Fortnightly, 3 October 2018

On 25 September, the first-ever electric passenger train left Jerusalem’s Yitzhak Navon Station this morning with 400 passengers on board. The Jerusalem-Tel Aviv fast rail link was launched although for the time being trains are only running between Jerusalem and Ben Gurion airport, where passengers must change to a diesel train to continue their journey. Estimates are that it will be another 3-6 months before electrification is completed on the section of line between Ben Gurion airport and Tel Aviv’s Haganah station. When completed the train journey between Jerusalem and Tel Aviv will take 28 minutes.

Israel Railways only obtained safety approval for the line two days before after Israel Police and the Fire and Rescue Services completed an emergency drill deep in one of the tunnels near Jerusalem. For the time being there is only one train in each direction per hour with the frequency increasing to every 15 minutes when the line is fully operational. Passengers can only travel on the trains by obtaining a voucher in advance via the internet or phone. Jerusalem residents can travel for free. (Globes 25.09)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Freightos Raises $44.4 Million Series C led by Singapore Exchange

Freightos has raised a $44.4 million Series C led by Singapore Exchange. Returning investors including General Electric Ventures (the lead investor of Freightos’ Series B extension last year), ICV and Aleph also participated in the round, which brings Freightos’ total funding so far to $94.4 million. While its online freight marketplace will continue to be Freightos’ flagship product, the company also wants to find ways to make the industry more efficient by building a global digital infrastructure.

Launched in 2016 as a price comparison service for freight forwarders – the agents that organize shipments from a supplier or manufacturer to their final destination – Jerusalem’s Freightos now also lets users book, manage and track shipments with more than 1,200 logistics providers. Freightos processes more than one million instant freight quote requests each month using its patent-pending routing and pricing engines. Its database of global shipping rates also underpins the Freightos Baltic Index (FBX), an industry-specific index created to provide more pricing transparency. (Freightos 21.09)

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2.2 Elbit Wins $173 Million Contract to Supply Naval Weapon Stations to an Asia-Pacific Country

Elbit Systems was awarded an approximately $173 million contract to provide Naval Remote Controlled Weapon Stations (RCWS) to the Navy and Coast Guard of an Asia-Pacific country. The contract will be performed over a five-year period. Under the contract, Elbit Systems will provide lightweight, fully stabilized dual-axis Naval RCWS to be installed onboard a wide range of vessels. The Naval RCWS to be provided feature a 12.7mm machine gun and ammunition, Elbit Systems’ advanced fire control system and the Company’s modular electro-optic suite.

Haifa’s Elbit Systems is an international high technology company engaged in a wide range of defense, homeland security and commercial programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (“C4ISR”), unmanned aircraft systems, advanced electro-optics, electro-optic space systems, EW suites, signal intelligence systems, data links and communications systems, radios and cyber-based systems. (Elbit Systems 20.09)

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2.3 BrandTotal Raises $6 Million in Series A Round to Expand Rollout of Agile Marketing Platform

BrandTotal, a New York and Tel Aviv based company whose agile marketing platform harnesses artificial intelligence, cyber security techniques and data science to empower brand marketers with competitive data and actionable insights by revealing the digital marketing activities of their top competitors, announced the closing of a $6 million round of funding, bringing their total venture funding to $8 million.

International venture capital firm Flint Capital led the Series A funding round. Glilot Capital Partners and Keshet Dick Clark Productions also joined the funding in early 2018. Both were participants in BrandTotal’s $2 million seed investment round, which closed July 2017. The Series A funding caps off an event filled summer for BrandTotal, announcing a partnership with Microsoft via Microsoft’s Dynamics 365, being selected to Oracle’s Startup Cloud Accelerator and having presented at Morgan Stanley’s prestigious Innovation Summit. Funds from the Series A Round will be used to expand sales, marketing and data science efforts via BrandTotal’s new offices in New York as well as internationally.

