immediately and automatically.  As soon as ransomware attempts to gain a foothold in a network, or move laterally toward strategic assets, illusive’s high fidelity detection and Advanced Ransomware Guard automatically blocks the ransomware operation on the source hosts, alerts defenders and diverts it to encrypt phony targets.

Tel Aviv’s illusive networks is pioneering deception-based cybersecurity with its patent-pending Deceptions Everywhere technology that neutralizes targeted attacks and Advanced Persistent Threats (APT) by creating a deceptive layer across the entire network. By providing an endless source of false information, illusive networks disrupts and detects advanced attacks with real-time forensics and without disruption to business.  (illusive Networks 21.07)

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10.1  Israel’s Consumer Price Index Rises By 0.3% in June

Israel’s Central Bureau of Statistics announced on 15 July that Israel’s Consumer Price Index (CPI) rose for the third consecutive month (0.3% in June) but has still fallen 0.8% over the past year.  The CPI rose 0.3% in May and 0.4% in April.  Prior to the past three months, the CPI had fallen for five straight months.  The rise was in line with analyst’s predictions.

Since the start of the year, the CPI is unchanged and over the past 12 months, the CPI has fallen 0.8%.  This is still well below the government’s inflation target range of between 1% and 3%.  Prominent price rises in June included fashion and footwear (8.3%), transport (1%) and culture and entertainment (0.6%).  Significant price falls in June included fresh fruit and vegetables (4.4%), furniture and household equipment (0.6%), and food (0.5%).  The housing price index, published separately from the CPI, showed that home prices rose 0.3% and have risen 7.8% over the past 12 months.  (CBS 15.07)

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10.2  Israel’s First Quarter Growth Figures Revised Upwards Once Again

The Central Bureau of Statistics released growth figures for Israel.  During the first quarter, the GDP rose by 1.7%.  The original figure of 0.8% was later revised to 1.3% before this release.  Business product grew 0.8% in the first quarter, compared with the previous figure of 0.2%.  Private consumption was up 5% (4.8%), and investments in fixed assets jumped 14.6% (16.2%).

The latest figures mean that concern about a possible recession has been greatly relieved, following the Central Bureau of Statistics’ second revision of the growth figures.  In Israel, a recession is defined as two consecutive quarters of negative per capital growth. 1.7% growth is practically the same as Israel’s 1.8% population growth, meaning that per capital growth is zero, but not negative.

Despite this good news, the latest figure for Israeli exports still indicates an annualized decrease, but only by 5.3% and not the 8% drop published a month ago.  (CBS 17.07)

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10.3  Israel’s Labor Productivity 14% Lower Than OECD Average

On 19 July, the Bank of Israel published an excerpt from its periodic fiscal survey, taken from the chapter dealing with basic skills of workers in Israel and market sector productivity.  The Bank of Israel said that Israel’s labor productivity is 14% lower than the developed country average and is particularly low in non-tradable sectors and industry sectors that sell only to the domestic market.  Productivity gaps in the food and accommodation services, as well as in construction and trade industries makes the greatest negative contribution to the overall productivity gap.  In contrast, labor productivity in the electronics industry is higher than the OECD average and reduces the productivity gaps between Israel and other advanced OECD economies.

As for the workers’ basic cognitive skills, the Bank of Israel claims that they are lower than the OECD average, even though the share of Israeli workers with an academic degree is higher than the OECD average.  This is explained in the report, “This finding indicates that workers’ skills, and particularly their cognitive abilities, are not derived from years of schooling only, but also from the quality of education and from other personal and environmental variables.”

The Bank of Israel claims that the relatively low level of skills of workers in non-tradable industries correlates with a lower output per worker, and is reflected in low-cost, labor-intensive work methods that involve little advanced technology.  According to the survey, skills are particularly low in the fields of trade and construction, as well as industries which sell mostly to domestic market even though the share of academic degree holders in the these industries remains higher than the OECD average.

The bank recommends adopting an approach of investing in basic cognitive skills through early childhood education in order to improve skills and bolster productivity.  In addition, it is recommended to improve the basic proficiency of adults through designated programs for population groups for which the survey found especially low achievements.  (Globes 19.07)

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10.4  OECD Says Israeli Roads the Most Congested in Developed World

Israel has the highest road congestion among developed nations, the Organization for Economic Cooperation and Development said in a recent policy paper.  According to the paper, Israel has the greatest average traffic density among OECD members, with more than 2.7 million vehicle-kilometers driven per kilometer of road.  The data used for the paper is from 2014.  An additional 400,000 vehicles joined Israel’s roads since then.  By comparison, Spain had fewer than 1.4 million vehicle-kilometers per kilometer and Turkey had fewer than 250,000 vehicle-kilometers per kilometer in the same reporting period.  In the paper, the organization’s economists recommended introducing congestion charges, especially around cities and on major arteries, to encourage people to use public transportation.  (IH 25.07)

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11.1  ISRAEL & SAUDI ARABIA:  Riyadh’s Diplomatic Dance With Israel

Simon Henderson wrote a Policy Alert for the Washington Institute on 25 July commenting that the unofficial Saudi visit to Jerusalem is a significant advance but not quite a breakthrough in relations, raising questions about what’s next.

