Fortnightly, 29 May 2019

Fortnightly, 29 May 2019

May 30, 2019


29 May 2019
24 Iyar 5779
24 Ramadan 1440




1.1  Proposed Legislation Reform Will Facilitate Access to Medical Cannabis in Additional Cases
1.2  Florida Governor Ron DeSantis Leads Trade Mission to Israel
1.3  Israel Agrees to Talks With Lebanon on Nautical Border


2.1  MultiVu Raises $7 Million to Revolutionize Next Gen 3D Sensor Technologies
2.2  Seedo Heads from Israel to Holland
2.3  Siemplify Closes $30 Million in Series C Financing
2.4  Siemplify Closes $30 Million in Series C Financing
2.5  Torii Announces $3.5 Million Seed Round at Collision Conference in Toronto
2.6  Ovzon & GetSAT Reach Agreement to Develop Mobile Satellite Terminals
2.7  VOOM Emerges From Stealth With $5 Million in Series A Funding
2.8  Guardicore Raises $60 Million; Continues to Build Momentum in Cloud & Data Center Security
2.9  Veego Completes Seed Round with Total Investment of $5 Million
2.10  Montréal’s Nuvei to buy Sagi’s SafeCharge for $889 Million
2.11  Mitsubishi Opens Israeli Innovation Outpost
2.12  Elbit Systems Awarded $127 Million Contract to Provide Tactical Radio Systems
2.13  Hill Country Wireless in Texas ‘Builds It Right the 1st Time’ with RADWIN JET
2.14  TriEye Raises $17 Million
2.15  Bill Ford to Open Israel Development Center
2.16  Identiq Raises $5 Million in Seed Funding


3.1  Jordan Introduced its 1st Agritech Accelerator – HASSAD
3.2  Trukkin Raises $3.5 Million to Become a Leading Truck Aggregator in the GCC
3.3  New Accelerators to Join Abu Dhabi Tech Hub to Support Start-Ups
3.4  Red Sea Farms Raise $1.9 Million to Grow Tomatoes in the Desert Using Saltwater
3.5  The Luxury Closet Closes Funding Round with Additional Capital for Rapid Expansion
3.6  Nearly 430 New Restaurants & Cafes Opened in Dubai So Far in 2019
3.7  Andersen Global Expands in Oman
3.8  Egypt’s Xpay Raises $250,000 Pre-Seed for Its Cashless Application


4.1  Tel Aviv Municipality Plans Electric Transportation Solutions to Pollution
4.2  Dubai’s Giant Solar Park Set to Add More Power by End of June
4.3  UAE Rubbish to Fuel Project Finalizes Preparations
4.4  Cyprus Supermarkets Happy with Drastic Plastic Bag Reduction


5.1  Lebanon’s Average Annual Inflation Rate Stands at 3.61% in April 2019
5.2  Lebanon’s New Budget Beginning of a Long Road to Economic Stability
5.3  Lebanon’s Trade Deficit Ended First Quarter at $4.09 Billion, Up by 2.46%
5.4  Jordan Reaches Preliminary Agreement With World Bank for $1.4 Billion Loan

♦♦Arabian Gulf

5.5  Dubai’s New Permanent Residence Program ‘Golden Card’ Announced
5.6  Dubai Free Zone to Return $354 Million to Firms in Wage Protection Push
5.7  Foreign Workers in Dubai Say Average Monthly Salaries Fall by 17% to $2,856
5.8  Dubai Unemployment Rate Remains Steady at 0.5% in 2018
5.9  US Approves $900 Million Sale of Military Equipment to the UAE
5.10  Saudi Arabia’s New System Issues Residence Permits for Skilled & Wealthy Foreign Nationals
5.11  Chinese Crude Imports from Saudi Arabia Rose by 43% in April
5.12  Saudi Arabia Expands Excise Tax to Include E-Cigarettes and Sweetened Drinks

♦♦North Africa

5.13  Egypt, Cyprus & Greece Sign Electricity Interconnection Deal
5.14  Egypt Establishes 26 Power Plants in 5 Years
5.15  Sudan’s Central Bank Receives Deposits of $250 Million from Saudi Arabia
5.16  Moroccans Living in the Arabian Gulf Sent MAD 11.6 Billion Home Last Year
5.17  Ireland Heads List of Foreign Investors in Morocco


6.1  Tourist Arrivals in Cyprus Reach an Historic High for April
6.2  OECD Forecasts 2.1% GDP Growth for Greece in 2019



7.1  Shavuot Holiday to be Marked on Eve of 8 June‎
7.2  Eid Al Fitr Holiday Likely to Start on 4 June
7.3  Kurdistan Parliament Elects Nechirvan Barzani as President


7.4  UAE Eid Al Fitr Private Sector Holidays to Begin on 3 June
7.5  After Defeat, Greek Prime Minister Calls for Snap Elections


8.1  Israel Innovation Authority & Mayo Clinic Sign Deal to Cooperate on Health Tech
8.2  Mor Research Applications Partners with Aspire Ventures and Smart Health Innovation Lab
8.3  Mars Partners with Jerusalem Venture Partners to Foster Foodtech Solutions in Israel
8.4  Body Vision Medical Receives FDA Clearance for LungVision 2.0 System
8.5  Limaca Medical Initiates First-in-Human Study of Biopsy Device for Improved Tumor Diagnosis
8.6  MyHeritage Launches New DNA Test Offering Powerful & Personalized Health Insights
8.7  MaxQ AI Launches ACCIPIO Ax – Slice-Level Intracranial Hemorrhage (ICH) Detection
8.8  Compugen Doses First Patient in COM701/Opdivo Combination Arm of Phase 1 Study
8.9  89bio Reports Positive Top-line Data from Phase 1 Trial of BIO89-100
8.10  Merck KGAA and GlucoMe Exploring Expansion for Digital Diabetes System
8.11  Gat Foods New Pilot Lab to Maximize Fruitlift Potential
8.12  Solabia Group Announces its Acquisition of Algatech
8.13  Finistere Ventures, OurCrowd, Tnuva & Tempo Partnership in Israeli FoodTech Innovation
8.14  Ayala Pharmaceuticals Raises $30 Million in Series B Financing
8.15  FDA Grants Theranica De Novo for Smartphone-controlled Migraine-Relief Wearable
8.16  The Mushroom Benefit Says “Anyone Can Cook”


9.1  Karamba Expands its Autonomous Cybersecurity Technology to Protect IoT Smart Devices
9.2  SeeVoov Wins the ITB China 2019 Tourism Innovation Startup Awards
9.3  Gimmonix & Trip Sciences Partnership to Deliver White-label Native Mobile Solution for Hotels
9.4  SQream and ITMPS Announce Strategic Partnership for the Korean Market
9.5  Lockheed Martin Teams with Rafael to Market SPICE Air-to-Surface Guidance Kits
9.6  RavenDB Adds Pull Replication & Distributed Online Counters to Its Offering
9.7  WhiteSource for Developers Enables Developers to Code Faster and More Securely
9.8  Mellanox Introduces Ethernet Cloud Fabric Technology
9.9  Reduxio Debuts Focus on Container-Native for Kubernetes and Clouds
9.10  Logicalis Selects XM Cyber to Power New Purple Team Offering
9.11  128 Technology & AudioCodes SD-WAN Solution for Unified Communications Services
9.12  Hailo is 2019’s Red Herring Top 100 North America Winner in AI/ Machine Learning Sector
9.13  Intel Launches 10th Gen Core Processor Developed in Israel
9.14  RADCOM to Assure the World’s First Fully Virtualized Cloud-Native Mobile Network


10.1  Inflation Rate Rises by 0.3% in April, While Housing Prices Increase 0.1%
10.2  Israel’s GDP Grows by 5.2% in First Quarter of 2019
10.3  OECD Reduces Israel’s 2019 Growth Forecast


11.1  ISRAEL: IMF Staff Conclude Visit to Israel
11.2  ISRAEL: The Future of the Israeli Defense Industry to 2024
11.3  JORDAN: Concerns for Jordan’s Stability
11.4  QATAR: Fitch Affirms Qatar at ‘AA-‘; Outlook Stable
11.5  SAUDI ARABIA: Staff Concluding Statement of the 2019 Article IV Mission
11.6  EGYPT: IMF Team Reaches Staff-Level Agreement on the Fifth Review for Egypt’s EFF
11.7  EGYPT: After Finalizing IMF Loan, Egypt’s Reforms Target Industrialization & Exports
11.8  MOROCCO: Outlook on the Moroccan Defense Market to 2024
11.9  TURKEY: Turkey Grapples with Big Trade Deficit with China
11.10  TURKEY: Turkey Groans Under Economic Pressure from Saudis
11.11  GREECE: Fitch Ratings Says Greek Fiscal Package Accelerates Policy Reversals


1.1  Proposed Legislation Reform Will Facilitate Access to Medical Cannabis in Additional Cases

On 16 May, Deputy Minister of Health Litzman announced that he was considering the removal of cannabis from the Dangerous Drugs Ordinance for some indications.  The announcement led to substantial rises yesterday in the share prices of cannabis-related companies traded on the Tel Aviv Stock exchange.  The market apparently estimates that the change could mean a significant rise in the number of medical cannabis users in Israel.

If the change comes into effect, then for certain illnesses there will be no need to obtain a license to use cannabis from the Ministry of Health with police approval, but only an appropriate prescription from a doctor specializing in the disease in question.  Currently, every cannabis user must hold a legal license in addition to the prescription.  Some doctors have been trained by the Ministry of Health to prescribe cannabis as they see fit and they are able to produce a Ministry of Health license automatically by computer.  Other doctors, who have not undergone training, have to send off documents and wait for the ministry to issue a license, at its discretion.

The medical specialties for which, according to the Ministry of Health’s announcement, no license will be required are oncology; neurology (for example Parkinson’s Disease and epilepsy); gastroenterology (Crone’s Disease); and infectious diseases.  The production and import of food supplements or preparations that contain CBD only will also be allowed, for all indications.  On the other hand, it appears that for indications such as pain or post-traumatic stress there will be no automatic permit and a license will still be required.  The thinking is that such conditions are easier to fake, and thereby obtain cannabis with no genuine medical need, and even to trade in it.

The Ministry of Health itself has not yet decided exactly how to implement Litzman’s declaration. The above assessments are implied by what he said and by the Ministry of Health spokesperson’s statement, but they do not amount to final decisions.  Although Litzman stressed that this was not a move towards full legalization of cannabis, market players argued that it would almost impossible to avoid leakage of cannabis from patients to the consumer market in such a situation, and take the view that the Ministry of Health has taken this into account and is acting on the assumption that legalization will come sooner or later.  (Globes 20.05)

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1.2  Florida Governor Ron DeSantis Leads Trade Mission to Israel

Republican Florida Governor Ron DeSantis arrived in Israel on 25 May with a delegation of close to 100 people for a six-day trade mission, one which will include business meetings, panel discussions on Florida issues and a cabinet meeting at the US Embassy in Jerusalem.  The governor, along with elected officials, state workers, lawmakers senior academics, businessmen and more participated in the trip.

The cabinet meeting on 29 May at the US Embassy in Jerusalem will not include state business or official action. Instead, it is reported DeSantis will meet with his independently elected cabinet to sign a resolution, declaring Florida’s support for the state of Israel as well as highlighting the Israel-Florida relationship.

An official agenda for the meeting says along with the proclamation, there will be three presentations on victims of terror, water quality and emergency management.  He will also give a keynote speech at the 2019 Israel-American Business Summit, hosted by the Federation of Israeli Chambers of Commerce and the US Embassy, where he will present opportunities for Israeli companies in Florida.  Media outlets have reported that DeSantis has repeatedly promised to be the “most pro-Israel governor” in America.  He promoted the relocation of the US Embassy from Tel Aviv to Jerusalem last year.  (Various 26.05)

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1.3  Israel Agrees to Talks With Lebanon on Nautical Border

Israel and Lebanon both claim a sea area estimated to contain large quantities of natural gas.  The US is mediating in the dispute.  On 27 May, Israeli Minister of National Infrastructures, Energy and Water Resources Steinitz met US Principal Deputy Assistant Secretary for Near East Affairs Satterfield and was updated on his recent talks with Lebanon concerning its maritime border with Israel.  Steinitz agreed to talks between Israel and Lebanon, with US mediation, with the aim of drawing an agreed maritime border that will enable both countries to develop gas and oil reservoirs adjacent to it.

The two countries are in dispute over an area of 860 square kilometers, mainly in the region of Block 9.  This area is estimated to hold large quantities of gas, similar to those of Israel’s Tamar reservoir, and both countries claim ownership of it.  Lebanon has already awarded exploration licenses in Block 9 to a consortium of companies that includes Total of France, EMI of Germany, and Novatek of Russia.  Israel has awarded a license in the disputed zone to Delek Drilling and Noble Energy.  At present, neither side is active in the area.  (Globes 28.05)

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2.1  MultiVu Raises $7 Million to Revolutionize Next Gen 3D Sensor Technologies

MultiVu announced the completion of a $7 million seed round led by Israel’s most active venture investor OurCrowd, Cardumen Capital and Hong Kong based investment firm Junson Capital.  MultiVu will use the funding to complete development of its first sensor product for 3D Face Authentication applications.  Funds will also be used for marketing and business development activities.  The technology development that led to the formation of the company was supported by TAU Technology Innovation Momentum Fund.

MutliVu’s innovative 3D image camera is based on a single sensor as opposed to existing solutions using two sensors and a light projector.  This unique solution produces both pictures and video streams as needed.  MultiVu’s single sensor solution is inexpensive, compact and energy efficient.  MultiVu’s technology is based on four years of research from the Faculty of Engineering at Tel Aviv University (TAU).  A licensing agreement was recently signed with the TAU, Technology Innovation Momentum Fund, managed by Ramot, TAU’s Business Engagement Center.

Tel Aviv’s MultiVu is an Israeli startup company developing state-of-the-art 3D Imaging sensors for mobile, automotive, industrial and medical applications.  MultiVu’s patented technology has been under development by the company’s core technical team for the past 4 years in the lab of Prof. David Mendlovic at the Electrical Engineering Department of Tel Aviv University.  MultiVu secured an exclusive worldwide license to the technology and is planned to bring a product to market within the next 2 years.  (TAU 15.05)

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2.2  Seedo Heads from Israel to Holland

Seedo Corp. has opened a customer service center and logistics warehouse near Rotterdam, Netherlands which will serve as its EU distribution hub.  Seedo will also begin shipments of its home cultivation device to existing customers throughout the EU.  As part of Seedo’s recent momentum, the company announced a partnership with Kibbutz Dan in Northern Israel to establish the first fully automated, commercial-scale, pesticide-free containerized cannabis farm in Israel.  The company also recently signed an agreement to establish a medical cannabis farm in Moshav Brosh, Israel.

Yokneam Illit’s Seedo is a market leading high-tech company providing the hemp and agriculture industries with the world’s first fully automated and controlled indoor growing machine.  Seedo provides growers with the freedom to cut costs while generating high yields of lab-grade, pesticide-free herbs and vegetables.  Seedo’s AI-powered, turnkey systems enable anyone from average consumers to large-scale producers the ability to grow without prior experience or ample space.  (Seedo Corp. 20.05)

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2.3  Siemplify Closes $30 Million in Series C Financing

Siemplify has secured $30 million in Series C funding led by Georgian Partners.  Siemplify will use these new funds to drive significant expansion of its global go-to-market strategy, as well as further enhance its market-leading security operations platform.  Siemplify’s existing investors – 83North, G20 Ventures and Jump Capital – also participated in the round.  The Series C investment brings Siemplify’s total funding to date to $58 million, a testament to the company’s growing dominance in the SOAR space.

Faced with a steady increase in the volume of security alerts, disparate security tools not designed to work together and a global cybersecurity talent shortage, security teams are constantly under pressure to do more with less. Siemplify serves as a 10x force multiplier for security teams: the Siemplify platform is an intuitive workbench that enables them to manage security operations from end to end, automate repetitive tasks and integrate security tools to respond to cyber threats with speed and precision, while getting smarter with every analyst interaction.

Tel Aviv’s Siemplify, the leading independent security orchestration, automation and response (SOAR) provider, is redefining security operations for enterprises and MSSPs worldwide.  The Siemplify platform is an intuitive workbench that enables security teams to manage their operations from end to end, respond to cyber threats with speed and precision, and get smarter with every analyst interaction.  (Siemplify 20.95)

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2.4  Hunters.AI Raises $5.4 Million Seed Round for the First Autonomous Threat Hunting Machine

Hunters.AI announced $5.4 million in seed funding for its mission to accelerate cyber threat response and fight cybercrime by helping organizations detect, identify and remediate sophisticated cyberattacks targeting their cloud, hybrid and enterprise environments.  The round was led by YL Ventures and Blumberg Capital.

The Hunters’ autonomous hunting solution finds the breadcrumbs that are always left behind by attackers, but that remain hidden to security defenses.  It then connects those digital traces to quickly identify and isolate attacks, and provide high fidelity and contextual attack stories, dramatically accelerating cyber threat detection and response time.  Hunters’ solution deployment does not require introducing new agents or scanners into the environment nor duplicating existing data.  The Hunters solution is currently in limited availability to qualified customers.  General availability will be available in late 2019.

Tel Aviv’s Hunters.AI is the industry’s first Autonomous Hunting solution.  Hunters combines its unique Attack Intelligence, Hunting AI and Continuous Automation with the enterprise’s existing security data to transform enterprise threat hunting from hunt and hope to hunting that works.  Hunters.AI generates and delivers actionable visualized attack stories allowing organizations to more quickly and effectively identify, understand and respond to attacks.  (Hunters.AI 22.05)

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2.5  Torii Announces $3.5 Million Seed Round at Collision Conference in Toronto

Torii announced that it has secured $3.5 million in seed investments.  Uncork Capital in Silicon Valley is leading the round, with additional investments from Global Founders Capital in Berlin and Entre Capital in London.  The seed round will allow Torii to pursue the next phase in its development roadmap, which will see them adding more sophisticated and customizable automation components into their product. It will also allow them to build a US-based sales and customer success team to handle the demand for the platform.

Founded in 2017, Ra’anana’s Torii offers a SaaS management solution that helps enterprises effectively manage their SaaS application use and subscriptions.  Torii’s platform allows IT managers to discover, audit, vet and control the SaaS apps that employees use; to optimize SaaS license utilization; and to set up automated workflows that free up the IT team from many of their tedious, regularly mistake-prone processes.  Torii is already being used by top brands and companies such as, SimilarWeb, Typeform, Payoneer, ClassPass, Delivery Hero and Thrive Global.  (Torii 21.05)

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2.6  Ovzon & GetSAT Reach Agreement to Develop Mobile Satellite Terminals

Sweden’s Ovzon, that offers a revolutionary global mobile broadband service via satellite and ultra-portable man packs, and GetSAT have signed an agreement to develop Satcom on The Move (SoTM) terminals for Ovzon’s global service.  By combining SoTM terminals developed by GetSAT and Ovzon’s world leading secure end-to-end mobile broadband satellite service, both companies strengthen their business opportunities for land, sea and air applications.  This joint solution ensures secure and robust SoTM broadband communications for defense, government, emergency response and broadcast customers world-wide.

The companies reached the strategic partnership after the successful demonstration of GetSAT’s MicroSAT L/M (Land / Mobile) for Land and Maritime applications in Sweden and the United States.  GetSAT’s terminals are based on its patented InterFLAT technology, which allows signals to be transmitted and received in the same panel, thus reducing the size, weight and energy consumption to provide advantages essential for the success of critical missions.  The agreement enables simpler accessibility for potential clients, since the terminals are included in the Ovzon service, thereby minimizing the user’s investment and operating costs.

Rehovot’s GetSAT Communications, a private company, supplies antennas and highly efficient portable terminals, which offer high-speed communications for terrestrial, aerial and maritime applications.  GetSAT provides services for government and military use, companies, emergency equipment, non-governmental organizations (NGOs) and humanitarian groups.  (GetSAT 22.05)

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2.7  VOOM Emerges From Stealth With $5 Million in Series A Funding

VOOM has emerged from stealth and closed a $5 million Series A funding round.  The round was led by Arbor Ventures with participation from returning investors F2 Capital, Verizon Ventures and Kaedan Capital, as well as new partner Plug and Play Ventures.  The funding brings the total amount raised to $7 million.  VOOM will build on the success of SkyWatch.AI, the usage-based insurance for commercial drones.  In addition to drone insurance, VOOM will offer on-demand insurance for episodic usage mobility including e-scooters, power sports, motor boats, small planes and other modes of transport.

With the rising popularity of on-demand mobility around the world, the need for effective on-demand insurance has never been more relevant.  Reports show that e-scooter accidents are on the rise across major US cities, with some doctors reporting to see as many as ten severe injuries a week.  Yet scooter companies are not known to issue insurance policies that protect riders from liabilities and personal injuries; insurance platforms that do exist for alternate forms of mobility such as boats and motorcycles are largely limited to rigid, annual based plans.

VOOM will build upon SkyWatch.AI’s telemetry-based risk analysis engine for commercial drones, which provides users with a mobile application that sends operators real-time hazard warnings, feedback, and actionable insights on how they fly.  VOOM’s new platform will collect mobility data points to analyze potential safety threats, including weather information and hazardous environments.  VOOM will use this data to score riders’ safety and performance to customize insurance policies.

Tel Aviv’s VOOM is the world’s first on-demand, telematics-based insurtech platform for specialized mobility products, dedicated to protecting users for anything they ride, fly, or sail.  The company’s first product, SkyWatch.AI, leverages the power of machine learning to assess and mitigate risks and provide on-demand insurance for thousands of drone pilots operating across the US. VOOM’s data-driven, usage-based insurance products include multiple high-risk, episodic-usage mobility verticals, including e-scooters, e-bikes, power sports, motor boats and small planes.  (VOOM 22.05)

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2.8  Guardicore Raises $60 Million; Continues to Build Momentum in Cloud & Data Center Security

Guardicore has raised $60 million in Series C funding, bringing the company’s total funding to $110 million.  This more than doubles the total capital raised to date and represents an endorsement of Guardicore’s current momentum as the company continues to disrupt the broader firewall and data center markets.  New investor Qumra Capital led the round and was joined by other new investors DTCP, Partech and ClalTech, Access Industries’ vehicle for Israeli technology investments.  Existing investors Battery Ventures, 83North, TPG Growth, and Greenfield Partners also participated in the round.  Guardicore will leverage the funds to fuel continued growth and accelerate investments in sales, marketing and customer service as it seeks to expand delivery of its Guardicore Centra security platform to enterprise organizations seeking to protect dynamic data center and cloud infrastructure environments.