Launched in June 2017, BrandTotal’s agile marketing intelligence platform is a SaaS-based solution that harnesses AI, cyber security techniques and data science to distill actionable insights. The technology was developed to provide brand marketers with valuable competitive intelligence about the digital marketing landscape within their industry. Through campaign aggregation, BrandTotal’s technology detects creatives across various digital channels and clusters them into campaigns for analysis. Using signal detection, the platform identifies trends and outliers between brands within the industry-wide competitive landscape. (BrandTotal 25.09)

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2.4 Grubhub Announces Acquisition of Tapingo

Chicago’s Grubhub, the US’ leading online and mobile food-ordering and delivery marketplace, today announced it has entered into an agreement to acquire Tapingo, a leading platform for campus food ordering. With over 150 college campus partners, Tapingo enables tens of thousands of order-ahead transactions per day for more than half a million active diners at on-campus cafes, restaurants, and cashier-less stores. The combination of Tapingo’s network with Grubhub’s restaurant marketplace and delivery capabilities will bring greater convenience to students and help campus restaurants capitalize on pickup and delivery orders.

Grubhub has entered into a definitive agreement to acquire Tapingo for approximately $150 million, subject to standard closing conditions. The transaction is expected to close in the fourth quarter of 2018. Grubhub will discuss the financial impact of the expected acquisition on its third quarter earnings call. Kirkland & Ellis LLP and Fischer Behar Chen Well Orion & Co served as legal counsel to Grubhub in connection with the acquisition. Herzog, Fox & Neeman and Silicon Legal Strategy served as legal counsel and JMP Securities LLC served as a financial advisor to Tapingo.

Tapingo’s U.S. and Israel based teams have built a technology platform custom designed for campus use, with direct integration into college meal plans and point-of-sale (POS) systems, ensuring seamless order-taking and accurate, up-to-the-minute transparency on wait times for diners. The Tapingo platform also streamlines operations and increases in-store efficiency for campus restaurant partners – including Taco Bell, Chipotle, Chick-fil-A, Panda Express and Jamba Juice – and powers partnerships with Aramark and Sodexo, the leading providers of food services and facilities management nationwide.

Tapingo provides world-class mobile solutions designed to improve the retail process for consumers and merchants. Blending its proprietary ordering technology with operational expertise, Tapingo allows operators to benefit from increased volume and efficiency while better serving customers. As the leading commerce app on campus, Tapingo serves students in more than 150 colleges, universities and professional campuses across the U.S., processing tens of thousands of transactions daily on its platform. (Grubhub 25.09)

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2.5 India’s Flipkart to Acquire Israeli Retail Analytics Startup Upstream Commerce

Indian electronic retailer Flipkart is acquiring Israel-based retail analytics provider Upstream Commerce. Financial terms were not disclosed, but pundits value the deal at between $40 to $50 million. Flipkart, founded in 2007 and headquartered in Bengaluru, India, is the country’s e-commerce leader, with over 100 million registered users, over 100,000 sellers and over 80 million products on offer. The company reported revenues of $3.07 billion for the fiscal year ended March 2017. In August, Walmart completed its $16 billion acquisition of a 77% stake in Flipkart.

Founded in 2010, Upstream is based in both Tel Aviv and New York. The company offers online retailers a pricing and product analytics service. Upstream raised around $6 million in total equity to date. Investors including Israeli venture capital firm YL Ventures, Moscow-based Bright Capital, and Los Gatos, California-based Webb Investment Network. Upstream’s team will continue to operate from Israel. Israel-based law firm Shibolet & Co. represented Flipkart. Israel-based Glusman & Co. represented Upstream. (Various 26.09)

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2.6 Snyk Raises $22 Million in Series B Funding

Snyk announced their $22 million, series B fundraising. The Series B fundraising was led by Accel, with participation from GV and existing investors Boldstart Ventures, Heavybit and others. This round comes less than 7 months after their previous one, in order to support our rapid growth and expand their developer-first offering.