Last week, retired Saudi major-general Anwar Eshki led a delegation to Israel, where he met with various officials and made public statements about the Palestinian issue and other matters.  The visit was highly unusual, unexpected, but not completely surprising – the general had revealed his contacts with Israel in June 2015 when he appeared in Washington alongside Dore Gold, the former Israeli ambassador to the UN who is a confidant of Prime Minister Binyamin Netanyahu and was soon to be appointed director-general of the Foreign Ministry, the institution’s top bureaucrat.  At the time, the two men admitted to a series of previous meetings and their unstated implication in going public was to suggest common Saudi and Israeli concerns about the imminent P5+1 nuclear deal with Iran.

Although the latest visit may not have been Eshki’s first trip to Israel, this time he was reportedly accompanied by a number of Saudi academics and businesspeople.  Despite the absence of mutual diplomatic recognition, all of these individuals would have needed special dispensation from the Saudi government to make the journey.  The only photographs published so far show Eshki standing with Israeli Knesset members and Palestinian officials.  He also met with Palestinian Authority President Mahmoud Abbas during an earlier side trip to Ramallah.  In an interview with Israel Army Radio, the general stated, “There will be no peace with the Arab countries before there is peace with the Palestinians…The Israel-Palestinian conflict is not the source of terrorism, but it does create fertile ground for acts of terrorism in the region.  If the conflict is resolved, the countries that exploit the Palestinian issue, namely Iran, will no longer be able to capitalize on it.”

Eshki also met with Gold again, albeit at a hotel rather than the Foreign Ministry.  Gold’s continuing centrality in engagement with the Saudis suggests that other dynamics (and perhaps tensions) are at play.  Since becoming director-general, he has concentrated on increasing the number of countries willing to recognize Israel and developing ties that already exist – hence Netanyahu’s recent African trip, which took in Kenya, Uganda, Rwanda and Ethiopia.  Last week, the West African Muslim-majority country of Guinea reestablished ties after a forty-nine-year break.  Similarly, Gold has been working on links with the Arab world.  Although he noted in a speech in Herzliya last month that Israel’s budding ties need to remain clandestine to respect Arab public “sensitivities,” he also pointed out the following: “Twenty, thirty years ago, everyone said ‘solve the Palestinian issue and you’ll have peace with the Arab world.’  Increasingly we are becoming convinced [that] it’s the exact opposite.  It’s a different order we have to create.  And that’s what we’re going to do.”  He then spoke of recent talks with an unnamed senior Arab diplomat, saying the Palestinian issue “was pretty close to the bottom” of the official’s current priorities.  Saudi deputy crown prince Muhammad bin Salman left a similar impression when he visited Washington in June.

In contrast, Eshki gave the appearance of adhering to a tight script during his trip, promoting the Arab Peace Initiative, the 2002 Saudi-led proposal that offered full diplomatic ties with Riyadh and fifty-six other Arab and Muslim countries once Israel reaches a peace accord with the Palestinians.  While seemingly farfetched at the moment, the initiative retains some value with diplomats.  While Netanyahu told an interviewer in 2014 that the proposal was drawn up at a very different time in the Middle East and was no longer relevant, he said last month that if it were revised, “then we can talk.”

The question is what happens now.  The main Saudi personality in the slow process of publicly acknowledging Israel has been former intelligence chief and ambassador Prince Turki al-Faisal, a more high-profile figure than Eshki but also not a current official.  So far this year, Turki has shaken hands with then-Israeli defense minister Moshe Yaalon and debated with Netanyahu’s former national security advisor.  Would he meet in public with Gold, who once wrote a book titled Hatred’s Kingdom: How Saudi Arabia Supports the New Global Terrorism?  Could such a meeting be held in Israel?  Moreover, after Netanyahu’s most recent comment about revising the Arab Peace Initiative, Saudi foreign minister Adel al-Jubeir asked, “Why should we change [it]?  I believe the argument that the Arab Peace Initiative needs to be watered down in order to accommodate the Israelis is not the right approach.”  The next step may well depend on Arab public reaction (or lack thereof) to Eshki’s visit. The response has largely been indifferent so far, though it may be too early to judge.