Tel Aviv’s Guardicore is a data center and cloud security company that protects your organization’s core assets using flexible, quickly deployed, and easy to understand micro-segmentation controls.  Their solutions provide a simpler, faster way to guarantee persistent and consistent security — for any application, in any IT environment.  (GuardiCore 21.05)

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2.9  Veego Completes Seed Round with Total Investment of $5 Million

Veego completed its Seed Funding with the addition of Robert Bosch Venture Capital GmbH (RBVC), the venture arm of the Bosch Group.  RBVC joins State of Mind Ventures (SOMV) and North First Ventures (N1V) to enable Veego to deliver innovative products to the rapidly growing connected-home industry.

Veego puts an end to malfunctions in smart homes.  Its breakthrough AI technology deploys on smart hubs, routers and IoT devices, automatically detecting, analyzing and repairing connected-home device and system problems before customers even notice them.  Veego is ready to deliver its unique autonomous malfunction detection, analysis and repair technology to Internet Service Providers and Smart-Hub manufacturers this summer.  It is also developing new technologies that will be embedded in smart devices, enabling breakthrough visibility into IoT device performance.

Across the entire connected-home ecosystem, Ramat Gan’s Veego delivers device and network-performance information to service teams, developers and integrators.  They automatically solve connected-home problems such as hardware and software, configuration and setup, complex integration, load on devices and networks, and environmental effects.  (Veego 21.05)

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2.10  Montréal’s Nuvei to buy Sagi’s SafeCharge for $889 Million

Montréal payments technology company Nuvei’s unit Nuvei Bidco is set to buy Israeli payment solutions company SafeCharge International Groupat a company value of $889 million.  The companies said SafeCharge shareholders would receive $5.55 in cash for each share held, representing a 25% premium to the stock’s closing price.

SafeCharge held its IPO on London’s Alternative Investment Market in 2014 at a company value of £243 million.  The company’s market cap at end of trading on Tuesday was £530 million and it is now being acquired at a value of £699 million.

SafeCharge‘s R&D and technical support teams are based in Tel Aviv.  The company also has offices in the UK, Bulgaria, Austria, the Netherlands, Singapore, Cyprus, Hong Kong, China and the US.  SafeCharge’s customers include Gett, Nayax, El Al, Nespresso, Pango, Migdal Insurance, and more. The company is licensed by the European Payments Institutions Federation and over the past year has received a UK license from the British regulator ahead of Brexit.  The company fully owns Credit Guard, a leading payments provider in Israel.  (Nuvei 22.05)

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2.11  Mitsubishi Opens Israeli Innovation Outpost

Mitsubishi Corporation has recently opened an innovation center in Tel Aviv, the company announced on 27 May.  Already operational, the center will help the Japanese corporation scout for Israeli companies and technologies in Mitsubishi’s core areas of interest, including automotive and smart mobility.

The digital revolution necessitates the tapping of new innovative technologies, and partnerships with Israeli startups could hold the key for Mitsubishi’s future growth, the company said in a statement.  Until now, Mitsubishi’s presence in Israel was limited to trade-related operations.  The corporation is the third Japanese general trade company to set up a local development center, after the Mitsui Group and the Marubeni Corporation.  Japanese multinational the Hitachi Group also has a center in Israel.

Over the past two years, Mitsubishi has broadened its reach in Israel, looking into potential collaborations with the assistance of the Israeli Ministry of Economy and Industry’s economic and trade mission in Japan.  The corporation has understood that if it wants to connect to Israeli innovation, it needs to expand its representation in Israel.  Through its Mitsubishi Motors arm, the corporation also has a strategic alliance with Renault–Nissan, which already has an innovation center in Israel.

Over the past four years, over 70 Japanese companies set up representation in Israel and Japanese companies invested over $5 billion in Israel in total.  The export-import turnover between Israel and Japan in 2018 was $3.2 billion according to the Israel Export Institute, a 12% increase from 2017, making Japan Israel’s tenth largest trading partner.  (Calcalist 27.05)

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2.12  Elbit Systems Awarded $127 Million Contract to Provide Tactical Radio Systems

Elbit Systems was awarded a $127 million contract to supply vehicular tactical radio systems to the Army of a country in South Asia.  The contract will be performed over a three-year period.  The radios to be supplied will include several configurations for integration onboard a range of armored fighting vehicles and tanks at the battalion and company levels.

Haifa’s Elbit Systems is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world.  The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land, and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios and cyber-based systems and munitions.  The Company also focuses on the upgrading of existing platforms, developing new technologies for defense, homeland security and commercial applications and providing a range of support services, including training and simulation systems.  (Elbit Systems 26.05)

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2.13  Hill Country Wireless in Texas ‘Builds It Right the 1st Time’ with RADWIN JET

RADWIN announced that service provider Hill Country Wireless & Technology in Texas, U.S. deployed RADWIN’s JET PRO 750Mbps Point-to-Multipoint series with Beam-forming to deliver high-speed broadband to businesses and homes in the community.  Hill Country Wireless & Technology aims to provide high-speed, quality internet to residents and businesses.  That is why they invested in RADWIN’s state-of-the art JET PtMP which allows them to provide up to 100Mpbs services to their subscribers.”

Tel Aviv’s RADWIN is a leading provider of Point-to-Multipoint and Point-to-Point broadband wireless solutions.  Deployed in over 170 countries, RADWIN’s solutions power applications.  (RADWIN 24.03)

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2.14  TriEye Raises $17 Million

TriEye announced completion of a $17 million Series A financing round led by Intel Capital.  Other investors include Marius Nacht, co-founder of Check Point Software Technologies, and TriEye’s existing investor Grove Ventures, headed by TriEye chairman Dov Moran, the inventor of the USB flash drive and co-founder of M-Systems.  TriEye has raised over $20 million to date including the latest round and a seed investment of $3 million led by Grove Ventures in November 2017.

TriEye’s HD SWIR camera, whose initial samples are expected to enter the market in 2020, is designed to save lives on the roads and is able to see in adverse weather and night-time conditions.  The camera will allow Advanced Driver Assistance Systems (ADAS) and autonomous vehicles to achieve flawless vision capabilities under common adverse weather and low-light conditions such as fog, dust or night-time.  Similar to the common digital camera, TriEye’s SWIR technology is CMOS-based, enabling the scalable mass-production of SWIR sensors and reducing the cost by a factor of 1,000 compared to current InGaAs-based technology.  As a result, the company can produce an affordable HD SWIR camera in a miniaturized format, supporting easy in-vehicle mounting behind the car’s windshield.

While TriEye’s primary target market is the automotive industry, its technology is highly applicable to a wide range of other sectors, including mobile, industrial, security and optical inspection.  The company intends to address challenges and opportunities in these fields in the upcoming future.

Founded in 2016, Tel Aviv’s TriEye SWIR imaging is imperative for ADAS and Autonomous Vehicles reliability and safety as it provides image data which standard vision cameras just cannot see.  TriEye’s groundbreaking solution, based on a decade of academic research, enables cost-effective, high resolution image data at night and under most weather conditions using shortwave infrared (SWIR) cameras.  (Various 28.05)

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2.15  Bill Ford to Open Israel Development Center

Ford chairman Bill Ford, the great grandson of Henry Ford, will be in Israel in June to open Ford’s development center in Tel Aviv, “Forbes” reports.  Bill Ford will also address the EcoMotion Mobility Conference in Tel Aviv on 11 June.  Ford already has a major presence in Israel after its acquisition of the Rehovot based machine learning company SAIPS in 2016 for several tens of millions of dollars.  Ford is committed to developing a fully autonomous vehicle by 2021 and the opening of the Israel development center will be part of the push to achieve this.  (Globes 28.05)

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2.16  Identiq Raises $5 Million in Seed Funding

Identiq announced the launch of its Anonymous Verification Network, enabling companies to truly work together to fight fraud for the very first time.  It also announced today a seed funding round of $5 million led by Entre Capital, with participants from leading VCs, including Slow Ventures, Vertex Ventures Israel and Oryzn Capital.

Identiq has created a distributed network allowing members to positively validate new users, and vouch for ones they already know, without sharing any personal user data whatsoever.  Identity can be verified at critical moments in the customer journey, like onboarding or first payment, by making crucial connections between data points such as email, phone, address, IP, device or funding source, etc.  This new approach leads to more accurate decisions, lower decline rates, reduced fraud, and better user experience for consumers.

Until now solutions attempted to validate identity information using large databases of private and personal user information, which by nature involve the risk of data being shared without user consent, or even stolen.  Companies using these centralized solutions must expose their own user data, putting them at risk of breach-by-proxy, disclosing trade secrets, and violating privacy regulations.

Identiq, on the other hand, does not collect, share or store any user data whatsoever.  Their FAIR (Fully Anonymous Identity Resolution) technology uses proprietary cryptographic protocols to obtain validation from other network members while preserving complete consumer privacy.  This makes it fully compliant with GDPR, CCPA, and other privacy regulations, and the first solution designed to complement the new sensitivities arising around such data privacy issues.

Tel Aviv’s Identiq is a young startup company set to change the Identity Verification market.  Unlike traditional identity verification vendors, the Identiq protocol can validate a new end-user without asking its customers to expose any user data whatsoever, setting a new standard for end-user privacy.  Identiq is bringing together like-minded companies to form the first fully anonymous global identity verification network.  This will allow companies to onboard new customers with confidence, while reducing false positives, increasing approval rates and creating a better user experience.  This technology can also be used for funding source validation, fast withdrawal, password recovery flows, and other high-risk activity validation.  (Identiq 28.05)

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3.1  Jordan Introduced its 1st Agritech Accelerator – HASSAD

Jordan aims to invest in its agricultural sector by encouraging its people to provide tech solutions regarding agriculture.  On 4 May, HASSAD Agritech, a 3-month business acceleration program supported by ITG Solutions was launched.  It will provide its services to support startups, solutions, and SMEs specializing in technology within the agricultural sector.  The accelerator aims to be a catalyst for the development of the sector in Jordan through its innovative startups.  The way to do this is by building a supportive and stimulating environment that captures the distinctive Agritech solutions and transforming these solutions into companies capable of scaling, influencing, and accelerating the development of the Jordanian economy.

HASSAD will select up to 15 startups in its 1st cohort and deliver an intensive and specialized acceleration program, provide the support from its network of professional mentors and coaches, networking with local and international bodies related to the sector, linkage with potential buyers and investors, and finally grant the access to ITG Agriculture’s farm in the Jordan Valley and ITG’s offices in Cairo, Riyadh, Nairobi and Silicon Valley.   The accelerator will focus on various areas related to Agritech and Agri-food, such as, Sustainable inputs, Digital Farming, Circular Economy and the supportive technologies in food, energy and water.  (ArabNet 20.05)

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3.2  Trukkin Raises $3.5 Million to Become a Leading Truck Aggregator in the GCC

Launched in 2017, Trukkin is a techno-logistics firm based in Saudi Arabia and the United Arab Emirates operating throughout the Gulf Cooperation Council (GCC) region and beyond.  The company works to innovate and simplify logistics and land transportation.

Trukkin has raised over $3.5 million in the recent funding round, which included marquee investors from the AL-Namlah Family Group, the Al-Madi Family Group, and the Abanumay Family Group. Batic Investments and Logistics, a publicly listed company on Tadawul, remains as one of the key investors in the start-up.

By adding the new capital to the company, Trukkin will be able to significantly scale their services across the GCC region.  The company has shipped to over 200 locations in the Middle East. In Saudi Arabia alone, Trukkin has completed over 10,000 long-haul, business-to-business truck movements.  That is a significant accomplishment given that the country represents nearly 50% of the overall GCC market opportunity.

Trukkin serves a wide range of customers.  Through its app and online marketplace, the company brings together shippers who need more transparency and easier access to trucks with truckers who need better access to demand and higher fleet utilization.  Their client base ranges from businesses who order close to 100 trucks a day to ones with smaller needs who order as few as three trucks a month.  (MAGNiTT 26.05)

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3.3  New Accelerators to Join Abu Dhabi Tech Hub to Support Start-Ups

Abu Dhabi’s Hub71, a global tech hub driven by Mubadala in collaboration with Microsoft, SoftBank Vision Fund and Abu Dhabi Global Market, has announced that two new partners, Techstars and Starburst, will join by the end of this year.  The accelerators aim to maximize success for start-ups from anywhere in the world and bring direct access to funds, sector expertise and a global network of industry leaders as well as mentorship-based 12-week programs.

As Abu Dhabi continues to build momentum around its aerospace ecosystem, Hub71 has also partnered with Starburst.  Abu Dhabi is the latest addition to its global network after having launched programs in Los Angeles, Montreal, Paris, Munich and Singapore.  Plug and Play, a global accelerator and venture capital firm from Silicon Valley, has also announced Hub71 as its regional headquarters.  Hub71 is a key initiative of the Abu Dhabi Government’s Ghadan 21 economic acceleration program.  (AB 25.05)

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3.4  Red Sea Farms Raise $1.9 Million to Grow Tomatoes in the Desert Using Saltwater

Thuwal’s Red Sea Farms, an agriculture technology spinout company from Saudi Arabia’s King Abdullah University of Science & Technology (KAUST) specializing in saltwater greenhouse technology, secured $1.9 million of co-investment from the KAUST Innovation Fund and Research Products Development Company (RPDC).

With its unique combination of engineering and plant science, Red Sea Farms has developed solutions to grow saltwater-tolerant crops in greenhouses cooled using saltwater.  In their saltwater greenhouse, 80 to 90% of freshwater is substituted with saltwater, massively reducing both the water and carbon footprint of food production.  The result is a system where both fresh water and energy requirements are reduced up to tenfold.

The seed investment will enable the company to build a 2,000 square meter saltwater greenhouse on the KAUST campus, and the company plans to produce 50 tons of tomatoes annually by 2020.  Building on six years of research at KAUST, the tomatoes that will be grown have significantly higher salinity tolerance.  The resulting crops can be grown using up to 30% diluted seawater, which will save further freshwater.  This also makes the fruits exceptionally sweet, with higher levels of vitamins and antioxidants.  The new patent-pending system can be retrofitted to existing greenhouses, allowing for evaporative cooling with saltwater resources to save fresh water.  The company is aiming to retrofit 5% of greenhouses in the Kingdom, offering a return on investment for farmers in less than two years.  (MAGNiTT 16.05)

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3.5  The Luxury Closet Closes Funding Round with Additional Capital for Rapid Expansion

Dubai’s The Luxury Closet, one of the world’s largest e-commerce platform for pre-owned luxury goods, has completed its growth funding round by securing additional capital that brings the total round to around $11 million.  This second closing was led by Knuru Capital, a newly set-up fund that invests in global digital disruptors, which will now become a key shareholder in the leading e-commerce platform together with two of the main Middle East and North Africa-focused VC funds and existing shareholders, Middle East Venture Partners (MEVP) and Wamda Capital.

The Luxury Closet also announced its expansion into Hong Kong, with a partnership with  The Luxury Closet will be taking over the operations of  With the completion of this fundraising round, The Luxury Closet is now fully equipped to continue revolutionizing how Middle Eastern consumers purchase luxury goods in a trustworthy online marketplace.

This transaction contains a secondary portion as well that allows MEVP’s seed vehicle, MEVF I, to provide its limited partners an initial return on their investment. MEVP still remains as the biggest single shareholder in The Luxury Closet.  Delta Partners Corporate Finance has acted as the financial advisor for The Luxury Closet fundraising process.  (MAGNiTT Staff 19.05)

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3.6  Nearly 430 New Restaurants & Cafes Opened in Dubai So Far in 2019

The total number of new restaurants and cafes opening in Dubai has reached 427 during the first four months of 2019.  According to the Business Registration and Licensing sector in the Department of Economic Development Dubai, the number includes 258 restaurants and 169 coffee shops, a growth of 25 percent compared to the same period in 2018.  The figures show that at least two restaurants and one coffee shop open daily in Dubai.

Bur Dubai accounted for the largest share of operational restaurants and cafes, followed by Deira, the research revealed.  The report also showed that the top ten nationalities investing in this sector during the first four months of 2019 were Indians, followed by Brits, Ethiopians, Pakistanis and Lebanese.  The total number of workers in active restaurants and cafes in Dubai reached 1,566.  (AB 27.05)

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3.7  Andersen Global Expands in Oman

Al Alawi and Co., a leading full-service law firm located in Oman, has finalized a collaboration agreement with Andersen Global.  The addition of Al Alawi and Co. brings 37 years of professional experience to the Andersen Global team in the Middle East.

Al Alawi and Co. is one of the largest and oldest independent law firms in Oman, with offices in Muscat and Salalah.  Dr. Ali Khamis Al Alawi founded the firm in 1982, and since then the firm has provided tax and legal services to multinational and national corporations, private businesses, government agencies and individuals.  These services include banking, finance, restructuring, partnerships, international trade, equity, commercial, IP, and real estate law.

San Francisco’s Andersen Global is an international association of legally separate, independent member firms comprised of tax and legal professionals around the world.  Established in 2013 by U.S. member firm Andersen Tax LLC, Andersen Global now has more than 4,500 professionals worldwide and a presence in over 144 locations through its member firms and collaborating firms.  (Andersen Global 28.05)

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3.8  Egypt’s Xpay Raises $250,000 Pre-Seed for Its Cashless Application

XPay has raised $250,000 in pre-seed funding from two angel investors.  XPay is part of Startupbootcamp Fintech.  Cairo’s XPay had previously raised an investment from EFG EV Fintech as well which is a Fintech-focused accelerator in Egypt.

Founded last year, XPay empowers communities to go cashless through its community management platform (for communities) and mobile app (for the consumers).  The startup enables universities, schools, gyms, social and sports clubs, residential compounds and different other communities to set up their offerings and collect payment online.  XPay’s mobile app allows members in these communities to pay in less than a minute using debit/credit cards, mobile wallet, and a cash collection service.

XPay currently has five communities using its services with the app being used by over 18,000 users and they are aiming to have over 200,000 users by the end of this year.  The startup plans to use this latest investment to execute its growth plans and expand its team.  XPay was also part of AUC Venture Lab and Womentum’s first cohort.  (MENABytes 17.05)

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4.1  Tel Aviv Municipality Plans Electric Transportation Solutions to Pollution

The Tel Aviv-Yafo municipality is putting together a strategic plan for electric transportation, with the goal of transferring a variety of vehicles in the city to electric propulsion and thereby reducing air pollution and noise.  The municipality estimates that demand for electric cars will grow thanks to falling battery prices and improvements in the cars’ range.  This is an initial plan which has not yet been funded, but in the long term it will have a dramatic effect on transport in Tel Aviv.

One of the proposals in the document is to forbid the entry of polluting vehicles into Tel Aviv in 2025.  The measure will be gradual.  Initially, by 2021, electric transportation will receive financial incentives.  Between 2022 and 2025, the municipality will put the emphasis on electrification of large vehicle fleets.  One further indication that the plan is in the initial stages is that it contains no definition of “polluting vehicle.”

The municipality believes that the plan will receive central government finance and private investment, chiefly from companies in electric vehicle battery charging.  The municipality is aware that statutory problems are liable to make it difficult to set up charging points and to delay the process.

For buses, the municipality is examining how electric buses can be charged quickly, at final route stops and depots.  Charging will be direct current or by supercapacitors.  The plan for charging electric buses will be carried out in cooperation with central government, and will include school buses.

The transition to electric taxis will happen with the aid of government incentives.  Until this happens, the Tel Aviv-Yafo municipality plans an experiment in this area.  Vehicle importer Carasso, which sells the Renault and Nissan brands in Israel, won a call for proposals by the Ministry of National Infrastructures, Energy and Water Resources, and it will lead a trial in Tel Aviv in which 20-30 electric taxis will participate.  In the trial, two rapid, 50-150 kWh charging points will be installed, as well as fourteen regular, 20-22 kWh points.  The rapid charging points will be able to charge an electric car battery twice as fast as the slower points, or even faster.

The Ministry of National Infrastructures, Energy and Water Resources will provide half the project’s NIS 4.8 million budget, and the Tel Aviv-Yafo municipality will provide NIS 400,000.  The remainder will be financed by other players, among them Carasso, and perhaps taxi-hailing app companies such as Gett.  The aim of the trial is to demonstrate that electric taxis can be kept on the move without resorting to replacement batteries, using different types of charging – rapid charging during working hours and slow charging when the taxis are not in service.  (Globes 27.05)

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4.2  Dubai’s Giant Solar Park Set to Add More Power by End of June

The Dubai Electricity and Water Authority (DEWA), has reviewed the progress of the 300MW second stage of the 800MW third phase of the Mohammed bin Rashid Al Maktoum Solar Park.  DEWA is building the third phase of the solar park using photovoltaic technology in three stages, in partnership with a consortium led by Abu Dhabi Future Energy Company (Masdar) and EDF Group, through its subsidiary EDF Energies Nouvelles.  This solar plant is the first of its kind in the Middle East and North Africa, with an advanced solar tracking system to increase generation efficiency by 20-30% when compared to fixed installations.

Construction of the 300MW third stage started earlier this year and will be operational in 2020.  The first stage has a capacity of 200MW and became operational in May 2018.  This stage provides over 60,000 residences with electricity, reducing over 270,000 tonnes of carbon emissions every year.  An international consortium led by the renewable energy contractors GranSolar and Acciona from Spain and Ghella from Italy are handling the engineering, procurement, and construction.  The solar park is the largest single-site solar park in the world, based on the Independent Power Producer model.  It will generate 5,000MW by 2030 with investments of up to AED50 billion.  (AB 20.05)

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4.3  UAE Rubbish to Fuel Project Finalizes Preparations

Emirates RDF has announced that it has finalized preparations for a project to turn rubbish into fuel in Umm Al Quwain.  Emirates RDF, a joint venture consisting of UAE-based contractors Besix and TG ECO Holding, together with Finland based Griffin Refineries, is planning the Refuse Derived Fuel Facility project with a 15 year post-construction operational phase.  Construction is set to start this month and will, from September 2020, receive 1,000 tons of municipal waste per day from about 550,000 residents living in the emirates of Umm Al Quwain and Ajman.