Over 160,000 developers use Snyk to find, fix and monitor for vulnerable libraries. Snyk now protects over 140,000 repositories on source code management platforms such as GitHub, Bitbucket and GitLab. These developers are downloading Snyk’s CLI at a rate of 100,000 downloads/week, integrating into their CI and other processes. Being an open platform that developers automate and integrate with, over 5,000,000 calls to Snyk’s API were made in the last month! Snyk’s goal is to automate vulnerability remediation so that issues are actually fixed on an ongoing basis – Snyk opens 10,000 fix pull requests and applies over 580,000 patches each month!

Snyk’s mission is to help developers use open source code and stay secure. The use of open source is booming, but security is a key concern. Snyk’s unique developer focused product enables developers and enterprise security to continuously find & fix vulnerable dependencies without slowing down, with seamless integration into Dev & DevOps workflows. Snyk is adopted by over 100,000 developers, has multiple enterprise customers (such as Google, New Relic, ASOS and others) and is experiencing rapid growth. Snyk was founded in 2015 and is headquartered in London with offices in Israel and the US. (Snyk 25.09)

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2.7 Fraud Prevention Technology Leader Forter Raises $50 Million

Forter secured $50 million in Series D financing. The funding round was led by March Capital Partners with participation from Salesforce Ventures and previous investors Sequoia Capital, New Enterprise Associates (NEA) and Scale Venture Partners.

E-commerce merchants find that by joining the Forter Merchant Network they are fighting fraud together. Forter not only removes the burden of fraud but also improves the user experience for their customers, reduces friction and false declines, and drives revenue creation. The company leverages sophisticated machine learning technologies, enhanced by human domain expertise, Israeli military intelligence and continuous research, to create a robust and ever-expanding identity database, already covering more than 180 million U.S. shoppers. Today, with Forter’s powerful data network effect, over 95% of transactions processed by the company are completed by consumers who interacted with the network before. This growing network continues to power a coalition of retailers against fraud. This includes Fortune 500 retailers, leading travel companies and fast-growing digital disruptors throughout the U.S., Europe, and Asia.

Tel Aviv’s Forter is the leading e-commerce fraud prevention company that protects merchants during each stage of the customer lifecycle. The company’s identity-based fraud prevention solution detects instances of fraud and abuse beyond transactions in real-time, such as attempts at account takeover and return abuse. A team of world-class analysts constantly update Forter’s machine learning solutions with cutting-edge insights and research, ensuring the proprietary algorithms adapt to the latest fraud trends in real-time. As a result, Forter is trusted by Fortune 500 companies, online travel businesses, and fast-growing digital disrupters to deliver exceptional accuracy, a smoother user experience and elevated sales at a much lower cost. (Forter 26.09)

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2.8 Source Defense Raises $10 Million

Source Defense has completed a $10 million Series A funding round. Venture capital firms investing in the round include Palo Alto, California-based Allegis Capital LLC (AllegisCyber), Tokyo-based Global Brain Corp., Connecticut Innovations and existing investor Jerusalem Venture Partners (JVP). Source Defense has also announced the opening of two new offices: The company’s new US headquarters in Stamford, Connecticut and a second R&D center in Rosh HaAyin. The company intends to launch an intensive hiring campaign in both locations.

Founded in 2014 and based in Rosh HaAyin, Source Defense develops cloud-based software for automatically monitoring and detecting vulnerabilities on third-party applications used on websites. Source Defense provides a fully automated solution that controls the access and permissions of all third parties operating on a website. This ensures compliance with customer data privacy and eliminates the potential for compromised third-party tools to skim payment information or other valuable data while reducing labor-intensive management. (Source Defense26.09)

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2.9 SoftWheel Announces Investment by Mitsubishi Corporation

SoftWheel announced that Mitsubishi Corporation, Japan’s largest trading and investment company, has joined SoftWheel’s latest investment round.

Established in 2011, SoftWheel is a technology company headquartered in Tel Aviv, Israel. SoftWheel develops cutting edge systems for the automotive industry, enabling the fusion of the drivetrain, suspension, e-motor, steering, and brakes into the vehicle’s wheel. Its innovative technology enables significant reduction in space, weight, and energy consumption of vehicle platforms for EV, hybrid, and autonomous vehicles.