Simon Henderson is the Baker Fellow and director of the Gulf and Energy Policy Program at The Washington Institute.  (TWI 25.07)

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11.2  SAUDI ARABIA:  Oil Reserves: A Riddle, Wrapped in a Mystery, Inside an Enigma

Diane Munro wrote in the Arab Gulf States Institute publication The Dhow that Saudi Arabia has long reigned as the most important holder of oil reserves in the world, but new data from a leading oil consultancy estimates volumes are sharply lower than official government projections, placing the kingdom below the United States and Russia.  Rystad Energy estimates for Saudi Arabia’s proved reserves at 70 billion barrels are significantly lower than the 266 billion reported by Saudi Aramco.

Saudi Arabia’s official oil reserves have been mired in controversy for decades but debate over the data escalated again earlier this year after the government announced plans for the sale of up to 5% of state-owned Aramco, slated for late 2017 or 2018, which is expected to be the world’s largest ever share offering.  Saudi Arabia has reported that proved reserves have been maintained in a narrow range of 260-268 billion barrels since 1990, when it substantially raised its official data from 173 billion barrels in 1989.  Not coincidentally, almost all OPEC members sharply increased their reported reserve data in the 1980s when the group was considering using oil reserves, among other criteria, as a basis for determining each country’s individual production quota allocation.  At the time, OPEC members, including Saudi Arabia, gave no explanation for the sudden upward revisions, such as new oil discoveries, to justify the sudden increases, which ignited debate over OPEC’s credibility of its reserve data.

Saudi Reserves


There are international industry guidelines for defining oil reserves and the methodologies used for calculating them but implementation of these standards varies globally, causing inconsistencies in the way reserves are publicly reported.  Both OPEC and non-OPEC state-controlled national oil companies have the widest variances and lack transparency.

There are three main categories of oil reserves that are universally accepted by the international oil industry: proved, probable, and possible reserves.  The guidelines are set by the Society of Petroleum Engineers (SPE) in collaboration with the American Association of Petroleum Geologists, Society of Exploration Geophysicists, Society of Petroleum Evaluation Engineers, and World Petroleum Council.  The U.S. Securities and Exchange Commission has similar definitions and guidelines that must be followed by U.S. companies for accounting purposes.  According to SPE:

  1. Proved Reserves are those quantities of petroleum which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods, and government regulations.
  2. Probable Reserves are unproved reserves which analysis of geological and engineering data suggests have 50% probability to be recovered.
  3. Possible Reserves are those unproved reserves which analysis of geological and engineering data suggests are less likely to be recoverable than probable reserves and have a 10% certainty of commercial extraction.

Recycling Information

OPEC purportedly adopted the SPE standards almost a decade ago but individual countries do not provide detailed or audited geological and engineering data to support their official submission to the OPEC Secretariat, which only reinforces the view that the data is politically driven.  Nonetheless, reserve data reported to the OPEC Secretariat for publication in its Annual Statistical Bulletin is widely disseminated across industry reports, adding further to the uncorroborated information in circulation.

The other main sources of public information on proved oil reserves are the Oil & Gas Journal (OGJ), annual BP Statistical Review of World Energy, and U.S. Energy Information Administration (EIA), which all basically recycle data that does not conform to SPE standards.  The OGJ’s reserves estimates are based on survey responses and official updates by individual countries that have not been vetted by outside auditors, and which are not updated on a regular basis in many cases.  The EIA data for countries other than the United States is from OGJ and in its footnote says: “Reserve estimates for crude oil are very difficult to develop.  As a convenience to the public, EIA makes available these crude oil reserve estimates from other sources, but it does not certify these data.”

The BP Statistical Review of World Energy is one of the industry standards for information but its data for global proved reserves is not sourced from its own research but compiled using a combination of primary official sources and third-party data from the OPEC Secretariat, OGJ, and World Oil.  Moreover, the latest report notes that “the data series for total proved oil does not necessarily meet the definitions, guidelines and practices used for determining proved reserves at company level, for instance as published by the US Securities and Exchange Commission, nor does it necessarily represent BP’s view of proved reserves by country.”

In the distant past, independently assessed oil reserve data for OPEC members was more readily available from oil companies that had production sharing contracts all over the world, but the information flow dried up with the rise of national oil companies.  There are several oil industry consulting companies that have a specialized focus on global oil exploration, production, and reserve data and, given the dearth of public information available, providing intelligence on oil field data to clients is big business.  IHS Markit, which in recent years has merged with leading consultants CERA, Petroleum Finance, and John S. Herold, among several others, is one of the oldest and largest firms that generates its own proprietary oil field data and analysis based on its deep resource base and decades of experience.  Norwegian-based Rystad is a relative newcomer, opening offices in Europe, the Americas, and Singapore over the past few years but so far does not have a Middle East presence.  Rystad quickly established a client base, in part, because its data products are significantly less expensive than the larger, more established firms.  Also, unlike other public reserve data in circulation, Rystad is at the forefront of trying to capture information on growing nonconventional oil field developments.