The waste will be converted into an alternative energy source called Refuse Derived Fuel (RDF), which will be used as a fuel in cement factories instead of coal.  It simultaneously results in a diversion of at least 90% of household waste from landfill.  Emirates RDF contributes to the UAE’s strategic objective of landfill diversion of least 75% by 2021 and it helps cement plants in decreasing their use of fossil fuels.  (AB 25.05)

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4.4  Cyprus Supermarkets Happy with Drastic Plastic Bag Reduction

Almost a year after the introduction of a law obliging shops to charge for plastic carrier bags, Cypriots have changed their ways, as some 85% less plastic bags have been distributed at supermarket counters since July 2018 when the law was imposed.  The Pancyprian Association of Retail Trade (PASYLE) appears to be pleased with the reduction in plastic bags used by Cypriot shoppers, but has reservations regarding the debate over the total banning of plastic bags.  The association is worried that abolishing plastic bags will have negative effects on tourism.

Free distribution of plastic bags at the tills of supermarket and other retail shops was banned as of 1 July 2018, while a compulsory charge of six cents is applied for each plastic bag given to consumers.  (FM 20.05)

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5.1  Lebanon’s Average Annual Inflation Rate Stands at 3.61% in April 2019

Lebanon’s average consumer prices rose by 3.61% year-on-year (y-o-y) by April 2019 compared to an annual uptick of 5.47% recorded in the same period of 2018, according to the Central Administration of Statistics (CAS).  The rise in the first 4 months of the year mainly came on the back of annual upticks registered across all components, except transportation and health.  The average costs of Housing and utilities (including: water, electricity, gas and other fuels), which held a combined 28.4% of the Consumer Price Index (CPI), rose by 3.78% y-o-y by April 2019.  In fact, average Owner-occupied rental costs (constituted 13.6% of this category) grew by a yearly 2.83%.  In turn, the average prices of water, electricity, gas, and other fuels (11.8% of housing & utilities) recorded a yearly uptick of 4.95% over the same period.  In addition, the average prices for Food and non-alcoholic beverages (20% of the CPI) and Education costs (6.6% of CPI) registered yearly upticks of 6.67% and 5.19%, respectively, by April 2019.  Average prices of Clothing and Footwear (5.2% of the CPI) also rose by an annual 12.89% in the first four months of the year.  Meanwhile, the average consumer prices of Health (7.7% of the CPI) and Transportation (13.1% of the CPI) recorded the respective marginal declines of 0.04% and 1.11% y-o-y.  The latter slipped as a result of the lower average oil prices which reached $/barrel by April 2019, compared to by April last year.  (CAS 21.05)

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5.2  Lebanon’s New Budget Beginning of a Long Road to Economic Stability

The Lebanese draft state budget for 2019 is the start of a “long road” and shows Lebanon is determined to tackle public sector waste, Prime Minister Saad al-Hariri said, after his unity cabinet wrapped up marathon talks on the plan.  The budget finalized by the government on 24 May cuts the deficit to 7.5% of GDP from 11.5% in 2018.  It is seen as a critical test of Lebanon’s will to launch reforms that have been put off for years by a state riddled with corruption and waste.

Lebanon’s bloated public sector is its biggest expense, followed by the cost of servicing a public debt equal to some 150% of GDP, one of the world’s heaviest debt burdens.  The government, which groups nearly all of Lebanon’s main political parties, met 19 times to agree on the budget. Hariri said the budget for 2020 would not take that much time “because now we know what we want to do”.

The budget could help unlock some $11 billion in financing pledged at a Paris donors’ conference last year for infrastructure investment, if it wins the approval of donor countries and institutions.  Hariri said the budget was a message to the Lebanese, financial markets and friendly foreign states that Lebanon was determined to “address the weakness, imbalance and squander in the public sector”.  Measures to rein in the public sector wage bill include a three-year freeze in all types of state hiring and a cap on extra-salary bonuses. State pensions will also be taxed.  A big chunk of the deficit cut stems from tax increases including a 2% import tax and a hike in tax on interest payments.  The government also plans to cut some $660 million from the debt servicing bill by issuing treasury bonds at a 1% interest rate to the Lebanese banking sector.  (Reuters 26.05)

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5.3  Lebanon’s Trade Deficit Ended First Quarter at $4.09 Billion, Up by 2.46%

Lebanon’s trade deficit for the first three months of 2019 stood at $4.09B, widening from $3.99B in Q1/18, on the back of total imports increasing by an annual 2.9% to $4.95B, while total exports grew by a yearly 5.06% to $855.8M.  In term of value, Mineral products were the leading imports to Lebanon in Q1/19, grasping a 32.34% stake of total imported goods.  Products of the chemical or allied industries followed, constituting 10.48% of the total, while machinery and electrical instruments grasped 9.31% of the total.  In details, Lebanon imported $1.6B worth of Mineral Products, up by 86.88% y-o-y on the back of a 61.27% yearly rise in their imported volume by March 2019.  The increase in volume could be attributed to the Lebanese Cabinet decision to impose a 2% tax on imported goods which excludes medicine, environment-friendly cars and primary equipment for agriculture and industry.

Meanwhile, the value of chemical or allied industries recorded a decrease of 7.78% y-o-y to settle at $518.74M and that of machinery and electrical instruments also declined by 15.70% over the same period to $460.87M.  In terms of top trade partners, Lebanon primarily imported from Russia, Kuwait and China with shares of 20.58%, 13.82% and 5.49%, respectively, in the month of March 2019.  As for exports, the top category of products exported from Lebanon were pearls, precious stones and metals, which grasped a share of 32.18% of total exports, followed by a share of 12.07% for prepared foodstuffs, beverage and tobacco and 12.07% for Machinery; electrical instruments over the same period.  Specifically, the value of pearls, precious stones, & metals surged by 15.99% in Q1/19 to reach $275.44M.  As for the value of Prepared foodstuffs; beverages, tobacco, it declined by 3.45% y-o-y to $103.28M.  Meanwhile, the value of Machinery; electrical instruments recorded an important increase of a yearly 36.62% to $99.15M.  In March 2018, the UAE, followed by Switzerland and Syria were Lebanon’s top three export destinations, respectively constituting 11.99%, 10.67%, and 6.71% of total exports.

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5.4  Jordan Reaches Preliminary Agreement With World Bank for $1.4 Billion Loan

The Jordanian government has reached a preliminary agreement with the World Bank to raise a loan it had already agreed on with the bank to $1.4 billion dollars to be received in the current year, official sources said.  The sources said the loan will be extended in two installments; $950 million and $450 million, the terms and interest rates of which will be decided upon completion of the agreement review.  The second installment of the loan is guaranteed by the Saudi and British governments as part of the outcomes of the London Initiative 2019 conference.  (Petra 27.05)

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►►Arabian Gulf

5.5  Dubai’s New Permanent Residence Program ‘Golden Card’ Announced

On 21 May, the UAE government announced a new permanent residency program, the ‘Golden Card’ visa, for foreign nationals in the UAE.  Previously, the UAE issued only 2- to 3-year employer linked visas to foreign nationals, who comprise roughly 90% of residents living in the UAE.  In a shift from that rigid policy, in May 2018, 5- and 10-year visas were announced for expats investing Dh5 and Dh10 million respectively, real estate included.  Exact criteria for the visa should be announced soon, but it is confirmed that permanent residency will include the spouse and children of the golden card visa holder.

The new permanent residency program has been hailed as a game changer with many calling it a Ramadan blessing, a sort of golden gift to all those who have contributed towards developing the UAE as it finally allows expats to look at Dubai as a home, rather than a temporary wealth creation destination.  This directly means more demand for real estate.  (UAE 28.05)

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5.6  Dubai Free Zone to Return $354 Million to Firms in Wage Protection Push

The Jebel Ali Free Zone will become the first in the UAE to return cash and bank guarantees to businesses; it will return $354 million to firms in wage protection push.  It announced the move through its new Workforce Protection Programme initiative that is set to roll out in September.

The move will provide added benefits to employees and infuse AED1.3 billion ($354 million) back into Dubai’s economy that companies can invest in their operations and strengthen their businesses.  Previously, companies registered at the free zone had to give a cash or bank guarantee as a way of providing insurance to their employees in the event of non-payment of wages.

Under the new Workforce Protection Programme, companies will avail of approved insurance coverage that will help protect the workers in case of wage default.  The insurance will extend to all Jafza-sponsored employees and apply by default to any new workers from the time they receive their work visas to the time the visa is cancelled.  (AB 18.05)

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5.7  Foreign Workers in Dubai Say Average Monthly Salaries Fall by 17% to $2,856

Dubai expatriate workers have seen their disposable income drop by nearly a fifth over the last year, as average monthly salaries decline faster than rental rates, according to a new global survey.  According to Deutsche Bank’s Mapping the World’s Prices 2019 survey, expat workers in Dubai have an average of around $2,068 per month left to spend after they have paid their rent.  While the United Arab Emirates still ranked 11th in the world overall, this represents a year-on-year decline of 19% from an average of $2,554 in 2018, the survey found.  While average rents (based on a mid-range, two-bedroom apartment) have dropped 12% to $1,576 per month, average monthly salaries for expats in Dubai have dropped 17% to $2,856 over the same period.

Despite the drop in disposable income, the latest HSBC Expat Explorer survey, released in January, found that nearly three-quarters of expats working in the UAE earn more than they would in their home country.  Another survey out this year, this time by consultancy firm Insight Discovery in March, also found that one in five of expats living in the Gulf do not save any of their monthly salary and nearly half save less than 5%.  (AB 22.05)

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5.8  Dubai Unemployment Rate Remains Steady at 0.5% in 2018

Dubai’s unemployment rate reached 0.5% last year, while the economic participation rate as a percentage of total working-age population reached 83.2%, according to official figures.  The Labour Force Survey 2018 published by Dubai Statistics Centre also showed the unemployment rate among Emiratis increased from 2.9% in 2016 to 4% in 2018.  Among expats, the rate remained below 0.5% in Dubai with males (0.2%) and females (1%); the Dubai Statistics Centre attributes the low rates to the UAE’s policies, which grant residency visas to employees, investors, students and persons of equivalent status with the condition that persons of working-age will not be allowed to stay in the UAE without a job.

The survey results showed that half of the Emiratis of working-age are involved actively in economic activities. Emirati males had a higher economic participation rate of 62.6% while the corresponding figure for Emirati females was 36.5%.  According to the survey, 2,242,363 people were employed last year out of which 81.3% were males while 18.7% were females.

The number of Emiratis employed and residing in Dubai went up by the end of 2018 to 82,630 compared to 75,856 by the end of 2016, which marks an increase of 6,774 employed Emiratis over the past three years, and an increase of employed Emiratis by 8.9% in 2018 compared to 2016.  The total unemployed persons residing in Dubai was 10,468 in 2018, up 2,893 from 2016 to 2018.  (AB 18.05)

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5.9  US Approves $900 Million Sale of Military Equipment to the UAE

The US State Department approved several Foreign Military Sales to the United Arab Emirates on 25 May.  For an estimated cost of $900 million, the DoS approved the sale of the Advanced Precision Kill Weapon Systems (APKWS) II All-Up-Rounds. Included in the deal is weapon support and test equipment, spares, technical publications, personnel training, other training equipment, transportation, US Government and contractor engineering, technical and logistics support services, and other related elements of logistical and program support.  The prime contractor will be BAE Systems.

A sale of Javelin Guided Missiles worth $102 million includes System Integration & Checkout (SICO) service, Field Service Representative, US Government and contractor technical, engineering and logistics support services’ tools and test equipment, support equipment, publications and technical documentation, spare and repair parts, and other related elements.  Raytheon will be Prime contractor for this FMS.

A possible FMS of follow-on blanket order US Marine Corps training and support to the United Emirates Presidential Guard Command is estimated at $100 million.  The DoS also approved a possible FMS of RQ-21A Blackjack Unmanned Air Vehicles for an approximate cost of $80 million, which also includes 40 Global Positioning Systems (GPS) with Selective Availability Anti-Spoofing Module (SAASM) Type II (MPE-S), air vehicle support equipment including eight Ground Control Stations, four launchers, and four retrievers, spare and repair parts, publications, training, and technical support services.  (DID 27.05)

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5.10  Saudi Arabia’s New System Issues Residence Permits for Skilled & Wealthy Foreign Nationals

The Consultative Assembly of Saudi Arabia has approved a draft law regulating the issuance of residence permits for highly-skilled and wealthy foreign nationals without the need for a sponsor.  In a move to attract foreign investors and entrepreneurs, the Shura Council has approved the initiative, similar to the Green Card in the United States, as the Gulf kingdom looks to open up its economy as part of its Saudi Vision 2030 ambitions.  According to initial announcements in the Saudi media, eligible foreign nationals will be able to obtain a residence permit for up to one-year (renewable) or for an unlimited period of time.

Qualifying applicants will be required to prove sufficient financial resources, have no criminal record and show medical fitness.  Beneficiaries of the program will be allowed to sponsor visitor visas for their relatives, employment visas for domestic workers, own property and travel without restrictions from and to Saudi Arabia.  Further details of the law along with executive regulations are expected to be announced in the coming months.

The news comes just a few weeks from another announcement confirming the launch of a new Gold Card extended residence visa scheme, with agencies and consultancies asked to research the possibility of further incentives aimed at attracting wealthy expat investors.  Saudi Arabia’s Crown Prince Mohammed bin Salman said in 2016 that the kingdom planned to introduce a United States-style green card system.  (AB 21.05)

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5.11  Chinese Crude Imports from Saudi Arabia Rose by 43% in April

According to data from the General Administration of Customs released over the weekend, Saudi crude exports to China totaled 6.3 million tonnes – or 1.53 barrels per day (bpd) –  compared with 1.07 bpd a year ago.  It was reported that Saudi shipments were bolstered by higher refinery run rates at China’s Hengli Petrochemical Co, where production at a 400,000 bpd-capacity refinery is expected to reach optimal levels in June.  At the moment, approximately 70% of the company’s feedstock comes from Saudi Arabia.

Imports of Russian crude to China stood at 1.49 million bpd – up from 1.35 bpd in April last year – compared to 789,137 bpd from Iran and 462,813 bpd from Venezuela.  Earlier in May, it was reported Saudi Aramco will sell additional cargoes to customers in Asia, in addition to those scheduled under long-term crude contracts.  (AB 26.05)

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5.12  Saudi Arabia Expands Excise Tax to Include E-Cigarettes and Sweetened Drinks

Saudi Arabia will expand an excise tax charged on tobacco and soda to include electronic cigarettes and all drinks with added sugar as part of its efforts to boost non-oil revenue.  Sweetened drinks will be subject to a 50% levy, while e-cigarettes and their liquids will face a 100% tax, according to a document issued by the kingdom’s tax authority.  The date of implementation hasn’t been determined yet.

The world’s largest crude exporter has introduced several new taxes and fees over the past few years as part of Crown Prince Mohammed bin Salman’s economic transformation plan, which calls for boosting non-oil revenue.  Although crude still accounted for about two-thirds of the government’s earnings last year, non-oil revenue has been growing steadily.  It jumped 46% in the first quarter compared with the same period last year, largely due to higher income from taxes on goods and services, including the excise levy.  The kingdom began imposing the excise tax in 2017, applying a 50% levy on soda and 100% on energy drinks and tobacco.  Separately, the government introduced a 5% value-added tax in January 2018.  (AB 19.05)

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►►North Africa

5.13  Egypt, Cyprus & Greece Sign Electricity Interconnection Deal

Egyptian Electricity Transmission Company (EETC) signed a framework agreement with Euro Africa Interconnector Company to connect the power grids of Egypt, Cyprus and Greece through Crete by a 2,000-megawatts (MW) electricity interconnection.

The agreement was signed by EETC and the CEO of Euro Africa Interconnector Company.  Euro Africa Interconnector prepared a feasibility study for the first phase of connecting 1,000 MW between the three countries.  A consultant will be hired to support EETC in preparing financial, commercial and operational agreements for the project.  (EO&G 23.05)

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5.14  Egypt Establishes 26 Power Plants in 5 Years

The Egyptian electricity sector successfully established 26 power plants over five years, the Ministry of Electricity announced.  The 26 stations include 114 electricity-generating units, the sources noted, adding that they produced around 25,000 megawatt (MW), which helped the sector achieve an electricity surplus.

The total investments of electricity production reached EGP 287 billion during the period from June 2014 until the beginning of 2019, the sources said, adding that the production surplus recorded a 25% in Q2/19.  The electricity sector is developing alternative energy projects to decrease dependency on fossil fuels and produce 20% of the country’s electricity from these sources by 2022.  (EO&G 26.05)

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5.15  Sudan’s Central Bank Receives Deposits of $250 Million from Saudi Arabia

Saudi Arabia announced on 19 May that it deposited $250 million in Sudan’s central bank as part of a support package for the country following the overthrow of longtime leader Omar al-Bashir.  In April, Saudi Arabia and the United Arab Emirates announced $3 billion in financial aid for Sudan.  The UAE said on 28 April it was depositing $250 million in Sudan’s central bank.

The oil-rich Gulf states pledged to inject $500 million into Sudan’s central bank and $2.5 billion to help provide food, medicine and petroleum products.  It said the move was aimed shoring up the Sudanese pound.

In recent years Sudan has been hit by an acute lack of dollars, a key factor behind the nationwide protests that first erupted in December and led to the toppling of Bashir by the army last month.  Sudan plays a key role in the regional interests of Saudi Arabia and its allies, siding with Riyadh against Shiite Iran and providing troops in the Saudi-led coalition fighting in Yemen’s war.  Both Gulf nations have voiced backing for Sudan’s military rulers, who are facing calls from protesters to cede power to a civilian transitional government.

The Sudanese currency had plunged even after the United States lifted its 20-year-old trade embargo on the country in October 2017.  Expectations that the end of US sanctions would bring an economic recovery failed to materialize, putting pressure on the pound.  The country’s economic crisis has deepened since the secession of South Sudan in 2011 that took away the bulk of oil earnings.  (AB 19.05)

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5.16  Moroccans Living in the Arabian Gulf Sent MAD 11.6 Billion Home Last Year

According to statistics released by the Moroccan Foreign Exchange Office, Moroccans living in the Arab Gulf sent MAD 11.6 billion back to Morocco in 2018.  This total amount received from Saudi Arabia, Qatar, Kuwait, UAE, Oman, and Bahrain represents 17.8% of all funds transferred to Morocco by Moroccan expatriates.  Most of the money sent to Morocco from overseas came from France (MAD 23 billion or 35.5%), followed by Italy (MAD 6 billion or 9.4%), Spain (MAD 5.6 billion or 8.6%).  From the Arabian Gulf region, most money came from Saudi Arabia (MAD 4.59 billion or 7.0%), followed by UAE (MAD 4.207 billion or 6.5%).

In 2018, Moroccans abroad transferred at a total of MAD 65 billion back to Morocco, a slight increase from MAD 60 billion in 2017.  The money coming into Morocco from overseas supports the country’s economy. It promotes the purchasing power of rural Moroccans, an important factor in promoting economic growth and social cohesion.  (MWN 23.05)

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5.17  Ireland Heads List of Foreign Investors in Morocco

Recent figures from the Moroccan Foreign Exchange Office show that Ireland topped the list countries with regard to foreign direct investment (FDI) in Morocco, outperforming France, whose net FDI flow stood at MAD 8.12 billion ($ 839 million) in 2018 and MAD 7.73 billion ($799 million) in 2017.

According to the office, foreign direct investment from Ireland stood at MAD 9.7 billion.  Slipping down to second place was France, with a net flow of MAD 3.77 billion ($389 million), followed by Denmark with MAD 3.18 billion ($328 million), then the United Arab Emirates, with MAD 2.79 billion ($288 million), and United States with a MAD 2.19 billion ($226 million) net flow.  Spain held the sixth position despite witnessing an uptick in net flow from MAD 1.29 billion ($133 million) in 2017 to MAD 1.98 billion ($204 million) in 2018.

Foreign direct investment net flows injected in Morocco totaled MAD 34.16 billion in 2018, a marked increase of 25.9% the previous year after the North African country witnessed a decline in foreign direct investment in 2014 and 2015 following the global recession.  Foreign direct investment from Ireland is mainly going towards the insurance sector.

Japan also witnessed considerable growth in terms of FDI in Morocco, rising from MAD 5 million in 2017 to MAD 1.58 billion in 2018.  In 2017, Morocco placed among the top 5 host countries of foreign direct investment, according to the 2018 world Investment Report.  The index shows that there are three areas that attracted foreign investment in 2018, accounting for more than half of direct investment in the country, namely insurance and finance services, totaling MAD 9.66 billion last year; the real estate sector, with MAD 5.35 billion; and manufacturing industries, with MAD 4.88 billion.  (MWN 19.05)

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6.1  Tourist Arrivals in Cyprus Reach an Historic High for April

Cyprus tourist arrivals in April increased by 4.8%, recording a historic high for the month helped by an influx of British, Russian and Israeli holidaymakers.  A small annual increase of 0.5% was also recorded for the first four months of the year, which was also a new record.

Arrivals of tourists in April reached 329,308 from 314,143 in the same month last year, recording an increase of 4.8%.  During four-month period January – April 2019 arrivals of tourists reached 686,783 from 683,581 in the same period of 2018, recording an increase of 0.5% and outnumbering the total arrivals ever recorded in Cyprus during the first four months of a year.

Tourist arrivals from key markets; the UK rose 5.4% in April, there was an increase of 2.3% in tourists from Russia and a 37% hike from Israel.  Tourist arrivals from Greece remained at the same level as last year.  There was a drop of 16.4% in tourist arrivals from Germany and 4.5% from Sweden.

The UK was the main source of tourism for Cyprus, with a 35.4% share, followed by Russia with 15.2%, Israel 7.1% and Greece 6.2%.  Meanwhile, Cyprus residents travelling abroad also increased in April by 3.1%.  A total of 116,970 residents of Cyprus returned from a trip abroad in April compared to 113,477 in April last year.  An increase of 6.4% was recorded in the trips of residents to the UK, as well as a 53.9% increase to Russia.  (FM 17.05)

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6.2  OECD Forecasts 2.1% GDP Growth for Greece in 2019

On 21 May, the Organization for Economic Cooperation and Development (OECD) announced that Greece’s economic recovery is expected to maintain its momentum, with the country’s Gross Domestic Product (GDP) rising by 2.0% or slightly more in 2019 and 2020 after a 1.9% growth rate in 2018.  The OECD expects the Greek economy to grow by 2.1% this year and by 2.0% in 2020.  “Domestic demand will contribute more to economic growth compared with the recent past, counterbalancing a slowdown in export growth,” the OECD said.  “Investments are expected to begin recovering as funding conditions are improving.  Higher household incomes, after a recent increase in the minimum wage and an increase in employment, will support consumption.

“Budget primary surpluses continue exceeding medium-term targets, access to international capital markets is improving and a cash buffer is significant,” the OECD explained.  Its report noted that safeguarding fiscal credibility demands the continuation of achieving medium-term fiscal goals.  “The continuation of progress in reducing high banks’ exposure in non-performing loans will require deeper measures.  Additional reforms are needed to boost productivity and investments, improving business environment and raising skills,” it added.

The OECD said that an increase in the minimum wage by 11%, to €650 per month, brought the minimum wage in Greece closer to the average rate seen in the OECD.  “The increase will reduce in-work poverty but risks abetting informal work and slowing gains in the number of jobs, given weak productivity,” it noted.

The OECD said that the Greek state’s budget primary surplus was 4.2% of GDP in 2018 and that the 2019 budget maintained a target for a primary surplus of 3.5% of GDP, but warned of “risks to expenditure management due to payment arrears and public payroll pressure arising mainly from court rulings.”  Recent fiscal measures will reduce tax revenues, and stressed that “future fiscal measures must prioritize investing in infrastructure and skills, fighting poverty and improving public spending effectiveness and control.”

The OECD also noted that “deviations from the current medium-term fiscal strategy would undermine gains in fiscal credibility.  Delays in reforms to improve business environment, competitiveness and banks’ health could create downside risks to the projected recovery in investments.  A fall in tourism related to a disorderly Brexit could lead to a sharper slowdown in exports.”  (AMNA 23.05)

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7.1  Shavuot Holiday to be Marked on Evening of 8 June

On 8/9 June, the Jewish world will observe the holiday of Shavuot.  Shavuot is the second of ‎the three major pilgrim festivals (Passover being the first and Sukkot the third) and occurs ‎exactly fifty days after the second day of Passover.  This holiday marks the anniversary of the ‎day when the Jewish People received the Torah at Mount Sinai.  This is a biblical holiday ‎complete with special prayers, holiday candle lighting and Kiddush, with many forms of work ‎and labor are prohibited.  The word shavuot means weeks and it marks the completion of the ‎seven-week counting period between Passover and Shavuot.  During these seven weeks the ‎Jewish people cleansed themselves of the scars of Egyptian slavery and became a holy nation ‎ready to enter into an eternal covenant with G d with the giving of the Torah.  Before the giving ‎of the Torah the Jews were a family and a community.  The experience of Sinai bonded the ‎Jews into a new entity: the Jewish people; the Chosen Nation.  This holiday is likened to their ‎wedding day – beneath the wedding canopy of Mount Sinai, G d betrothed the Jews.  ‎The holiday is observed for an additional day in the Diaspora.

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7.2  Eid Al Fitr Holiday Likely to Start on 4 June

If all goes according to the forecasts, the month of Ramadan will last until Tuesday, 4 June  and Eid Al Fitr will fall the following Wednesday, 5 June, according to astronomical calculations.  The Arab Union for Astronomy and Space Sciences (AUASS) said the new moon of the lunar month of Shawwal that follows Ramadan will emerge on 3 June.

Eid al-Fitr, also called the “Festival of Breaking the Fast”, is an important religious holiday celebrated by Muslims worldwide that marks the end of Ramadan, the Islamic holy month of fasting.  This religious Eid (Muslim religious festival) is the first and only day in the month of Shawwal during which Muslims are not permitted to fast.  The holiday celebrates the conclusion of the 29 or 30 days of dawn-to-sunset fasting during the entire month of Ramadan.

Eid al-Fitr has a particular prayer consisting of two units and is generally offered in an open field or large hall.  It may be performed only in congregation (jamāʿat) and has an additional extra six takbirs (raising of the hands to the ears while saying Allāhu ʾAkbar, which means “God is great”).  Muslims believe that they are commanded by God, as mentioned in the Quran, to continue their fast until the last day of Ramadan and pay the Zakat al-Fitr (charity) before offering the Eid prayers.   (Various 28.05)‎

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7.3  Kurdistan Parliament Elects Nechirvan Barzani as President

Kurdish lawmakers elected Nechirvan Barzani as president of the semi-autonomous Kurdish Regional Government (KRG) in northern Iraq on 28 May.  Barzani, who had been serving as regional prime minister, won 68 votes from the 84 lawmakers present.  The regional legislature has a total of 111 seats.  The Kurdistan Democratic Party (KDP) had nominated Barzani in December.

He is the nephew of the previous and only other holder of the office, Masoud Barzani, who stepped down after 12 years as regional president in November 2017, less than a month after leading a referendum on Kurdish independence that did not succeed and led to a crisis for Iraq’s Kurds.  The post had remained vacant since, and the president’s powers were divided between the prime minister, parliament and the judiciary in a makeshift arrangement.

Nechirvan Barzani’s election as president followed a final agreement reached between the KDP and Patriotic Union of Kurdistan (PUK) on 26 May on the formation of a new KRG government.  Previously, the KDP reached an agreement with the Gorran Movement, the third party, for the establishment of the government.  In the KRG parliamentary elections held on 20 September, 45 members of KDP, 21 members of PUK, 12 members of Gorran Movement, eight members of New Generation Movement, seven members of Islamic Society Party, five members of Islaha True Coalition and two members of Azadi and Modern Lists were elected to the parliament.  Five members of the Turkmen, who were subject to the quota system, and six members of the Christians were also elected.  (Various 28.05)

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7.4  UAE Eid Al Fitr Private Sector Holidays to Begin on 3 June

The UAE’s Ministry of Human Resources and Emiratisation has announced that private sector workers will have four days for Eid Al Fitr this year, one day less than the public sector.  The holiday will start on 3 June and end on either Thursday, 6June or Friday, 7 June, depending on moon-sighting.  Earlier, the UAE’s cabinet announced that public sector holidays for Eid Al Fitr will start on Sunday, 2 June.  Directives issued earlier this year, private sector employees will benefit from the same public holidays as the government sector from this year.  (AB 26.05)

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7.5  After Defeat, Greek Prime Minister Calls for Snap Elections

Following a resounding defeat by the conservative New Democracy (ND) on 26 May in European Parliament elections, Greek Prime Minister Tsipras said he will call early elections after the upcoming second round of local and regional elections.  Speaking outside SYRIZA party headquarters in Athens in the wake of his party’s defeat in European Parliament elections, Tsipras, who had said the polls would be a vote of confidence in the government’s policy, admitted that the outcome was not up to their expectations.  The first official projections for a general election have ND taking a 9-point lead over SYRIZA.

With 33% of votes counted, ND had 33.31% ahead of SYRIZA with 23.88% and centrist Movement for Change (KINAL) with 7.18%.  The Communist Party KKE had 5.75%, ahead of neo-Nazi Golden Dawn with 4.85 and pro-Russian right-wing party Greek Solution with 4.04%.  The Diem25 party of former finance minister Yanis Varoufakis received 3.15% of the vote.

In the Athens mayoral race, conservative Costas Bakoyannis was in the lead with 42.6%, far ahead of SYRIZA’s candidate Nasos Iliopoulos, who was seen securing just 16%.  In Thessaloniki, ND’s candidate for mayor, Nikos Tachiaos, was ahead with 23% compared to Constantinos Zervas with 14.75%, slightly ahead of SYRIZA’s Katerina Notopoulou with 13.85%.  This year, some 528,000 Greeks were eligible to vote for the first time, including 106,760 17-year-olds who assumed the right to vote following a change in the law by the SYRIZA-led government in 2016.  In what was seen as one of the more worrisome developments of the evening, late exit polls indicated that 13% of young Greeks aged between 17 and 24 voted for neo-Nazi Golden Dawn against 30% who backed ND and 25.6% SYRIZA.  (Kathimerini Greece 27.05)

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8.1  Israel Innovation Authority & Mayo Clinic Sign Deal to Cooperate on Health Tech

On 14 May, the Israel Innovation Authority and the Mayo Clinic signed a Memorandum of Understanding (MOU) to cooperate on health tech innovation, with a focus on new medical devices, diagnostics, software solutions and therapies.  The authority, the Israeli government’s support arm for the country’s innovation and R&D said through the collaboration Israeli companies can co-develop, test, and pilot technologies, with services and expertise provided by the Mayo Clinic.  The program was developed by Mayo Clinic and the IIA’s American operations division.

The Mayo Clinic launched their Israeli Startup Initiative in 2016 to promote collaboration between Israeli startups and employees of the Mayo Clinic.  The goal was to accelerate availability of medical innovations to the public, introduce Israeli healthcare technology to the US and promote the development of new discoveries for the benefit of patients, a statement from the authority said.

Israeli startups are invited to apply for funding.  They will receive it directly from the Israel Innovation Authority with extra services and mentorship from the Mayo Clinic.  A call for proposals will focus on health technologies with two tracks — both collaborative R&D projects between Israeli companies and the Mayo Clinic as well as pilot and validation-stage projects for Israeli companies facilitated by the Mayo Clinic.  (No Camels 16.05)

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8.2  Mor Research Applications Partners with Aspire Ventures and Smart Health Innovation Lab

Tel Aviv’s Mor Research Applications, a subsidiary of Clalit Health Services, has agreed to join in Lancaster, Pennsylvania’s Aspire Ventures Precision Medicine Fund and Smart Health Innovation Lab (iLab).  The collaboration is part of a strategic partnership agreement among Aspire, Penn Medicine Lancaster General Health (LG Health), Capital BlueCross, Clio Health, Clalit, and Mor, that benefits all parties in advancing technologies for precision medicine and achieving international market adoption that improves healthcare globally.

Mor Research Applications is the Technology Transfer Office of Clalit Health Services.  Clalit is the largest HMO in Israel and the second largest in the world, with 4.3 million members, 14 hospitals and around 2,000 clinics across the country.  Mor provides end-to-end technology transfer services and helps inventors translate new ideas in the medical fields into beneficial products and solutions available to health caregivers and patients. Mor’s commercialization portfolio comprises more than 100 different projects and companies, from pre-seed to advanced stage, aiming to solve a number of unmet needs.

The iLab is designed to accelerate the progress of such companies by finding, fostering and developing new approaches to healthcare that can be directly deployed in new markets globally.  Established by Aspire, LG Health, Capital BlueCross, and Clio Health, the iLab connects healthcare startups with experts across the healthcare field, including investors, payors and providers.  That access offers startups first-hand knowledge of the market and how their technology can best serve patients within that ecosystem.   (Mor 14.05)

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8.3  Mars Partners with Jerusalem Venture Partners to Foster Foodtech Solutions in Israel

Jerusalem Venture Partners (JVP) announced a new partnership with Mars, Incorporated, on a first-of-its-kind research and development agreement in Israel aiming to pursue innovative tech solutions for global food, agriculture and nutrition challenges.  By collaborating on R&D investment, Mars will support Israeli start-ups and the formation of companies, and will work together with leading Israeli academic institutions, such as the Hebrew University, the Weizmann Institute, the Technion, Migall and Tel Hai College, among others, to further Foodtech innovations.  Mars Edge and the Mars Advanced Research Institute, representing Mars, will explore the converging fields of food, health and technology fueling the next generation of agriculture and nutrition.  The partnership will tackle major global sustainability issues by providing scalable solutions to the challenges of feeding humanity in a way that preserves and protects the environment.  It has the potential to unlock opportunities in the emerging space of personalized nutrition.

The JVP-Mars R&D Partnership is part of JVP’s Foodtech initiative to transform Israel’s Upper Galilee region into the global Foodtech epicenter.  Israel’s connection to other global “tech” hubs, ranging from the U.S. East Coast to Singapore, will help Mars further its efforts to drive global conversations and help lead the industry toward solutions for a more sustainable and healthy future.

Jerusalem Venture Partners (JVP), is an internationally renowned venture capital fund based in Israel.  Established in 1993, JVP has to date raised $1.4 billion across 9 funds, and has been listed numerous times by Preqin, and other rankings, as one of the top-ten consistently performing VC firms worldwide.  JVP has built over 130 companies, leveraging a broad network of partners and market expertise to help companies become global market leaders.  (JVP 15.05)

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8.4  Body Vision Medical Receives FDA Clearance for LungVision 2.0 System

Body Vision Medical has received clearance from the U.S. FDA to market their LungVision 2.0 System.  The new release of LungVision System features real-time tool-in-lesion confirmation combined with seamless integration of LungVision Tool, a disposable lung navigation catheter with superb maneuverability.  LungVision Tool guided by LungVision 2.0 System is used through the standard bronchoscopes to allow access of any endotherapy accessories to small pulmonary nodules.

LungVision platform has demonstrated outstanding results through multicenter clinical trials in the U.S. of over 400 clinical procedures.  Utilizing machine learning and a sophisticated augmented reality approach for accurate real-time navigation, LungVision allows physicians to plan, visualize, and track endobronchial tools inside the radiolucent lesions in real time.  LungVision instantly fuses intraoperative imaging with pre-operative CT.

Ramat HaSharon’s Body Vision Medical is a medical device company specializing in augmented real-time imaging, artificial intelligence and intra-body navigation.  The company was founded in 2014 to address the contemporary unmet clinical need of early lung cancer diagnostics and, in future, the growing demand of minimally invasive treatment.  (BVM 17.05)

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8.5  Limaca Medical Initiates First-in-Human Study of Biopsy Device for Improved Tumor Diagnosis

Misgav’s Limaca Medical, a portfolio company of The Trendlines Group, announced the start of its first-in-human (FIH) clinical study for its electromechanically driven Endoscopic Ultrasound-guided (EUS) biopsy device.  The study is being conducted in two leading Israeli medical centers.  The study’s objectives are to assess safety and performance.

Current biopsy products – manually operated EUS, Fine Needle Aspiration (FNA) and FNB – face numerous limitations: multiple, imprecise stabbings; tissue acquisition rate of only 70% to 80%; and repeat procedures due to failed biopsies.  Limaca’s KORA GI, an electromechanically driven, EUS-guided biopsy device for improved diagnosis of gastrointestinal system and adjacent organ tumors, is less operator dependent than manually-driven devices, yielding better results.  It is used with an ultrasound endoscope for Fine Needle Biopsy of masses within or adjacent to the GI tract.  Limaca has launched a $2 million financing round to support its FDA 510(k) submission and CE mark clearance, production scale-up, and U.S. Registry Study.  (Limaca Medical 16.05)

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8.6  MyHeritage Launches New DNA Test Offering Powerful & Personalized Health Insights

MyHeritage announced a major expansion of its DNA product line with the launch of the MyHeritage DNA Health+Ancestry test.  The test provides a new dimension of genetic insight with comprehensive health reports that can empower future health and lifestyle choices.  It is a superset of the current MyHeritage DNA Ancestry-Only test, and includes its pillar features: a percentage breakdown of ethnic origins and matching to relatives through shared DNA.  MyHeritage is now the only global consumer DNA company to offer an extensive health and ancestry product in over 40 languages.

The launch of the Health+Ancestry product distinguishes MyHeritage as the only major service that bridges consumers’ past, present and future: MyHeritage’s integrated suite of products enable users to discover their family history and ethnic origins, find new relatives, and receive valuable insights to help manage choices regarding their health that may impact their future well-being.

The MyHeritage DNA Health+Ancestry test provides health reports that show users their risk of developing or carrying genetic conditions.  Reports include conditions where specific genes contribute to the risk, such as hereditary breast cancer, late-onset Alzheimer’s disease, and late-onset Parkinson’s disease; conditions associated with multiple genes, such as heart disease, and type 2 diabetes; and carrier status reports on conditions that can be passed down from a couple to their children, such as Tay-Sachs disease and cystic fibrosis.  In total, MyHeritage’s Health+Ancestry test covers one of the most extensive ranges of conditions offered by an at-home DNA test: 11 Genetic Risk Reports, including a hereditary breast cancer (BRCA) report that tests 10 pathogenic variants; 3 Polygenic Risk Reports; and 15 Carrier Status Reports.

Israel’s MyHeritage is the leading global discovery platform for exploring family history, uncovering ethnic origins, finding new relatives, and gaining valuable health insights.  With sophisticated matching technologies and billions of international historical records, MyHeritage empowers users to build their family trees and make exciting family connections.  MyHeritage’s technologically advanced and affordable product, the MyHeritage DNA Ancestry-Only test, reveals ethnic origins and finds relatives with a simple cheek swab.  Launched in 2016, MyHeritage DNA has become one of the world’s largest consumer DNA databases, with 3 million people.  (MyHeritage 20.05)

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8.7  MaxQ AI Launches ACCIPIO Ax – Slice-Level Intracranial Hemorrhage (ICH) Detection

MaxQ AI announced that ACCIPIO® Ax will begin shipping in August and will be available as a part of the ACCIPIO® ICH Platform.  ACCIPIO Ax will be the second component of the ACCIPIO ICH Platform and will provide new tools to support clinical assessment of intracranial hemorrhage (ICH).  Radiology Departments, Emergency Room and Neuroradiology teams across the U.S. and the EU will soon be able to access a comprehensive solution for ICH triage through workflow prioritization and slice-level preview.  ACCIPIO Ax includes the exclusive ACCIPIO Ax SliceMap, an integrated view which guides clinicians rapidly to CT slices with suspected ICH without leaving their PACS viewer.

With regulatory approvals and an FDA Breakthrough Device designation for ACCIPIO® Dx – MaxQ AI’s ACCIPIO suite of software promises to be Seamless from the Start™ with a fully-automated and integrated solution by major OEM CT, PACS and AI ecosystem partners.  With the potential for improving detection and workflow for suspected ICH, these solutions are poised to usher in a new era of augmented care by enabling faster and more accurate treatment of patients.

Tel Aviv’s MaxQ AI is at the forefront of Medical Diagnostic AI, transforming healthcare by empowering physicians to provide ‘smarter care’ with artificial intelligence (AI) clinical insights.  Their team of deep learning and machine vision experts develop innovative software that uses AI to interpret medical images and surrounding patient data.  Working with world-class clinical and industry partners, their software enables physicians to make faster, more accurate decisions when diagnosing stroke, brain trauma and other serious conditions.  (MaxQ AI 20.05)

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8.8  Compugen Doses First Patient in COM701/Opdivo Combination Arm of Phase 1 Study

Compugen has dosed the first patient in the combination arm of its Phase 1 study, combining escalating doses of COM701 with a fixed dose of Opdivo® (nivolumab) in patients with advanced solid tumors.  The combination dose escalation arm was initiated following the determination of well-tolerated doses with no dose-limiting toxicities reported of COM701 from the monotherapy dose escalation arm of the trial.  Bristol-Myers Squibb will supply Opdivo, a PD-1 inhibitor, for the combination arms of the Phase 1 study under the clinical trial collaboration announced in October 2018.

The Phase 1 study now has ten participating sites, having recently added Columbia University, MD Anderson Cancer Center, UCLA, the Cleveland Clinic and START Midwest.  The primary endpoints for the study are safety and tolerability; secondary endpoints include preliminary anti-tumor activity, pharmacokinetics and pharmacodynamics.

In October 2018, Compugen entered into a clinical trial collaboration with Bristol-Myers Squibb to evaluate the safety and tolerability of Compugen’s COM701 in combination with Bristol-Myers Squibb’s PD-1 inhibitor Opdivo® (nivolumab), in patients with advanced solid tumors.  Under the terms of the collaboration agreement, Compugen will sponsor the ongoing two-part Phase 1 trial, which includes the evaluation of the combination of COM701 and Opdivo in four tumor types, including non-small cell lung, ovarian, breast and endometrial cancer.  The collaboration is also designed to address potential future combinations, including trials sponsored by Bristol-Myers Squibb to investigate combined inhibition of checkpoint mechanisms, such as PVRIG and TIGIT.

Holon’s Compugen is a clinical-stage, therapeutic discovery and development company utilizing its broadly applicable computational discovery platforms to identify novel drug targets and develop first-in-class therapeutics in the field of cancer immunotherapy.  The Company’s therapeutic pipeline consists of immuno-oncology programs against novel drug targets it has discovered computationally, including T cell immune checkpoints and other early-stage immuno-oncology programs focused largely on myeloid targets.  Compugen’s business model is to enter into collaborations for its novel targets and related drug product candidates at various stages of research and development.  (Compugen 20.05)

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8.9  89bio Reports Positive Top-line Data from Phase 1 Trial of BIO89-100

89bio announced positive top-line results from a Phase 1 single ascending dose (SAD) study of its investigational medicine, BIO89-100, in healthy volunteers.  BIO89-100 is a novel long-acting glycopegylated fibroblast growth factor 21 (FGF21) analogue in clinical development for the treatment of patients with NASH.

BIO89-100 was generally safe and well tolerated in the Phase 1 study.  The most commonly observed treatment-related adverse events were injection site reactions and headache, all of which were reported as mild.  The pharmacokinetic (PK) profile of BIO89-100 was generally dose proportional with a half-life ranging from approximately 53-100 hours.  Furthermore, at single doses of 9.1 mg and higher, BIO89-100 demonstrated significant improvements versus baseline in key lipid parameters measured at 8 and 15 days.  The mean changes versus baseline include reductions in triglycerides (up to 51%) and LDL-C (up to 37%) and increase in HDL-C (up to 36%).

NASH is the most advanced stage of nonalcoholic fatty liver disease (NAFLD).  BIO89-100 is a novel long-acting glycopegylated FGF21 analogue for the treatment of NASH.  It was engineered using a proprietary glycopegylation technology to prolong the biological activity of native FGF21.