Saudi Reserves


Rystad’s latest data release may have been intended to add more clarity to the opaque world of oil reserves, but the new analysis has had the unintended consequence of adding further confusion to estimates of global oil reserves.  Rystad issued a press release on 4 July with the provocative headline, “The U.S. Now Holds More Oil Reserves Than Saudi Arabia,” which was misleading since the analysis was based on highly speculative estimates for “yet undiscovered fields,” which deviates from the accepted industry definition of reserves.  Rystad’s expanded definition of reserves to include yet undiscovered fields catapulted the United States and Russia above Saudi Arabia and made for explosive headlines in dozens of news reports, including the Financial Times, Bloomberg, and Gulf News.  Under the expanded definition, which Rystad labels 2PCX, the United States holds 264 billion barrels, followed by Russia at 256 billion barrels, and Saudi Arabia at 212 billion barrels.  But, by any measure, this new data set can’t be considered reserves since an oil or gas deposit is classified as reserves only after technical and commercial certainty of extraction using existing technology has been established.  When Rystad uses industry accepted definitions of reserves under its IP, 2P, and 2PC categories as shown in the table, Saudi Arabia outranks all other countries.

However, it is Rystad’s estimates for the industry standard of “proved reserves” that are challenging the veracity of the publicly available reserve data, and critically Saudi Arabia’s role as the largest holder of global oil reserves.  According to Rystad, Saudi Arabia’s proved reserves are just 70 billion barrels compared with 266 billion reported by Saudi Aramco.  Rystad defines its proved reserves as “conservative estimates in existing fields,” which is in line with the SPE’s standard definition.  Rystad assesses total OPEC proved oil reserves at just 381 billion barrels compared to an average of 1.21 trillion from the three major public sources of data – BP, EIA, and OPEC.  According to Rystad, some countries, especially members of OPEC, exaggerated the size of their reserves in self-reported surveys; once only economically viable reserves were included for each country the numbers were much lower.  The company said the data was based on an analysis of 60,000 fields worldwide conducted over a three-year period, but without access to Saudi Arabia’s oil field data it is difficult to understand how the new Saudi proved oil reserve estimates were arrived at with any degree of accuracy.

Deciphering the Puzzle

Data on Saudi Arabia’s oil fields, production rates, and reserve base have been scarce since the government took over full ownership of Aramco in 1980 from its partners – Standard Oil of California (later Chevron), the Texas Company (later Texaco), Standard Oil of New Jersey (later Exxon) and Socony Vacuum (later Mobil).  Indeed, some of the last detailed information about Saudi oil reserves in the public domain was from a subcommittee report for the U.S. Senate in 1979.

As a result, questions over Saudi Arabia’s reserves have been simmering for decades and hit a feverish pitch during the height of peak oil concerns, fueled in part by the 2005 publication of investment banker Matthew Simmons’ book, “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.”  Simmons argued in his book that Saudi Arabia’s production was nearing peak levels and would go into terminal decline by the end of the decade.  Defying the gloom and doom peak oil scenarios, Saudi Arabia’s production is a sharp 1.4 million barrels per day (mb/d) above average 2004 levels, and near record at 10.45 mb/d in June, according to the International Energy Agency.  Given the dearth of information available on Saudi oil fields, Simmons’ conclusions were partly drawn from analyzing 235 technical reports from the library of the SPE.  Simmons’ forecast of a pending decline in Saudi Arabia’s oil production was proved wrong within a few years but the lack of transparency in oil field data, especially for Saudi Arabia and other OPEC members, was at the core of the mistaken analysis.

Debate over Saudi Arabia’s proved, probable, and possible oil reserves is expected to increase exponentially leading up to Aramco’s stock listing on global markets, which will almost certainly compel the government to provide more transparency on financial and operating data, including the country’s prized oil reserves.  Between now and then, investment analysts will be closely tracking efforts to narrow the gulf between Rystad’s low-end proved reserve estimate of 70 billion barrels and Aramco’s lofty 266 billion barrels in order to place a value on the shares.  Saudi Deputy Crown Prince Mohammed bin Salman has said he plans to usher in a new era of transparency as part of Vision 2030.  The upcoming share sale in Aramco is an opportune time to make good on that pledge and lift the near four-decade veil of secrecy on oil reserve data in order to bring financial and operating standards at the world’s largest oil company in line with accepted international practice.

Diane Munro is a former senior oil market analyst at the International Energy Agency and a contributing writer at the Arab Gulf States Institute in Washington.  (AGSI 25.07)

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11.3  EGYPT:  Egypt’s Ad Hoc Economy

On 20 July, Mohamed Elmeshad posted on Sada that grand projects, though moving quickly, are doing nothing to address the underlying structural problems plaguing Egypt’s economy.