89bio is a privately held biopharmaceutical company building a pipeline of biologic and small molecule treatments for liver and metabolic disorders.  The company’s lead product candidate for the treatment of NASH is BIO89-100.  Currently in Phase 1, BIO89-100 is a novel long-acting glycopegylated FGF21 analogue.  89bio is headquartered in San Francisco with R&D and operations in Herzliya, Israel.  (89bio 22.05)

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8.10  Merck KGAA and GlucoMe Exploring Expansion for Digital Diabetes System

GlucoMe announced that it is exploring expansion of its partnership with Merck KGaA, Darmstadt, Germany.  This follows a successful joint pilot in several Vietnam hospitals, facilitated by a third party.  In August 2018, Merck KGaA, Darmstadt, Germany, a world leader in science and technology with more than 60 years of experience in the treatment of type 2 diabetes, partnered with GlucoMe to assess the advantages of GlucoMe’s digital diabetes care solution against the current standard of care in Vietnam.

GlucoMe is a digital diabetes management solution that effectively and efficiently streamlines the disease management process for patients and the entire healthcare system.  The GlucoMe system was integrated in five Vietnam hospitals.  Three hundred patients with diabetes used GlucoMe’s wireless blood glucose monitor over a three-month period to measure their blood sugar levels at home.  The clinical data was synced through GlucoMe’s mobile app and analyzed by GlucoMe’s Digital Diabetes Clinic (DDC) and its Control Tower alert system.  This enabled medical professionals and their staff to continuously monitor their patients and intervene more efficiently and effectively than the current face-to-face standard of care allows.  It also helped medical teams identify and prioritize severe and urgent cases for the timeliest intervention.

Yarkona’s GlucoMe is a digital health company developing and marketing a comprehensive digital solution for diabetes management.  With its new algorithm-based Decision Support System analyzing relevant diabetes data and providing medical teams with treatment recommendations, GlucoMe is on track to realizing its vision of offering an autonomous diabetes health care platform.  The GlucoMe solution enables smart and cost-effective remote care and monitoring, streamlining and simplifying diabetes care for patients, caregivers and medical professionals.  Its core architecture enables quick and simple implementation and allows organizations to easily scale up while delivering personalized quality care.  (Merck 21.05)

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8.11  Gat Foods New Pilot Lab to Maximize Fruitlift Potential

Fruitlift, the real-fruit based solution to replace refined sugars in RTE cereals, is advancing into the next phase of its go-to-market plan following its launch in March this year.  Gat Foods will install a lab-scale extrusion plant to integrate Fruitlift into various breakfast cereal applications and fully assess its integration into large-scale cereal production processes.  The pilot plant replicates a large industrial production belt on a smaller lab scale.  The company designed a high-quality custom extrusion plant machinery after researching several models to assess the necessary specifications required to fully fit Frutlift’s solution into the unique production flows of cereals manufacturers.  The base already has successfully completed its initial round of trials in a pilot lab in the UK.

Fruitlift is an all-natural, liquid based ingredient – composed of 90% fruit components and designed to be injected into the flour mix of puffed cereals to replace white refined sugar, which until now has been a significant component in RTE cereals.  The real challenge was to integrate a wet fruit solution into a dry product to bring breakfast cereals to consumers in a more natural and better-for-you format.  Fruitlift delivers a mild sweetness, with or without a fruity flavor in a range of fruits to choose from.

Gat Foods’ patent-pending technology provides a tailor-made solution to food companies.  The fruit base is offered in a choice of fruits and can be customized to fit any manufacturing process, or formulated to fit any type of flour mixture.  It can be injected either as a base or a coating and the dose can be adjusted to desired sweetness levels and taste preferences, whether the company is seeking a pronounced fruit flavor or to have the solution blend in with the brand’s signature flavor.

Givat Haim’s Gat Foods is a wholly owned subsidiary of Central Bottling Company Group.  Since 1942, the company has developed, produced, and marketed innovative fruit solutions for beverage manufacturers, providing value-added ingredients that help create customized beverages with proven success.  The company is now expanding its expertise to incorporate its innovative ingredients into food formulations as well.  (Gat Foods 21.05)

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8.12  Solabia Group Announces its Acquisition of Algatech

France’s Solabia Group has acquired Kibbutz Ketura’s Algatech.  Solabia, a family-owned company working closely with its minority partner TA Associates, is a global leader in biotechnology, fine chemicals and plant extraction technologies, and provides a range of active ingredients used by the cosmetics, pharmaceutical, diagnostic and nutrition industries worldwide.  Financial terms of the transaction were not disclosed.

Founded in 1998 and located in the Arava desert in southern Israel, Algatech is leading innovation in the microalgae industry and is one of the very few companies in the world to have perfected commercial-scale production at the very highest standard.  Algatech’s mission is to unlock and share the immense power of microalgae by bringing algae-based products to market and continuing to explore its limitless and wide-ranging applications.  Over the past two decades, the Company has grown to become one of the world’s largest photobioreactor facilities, and a leading biotech business in the nutraceuticals sector.  Algatech has complete oversight and control of its value and supply chains – from research, science, IP and cultivation to product development, testing and marketing – and can deliver tailored end-to-end solutions to meet its customers’ needs.  Algatech currently exports to more than 35 countries worldwide, serving leading brands across the nutrition, cosmetic and food and beverage industries.

Algatech has realized high double-digit top line growth over the last several years and this trajectory will accelerate with Solabia’s backing.  The strategic investment from Solabia will support Algatech’s continued focus on R&D and product development, as well as the expansion of its production capabilities, enabling the Company to serve the increasing global demand for microalgae.  Algatech will become the center piece of Solabia’s nutrition division and the combination will allow both companies to benefit from the combined network and expertise, as well as to access new marketing channels and an expanded customer base.

The transaction represents a full realization of UK-based investment firms Grovepoint Capital and JCA Charitable Foundation in Algatech, while Kibbutz Ketura will retain a minority share.  (Solabia Group 22.05)

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8.13  Finistere Ventures, OurCrowd, Tnuva & Tempo Partnership in Israeli FoodTech Innovation

Finistere Ventures, a global agrifood investment leader, OurCrowd, Israel’s most active venture investor, Tnuva, Israel’s largest food manufacturer, and Tempo Beverages, the leading Israeli beverage company, announced the creation of the largest consortium focused on championing FoodTech and AgTech innovation in Israel.  Centered on Israeli technologies throughout the food and beverage value chain – from alternative proteins and nutritional value improvements, to functional ingredients and supply chain efficiency – the consortium will invest up to $100m in local best-in-class agrifood startups.

The partnership was created following the Israeli government’s establishment of an innovation incubator in Northern Israel focused on FoodTech.  Finistere Ventures, OurCrowd, Tnuva and Tempo Beverages will be bidding to operate the incubator being built as part of Kiryat Shmona’s planned innovation center, to intensify their investment in the Israeli FoodTech community.  Together Finistere, OurCrowd, Tnuva, and Tempo, will actively encourage, support and invest in Israeli entrepreneurs building new companies to meet evolving consumer demands and transform the current ag and food chain.  Thanks to the partners’ extensive industry network, entrepreneurs will also be able to gain direct access to leading global food and beverage giants such as PepsiCo, Bright Food, Heineken and Nutrien.

With each partner offering unique experience, knowledge and resources, the consortium will give entrepreneurs guidance across a broad range of activities, including technology development and due diligence, team building, business development, seed and Series A investment strategies, and the production and marketing of food.  (OurCrowd 27.05)

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8.14  Ayala Pharmaceuticals Raises $30 Million in Series B Financing

Ayala Pharmaceuticals announced the successful completion of a $30 million Series B financing.  The investment was led by Novartis with participation from SBI JI Innovation Fund and all existing investors, including Israel Biotech Fund, aMoon and Harel Insurance & Finance Group.  The new capital will fuel Ayala’s plans to advance the clinical development of lead product candidate AL101, a pan-Notch inhibitor that is currently being evaluated for adenoid cystic carcinoma (ACC).  The company intends to advance the phase 2 study in ACC and initiate a phase 2 clinical trial in triple negative breast cancer (TNBC).

Ayala Pharmaceuticals is broadly developing its product candidates, AL101 and AL102, best-in-class gamma secretase inhibitors, with studies underway in solid tumors (AL101) and in hematologic malignancies (AL102) and in collaboration with Novartis in multiple myeloma.  The U.S. FDA’s Office of Orphan Products Development recently granted Orphan Drug Designation to AL101 for the potential treatment of ACC.

As a precision oncology company, Rehovot’s Ayala Pharmaceuticals was founded in November 2017 with an experienced global management team and a strong investor base.  Ayala is today a clinical-stage biopharmaceutical company dedicated to developing targeted cancer therapies for people living with genetically defined cancers.  Ayala is broadly developing its product candidates, AL101 and AL102, best-in-class gamma secretase inhibitors, with clinical and preclinical studies underway in both solid tumors (AL101) and hematologic malignancies (AL102).  (Ayala Pharmaceuticals 28.05)

8.15  FDA Grants Theranica De Novo for Smartphone-controlled Migraine-Relief Wearable

Theranica announced that the U.S. Food and Drug Administration (FDA) granted a De Novo request for its smartphone-controlled electroceutical, Nerivio Migra, utilizing Remote Electrical Neuromodulation for the acute treatment of migraine.  The FDA market authorization is based on the results of a prospective, randomized, double-blind, placebo-controlled, multi-center pivotal study, where 252 patients from 12 clinics used the non-invasive wearable to treat their migraine attacks.

Nerivio Migra, a first-in-category product, is placed on the upper arm (not the head or neck) and uses smartphone-controlled electronic pulses to create a Conditioned Pain Modulation (CPM) response.  Nerivio Migra is indicated for acute treatment of migraine with or without aura in adult patients who do not have chronic migraine.

Netanya’s Theranica Bioelectronics, founded in 2016, is dedicated to combining advanced neuromodulation therapy with modern wireless technology to develop proprietary electroceuticals that address prevalent medical conditions and diseases.  Nerivio Migra, Theranica’s first FDA authorized to market device is a low-cost, low side effect wearable for the acute treatment of migraine.  Theranica will continue to use its proprietary technology to develop additional solutions to other painful disorders.  (Theranica 28.05)

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8.16  The Mushroom Benefit Says “Anyone Can Cook”

The Mushroom Benefit rolls out its innovative line of Cuisine Bags set to redefine the soups, stock and sauces retail market.  Each mesh sachet (about twice the size of a tea bag) contains a unique blend of exotic mushrooms and natural seasoning and flavors that endow any savory stew, soup, sauce or marinade with a gourmet touch in a single easy step.  The startup will launch the new product line at the Summer Fancy Foods Show, New York at the Javits Center, on 23-25 June.

The patent-pending Cuisine Bags offer a plant-based, clean-label alternative to traditional powdered soup stocks.  They also make a convenient quick-fix solution for preparing sophisticated cuisine that demands minimal expertise and that can readily conform to the time constraints of modern life, turning home cooking into a gourmet experience in just fifteen minutes of infusion in boiling water.  Each sachet contains a complex balance of mushroom goodness, infusing natural, full-bodied flavors of umami and additional herbs to enrich any home-cooked dish.  The Mushroom Benefit carefully selected a choice mix of exotic mushrooms, principally shiitake and black truffle, to deliver maximum taste enrichment.  The Shiitake mushroom was chosen as a base due to its rich umami characteristic that imparts a meaty, savory sensation to foods.

Each Mushroom Benefit Cuisine Bag package contains five sachets.  The bags themselves are made of 100% natural and wholly biodegradable corn fiber, demonstrating the company’s commitment to careful utilization of natural resources and reducing packaging footprint.

Netanya’s The Mushroom Benefit began as a family run business.  Today, the startup focuses on the innovation and development of novel functional food products based on exotic mushrooms and other natural ingredients within the international specialty food marketplace.  (The Mushroom Benefit 28.05)

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9.1  Karamba Expands its Autonomous Cybersecurity Technology to Protect IoT Smart Devices

Karamba Security announced that its autonomous security solution is being used to protect connected devices and systems across a broad spectrum of vertical markets facing similar large-scale cybersecurity threats.  Following successful deployments of Karamba’s embedded, self-protecting and auto-recovery software technology in the automotive industry – including more than 32 engagements with car manufacturers and tier-1 automotive suppliers – manufacturers in other vertical markets have sought out Karamba’s technological offering.  Manufacturers of enterprise edge devices, Industry 4.0 controllers and other connected systems have engaged with Karamba, using its runtime integrity software to provide an active hardening layer to their connected, massively deployed devices.

In conjunction with this market expansion, Karamba also announced a go-to-market partnership with embedded software firm Wind River to help automotive, aerospace, defense, industrial, medical and network providers to automatically embed self-protection security in their connected devices.  With their successful collaboration for the automotive industry, the two companies launched an initiative to expand the use of built-in, embedded, runtime integrity in the connected systems world.

Hod HaSharon’s Karamba Security provides industry-leading embedded cybersecurity solutions for connected systems.  Product manufacturers in automotive, Industry 4.0, IoT, and enterprise edge rely on Karamba’s automated runtime integrity software to self-protect their products against Remote Code Execution (RCE) cyberattacks with negligible performance impact.  After 32 successful engagements in automotive and other industries, product providers trust Karamba’s award-winning solutions to increase their brand competitiveness and protect their own customers against cyber threats.  (Karamba Security 14.05)

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9.2  SeeVoov Wins the ITB China 2019 Tourism Innovation Startup Awards

SeeVoov has been named winner of the ITB China Innovation Startup Awards.  The ITB China Startup Awards recognizes companies that turned dreams and ideas into viable business solutions with outstanding market potential.  The winner was selected by jury of well-known industry professionals.

Omer’s SeeVoov offers a novel trip planning experience based on videos watching.  Using the unique videos tagging technology they developed, SeeVoov creates one of a kind Location based videos and images Database that feeds the various consumer products they offer.  SeeVoov technology is based on an intelligent machine learning system that automatically tags videos based on image analysis (Deep Learning).

The system searches the web for relevant videos based on specific rules (Crawler).  Those videos are then entered into the company algorithm that automatically identifies the locations shown on videos, collects travelers’ reviews, pictures, basic information, and exact location and stores the data in the company’s database.  The data collected on the processed videos feeds the system again after review and approval by a travel expert, which improves the system accuracy.  The system is highly scaleable and can tag videos rapidly and automatically.  (SeeVoov 16.05)

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9.3  Gimmonix & Trip Sciences Partnership to Deliver White-label Native Mobile Solution for Hotels

Gimmonix Technologies and Trip Sciences, developer of a mobile travel e-commerce platform, have joined forces to create an innovative, white-label hotel point-of-sale on mobile apps.  The joint offering delivers a SaaS mobile solution pre-integrated into the Travolutionary platform, arming travel agencies with a point-of-sale mobile app for hotel bookings, under their own brand.  Agencies viewing accommodation as a strategic differentiator will be able to make a strong entrance into the mobile arena, without having to spend scarce budgets, headcount and time on developing their own iOS and Android solutions.

The white-label mobile solution is available simultaneously in all markets Gimmonix operates in.  It is already live in the app stores under the brands of two Latin American agencies, TIJE Travel and Volala, with more brands expected to launch in the coming months.

Tel Aviv’s Gimmonix is a technology company advancing hotel supplier aggregation and distribution technology. Its portfolio includes Travolutionary, Mapping.Works and Reservation.Works.  (Gimmonix 16.05)

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9.4  SQream and ITMPS Announce Strategic Partnership for the Korean Market

SQream and Korea’s ITMPS announced a strategic partnership to expand the availability of SQream DB in the Korean market.  SQream DB is the software-defined GPU-accelerated data warehouse designed for rapidly analyzing massive data stores at a fraction of the cost.  ITMPS’ existing customers include Samsung, Hyundai, Thales, SK Telekom, LG U+, KTDS and other major Korean enterprises.

Tel Aviv’s SQream develops and markets SQream DB, a software-defined GPU data warehouse designed to enable unparalleled business intelligence from massive data stores.  Global enterprises use SQream DB to analyze more data than ever before, while achieving improved performance, reduced footprint, significant cost savings and the ability to scale the amount of data they analyze to hundreds of terabytes and more.  SQream DB is available both on premise and in the cloud.  (SQream Technologies 16.05)

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9.5  Lockheed Martin Teams with Rafael to Market SPICE Air-to-Surface Guidance Kits

Lockheed Martin and Rafael Advanced Defense Systems signed a teaming agreement to jointly develop, market, manufacture and support Rafael’s Smart, Precise Impact and Cost-Effective (SPICE) guidance kits for U.S. sale.  SPICE is a family of stand-off, autonomous, air-to-surface weapon systems that provide affordable precision in a GPS-denied environment.  In use since 2003, SPICE is combat-proven and in service with the Israeli Air Force and several other nations worldwide.

The teaming agreement covers the SPICE 1000 (1,000 pound/453 kilogram weight class) and SPICE 2000 (2,000 pound/907 kilogram weight class) kit variants.  Over 60% of SPICE is already manufactured in the U.S. in eight states.

With a legacy of 70 years, Haifa’s Rafael Advanced Defense Systems designs, develops, manufactures and supplies a wide range of state-of-the-art defense systems for air, land, sea and space applications for the Israeli Defense Forces and its defense establishments, as well as for international customers.  Rafael is one of Israel’s three largest defense with over 7,500 employees and numerous subcontractors and service suppliers.  (Lockheed Martin 16.05)

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9.6  RavenDB Adds Pull Replication & Distributed Online Counters to Its Offering

RavenDB has released a new version of its open source NoSQL document database product.  In this new release, RavenDB 4.2, the company has added pull replication and distributed counters along with cluster wide transactions and graph queries.  RavenDB’s new pull replication capabilities improve the existing practices of external data replication, which require data replication definitions at both the central and remote nodes for edge nodes to pull data from a central database.  With the new pull replication feature, RavenDB allows new edge nodes to be defined without any impact on or new configurations at the central cluster.  The benefit of this approach is that a new edge node initiates the connection with the central database, so that any new edge node can be deployed behind the NAT without any concerns for tunneling issues.

RavenDB 4.2 also includes a new distributed counters feature that improves Internet-based voting and polling systems that required the aggregation of large volumes of simultaneously inputted data from multiple sources.  By separating the counter from the actual document, RavenDB allows performance to remain optimal.  Graph queries are also a new feature in RavenDB 4.2 and enable users to add graph functionality to existing data by processing documents as nodes and edges in order to detect patterns between data points.  This new graphic functionality is valuable for predictive analytics, fraud detection and social media applications.

Hadera’s RavenDB is a global provider of database infrastructure solutions that empowers Fortune 500 companies and enterprises across the globe to process online transactions through an open source platform.  Recognized by the world’s most influential analyst firms as an excellent and cost-effective choice for companies looking to modernize their data management strategy, RavenDB is the industry’s first fully-transactional, NoSQL ACID database that combines scalability, high-availability and performance.  (RavenDB 15.05)

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9.7  WhiteSource for Developers Enables Developers to Code Faster and More Securely

WhiteSource announced the launch of “WhiteSource for Developers”.  The new offering is designed specifically to make developers’ lives simpler when working with open source, enabling them to code faster and more securely.  WhiteSource for Developers natively and frictionlessly integrates to developers’ environments (browsers, IDEs, and repositories), offering developers the information they need, when they need it, and where they need it.  By enabling developers to choose better open source components from the start, detect vulnerable or problematic components in early stages of development (IDEs and repositories), and speed up the remediation process through automation, WhiteSource for Developers will allow developers to “shift left” open source security and compliance management.

By bundling these four capabilities together, WhiteSource enables software developers and their companies and organizations to more quickly adapt to today’s ever-evolving open source security environment, equipping them with the tools they need to work at the speed of business.

Givatayim’s WhiteSource is the leader in continuous open source security and license compliance management.  Its vision is to empower businesses to develop better software by harnessing the power of open source. Industry leaders like Microsoft, IBM, and hundreds more trust WhiteSource to secure and manage the open source components in their software.  (WhiteSource 15.05)

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9.8  Mellanox Introduces Ethernet Cloud Fabric Technology

Mellanox Technologies introduced breakthrough Ethernet Cloud Fabric (ECF) technology based on Spectrum-2, the world’s most advanced 100/200/400 Gb/s Ethernet switches.  ECF technology provides the ideal platform to quickly build and simply deploy state of the art public and private cloud data centers with improved efficiency and manageability.  ECF fully incorporates Ethernet Storage Fabric (ESF) technology that seamlessly allows the network to serve as the ideal scale-out data plane for computing, storage, artificial intelligence, and communications traffic.  ECF technology fully embraces Open Ethernet platforms that disaggregate hardware and software, and Spectrum-2 based switches are available with network operating systems including Mellanox Onyx, Cumulus Linux, SONiC and Linux SwitchDev.  Spectrum-2 switches with ECF enables data center architects to achieve the highest levels of performance, flexibility and advanced visualization capabilities to improve operational efficiency.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end Ethernet and InfiniBand smart 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, unlocking system performance and improving data security.  (Mellanox 20.05)

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9.9  Reduxio Debuts Focus on Container-Native for Kubernetes and Clouds

Reduxio announced the start of customer evaluations of their container-native cloud storage and data management platform with its breakthrough microservices architecture that provides enterprises deploying stateful container applications never-before-available capability and flexibility for Kubernetes-based private, hybrid, and multi-cloud infrastructure.

To meet the growing demand for robust cloud-native enterprise cloud solutions, Reduxio’s Magellan platform will be generally available in the fall of 2019.  The Magellan Cloud Data Platform combines new patent-pending IP for data mobility that allows enterprises to unify multiple infrastructure islands into a single data cloud for applications with proven data management capabilities in a microservices-based platform.  Magellan will help organizations overcome limitations in data and application portability and mobility to fully realize the benefits of multi-cloud and hybrid cloud strategies, while delivering incredible flexibility and extensibility to accelerate application modernization and digital transformation. Reduxio is supported by leading investors including Intel Capital, JVP and C5 Capital.

As a container-native, software-only solution built on a microservices architecture, Reduxio Magellan can deliver the portability and scalability cloud-native applications require, eliminating expensive and inefficient infrastructure that obviates the very portability advantage that drove teams to adopt containers.  Reduxio is working with select customers and partners as part of its early-access evaluation program, engaging organizations that are looking to use Kubernetes and stateful containers in production and develop innovative ways to deploy modernized applications in hybrid or multi-cloud environments.  Reduxio is also partnering with select Cloud Service Providers to improve the efficiency and economics of their infrastructure and enable them to expand their service offerings.

Since 2012, Tel Aviv’s Reduxio has redefined data management and data protection, and the company has evolved its mission to deliver the first microservices-based container-native storage and data platform for stateful applications.  Reduxio’s cloud data platform for Kubernetes pairs high performance software-defined container-native storage and data management with data mobility to enable customers to build a single data cloud for their applications across all their infrastructure, anywhere.  Reduxio is backed by Intel Capital, C5 Capital Cloud Partners and Jerusalem Venture Partners (JVP).  (Reduxio 20.05)

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9.10  Logicalis Selects XM Cyber to Power New Purple Team Offering

XM Cyber and Logicalis, a leading provider of global IT solutions and managed services, announced that XM Cyber’s platform HaXM will power Logicalis’ new Purple Teaming Service.  The partnership will initially focus on the United Kingdom, with the new service being sold from Logicalis’ Jersey-based Centre of Excellence and Security Operations Centre (SOC), and will then expand globally.

The HaXM platform combines continuous and automatic red and blue team processes so that organizations are always one step ahead of the attack.  As such, Logicalis’ Purple Teaming Service will rapidly uncover all hidden attack vectors within users’ networks and provide prioritized actionable remediation of security gaps.  Organizations can then focus their resources on the most essential issues that target critical assets.  This service runs safely and has no impact on network availability or user experience, and its continuously updated threat database includes attack techniques and methods from decades-old malware to the latest advanced persistent threats (APTs).

Herzliya’s XM Cyber provides the first fully automated breach and attack simulation (BAS) platform to continuously expose attack vectors, from breach point to any organizational critical asset.  This continuous loop of automated red teaming is completed by ongoing and prioritized actionable remediation of security gaps.  In effect, HaXM by XM Cyber operates as an automated purple team that fluidly combines red team and blue team processes to ensure that organizations are always one step ahead of the attack.  XM Cyber has already received over 16 industry awards, including being recognized as a “Technology Pioneer” by the World Economic Forum.  (XM Cyber 22.05)

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9.11  128 Technology & AudioCodes SD-WAN Solution for Unified Communications Services

Burlington, Massachusetts’ 128 Technology, the leader in Session Smart routing, and AudioCodes announced the introduction of an integrated SD-WAN solution to support business voice, video and data needs.  The joint solution features multiple WAN access interfaces, dynamic multi-path routing, session border controllers (SBC), and VoIP media gateways, all on a single AudioCodes Mediant 800 platform.  Targeted for global enterprises, medium and small businesses and service providers, it enables secured and cost-effective branch-to-branch, branch-to-data center and edge-to-cloud connection, as well as unified communications (UC) service delivery, all in a single integrated appliance.

AudioCodes’ One Voice Operations Center (OVOC), a voice network management solution that combines management of voice network devices and quality of experience monitoring into a single, intuitive web-based application, was adapted to integrate 128 Technology’s Conductor.  The Conductor is an authority-wide orchestration and automation service, providing topology, policy management, centralized visibility and an analytics engine.  By making all this information available in a single pane of glass, the end customer has an advanced management tool for both data and voice services.

Lod’s AudioCodes is a leading vendor of advanced voice networking and media processing solutions for the digital workplace.  AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers and hosted business services.  AudioCodes offers a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.  (AudioCodes 21.05)

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9.12  Hailo is 2019’s Red Herring Top 100 North America Winner in AI/ Machine Learning Sector

Hailo has been selected as a winner of Red Herring’s Top 100 North America Award in the AI/Machine Learning Sector.  The awards recognize the continent’s most exciting and innovative private technology companies.  The Hailo-8 processor, now being sampled with select partners across multiple industries, features up to 26 tera operations per second (TOPS) and significantly outperforms all other edge processors, with area and power efficiency far superior to other leading solutions, all at a size smaller than a penny.  According to preliminary results comparing Hailo-8 ™ to Nvidia’s Xavier AGX, which runs NN benchmarks such as ResNet-50, Hailo-8 consumes almost 20 times less power while performing the same tasks.

Tel Aviv’s Hailo, an AI-focused Israel-based chipmaker, has developed a specialized deep learning processor that delivers the performance of a data center-class computer to edge devices.  Hailo’s AI processor is the product of a rethinking of traditional computer architecture, enabling smart devices to perform sophisticated deep learning tasks such as object detection and segmentation in real time, with minimal power consumption, size, and cost.  The deep learning processor is designed to fit into a multitude of smart machines and devices, including autonomous vehicles, smart cameras, smartphones, drones, AR/VR platforms and wearables.  (Hailo 23.05)

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9.13  Intel Launches 10th Gen Core Processor Developed in Israel

Intel has launched its 10th generation core processor at Computex 2019 in Taipei, Taiwan.  The 10nm core processor, called Ice Lake, was developed by Intel in Israel.  Intel says that the new 10th generation core processor brings high-performance AI to the PC at scale with for the first time Intel® Deep Learning Boost (Intel DL Boost).  The processors are built on the company’s 10nm process technology, new “Sunny Cove” core architecture and new Gen11 graphics engine.  10th Gen Intel Core processors will range from Intel Core i3 to Intel Core i7, with up to 4 cores and 8 threads, up to 4.1 max turbo frequency, and up to 1.1 GHz graphics frequency.  (Globes 28.05)

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9.14  RADCOM to Assure the World’s First Fully Virtualized Cloud-Native Mobile Network

RADCOM has entered into a multi-year agreement with Rakuten Mobile to provide RADCOM’s Network Intelligence solution for Rakuten Mobile’s unique and innovative mobile network which is planned to be launched in October this year.  The new mobile network will be the world’s first fully virtualized, end-to-end cloud-native mobile network that adopts 5G systems architecture from launch.  Rakuten Mobile chose RADCOM Network Intelligence because of its ability to monitor the entire end-to-end network, including the world’s first fully virtualized radio access network (RAN).  RADCOM Network Intelligence will be tightly integrated across Rakuten Mobile’s distributed, telco cloud to assure the highest service quality is delivered to customers for voice, video, VoLTE, data, and IoT services from the mobile edge up to the network core.  RADCOM Network Intelligence will be deployed as multiple Virtual Network Functions (VNFs) that are highly scalable and cloud efficient, enabling customer experience agility for Rakuten Mobile’s new, innovative mobile network.

Tel Aviv’s RADCOM is the leading expert in cloud-native Network Intelligence for telecom operators transitioning to SDN/NFV.  Providing a critical first step in an operator’s NFV transformation, RADCOM’s Network Intelligence delivers end-to-end network visibility from virtual tapping point to network insights.  Comprised of RADCOM Service Assurance, RADCOM Network Visibility and RADCOM Network Insights, RADCOM’s Network Intelligence portfolio provides operators with complete visibility across their virtual and hybrid networks.  (RADCOM 28.09)

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10.1  Inflation Rate Rises by 0.3% in April, While Housing Prices Increase 0.1%

On 15 May, the Central Bureau of Statistics announced that the Consumer Price Index (CPI) rose by 0.3% in April, lower than expected.  The CPI has risen 1.3% in the past 12 months, still towards the lower end of the Bank of Israel’s annual target range for inflation of between 1% and 3%.  The CPI has risen 0.8% in the first four months of 2019.  This was the third successive month in which the CPI has risen after three successive months before that when it fell.

Prominent price rises in April included footwear (2.4%), fresh fruit (1.5%), transport (1.5%) and culture and entertainment (0.5%).  The Central Bureau of Statistics also published the Housing Price Index for February-March 2019.  The Index showed the price of the average deal rising 0.1% in February-March compared with January-February. Housing prices have risen 0.5% over the past 12 months.  (CBS 15.05)

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10.2  Israel’s GDP Grows by 5.2% in First Quarter of 2019

There was a sharp rise in GDP growth in Israel in the first quarter of 2019, the Central Bureau of Statistics announced.  According to the first estimate, the economy grew 5.2% on an annualized basis in the first quarter.  This compares with 3.9% in the fourth quarter of 2018 and 2.8% in the third quarter of 2018.  After deducting the import of vehicles and the income from tax on those vehicles, the economy grew 3.7% in the first quarter of 2019 and 3% in the fourth quarter of 2018.

Expenditure on vehicles for private use grew almost 600% on an annualized basis in the first quarter of 2019 after rising 40.4% in the preceding quarter, due to the imminent reduction of tax benefits as part of the green tax law.  Business output rose 5.8% on an annualized basis in the first quarter of 2019, after rising 3.9% in the fourth quarter of 2018 and 2.5% in the third quarter of 2018.

Imports of goods and services rose 6.7% on an annualized basis in the first quarter of 2019 after rising 12.2% in the preceding quarter.  Exports of goods and services grew 4.9% on an annualized basis in the first quarter of 2019.  (CBS 16.05)

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10.3  OECD Reduces Israel’s 2019 Growth Forecast

The Organization for Economic Cooperation and Development (OECD) has cut its 3.5% forecast for Israel’s economic growth in 2019, which it issued in November 2018, to 3.1%, and is now forecasting 3.3% GDP growth in 2020.  The lowering of the OECD’s forecast follows similar measures by the International Monetary Fund (IMF) and the Bank of Israel Research Department.  OECD’s new forecast was part of a broad forecast for global growth, following growing geopolitical tension and the escalating trade war between China and the US.

The lower forecast in itself is not alarming, because it is due largely to exogenous external factors, headed by the slowdown in world trade and the growing tension between the US and China and Iran.  The OECD emphasizes that even after being lowered, the growth forecast for Israel is still strong and close to the economy’s potential.  At the same time, the hinted warnings issued to the incoming Israeli government that unpopular but essential measures must be taken, such as tax increases, cannot be ignored.

The OECD said that Jerusalem has to renew its efforts at reforms for increasing efficiency in the public sector and the tax system in order to bolster its revenues.  The economists also note that even though Israel’s economy growth is still close to its potential, there are clear signs that the labor market and the pace at which new jobs are being created in the private sector are slowing down.  Up until now, the labor market was a source of strength for the economy.

This is not the first time that such comments have been made.  Globes added that the credit rating agencies were the first to warn that the swelling budget deficit requires belt-tightening measures.  Beyond the warning itself, however, a change in the OECD’s positive, friendly, and complimentary tone towards Israel in recent years is noticeable.  The change in sentiment towards Israel is liable to have far worse consequences than a lowering of a growth forecast.

First time in a long time, the OECD’s forecast is mixed with a critical attitude towards Israel, when it noted that the budget deficit will increase far beyond the targets set for 2019 and 2020 if the government does not undertake new consolidation measures.  The new government must focus on conforming to the fiscal frameworks.  This requires restraint in government spending, streamlining, and increasing tax revenues, among other things, by cutting tax exemptions, such as the VAT exemption for fruits and vegetables.

The OECD also expects the new government to initiate structural reforms for reducing inequality, which is still at high levels, and for encouraging competition in sectors in which it is lacking.  The OECD also calls on the government to narrow gaps between the outlying areas and central Israel by supporting weak local authorities, whether by direct budgetary assistance or through changes in the budgetary mechanism for distributing revenues among the local authorities.  (OECD 21.05)

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11.1  ISRAEL:  IMF Staff Conclude Visit to Israel

An International Monetary Fund (IMF) staff team visited Israel from 19 – 23 May to discuss macroeconomic, financial, and structural policy issues, in preparation for the annual Article IV consultation to be held later in 2019.  At the end of the visit, the IMF issued the following statement:

“Israel’s solid macroeconomic performance continues, with output rising by 3.2% in the year to the first quarter of 2019, and similar growth is expected for 2019 as a whole.  Export growth, led by hi-tech services, declined little despite a weakening global economy, but fixed investment slowed as falls in housing construction outweighed strong machinery spending.  Job creation exceeded 2% in 2018, driven by 3.5% gains for women, keeping unemployment at historic lows of about 4%.  The tight labor market pushed business sector wage rises up to 4.3% in 2018, from 2.9% in 2017.

“Monetary policy remains accommodative, with the policy rate at 0.25% following a hike in the last quarter of 2018.  Inflation has risen from low levels, to remain just above the floor of the 1-3% target range since mid-2018.  A further increase in inflation is expected in the next few years, although this outlook is subject to risks from global growth and inflation, together with uncertainties around the net impact of rising wages and increased competitive pressures in Israeli markets.  In that context, it is appropriate that the Bank of Israel has indicated that future interest rate rises will be gradual and cautious.

Unlike in many advanced economies, Israel’s banks did not become a burden on the budget or a drag on growth during the global financial crisis.  Earlier IMF reports noted that banking supervision in Israel follows a very rigorous and comprehensive approach, contributing importantly to this financial stability.  By approving legislation for the Financial Stability Committee which recently became operational, the Knesset has helped close regulatory and supervisory gaps across the financial system.  Looking forward, any new legislation should remain consistent with international principles for effective bank supervision, especially by preventing government or political interference that compromises the operational independence of the supervisor.  The Bank of Israel releases information on its supervisory activities through various channels, and it should continue to enhance this public transparency and its engagement with the Knesset, while safeguarding confidential information on specific institutions, companies, and individuals.

“Israel’s budget deficit is on a rising path, reaching 3% of GDP in 2018 despite very low unemployment, lifting debt to 61% of GDP.  Even with strong efforts to keep spending close to budget allocations, the deficit is expected to rise to 3.5% or more in 2019, and current policies imply further deficit increases in coming years.  Leaving debt on a rising path will constrain Israel’s ability to use fiscal policy to cushion shocks to the economy.  The budget deficit should therefore be reduced to 2.5% of GDP to ensure that the debt ratio stabilizes.  Israel’s healthy economic position supports making timely progress to this target in the budget for 2020, through the adoption of high-quality structural measures to cut tax benefits, raise revenues, and improve spending efficiency.

“Since the mid-2000s, Israel’s growth has averaged 3.7% thanks to rises in the working age population and in participation, but labor productivity contributed only 0.8% on average.  Although there is scope to increase employment rates in the Arab and Haredi populations, demographics will slow the average pace of job creation in coming decades.  Faster productivity gains must therefore be ignited to sustain solid increases in Israeli household incomes.  Much further progress is needed on cutting regulatory costs and uncertainties that lower business investment, including through digitalization of government.  Productivity lost in traffic should be reduced by charging congestion fees and boosting investment in transport infrastructure.  Deep reforms of education and training are crucial to upgrading the skills of those already employed as well as those of the Haredi and Arab populations.  Building on measures taken in recent years, expanding the Earned Income Tax Credit and the support for childcare can help contain poverty while also boosting employment and productivity.  (IMF 24.05)

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11.2  ISRAEL:  The Future of the Israeli Defense Industry to 2024

The “Future of the Israeli Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2024” report has been added to‘s offering.  This report offers detailed analysis of the Israeli defense industry with market size forecasts covering the next five years.

They found that Israel’s defense expenditure as a percentage of its GDP is anticipated to increase to an average of 4.5% over the forecast period.  The Israeli defense budget, which stands at about $17.6 billion in 2019.

Between 2015 and 2019, the country’s capital expenditure allocation stood at an average of 52.1% of the total defense budget and is expected to increase slightly to an average of 52.6% over the forecast period.  Overall, Israel is projected to spend a total of $68.5 billion on the acquisition of military hardware between 2020 and 2024.  The MoD is expected to invest in physical security of critical infrastructure, land-based C4ISR systems, infrastructure construction, Armored Personnel Carriers (APC), Multirole Fighter aircraft and Corvettes among others.

Israel’s gross defense expenditure is anticipated to be $130.3 billion cumulatively over the forecast period.  Driven by the need to secure itself against potential threats from Iran, Saudi Arabia, Syria and to a certain extent, Egypt, Israel has traditionally focused on developing a robust and aggressive defense posture.

Israel remains surrounded by enemies and potential rivals and thus the country can ill afford to ignore security risks that have the potential to develop into a major security threat in future.  As one of the largest defense markets in the Middle East, Israel allocated a gross budget of $20.3 billion in 2019 and is likely to continue spending heavily on fortifying its defense and security apparatus.

During the period 2015 to 2019, the Israeli gross defense expenditure increased from $18.1 billion in 2015 to $20.3 billion in 2019, reflecting a CAGR of 2.90% over the analysis period.  However, the Israeli defense expenditure is anticipated to grow rapidly from $21.9 billion in 2020 to $30.5 billion in 2024, registering a CAGR of 8.59% over the forecast period.  The growth can be partially attributed to $19 billion worth of military aid that the country is scheduled to receive from the US between 2019 and 2023, coupled with the country’s plans to boost its investments in missile defense capability by about $8-10 billion over the next decade.

Over the forecast period, Israeli defense expenditure as a percentage of GDP is anticipated to maintain an average of 4.5%, driven primarily by the Palestinian conflict and the threats posed by the increasing influence of Iran and Hezbollah within neighboring Syria.  Israel is expected to focus its expenditure on the procurement of fighter aircraft, missiles, corvettes, nuclear capable submarines, border security equipment and communication systems, among others.  These procurement plans are expected to maintain Israel’s capital expenditure allocation at 52.5% even in 2024.

Israel has one of the most advanced defense industries worldwide and the country has consistently ranked among the top 10 defense exporting countries globally.  During 2013-2017, Israel was ranked eighth on the list of the highest arms exporting countries, with a share of 2.9% of the global arms market.  During the period 2014-2018 India was the single largest customer for Israeli defense equipment, accounting for 46.3% share of the Israeli defense exports. Azerbaijan and Vietnam were ranked as the second and third largest markets for Israeli defense equipment, accounting for 17.4% and 8.5% respectively.  Asia is the major defense market for Israeli defense equipment and accounts for a 78.7% share of Israeli defense exports during the period 2014-2018.

The Israeli government imported fighter aircraft, naval vessels, missiles, armored vehicles, engines, sensors, and artillery systems during 2014-2018. The US accounted for 50.8% of Israeli defense imports during this period, while India emerged as the single largest customer for Israeli defense goods with a share of 46.3%.  The three key Israeli arms export categories were missiles, air defense systems and sensors.  (R&M 20.05)

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11.3  JORDAN:  Concerns for Jordan’s Stability

On 21 May, Oded Eran published in INSS Insight that in the first years after the outbreak of the Arab Spring, the common assessment was that the Hashemite Kingdom was able to cope with the challenges it confronted, despite the various internal and external political pressures, including the demographic pressure created by the wave of refugees from Syria.  However, cracks in this image of stability have begun to emerge, and there are increasing indications that the developments in the country could lead to a serious undermining of the regime, with long term strategic ramifications.  The destabilization process could, for example, be sparked by protracted mass demonstrations, some of them violent, a loss of control over the situation by security forces, and a loss of the palace’s control over parliamentary decisions.

The status of the Hashemite monarchy in Jordan has not been subject to question since the establishment of the kingdom.  While at the outset of the Arab Spring there were calls to reduce the King’s authority and establish a constitutional monarchy, King Abdullah II wisely deflected the trend by adopting some of the demands – mainly by changing the electoral system.  However, the past two years have seen increased criticism both of the King’s approach to the kingdom’s fundamental problems, and of the personal conduct of the King and Queen Rania.  Rumors and reports in non-Jordanian media that an underground organization has formed against the King and includes some of his close associates were verified when the King publicly confirmed this.  In early May, the Jordanian press published a letter from the King to Ahmad Husni, appointed as the new director of the General Intelligence Service, which has a key part in Jordan’s internal and external security.  The king took pride in the security services that, he said, had managed to uncover “desperate attempts” against the nation, and especially recently, indicating that a number of people were exploiting the difficult conditions that Jordan faced.  According to the king, this is a complex and challenging period for the region in which Jordan itself must contend with regional instability and a tense international climate.  Along with the head of General Intelligence, other officials in the palace were also replaced.

Since its statehood, Jordan has grappled with existential economic problems stemming from a lack of natural resources and other local sources of income, as well as the need to contend with several migrant waves – large relative to the size of its population.  In addressing these fundamental problems, the Jordanian government is compelled to rely on grants and loans from donor countries and international institutions.  This is also true for other countries, but extreme challenges to their stability or their regimes do not create regional unrest or have international ramifications.  Since 2011, nearly 1.5 million Syrian refugees have arrived in Jordan and there is only a slim chance that any significant number will be able to return to their native land.  While the international community has helped Jordan cope with the financial burden of absorbing the Syrian refugees, Jordan will continue to bear the long term economic, legal and political burden inherent in the presence of such a large minority (almost 15% of the population) that lacks a clear status.  Moreover, donor countries themselves likewise face difficult political and economic realities, on both internal and international levels, and their ability to maintain levels of aid that meet Jordan’s needs even partly is far from assured.

In May 2019, the International Monetary Fund published a detailed report on Jordan’s economic situation.  The IMF’s demands of Jordan from 2016 to reform the tax system (including supervision, enforcement, and collection) as a condition for receiving a loan, as well as a rise in fuel and electricity prices, ignited a rebellion in the Jordanian parliament, which refused to accept them.  The King was forced to dismiss Prime Minister Hani Mulki, and the new government, headed by Omar Razzaz launched a “national dialogue” that culminated in December 2018 with parliament adopting a large portion of the demands.

Much ambivalence can be discerned between the lines in the report’s conclusions.  It notes that economic growth in 2018 was weak, as unemployment remained at 18% (more than 42% among young people and more than 23% among women).  The government deficit rose toward the end of 2018, reaching 2.4% of GDP, erasing the deficit cut earlier in the year. In contrast to the cuts in government expenditure on health, the report points to the deficit growth due to a cut in electricity prices despite a rise in fuel prices, which increased the electrical company’s contribution to the deficit to 0.3% of GDP.  The deficits of the electricity company and water authority brought the public sector deficit to 4.3% of GDP, though the forecast in 2016, when the IMF approved a $723 million loan to Jordan to be disbursed over three years, was that the deficit would reach only 1.8% of GDP.

The report notes that a $500 million loan from the World Bank, $2.5 billion in aid pledges and $1.6 billion worth of cash from Kuwait, Saudi Arabia and the United Arab Emirates, along with periodic interest rate increases by the Central Bank of Jordan helped maintain the stability of the monetary system.  However, Standard & Poor’s credit rating for Jordan was downgraded in October 2017 from BB- to B+, where it remains to this day

Under the sub-heading “The forecast remains subject to considerable risks,” the report states that while the situation in Syria has stabilized, it remains fluid and prone to unexpected developments, and that an increase in oil prices and a reduction in international credit sources could harm Jordan’s foreign exchange reserves and increase its inflation rate.  On the positive side, it notes that a rise in oil prices could increase Jordanian exports to oil-producing countries as well as remittances by Jordanian workers in these countries, and yield positive results from the construction of the oil pipeline from Iraq to Aqaba.  Any forecast will, of course, depend on the strict implementation of the new income tax law and compliance with collection targets.