President Abdel Fattah el-Sisi has portrayed himself as a figure who could bring not only political but also economic stability.  His government periodically outlines broad economic plans, most recently the 2016-17 budget put forth by Prime Minister Sherif Ismail in March, which set three priorities of closing down the fiscal deficit, increasing investments, and engaging in more efficient welfare spending.  However, while these priorities constitute a part of an economic plan, they do not form a vision for the economy, particularly given that the 2011 revolution was based largely on the deteriorating state of its middle and lower economic classes.  Rather than addressing persistent economic problems like the growing income gap, Sisi’s statements and policies have steered clear of specifics in favor of emotive and patriotic rhetoric, especially in promoting mega-projects he hopes will boost Egypt’s attractiveness to foreign investors.

In retrospect, it seems President Sisi believed the economy only needed a spark to be nudged back to the improved fiscal balance and high GDP growth rates that Egypt experienced prior to 2011.  Grand projects and investment conferences would in theory lure funding to jumpstart the economy and solve the government’s insolvency.  Gamal Abdel Nasser’s major projects helped build his popularity and speed economic growth early in his tenure.  Hosni Mubarak continued this strategy without paying enough attention to the dwindling welfare and purchasing power of ordinary citizens, increasing inequality, rampant corruption, red tape and cronyism – a level of economic mismanagement that ultimately led to IMF-imposed, neoliberal economic policies in the 1990s.  Similarly, Sisi has forced through grand projects, using the military as his major contractor, with the allegiance of a class of businessmen who cannot afford to be on the wrong side of the regime due to the regime’s high intolerance for all kinds of dissent.  While Egypt is in need of some infrastructural development (and which is partly provided by some of these projects), ultimately it looks as though the regime is aiming to boost its profile and rapidly create a glittering list of accomplishments before actually achieving anything for the longer-term economy.

The current regime is essentially blending the Mubarak plans of the 1990s and 2000s – which relied on a centralized security state implementing deregulation and privatization while emulating Nasser-era mega-projects aimed at rallying patriotism – while heavily increasing the role of the military in their implementation.  The first of the latest series of mega-projects was an ambitious $8 billion endeavor to create a 37 kilometer extension to the Suez Canal.

The canal expansion plan was ambitious in scope and impressive in execution, but ultimately overstated in utility.  The undertaking was achieved in a remarkably short period of time (which also drove up its cost) as a result of the efficiency the military employed in the activity.  The president famously gave an on-air order to the admiral in charge of the project, Mohab Mohamed Mameesh, to complete it in one year instead of the planned three, to which Mameesh agreed with no reference to why they had initially planned three years.  But, contrary to its international billing as “Egypt’s gift to the world” and locally as the solution to many economic woes, the project has had disappointing returns since its completion.  Though this is partly a result of dropping oil prices, it appears that the project was poorly planned, focusing more on speed and pageantry rather than cost-effectiveness or utility.  The canal expansion was supposed to signal to the world and to Egyptians that Sisi is a no-nonsense “doer,” yet many questioned how successful the canal project would be in delivering his promises of faster traffic and higher revenues.  The long-term plan includes developing nearby land as a logistics services hub, a plan that promises to actually add value to the economy, but its potential has received far less media attention because it has less public relations value.

In addition, after the May 2015 “Egypt the Future” economic conference in Sharm El-Sheikh, Minister of Investment Ashraf Salman announced that Egypt had signed around $92 billion in Memoranda of Understanding (MOUs), in addition to around $38 billion in formal deals, financing, and loan agreements.  Yet many involved in the conference, such as Telecom tycoon Naguib Sawiris, have stated that the majority of these MOUs would not be actualized and the conference would ultimately fail, as Egypt needed to first acknowledge and then fix systemic problems with red tape, ineffective bureaucracy and endemic corruption.  Though the government did amend the investment laws to suit the needs of these specific investors, such as giving investors greater legal immunity and deregulating public procurement, these reforms may exacerbate corruption while failing to attract the kind of FDI that creates value.

One of the headline deals of the conference, building a new administrative capital for Cairo, which aimed to generate international confidence in the Egyptian economy, was severely setback last January.  The Emirati contractor Arabtec had backed out of the deal, despite announcing planned investments of around $2 billion, claiming that they were not able to agree on terms after the Egyptian government changed some of the details of their non-binding MOU.  As with the Suez project, the military swooped in and became the main contractor.  In fact, the military has become the state’s primary construction contractor, sitting at the helm of most projects via the Armed Forces Engineering Authority.  While the Armed Forces are perhaps able to complete certain important infrastructural projects at times of economic and political uncertainty, their ever-growing role in the economy is unlikely to inspire confidence among local or international investors, who would like to see a vibrant private sector.