Although government resolutions on tax reforms and the abolition of subsidies have been approved by parliament, they continue to provoke lawmakers and spark public protests in Jordan’s main cities.  In Amman, the weekly demonstration in the Fourth Square has become a fixture.

In addition, the Israeli-Palestinian conflict continues to stir up public opinion in Jordan and preoccupy King Abdullah II.  Compounding this situation are elements that will exacerbate the ramifications of the conflict for Jordanian-Israeli relations.  In recent months, tension has erupted over the Temple Mount due to the struggle between Islamist, Palestinian and foreign elements (Turkey, for example) for greater control over inside the compound, and Israel as it seeks to exercise its sovereignty over the site.  Jordan, which unilaterally broadened the application of the clause in the peace treaty acknowledging Israel’s recognition of Jordan’s special interest in the holy sites of Islam in Jerusalem, such that it is tantamount to custodianship over the holy sites of Islam and Christianity, has transformed the issue into a means of strengthening its international standing.  The King has perhaps channeled internal criticism at the regime into a public protest against Israel and a rallying around the King and his self-styling as defender of Jerusalem’s central place in Islam.

If the new Israeli government initiates or accepts legislative moves toward annexation to Israel and/or the application of Israeli jurisdiction to areas of Judea and Samaria, Jordan will head the Arab camp that will urge the international community not to recognize these measures, condemn Israel and even impose sanctions unless Israel refrains from such moves.

Exacerbating the picture are the expected ramifications of President Trump’s “deal of the century” to resolve the Israeli-Palestinian conflict.  King Abdullah, who reiterates in every meeting with leaders of the region and the international community that there is no solution other than the two-state solution based on the 1967 lines and East Jerusalem as the capital of the Palestinian state, finds it hard to hide his opposition to any other paradigm, clearly alluding to the upcoming US plan – although King Abdullah claims that the administration has not clarified the details of the plan to him.  Once it is made public none of the diplomatic rhetoric will help him, and he will be forced to voice his opposition in clear and unequivocal language so as to silence all those secretly whispering in Amman that generous American aid would moderate his response.

The already cool relations between Israel and Jordan, and especially between the King and Prime Minister Benjamin Netanyahu, will be heavily tested with in the next few months.  In addition to the stalemate in the Israeli-Palestinian negotiations and the ongoing tension on the Temple Mount, Israel and Jordan will have to deal with Jordan’s announcement that the agreements regarding Naharayim and Tzofar (two enclaves that were recognized in the 1994 peace treaty as belonging to Jordan but remained open to Israeli presence for 25 years) will not be renewed; attempts in Israel to move forward with the annexation of territories in Judea and Samaria; disagreement over the Dead Sea-to-Red Sea canal; ongoing criticism in Jordan of the deal for Israel to sell gas to Jordan; and the US “deal of the century.”  This is a list whose every item threatens the essence of the relationship.

Israel has an interest in Jordan’s stability, and developments in the Middle East over the past decade have only strengthened this interest.  Moreover, Israel wields significant influence on Jordan’s ability to cope with some of the challenges it faces, and therefore what is necessary is strategic Israeli thinking, along with Jordanian and Israeli willingness to avoid provocative steps despite internal pressures in both countries.  A comprehensive dialogue is also required between them, and at the senior level, in order to stabilize and ensure the relations to the fullest extent possible.  (INSS 21.05)

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11.4  QATAR:  Fitch Affirms Qatar at ‘AA-‘; Outlook Stable

On 27 May 2019, Fitch Ratings affirmed Qatar’s Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘AA-‘ with a Stable Outlook.

Key Rating Drivers

Qatar’s ‘AA-‘ ratings reflect a return to fiscal surpluses, strong sovereign net foreign asset position and external surpluses, and one of the world’s highest ratios of GDP per capita.  We estimate Qatar’s fiscal breakeven Brent price of oil at around $60/bbl, lower than for some regional peers.  These strengths are balanced against a high level of debt and contingent liabilities compared with rated peers, heavy hydrocarbon dependence and mediocre scores on measures of governance and doing business.

Qatar is exposed to regional geopolitical shocks.  A standstill continues in the dispute that began in mid-2017 between Qatar and the Quartet consisting of the UAE, Saudi Arabia, Bahrain and Egypt, resulting in the rupture of mutual trade, financial and diplomatic relations.  Although we believe risks of escalation are low, there has also been little visible progress in reconciliation efforts.  Possible spillovers from recent tensions between Iran and the US and some of its allies have increased the risk of disruptions to Qatar’s economy, including its shipment of hydrocarbon exports through the Strait of Hormuz.

The general government budget swung to a surplus of 4.6% of GDP in 2018 from a deficit of 3.7% of GDP in 2017.  Under our definition, which is aligned with the IMF’s Government Finance Statistics methodology, this includes in revenue our estimate of the investment income on government external assets, mainly in the Qatar Investment Authority (QIA).  Revenue was up around 24%, led by a rebound in oil and gas prices, but spending was down 5% as an up-tick in wages and salaries was more than offset by underperformance in capital spending and a decline in other current spending.

We expect the general government surplus to narrow to 2.8% of GDP in 2019 and 0.2% of GDP in 2020.  This mainly reflects our baseline assumption of a moderation in Brent oil prices, which also drive the pricing of most of Qatar’s gas sales, to an average of $65/bbl in 2019 and $62.5/bbl in 2020.  We also expect government spending to rebound by nearly 9%, led by capital spending, which we expect will plateau at around 13% of GDP (QAR95 billion) in 2019-2021 in the run-up to the 2022 Football World Cup.  In 2020-2023, we assume that a ramp-up of work on the North Field expansion will put pressure on Qatar Petroleum’s returns to the government.  We estimate that a $10/bbl change in the average oil price from our baseline assumption could move the fiscal balance by around 3pp.

There are prospects for significant longer-term improvements to the public finances. Government capital spending (more than 40% of the total) is likely to start trending down in 2022, even as the government adds new projects to the pipeline in order to avoid a sharp contraction in non-oil activity and the defense sector puts further upward pressure on spending.  This should help offset some of the fiscal cost of the North Field expansion, which is expected to add 32 million tonnes per year of liquefied natural gas export capacity starting in 2023, a 42% increase over current capacity of 77 million tonnes and equal to an addition of nearly 800,000 barrels of oil equivalent per day.  Expected by-products include 260,000 bbl/day of condensate.

We expect government debt to jump to 63% of GDP in 2019 from 59% in 2018 despite the fiscal surplus.  This is well above the ‘AA’ median of around 40% of GDP. The projection includes around 1% of GDP of domestic T-bills and 8% of GDP of government overdrafts with local banks.  Our understanding is that around half of this year’s $12 billion external issuance will be put towards the government reserve account, with the rest used to reduce borrowing from banks and pre-fund future maturities.  Much of last year’s $12 billion of bonds also went towards replenishing the government reserve, which had been used to inject liquidity into banks in 2017.  As a result, we assume that gross issuance will be somewhat below financing needs in 2020-2023.

We estimate that sovereign net foreign assets (reserves plus other government assets less external debt) were broadly stable at around 119% of GDP ($229 billion) in 2018, above the ‘AA’ median level of 4% of GDP.  Qatar Central Bank (QCB) reserves doubled to $30 billion, largely offset by sovereign external borrowing.  We also estimate that other government external assets may have dipped slightly to $233 billion by end-2018, as negative returns in global equity markets likely offset new investment abroad.

The country’s banking sector (with assets of over 200% of GDP), is a source of potential contingent liabilities for the sovereign.  The sector relies heavily on non-resident funding and has concentrated exposures, including to a weakening domestic real-estate sector.  Profitability is currently sufficient to absorb some worsening of asset quality, and capitalization levels remain adequate.  Non-performing loans were only 1.9% of total loans in 2018 (up from 1.6% in 2017).  However, the increased prevalence of loan restructurings in banks, and a Fitch-estimated problem loans ratio of approximately 10% indicate a worse asset quality picture and the potential for headline metrics to deteriorate.

Around $28 billion in non-resident funding has flowed back into the banking system since November 2017, after falling by nearly $31 billion in June-October 2017, mainly due to withdrawals of deposits by Saudi Arabia and UAE-based clients.  Asian institutional investors have been the main source of returning non-resident funding.  This allowed the public sector to pare back its liquidity assistance to the banking sector by $17 billion in 2018, from a cumulative $40 billion in June-December (consisting mainly of placements by the QCB, the QIA, and the Ministry of Finance).  Public sector deposits at banks increased again in early 2019 amid fiscal surpluses and Eurobond issuance, and the government intends to reduce local borrowing in order to support private credit growth (which we forecast at 9% in 2019).

We forecast real GDP growth at around 2% in 2019-2021, after 1.4% in 2018.  Hydrocarbon GDP, after falling by 2% 2018, will likely continue to show mild declines in the next few years amid dwindling crude production in maturing oil fields, and continued delays at the Barzan gas project (which in any case would mainly produce gas for local consumption and ramp up gradually).  The North Field expansion will significantly boost hydrocarbon growth after 2023.  On the non-hydrocarbon side, we expect a gradual trend slowdown from 4.7% y-o-y in 2018, as the growth impulse from high but peaking government capital spending fades.

Key Assumptions

Fitch assumes that:

-Brent crude will average $65/bbl in 2019 and $62.5/bbl in 2020.

-Qatar will continue to be able to export hydrocarbons and trade with countries that are not currently party to its dispute with neighbors.

-The majority of QIA assets can be monetized over time to meet liquidity needs as they arise.

Rating Sensitivities

The main factors that could, individually or collectively, lead to positive rating action are:

-A marked and sustained reduction in public debt.

-A substantial improvement in Qatar’s external balance sheet.

-An improvement in structural factors such as a reduction in geopolitical risk, lower oil dependence, and an improvement in governance or business environment indicators.

The main factors that could, individually or collectively, lead to negative rating action are:

-A further increase in public debt, for example due to renewed widening of fiscal deficits or a materialization of large contingent liabilities.

-A deterioration in Qatar’s external balance sheet.

-An escalation of regional geopolitical tensions that threatens Qatar’s economic and financial stability.

Qatar does not publish data on its International Investment Position (IIP). In particular, there is no disclosure on the size, composition and returns of government external assets (mostly relating to the QIA).  Fitch produces its own estimates of Qatar’s IIP figures based on data from the Bank of International Settlements, Qatar’s depository corporations survey and Qatar’s fiscal and balance of payments data.  The estimates of Qatar’s government external assets are derived by compounding the government’s investments abroad (from balance of payments statistics) using assumptions about returns and asset allocations.  (Fitch 27.05)

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11.5  SAUDI ARABIA: Staff Concluding Statement of the 2019 Article IV Mission

Based on the preliminary findings of an IMF mission to Saudi Arabia, on 15 May following concluding statement was released:

Economic reforms have started to yield positive results.  Non-oil growth has picked-up, female labor force participation and employment have increased, the successful introduction of the value-added tax has underpinned an increase in non-oil fiscal revenues, energy price reforms have helped reduce per capita consumption of gasoline and electricity, measures have been introduced to compensate low and middle-income households for the higher costs resulting from reforms, and fiscal transparency has increased.  Reforms to the capital markets, legal framework, and business environment are progressing well.  Challenges, however, remain. Government spending has risen, supporting growth but raising medium-term fiscal vulnerabilities to lower oil prices.  Fiscal consolidation is needed to reduce these vulnerabilities. More generally the economic footprint of the public sector is still large.  The unemployment rate of nationals remains high. Job creation is a key challenge identified under the government’s reform program.  To deliver a diversified, productive and competitive economy, reforms need to make Saudi nationals more competitive for private sector jobs, raise foreign direct investment, and increase the availability of finance for young and growing companies.

Recovery in the Non-Oil Economy

Economic outcomes improved in 2018.  Real GDP growth rebounded to 2.2% after contracting in 2017.  Real oil GDP increased by 2.8% (3.1% decline in 2017), while non-oil GDP growth rose to 2.1% (1.3% in 2017).  Government spending increased, but the exit of expatriate workers and dependents appears to have held back growth.  CPI inflation rose with the introduction of the value-added tax (VAT) and increase in energy prices in January 2018 but has eased since as housing rents have fallen.  Consumer prices declined by 2.1% (y/y) in March 2019.

Real non-oil growth is expected to further strengthen to 2.9% in 2019.  Recent monthly indicators have been positive and the increase in oil prices since the turn of the year is boosting confidence.  At this time, it is difficult to assess future developments in the oil market given uncertainties about production in some key exporting countries.  On the assumption that Saudi Arabia produces at its agreed level under the current OPEC+ agreement in H2/19, real oil GDP growth is projected at 0.7% in 2019 and overall real GDP growth at 1.9%.  If Saudi Arabia increases oil production, then oil GDP growth would be higher (as would export and fiscal revenues).  Over the medium-term, the team expects a strengthening in non-oil growth to around 3-3¼% as the ongoing reforms yield dividends and overall real GDP growth to settle around 2½%.

Higher government spending has supported growth and the implementation of reforms, but has increased medium-term fiscal vulnerabilities

The fiscal deficit narrowed in 2018 to 5.9% of GDP.  The non-exported oil primary deficit (NEOPD)—the team’s preferred measure of the fiscal stance because it focuses on what is directly under the control of the government and is not affected by the volatility of oil revenues—increased to 39.5% of non-oil GDP in 2018 from 38.5% in 2017.  Oil and non-oil revenues increased substantially in 2018 as did government spending.  Despite the budget surplus in the first quarter, the team projects that the fiscal deficit will rise to 7% of GDP in 2019.  No decline in the overall fiscal deficit from this year’s projected level is expected over the medium-term based on current policies and the oil price path currently embedded in financial markets ($57 a barrel in 2024).  The NEOPD is expected to decline to 29.4% of non-oil GDP in 2024 as announced fiscal measures are implemented.

The fiscal deficits in recent years have resulted in a decline in the government’s fiscal buffers.  At end-2018, the central government debt-to-GDP ratio was 19.1% and the central government net financial asset-to-GDP ratio (defined as government deposits at the central bank less gross debt) was 0.1%.  While enviable in a global context, these ratios were below 2% and around 50% of GDP, respectively, at end-2014.

Fiscal consolidation is needed to reduce these medium-term vulnerabilities.  The team understands the authorities’ desire to support growth and the Vision 2030 reform program through higher spending but believes that fiscal policy should strike the right balance between fiscal sustainability, social spending and development.  If oil prices are lower than assumed in the government’s budget plan, the country would face large fiscal deficits unless spending was reduced, but from a starting position of weaker fiscal buffers than in 2014.

Achieving planned fiscal targets will require implementing the reforms set out in the Fiscal Balance Program and identifying additional fiscal measures.  Planned energy and water price reforms, supported by compensation for low and middle-income households through the Citizens Account program, and increases in expatriate labor fees should proceed, although the latter can be implemented more gradually to give businesses time to adjust.  The cost-of-living allowances introduced in the January 2018 Royal Decree should be allowed to expire as planned at end-2019.  In addition, a reduction in the government wage bill, a more measured increase in capital spending, and the better targeting of social benefits will all yield fiscal savings.  The introduction of the VAT has been very successful, and consideration should be given to raising the rate from 5%, which is low by global standards, in consultation with other GCC countries.

Improvements in expenditure management and fiscal transparency need to continue.  Important reforms have been implemented to strengthen the budget process, develop a medium-term fiscal framework, introduce an online expenditure management system (Etimad), strengthen fiscal analysis and increase publicly available information on the budget.  The new public procurement law, which needs to cover all procurements from budget resources, should improve spending efficiency and help reduce potential risks of corruption in procurement.  Nevertheless, spending has increased with oil prices over the past two years.  The fiscal framework and expenditure management processes need to be able to maintain spending at a level that is sustainable across different oil price environments.  Otherwise large adjustments in spending will be needed during times of low oil prices which causes undue volatility in growth.

Promoting Non-Oil Growth, Diversification and Job Creation Remain Key Challenges

The government is implementing ambitious reforms to develop the non-oil economy under its Vision Realization Programs (VRPs).  These initiatives center around improving the climate for doing business in Saudi Arabia, developing new, or expanding existing, sectors of the economy, attracting foreign direct investment, developing small and medium-sized enterprises (SMEs), broadening and deepening the financial markets, and strengthening the human capital of Saudi nationals.  Careful prioritization of the reforms is important to ensure successful implementation.

Important reforms have been made to strengthen the legal framework and reduce constraints to business.  The bankruptcy and commercial pledge laws fill important gaps in the legal infrastructure, while efforts to streamline procedures for starting a business and clearing containers through ports should support business formation and trade.  Looking forward, FDI licensing requirements should be reviewed as planned and the privatization and PPP programs, which are now starting to see transactions, accelerated.

Labor market reforms should focus on four areas to encourage Saudi nationals to work in the private sector and companies to hire them:

Reducing the availability and attractiveness of government work.  The authorities should clearly signal that government employment will not increase in the future so that the wage at which workers are willing to accept a private sector job is lowered.  Over time, thought will need to be given to how the attractiveness of working in the government sector can be reduced and incentives for working in the private sector increased.

Strengthening education, training, and career development.  Reforms are needed to improve educational outcomes and equip students with the skills in demand in the private sector.  The revamping of current vocational training programs and the acceleration of educational reforms will help.  Companies need to play their part by ensuring career development is a high priority in their human resource policies.

Increasing the mobility of expatriate workers through reform of the visa system.  Allowing expatriates to move freely between jobs would over time increase their wages, reducing wage differentials with nationals.

Further increasing female participation and employment.  Regulations should be reviewed to ensure there are no impediments to female employment.  Creating programs for female entrepreneurs under SME initiatives and expanding as needed existing programs to defer transportation and childcare costs should be considered.

Industrial policies such as those in the National Industrial Development and Logistics Program can help overcome the reluctance of private companies to enter new or riskier sectors but need to be carefully implemented.  Experiences with industrial policy have been mixed.  They have played an important role in development in some countries but have led to large inefficiencies in others.  Lessons from successful country experiences suggest these policies work best when government support is made available to priority sectors rather than specific companies, is time-bound and has strict performance criteria attached.  Human capital development is also essential for success.

More broadly, government interventions in the economy need to be carefully handled.  The economic footprint of the public sector is large—through higher government spending, the growing role of the Public Investment Fund, and numerous programs of subsidies in housing, mortgage loans and SME development.  Government interventions in the economy should focus on areas where they crowd-in private sector investment.

It is important that the reforms are inclusive and the less well-off are protected from any negative effects.  The introduction of the Citizens Account program in December 2017 has appropriately helped shield low and middle-income households from the higher costs associated with the VAT and energy price reforms.  The government is also reviewing its social assistance programs to ensure they provide adequate financial support to those in need and are well-targeted.  An effective social assistance program should be based on a commonly agreed poverty line and reliable information on the distribution of income.

Financial Sector Development and Inclusion Will Support Growth

Banks are profitable, liquid, and well-capitalized.  Mortgage lending is continuing to grow rapidly against the backdrop of the decline in real estate prices in recent years.  While mortgages are still a relatively small share of total bank lending, and risks to banks are reduced by salary-assignment and government guarantees on a large share of new lending, SAMA should continue to keep a careful eye on the quality of real estate lending.

Capital market reforms have advanced quickly and have culminated in Saudi Arabia’s inclusion in global equity and bond market indices.  This will increase inflows into the equity market and further increase demand for debt.  Significant reforms have taken place in the domestic debt market including the introduction of a primary dealer system and the extension of the government yield curve to long-dated maturities.  Over time, this will help financial sector development and the deepening of the private debt market.

Improving financial access is a key goal of the Financial Sector Development Program.  Financial access should be increased for SMEs, women, and youth, although specific sector lending targets should be avoided.  The development of agency banking (where transactions take place via an agent such as the post office) and Fintech could help broaden the channels of access to financial services and increase market competition, particularly in areas outside the major cities.  As reforms proceed, getting the right balance between innovation and stability will be a key challenge for the financial regulators.

The exchange rate peg continues to serve Saudi Arabia well given the current economic structure.  SAMA’s foreign exchange reserves remain at very comfortable levels.

Improved Economic Data Will Support Policymaking

The availability of economic data has improved considerably, but further efforts are needed.  Saudi Arabia does not yet subscribe to the IMF’s Special Data Dissemination Standards (SDDS).  The team welcomes the authorities’ commitment and efforts to subscribe as soon as possible.  Beyond this, weaknesses in labor market, balance of payments, and national accounts statistics need to continue to be addressed by the authorities.  (IMF 15.05)

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11.6  EGYPT:  IMF Team Reaches Staff-Level Agreement on the Fifth Review for Egypt’s EFF

An International Monetary Fund (IMF) team visited Egypt on 5 – 16 May 2019 to conduct the fifth and final review of Egypt’s economic reform program supported by a three-year Extended Fund Facility.  At the end of the visit the IMF issued the following statement:

“The IMF staff team and the Egyptian authorities have reached a staff-level agreement on the fifth and final review of Egypt’s economic reform program, which is supported by the IMF’s Extended Fund Facility arrangement.  The staff-level agreement is subject to approval by the IMF’s Executive Board. Completion of this review would make available SDR 1,432.76 million (about $2 billion), bringing total disbursements under the program to about $12 billion.

Over the last three years the Egyptian authorities have carried out an ambitious home-grown reform program which has aimed to correct significant external and domestic imbalances, promote inclusive growth and job creation, and strengthen social spending.  The authorities’ efforts have been successful in achieving macroeconomic stabilization, a recovery in growth, and an improvement in the business climate.  GDP growth accelerated from 4.2% in 2016/17 to 5.3% in 2017/18; unemployment declined from 12% to below 9%; and the current account deficit narrowed from 5.6% of GDP to 2.4%.  Gross general government debt is expected to decline according to our estimates to about 85% of GDP in 2018/19 from 103% of GDP in 2016/17. International reserves increased from $17 billion in June 2016 to $44 billion in March 2019.  As a result, Egypt has become more resilient to the elevated uncertainty in the external environment.

“The Central Bank of Egypt (CBE) has modernized its monetary policy framework, which focuses on inflation as its primary objective under a flexible exchange rate regime.  Its monetary policy stance has been appropriately calibrated, helping to reduce inflation from 33% in July 2017 to 13% in April 2019 despite occasional supply-side shocks and excessive volatility in some food prices.  Addressing food supply bottlenecks by investing in logistics, storage facilities, and transport infrastructure, and reducing non-tariff trade barriers are important measures that would reduce this volatility.  The CBE aims to reduce inflation to single digits in the medium term.  This would help to further strengthen macroeconomic stability, reduce interest rates and attract investment.  The CBE’s commitment to exchange rate flexibility ensures that that the Egyptian pound reflects economic fundamentals, protects international reserves and enhances the economy’s resilience to external shocks.  The CBE has also established itself as a credible guardian of financial sector stability.

“Egypt is on track to achieve its three-year fiscal consolidation objective of 5.5% of GDP in the primary balance.  The primary surplus target of 2% of GDP in 2018/19 is within reach, and the authorities intend to maintain this level in the medium term to keep general government debt on a steadily declining trajectory.  The fuel subsidy reform is nearing a successful completion, which will be a significant accomplishment.  This reform has played a critical role in creating space for spending on better targeted social programs that help the most vulnerable and in achieving the program’s fiscal objectives, supported by measures to mobilize more resources and streamline current spending.  Going forward, the main priorities include raising tax revenues for much needed spending on health, education and social programs.  We welcome the authorities’ plans to preserve the fiscal consolidation gains achieved during the program, further strengthen the capacity for debt and fiscal risk management, improve spending efficiency, and enhance the transparency and accountability of public finances.

“We commend the authorities for implementing a social protection package, which eases the burden of adjustment on the vulnerable.  This package was critical in garnering broad public support for difficult reforms.  The reduction in regressive and inefficient fuel subsidies has provided the financial means for it.  The pension increases and targeted initiatives such as Takafol and Karama, Forsa and Sakan Karim aim to support the poorest and deliver public services to the most underserved groups.  Mastura provides microfinancing to women to increase female employment.  The measured increases in public sector wages and progressive tax credits have benefited the middle class.  Efforts are ongoing to further improve targeting and expand the coverage of the social safety net.

“The objective of structural reforms is to generate higher and more inclusive growth and create jobs for Egypt’s young and growing population.  Steady progress is being made in implementing measures that aim to increase productivity, remove barriers to investment and trade, improve governance and reduce the role of the state in the economy.  The key reform areas include: improving access to finance; improving industrial land allocation; enhancing competition; strengthening transparency and management of state-owned enterprises; and fighting corruption.  Timely completion of the planned measures would yield significant dividends in terms of higher investment, inclusive growth, and job creation.  Staff welcomes the authorities’ strong commitment to maintain the reform momentum beyond the program, which expires in November.”  (IMF 17.05)

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11.7  EGYPT:  After Finalizing IMF Loan, Egypt’s Reforms Target Industrialization & Exports

Ahmed Elleithy observed on 20 May in Al-Monitor that an IMF mission in Cairo to review Egypt’s economic reform program under a $12 billion loan, focused on the country’s plan to launch structural reforms, targeting the industrial and export sectors.

The Egyptian authorities and an International Monetary Fund (IMF) mission reached a staff-level agreement over the completion of the fifth and final review of the Extended Fund Facility (EFF).  An IMF team led by Subir Lall, IMF assistant director for the Middle East and Central Asia, visited Egypt on 5-16 May, for the final review of Egypt’s economic reform program supported by a three-year EFF.  By July, Egypt is expected to get the last tranche worth $2 billion of the IMF’s $12 billion loan program signed in November 2016.

Egyptian Deputy Finance Minister Ahmed Kouchouk said in a press statement on 7 May that the government would provide the IMF mission with the latest developments regarding the country’s financial performance, growth and balance of payments indicators in the coming two weeks.  “The mission is focusing on Egypt’s plan to launch structural reforms, targeting the industrial and export sectors.  However, the IMF’s review will not result in fresh decisions that are severe for citizens as all requirements have been fully fulfilled since the beginning of the agreement,” Rashad Abdo, head of the Egyptian Forum for Economic and Strategic Studies, told Al-Monitor.  Abdo cited that Egypt has taken a raft of measures aimed at financial reforms, i.e., reining in the state budget and current account deficits over the past three years.

The IMF Country Report No. 19/98 issued in April stated that Egypt’s “progress on structural reforms has been mixed, but the program objectives remain achievable.”  It added, “Sustained efforts are needed to advance critical reforms in competition, industrial land allocation, transparency and governance of state-owned enterprises and public procurement.”

In this regard, Abdo said both Egypt and the IMF agree on the need to enhance the role of the private sector. However, he warned of a sudden withdrawal of the public sector.  Egypt has announced its plan to sell stakes in state-owned companies via initial public offerings to minimize the role of the public sector, according to the loan agreement with the IMF.

Paris-based bank BNP Paribas said the recent structural changes in Egypt’s economy “do not favor a significant rebound in activity based on productive investment and job creations.”  “The public sector accounts for about 40% of the official economy and a quarter of formal employment.  For historical reasons, the public sector plays a very key role in the economy, and recent reforms have not changed this substantially,” BNP Paribas stated in a report issued in April titled “Egypt: From Macroeconomic Stabilisation to Sustainable Growth.”

Most international banks, like BNP Paribas, have economic research units for issuing reports on countries, commodities, world stocks, and so on.  These research units are mainly interested in addressing foreign investors who have been buying into Egypt’s sovereign debt instruments over the past three years.  However, Abdo believes the full withdrawal of the public sector will leave the private sector alone on the local market.  “Without market controls, the private sector will monopolize the market and prices will shoot up.  The BNP Paribas report is based on theoretical arguments,” he said, citing that the public sector is like a balance of power on the local market.

Assessing the country’s economic reforms after nearly three years, Abdo said, “Egypt has achieved political and legislative stability that has contributed to the improvement of the investment environment and tourism recovery.”  He noted that following the currency float in November 2016, Egyptian merchants focused only on exports at the expense of the local market, taking advantage of higher earnings from a depreciated pound versus the greenback.  “To boost exports, there must be production surpluses like in China, where its currency is depreciated for making its products cheaper to world importers,” he said.

According to Abdo, building up a local manufacturing base for both the domestic and foreign markets is a must. “Therefore, all obstacles — i.e., importing machinery, equipment and intermediate goods — facing industrialization should be ironed out. Industrialization for creating production surpluses is a must in the long term,” he added.  “Industrialization will create jobs and maintain sustained economic growth in the long run.”

The industrial sector accounts for 30% of manpower in Egypt, or 2.5 million people in roughly 38,000 manufacturing firms.  It contributes 17.7% of gross domestic product (GDP), according to the official State Information Service.  Egypt’s non-oil manufacturing sector accounts for 16% of GDP, Amr Taha, the executive director of the state-run Industrial Modernization Center, was quoted as saying.

Prime Minister Mustafa Madbouly told a Cabinet meeting on 12 May that the sustainability of development rates would rely on enhancing the local industry.  “Boosting the industrial sector is a guarantee to keep the economy on track and ensure there would be no decline in growth objectives.”  Moreover, Madbouly said March 8 that his government plans to increase exports by 221.8% from $24.8 billion at present to $55 billion in the coming years.

Egypt’s Planning Minister Hala al-Saeed told the parliament on 16 April that the government is targeting the completion of 13 industrial complexes across the country and issuing 12,000 new industrial licenses in the fiscal year 2019-20, which will begin on 1 July.  She said the government would continue the structural transformation of economic growth resources with increased reliance on investment and exports, increasing the contribution of both sectors to 42% and 38% of GDP growth, respectively.

Egypt’s exports rose to $14.3 billion in the first half of the fiscal year 2018-19 (July-December 2018), up from $12.1 billion in the same period a year earlier, the Central Bank of Egypt stated on 1 April.

Ahmed Elleithy is an Egyptian reporter and financial columnist who has been writing for various local and international newspapers and news portals since 2004.  (Al-Monitor 20.05)

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11.8  MOROCCO:  Outlook on the Moroccan Defense Market to 2024

The “Future of the Moroccan Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2024” report has been added to‘s offering.

Between 2015 and 2019, Morocco’s defense expenditure increased from $3.3 billion in 2015 to $3.7 billion in 2019, registering a CAGR of 3.39%.  The defense budget is anticipated to increase from $3.9 billion in 2020 to $4.7 billion by 2024, registering a CAGR of 4.24%.  The rise in defense spending is mainly driven by the procurement of F-16 Fighting Falcons, Single Channel Ground and Airborne Radio Systems (SINCGARS) combat net radio, M1A1 tanks, electric submarines and patrol ships.

The prime factor stimulating the country’s defense expenditure is its ongoing arms race with adjoining Algeria, which receives a steady supply of weapons from Russia.

Over the forecast period, the increased threat of terrorism from internal and external terrorist groups and the ongoing modernization of its armed forces are the key factors expected to drive military expenditure.  The country also faces insurgency in the Western Sahara region, where the local insurgent organization Polisario Front is engaged in a violent struggle with the Moroccan regime for territory.  The threat posed by the prospect of prolonged insurgency within the Western Sahara region makes it imperative for Morocco to allocate substantial expenditure to counter-terrorism and counter-insurgency efforts.

Morocco is projected to increase its defense budget from $3.7 billion in 2019 to $4.7 billion in 2024, at a CAGR of 4.24%.  Moroccan homeland security (HLS) expenditure increased from $2.1 billion in 2015 to $3 billion in 2019, registering a CAGR of 8.56%.  On a cumulative basis, Morocco is expected to spend a total of $21.4 billion on its armed forces over the forecast period, compared to $17.5 billion over 2015-2019.  The country’s capital expenditure is expected to increase from $1.2 billion in 2020 to $1.4 billion in 2024, growing at a robust CAGR of 4.31% over the forecast period.

The Moroccan government is expected to procure transport aircraft, multirole fighters, submarines, missile defense system, and armored vehicles, among others.  Additionally, opportunities in security systems and platforms such as military IT networking, wireless systems, motion sensors, alarms, and radar systems are expected to arise as a result of the country’s focus on strengthening border security.  (R&M 20.05)

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11.9  TURKEY:  Turkey Grapples with Big Trade Deficit with China

Mehmet Cetingulec posted on 21 May in Al-Monitor that amid Washington’s trade war on China, Ankara is also grumbling about a massive trade gap with Beijing, but a number of factors stand in Turkey’s way to resolve the deficit.

President Donald Trump has stepped up his trade war on China after the United States’ trade deficit in goods with China hit a record $419.2 billion last year.  US exports to China were worth $120.3 billion, while its imports were 4.5 times bigger, totaling $539.5 billion.  Turkey, saddled in relative terms with a worse trade deficit with China, has begun to openly complain about the imbalance and has raised the prospect of taking measures, but how much can it really do?

Last year, Turkey’s exports to China totaled $2.9 billion, while its imports were seven times bigger, standing at $20.7 billion.  China was the 16th largest buyer of Turkish goods and the second largest exporter to Turkey after Russia.  In 2017, China was the No. 1 exporter to Turkey, but in 2018 Turkish imports from China decreased 11.3% while its imports from Russia rose 12.7%, putting Russia in the top spot.  Despite the drop, Turkey’s trade gap with China remains massive, accounting for 33% of Turkey’s overall foreign trade deficit of $55.1 billion.

Looking at the past decade, Turkey’s trade deficit with China totaled a staggering $190.6 billion from 2009 to 2018.  The gap, which stood at $11 billion in 2009, enlarged steadily, peaking at $23 billion in 2016 before falling to $20.4 billion in 2017 and $17.8 billion last year.  The decrease in the past two years, however, stems not from an increase in Turkey’s exports but a shrinkage in the bilateral trade volume.

Judging by the trend in Turkish exports, closing the gap seems impossible.  Exports to China peaked at $3.6 billion in 2013, only to go down in the ensuing years.  Throughout the past decade, Turkish exports to China have fluctuated between $2 billion and $3 billion, with the year 2013 being the sole exception.

The contraction in bilateral trade has accelerated this year.  In the first quarter, Turkey’s exports to China decreased 18.6% to $571 million from $701 billion in the same period last year.  China retains second place among the largest exporters to Turkey, but its sales fell nearly 30% to $4.2 billion from $6 billion in the first quarter of 2018.

The economic crisis bruising Turkey could explain why it buys less from China, but the decrease in China’s import of Turkish goods suggests that trade haggles have begun between the two countries.  Like the United States, Turkey is irked by Chinese trade domination and has begun to openly express it.  Treasury and Finance Minister Berat Albayrak said in January that the current state of trade with China and South Korea was not sustainable.  “It is supposed to be a win-win affair, but we see a picture in Turkey’s disfavor. Either we gain together or we will take different steps,” he said.

Speaking on the sidelines of the World Economic Forum in Davos a week later, Albayrak said “serious work” had begun to narrow the trade gaps with the two Asian heavyweights.  “We can say that we are not in a happy commercial relationship,” he said, pledging “a much more active policy” on South Korea and China.  It remains unclear whether Ankara’s “active policy” will entail higher tariffs or other measures to curb exports.  Still, punishing China at a stroke like the United States is trying to do is not possible for Turkey for several reasons.

China has offered Turkey financial support in times of hardship.  Last summer, when Turkey’s economic woes jolted the foreign-exchange market, Ankara was able to secure a $3.6 billion loan package from China.

Bilateral ties hold the potential of significant headway in other areas.  China is interested in boosting investment in Turkey.  Its ambassador to Ankara, Deng Li, said in March that China aimed to increase investment in Turkey to $6 billion by 2021 from the current $2.8 billion.

In 2018, declared as “Turkey Tourism Year” in China, the number of Chinese tourists visiting Turkey increased 60% to 390,000.  According to Deng, the goal is to bring the figure up to 800,000 in the short run.

Though Ankara has not yet outlined any measures specifically for China, general policies aimed at curbing imports — the result of Turkey’s currency woes — are bearing on China directly.  Earlier this month, for instance, the 25% special consumption tax on mobile phones was doubled to 50%. China tops the list of mobile phone exporters to Turkey.  Last year, Ankara imposed certain import restrictions on shoe and textile products.  Other factors complicating imports from China such as protracted customs procedures and extra paperwork have reached such a level that importers’ complaints have made headlines in the press.  Yet Turkey’s import of intermediary goods from China stands in the way of heavier restrictions.

Besides mobile phones, the top goods imported from China include audio, visual and other transmission devices, automatic data processing machines and their magnetic or optical readers, synthetic yarn, parts and accessories for road vehicles, electrical transformers, toys, pipes, boilers, tanks, faucets, air and vacuum pumps, gas compressors, fans, monitors, projectors, TV receivers and illuminated signs.  The top products that Turkey exports to China include marble, chrome, lead, copper, iron and precious metals.

Meanwhile, Turkish citizens could unwittingly “help” the government in its efforts to balance trade with China.  With the Turkish lira nosediving since last year, they are becoming poorer and the demand for imported luxury goods, especially mobile phones, is on the decline, auguring some forced adjustments.

Mehmet Cetingulec is a Turkish journalist with 34 years professional experience, including 23 years with the Sabah media group during which he held posts as a correspondent covering the prime minister’s and presidential offices, economy news chief and parliamentary bureau chief.  (Al-Monitor 21.05)

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11.10  TURKEY:  Turkey Groans Under Economic Pressure from Saudis

On 20 May in Al-Monitor, Amberin Zaman said that while they were once Turkey’s biggest foreign buyers of real estate, Saudis are increasingly boycotting the country as the kingdom’s chamber of commerce warns citizens away.

Tensions between Turkey and the Kingdom of Saudi Arabia are spilling over into the economic realm with the Riyadh Chamber of Commerce and Industry warning Saudis against investing in Turkey.  Chairman Ajlan Al-Ajlan took to Twitter to air warnings about the hazards of doing business in Turkey.  He said his organization had received multiple complaints from Saudi investors who said their assets were under threat and that the Turkish authorities were not doing enough to protect them.  Al-Ajlan cited what he called the volatile security climate in Turkey and claimed Saudi businesspeople had been extorted by “influential entities there” and that Saudi tourists faced “increasing cases of harassment and fraud.”

Earlier this month the influential governor of Riyadh, Prince Faisal bin Bandar, was captured on video refusing a cup of coffee upon learning that it was a Turkish brew manufactured by Turkey’s oldest coffee maker, Kurukahveci Mehmet Efendi.  The video was circulated by a fellow member of the royal family, Prince Abdullah bin Sultan al Saud, who revived calls for a boycott of Turkish goods.

Relations between Ankara and its former Ottoman dominion took a nosedive following the murder of Saudi journalist Jamal Khashoggi in the Saudi Consulate in Istanbul.  Turkey’s President Recep Tayyip Erdogan led a loud campaign that forced the Saudis to retract initial denials that Khashoggi was killed inside the consulate and pin the blame on Saudi security officials who supposedly went rogue.  But that did not stop Turkey from leaking a steady stream of evidence, including an alleged audio recording of Khashoggi’s slaughter, all of which appeared to incriminate Saudi Arabia’s powerful Crown Prince Mohammed bin Salman.

At first, the crown prince sought to defuse the crisis, calling Erdogan on the telephone and seeking a meeting with him.  But Turkey pressed on with its efforts to discredit bin Salman, ostensibly in the hope that the United States would turn its back on him and that his father King Salman would sideline him.  But none of it transpired and the crown prince has since been on the warpath with Ankara.

Bloomberg reported that when the boycott calls first erupted in November, Saudis topped the list of foreign nationals buying Turkish real estate.  Within weeks they dropped to sixth place, with a 37% plunge in purchases.  Construction-fueled growth was at the center of Erdogan’s economic strategy.  Now it’s in the doldrums.

Saudi tweep Naif Madkhali, who has over half a million followers on Twitter, was among a handful of pro-government users that led the charge against Turkey.  Last week he relayed offers to help Saudi tourists go to Muslim-majority destinations like Azerbaijan or Bosnia if they canceled their plans to go to Turkey.  “Guys, the topic is bigger than tourism and entertaining.  A sense of national duty compels me to contribute to anything that would help me stand with my country.  There are better choices [than Turkey],” he declared.

Turkey has been pressing for a UN-led inquiry of the Saudi dissident’s gruesome killing.  Khashoggi’s remains — he was reportedly dismembered with a bone saw — have yet to be found.  But Ankara’s clamors for justice have begun to fade as its economy continues its downward spiral amid a weakening lira and a skyrocketing energy bill exacerbated by US sanctions on Iran.

Gonul Tol, the director of the Turkey program at the Middle East Institute, believes that Turkey’s de-escalation of the Khashoggi affair may be linked to its increasingly shaky finances.  Tol told Al-Monitor, “The crisis between Turkey and Saudi Arabia is extremely serious and Turkey is the more vulnerable of the two.  Of the Gulf states, Saudi Arabia is one of the top investors in Turkey and Turkey is terrified of losing Saudi money, particularly at a time when it’s suffering economically, and that’s why it’s toned down its salvos over Khashoggi.”

Luckily, not all Saudis believe in punishing Turkey.  Last month, Saudi Arabia-based SAK consultants announced plans to invest up to $100 million in Turkey’s agriculture, health and hotel sectors.  The company’s chairman Solaiman El Kherejji said politics ought not interfere with business.  Reuters reported that Turkish exports to Saudi Arabia for the three months ending in February 2019 rose by 16% compared with the same period last year.

Amberin Zaman is a senior correspondent reporting from the Middle East, North Africa and Europe exclusively for Al-Monitor.  Zaman has been a columnist for Al-Monitor for the past five years, examining the politics of Turkey, Iraq and Syria and writing the daily Briefly Turkey newsletter.  (Al-Monitor 20.05)

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11.11  GREECE:  Fitch Ratings Says Greek Fiscal Package Accelerates Policy Reversals

On 29 May, Fitch Ratings said Greece’s new fiscal package increases uncertainty about the country’s medium-term policy stance and is set to generate tensions with Greece’s European creditors.  Prime Minister Alexis Tsipras announced an array of expansionary measures on 7 May.  Some, including lower VAT rates, a cut in corporate income tax, an increase in pension benefits and a scheme to settle outstanding tax and social security payments in instalments, are set to be adopted by Parliament later this month.  One Greek press report suggests these measures could be worth about €1.1 billion (0.6% of GDP) in 2019 and €3.4 billion (1.9% of GDP) in 2020.

A second set of measures could be tabled later this year, most likely after the elections due by 20 October.  It includes a repeal of the reduction in the personal income tax threshold due to take effect in January 2020.

The announcement of the new package comes ahead of this month’s European and local elections.  We view it at least in part as an attempt by the governing Syriza party to boost its popularity after three years of fiscal tightening.  Whether the package will lead to a lasting shift in the fiscal stance will partly depend on how it affects relations with official creditors, and also on the composition of Parliament after October’s national elections.

We had assumed that partial policy reversals were likely as part of Greece’s dialogue with its official creditors following the conclusion of its third bailout program in August 2018.  Indeed, the 2019 budget had already partially reversed some program measures, including pension cuts, with the approval of creditors.  However, the new announcements represent a larger, faster reversal than we anticipated.

In particular, repealing the reduction in the income tax threshold could make it harder for future Greek governments to rebalance the fiscal policy mix without hampering the commitment to fiscal targets.

The measures increase uncertainty over near-term fiscal outturns.  Strong outperformance – at 4.4% of GDP, Greece’s 2018 primary surplus was well above the target of 3.5%, has created room for some fiscal loosening.  The impact will also depend on the short-term boost to GDP growth, which could exceed our forecasts of 2.3% this year and 2.2% next year.

However, the Greek government also said it intended to reduce the 2020-2022 primary surplus target to 2.5% of GDP from 3.5%.  Eurogroup president Mario Centeno said on 16 May that the measures would be discussed at its next meeting on 13 June, and that the Eurogroup expected the commitment to be respected.

Tensions between Greece and its creditors are likely to increase.  The consequences are unclear, but a sharp escalation could have an impact on Greek public finances.  For example, the member states of the European Stability Mechanism (ESM) can veto Greece’s plans for early repayment of its more expensive IMF loans.  They could also block further disbursements of profits on Greece’s sovereign bonds bought under the ECB’s Securities Markets Programme, which are subject to compliance with policy commitments.

Such steps would not undermine the improvement in public finance sustainability reflected in our two-notch upgrade of Greece to ‘BB-‘/Stable in August 2018.  But they could weaken financial market sentiment and increase funding costs, although this is mitigated by Greece’s large deposit buffer (€27 billion at December 2018) and low gross financing needs.  (Fitch 20.05)

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