Yet despite the grand ambitions and scope of such projects, foreign investment only slightly picked up to $3.1 billion in fiscal year 2015-2016 from $2.6 billion the year before (primarily due to cross-border mergers and acquisitions).  Egypt’s exports decreased in the same period by 26%, reflecting a decline in oil prices, and the balance of payments deficit increased greatly over the same period from $1 billion to $3.4 billion.  The increasing deficit is symptomatic of Egypt’s inability to drive up demand for its currency, which along with its shrinking foreign currency reserves is contributing the rapid devaluation of the Egyptian pound, which decreased from 7.17 to the dollar to 8.86 to the dollar since Sisi came to power in June 2014.  For a country with a high import bill (Egypt is the world’s largest wheat importer) this contributes to Egypt’s highest levels of inflation in the past seven years, from 8.2% in May 2014 to 10.9% in April 2016.  This is on top of persistent issues such as high youth unemployment.

In their efforts to address these underlying structural issues, Egyptian authorities are demonstrating that they have just as little vision as they do for the mega-projects.  For example, to curb inflation, the Central Bank of Egypt raised interest rates to a ten-year high on 16 June to discourage consumer spending while attracting liquidity in savings and putting a lid on soaring prices.  However, this decision counteracts other efforts to encourage investment, such as the historic devaluation of the pound in March this year, which was supposed to encourage foreign investment and build up trust in the Egyptian regime’s free-market credentials.

Planning a comprehensive plan for economic stability is of course not so simple.  Besides inheriting an unenviable economic situation, this government faced a series of external and internal shocks that impeded many of its plans, especially in tourism.  To top it off, there has been a spate of energy shortages, prompting the government to take the unpopular position of decreasing subsidies on energy products while adding to the energy capacity of the national grid.  Though GDP growth has been a silver lining, at about 4.2% in fiscal year 2015-2016, compared to nearly half of that the year before, many of the challenges will remain as long as the government has a lack of cohesion regarding economic policy.  International financial institutions seem to agree, as Egypt’s credit outlook was downgraded on 13 May by Standard and Poor’s and the IMF on 12 April forecast a decrease in Egypt’s 2016 GDP growth.

The last time Egypt faced this kind of economic crunch and insolvency was in the late 1980s.  The state was fast approaching bankruptcy.  Fiscal deficits caused by historically high spending on subsidies, employment, and services, coupled with a deteriorating economy, meant the state could not support its crippling foreign debt.  However, Egypt was saved from complete insolvency during the Persian Gulf War, which allowed Egypt to bargain with the United States and some of its allies for debt forgiveness and more aid in exchange for its military involvement. It was this economic “miracle” that prolonged Mubarak’s regime for a couple more decades.  Short of another miracle, this regime will need to embark on significant and comprehensive structural change to remove impediments to development in the country in order to have any hope of achieving sustainable and equitable growth.

Mohamed Elmeshad is an Egyptian journalist and PhD student at the School of Oriental and African Studies (SOAS) in London, where he is researching the political economy of media in the Arab world.  (Sada 20.07)

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11.4:  EGYPT:  Egyptians Ditch Daylight Saving Time

Walaa Hussein posted in Al-Monitor on 14 July that after a long tug of war, the Egyptian government has finally relented to parliament and given up daylight saving time, based on a number of studies concluding daylight saving time is, well, pointless.

The debate over daylight saving time’s usefulness has gone back and forth, much like Egypt’s clocks.  This summer, the government insisted daylight saving time would continue.  Parliament countered by passing a law to cancel it.  The Cabinet persisted, but then, on 5 July, just three days before daylight saving time was to take effect, officials reversed their position, resulting in a mad scramble to revise schedules at the last minute.

The Cabinet’s change of heart might have been influenced by parliament’s escalation of the debate, accompanied by pressure from social media users.  Young Egyptians satirically demanded the return of former President Hosni Mubarak, who supported daylight saving time for decades, if the government insisted on keeping daylight saving time.  Some later joked that their success in getting rid of daylight saving time was one of the most recent gains from the revolution that ousted Mubarak in 2011.

Egypt had abided by daylight saving time since 1988 by virtue of a law issued by Mubarak himself.  Daylight saving time used to run from the last Friday of April until the last Thursday of September.  The law was amended in 1995 to exempt the month of Ramadan so observers would not have to wait so late in the day to break their fasts at sundown.

After the revolution of 2011, the government became indecisive about the time change.  Daylight saving time was canceled for the first time in 23 years in 2011, marking the first time the government had admitted that daylight saving time had a negative impact on people’s biological clocks and that it was disturbing airline flight schedules while failing to actually save energy.

Three years later, the prime minister approved daylight saving time once again in May 2014.  This time, the government justified its decision by saying daylight saving time helped alleviate electrical loads by reducing the evening hours of darkness.  The government of current Prime Minister Sherif Ismail adopted the same approach after he was appointed in December, and planned to continue daylight saving time — until parliament passed a law canceling the time change in Egypt, supposedly once and for all.

Ahmad al-Sajeeni, head of parliament’s local management committee, told Al-Monitor that parliament’s decision was based on numerous studies, all critical of daylight saving time.  “The studies conducted by the Ministry of Electricity itself confirmed that daylight saving time does not save energy,” he noted, adding that Cairo is a city that never sleeps.

The Egyptian Ministry of Electricity’s studies have shown that daylight saving time only results in energy savings of about 0.07%, while official and unofficial polls showed that around 70% of Egyptians reject daylight saving time.  According to Sajeeni, the government did not oppose the law eliminating daylight saving time when the committee discussed it and did not show any reservations.  However, the government objected to the timing since it had already issued a decision for this year.

Camellia Abdul Rahman, a homemaker living in Cairo, told Al-Monitor that daylight saving time disturbs her family, especially her children, whose sleep hours are affected by advancing clocks by one hour in the spring or summer and going back one hour in the fall.  Also, the assertion by some daylight saving time supporters that the extra hour of daylight makes streets safer at night is moot, she said.  Safety isn’t as much of an issue as it once was, “since shops remain open and lights remain lit throughout the night [anyway],” she said.

Despite stories to the contrary, early-rising farmers had nothing to do with daylight saving time and have never liked it.  Mohammad Barghash, the former head of the Egyptian Farmers Union, told Al-Monitor that farmers hate daylight saving time and describe it as the “wicked daylight hour.”  “Farmers leave their homes as soon as daylight shines and only return when the sun sets,” he said, and the added hour of darkness in the morning just makes it more difficult for farmers to get their produce to market early.  (Al-Monitor 14.07)

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11.5  MOROCCO:  IMF Executive Board Approves $3.47 Billion for Morocco

The IMF announced on 22 July that its Executive Board approved a two-year arrangement for Morocco under the Precautionary and Liquidity Line (PLL) for SDR 2.504 billion (about $3.47 billion, or 280% of Morocco’s quota).  The access under the arrangement in the first year will be equivalent to SDR 1.252 billion (about $1.73 billion, or 140% of quota).

In recent years, the authorities have successfully reduced fiscal and external vulnerabilities and implemented key reforms with the support of two successive 24-month PLL arrangements.  The new PLL arrangement will provide Morocco with useful insurance against external shocks as the authorities pursue their reform agenda aimed at further strengthening the economy’s resilience and fostering higher and more inclusive economic growth.

The authorities have stated that they intend to treat the arrangement as precautionary, as they have done under the previous two arrangements, and they do not intend to draw under the PLL unless Morocco experiences actual balance of payments needs from a significant deterioration of external conditions.

Morocco’s first PLL arrangement for SDR 4,117.4 million (about $6.21 billion at the time of approval) was approved on 3 August 2012.  Morocco’s second 24-month PLL arrangement for SDR 3.2351 billion (about $5 billion at the time of approval) was approved on 28 July 2014.  The PLL was introduced in 2011 to meet more flexibly the liquidity needs of member countries with sound economic fundamentals and strong records of policy implementation but with some remaining vulnerabilities.

Following the Executive Board on Morocco, Mr. Mitsuhiro Furusawa, IMF Deputy Managing Director and Acting Chair of the Board, made the following statement:

“Despite the difficult global and regional environments, Morocco has made significant strides in reducing fiscal and external vulnerabilities and addressing medium-term challenges, supported by the two successive Precautionary and Liquidity Line (PLL) arrangements.  External imbalances have declined substantially and fiscal consolidation has progressed, while policy and institutional frameworks have been strengthened, including through the implementation of the new Organic Budget Law, the adoption of the civil service pension reform, and ongoing improvements to financial sector oversight.

“Nevertheless, the economy faces significant downside risks. In particular, heightened geopolitical and security risks, a protracted period of slower growth in Morocco’s main trading partners, or more volatile global financial conditions could significantly affect the economy through higher oil prices, disruptions to export and tourism revenues and remittance and capital inflows, or higher borrowing costs.  In this context, a successor PLL arrangement would serve as a valuable insurance against external risks and support the authorities’ economic policies.

“The authorities are committed to further reducing fiscal and external vulnerabilities while strengthening the foundations for higher and more inclusive growth.  Building on the achievements made in recent years, further fiscal consolidation should be based on both continued expenditure control and further tax reforms.  Timely implementation of the civil service pension reform and careful fiscal decentralization will help preserve fiscal sustainability.  Adopting the revised central bank law and continuing to implement FSAP recommendations will further strengthen the financial sector policy framework.  The authorities should push forward with their plan to transition to an inflation-targeting regime and greater exchange flexibility, which will help preserve competitiveness and enhance the economy’s capacity to absorb shocks.

“Continued reforms to improve the business climate, competitiveness, and labor market policies will be essential to increase potential growth, reduce persistently high unemployment levels, especially among the youth, and increase the participation of women in the labor force. “  (IMF 22.07)

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11.6  TURKEY:  Foreign Currency Ratings Lowered To ‘BB/B’; Outlook Negative

On July 20, 2016, S&P Global Ratings lowered its unsolicited foreign currency long- and short-term sovereign credit ratings on the Republic of Turkey to ‘BB/B’ from ‘BB+/B’.  At the same time, we lowered our unsolicited local currency long- and short-term sovereign credit ratings on Turkey to ‘BB+/B’ from ‘BBB-/A-3’.  The outlook is negative.

S&P also revised the transfer and convertibility (T&C) assessment on Turkey to ‘BBB-‘ from ‘BBB’. In addition, we lowered our unsolicited long-term Turkey national scale rating to ‘trAA+’ from ‘trAAA’ and affirmed the ‘trA-1’ short-term rating.

In this case, the reason for the deviation is S&P’s view that following the attempted coup on 15 July 2016, Turkey’s institutional effectiveness has been further eroded, raising risks to its externally leveraged economy.  They believe these events will make rolling over Turkey’s substantial short-term external debt more challenging.


The downgrade reflects S&P’s view that following the attempted coup on 15 July, Turkey’s political landscape has fragmented further.  S&P believes this will undermine Turkey’s investment environment, growth, and capital inflows into its externally leveraged economy.  In the aftermath of the failed coup, S&P believes that the risks to Turkey’s ability to roll over its external debt have increased.  S&P estimates that it has to roll over nearly 42% of its total external debt–amounting to over $170 billion (5x usable reserves; 24% of estimated 2016 GDP)–over the next 12 months.  In addition, S&P expects that given the political uncertainty, Turkey’s policymakers will likely stray from their commitment to enact reforms intended to wean the economy away from its dependence on foreign financing.

Since the attempted coup, S&P understands that, so far, an estimated 45,000, largely government officials, have either been suspended or removed from their posts, with the education and judiciary sectors most affected.  A further 14,000 police officers and soldiers have either been suspended or detained.  S&P had already expected heightened political uncertainty in 2015 – due to escalating domestic violence following the ending of the peace process with Kurdish militants, two general elections and instability along Turkey’s southeastern border–to spill over into 2016.  However, the attempted coup and our expectation about the associated fallout on the real economy, through weakening capital inflows, is beyond what we factored into our previous base-case scenario.  Turkey’s net foreign exchange reserves – at an estimated $32 billion – provide coverage for only about two months of current account payments, suggesting limited buffers to offset external pressures.

Mitigating its external vulnerabilities to some degree, Turkey has deep local-currency capital markets that have facilitated its access to and cost of financing.  Two-thirds of government debt is funded in local currency and at fixed rates.  Furthermore, S&P views the treasury’s policy of meeting net public-sector financing needs by issuing in local currency at longer maturities as a positive rating factor.


The negative outlook reflects our view that Turkey’s economic, fiscal, and debt metrics could deteriorate beyond what we expect, if political uncertainty contributed to further weakening in the investment environment, potentially intensifying balance-of-payment pressures.  We could also lower the ratings if we assessed Turkey’s monetary policy credibility as deteriorating due to government intervention.

We could revise our outlook on Turkey to stable if the government’s fiscal deficits remained modest and the independence of key institutions was not eroded.  (S&P 20.07)

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11.7  TURKEY:  Moody’s Reviews for Downgrade Ratings of 17 Turkish Banks

On 19 July, Moody’s Investors Service announced that it placed under review for downgrade the ratings of 17 Turkish banks following a recent so-called coup attempt in Turkey and the related placement of the Turkish sovereign rating under review for downgrade.

The review for downgrade of the banks’ ratings is driven by the need to assess risks arising from the evolving political and economic situation, namely the potential weakening of the government’s capacity and willingness to provide support to the banks in case of need, as implied by the review for downgrade on the sovereign rating, and the risk of further deterioration in the domestic operating environment, which could affect the banks’ financials, as potential increases in the cost of funding, reduced profitability, more limited capital generation capacity and weakening asset quality could weigh on results over the coming quarters, said Moody’s.

While Moody’s said that it expects all rated financial institutions to be affected to some degree by the economic and financial implications of recent events, the review will assess each institution’s particular credit characteristics, in order to determine to what extent their individual credit ratings could display resilience or susceptibility to the aforementioned risks.

Moody’s said it was reviewing Turkey’s credit rating for a possible downgrade after the attempted military coup on the weekend.  A one-notch downgrade from the current Baa3 rating would push the government’s rating down into “speculative” or junk status.  “Despite the coup’s failure, Moody’s considers its occurrence a reflection of broader political challenges, as associated credit risks remain elevated,” Moody’s then said.  (Moody’s 19.07)

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