SoftWheel is also active in the personal mobility sector, providing in-wheel technology for wheelchair and bikes. SoftWheel’s system reduces pain for wheelchair riders and increases their comfort, significantly improving the daily riding experience. SoftWheel is active in North America and Europe and is providing its wheelchair technology to American veterans through its partnership with Ki Mobility and to the general U.S. market through Numotion. As medical devices, SoftWheel’s wheels, which are clinically proven to provide benefits and are FDA and CE approved, are reimbursed in select global markets. (SoftWheel 27.09)

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2.10 CTERA Raises $30 Million in Growth Funding to Power Global Expansion

CTERA Networks has secured a $30 million Series D growth equity funding round. The round was led by Red Dot Capital Partners, a Temasek Holdings backed growth fund, with the support of new investor Singtel Innov8 and with the participation of all existing shareholders: Benchmark Capital, Bessemer Venture Partners, Cisco, Venrock, Vintage Investment Partners and Viola Group. The new investment will be used for the expansion of CTERA’s global sales and delivery organization, with an emphasis on growth in Asia, and particularly in Southeast Asia and Singapore. In addition, it will be used to power the continued development of CTERA’s patented file services technology.

This funding round follows a year of record results for CTERA, in which the company has more than doubled its enterprise software subscription revenue, signed strategic reselling agreements with IBM and HPE, and continued to add world-leading organizations to its customer base. These include McDonald’s, WPP Plc and the U.S. Department of Defense, as well as global top-5 banks, insurance companies, global advertising groups and defense organizations.

Trusted by Fortune 100, government organizations and leading service providers, Petah Tikva’s CTERA provides the only cyber-hardened and completely unified file sharing and data protection platform that allows enterprise IT to address the full continuum of global file services from the cloud infrastructure of their choice. CTERA is leading the digital transformation of enterprises to cloud-enabled file services, with millions of corporate users and tens of thousands of cloud-enabled offices worldwide. (CTERA 02.10)

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2.11 IAI’s BEDEK Aviation Group Named Official Maintenance Supplier by Hainan Group’s Airlines

Israel Aerospace Industries’ BEDEK Aviation Group has recently entered an official supplier agreement with HNA Group from China. Under the agreement, BEDEK’s Engine Division will serve as the maintenance and overhaul center for the V2500 engines of HNA Group’s airlines. The engines will be sent to BEDEK by the customers and returned to China following servicing. The signing of the agreement, which is estimated at tens of millions of dollars a year, was held at HNA Group headquarters in Haikou.

BEDEK has acquired worldwide reputation as a leading supplier of comprehensive services for passenger and cargo airplanes. Its customers include aircraft lease companies, airlines, aircraft manufacturers and cargo shippers. BEDEK’s modern facility provides a complete range of maintenance and overhaul services catered for wide and narrow body aircraft. Recent years have seen significant developments in engine maintenance with BEDEK’s Engine Division providing “leasing” services to aircraft engines. The new agreement with HNA Group is an important breakthrough and vote of confidence in the quality of service provided by BEDEK Aviation Group. (IAI 26.09)

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2.12 IAI and Effective Space Agree to Technological and Financial Cooperation

Israel Aerospace Industries (IAI) and Effective Space announced that they have signed a term sheet for cooperation, including both technological and financial partnerships. Under the agreement, Effective Space will appoint IAI as the primary contractor of its SPACE DRONE spacecraft, while IAI will work to complete the necessary approvals for equity investment in Effective Space. The term sheet follows more than a year of cooperation, during which both companies have been jointly working on the SPACE DRONE spacecraft design.

Effective Space is pioneering a new era in last-mile logistics in space that will see its SPACE DRONETM spacecraft fleet deployed to provide auxiliary services to space assets. Initial services to be provided by Effective Space will be life-extension for satellites in Geosynchronous Earth Orbit. The company’s first contract, signed in 2017 with an international satellite operator, will see two SPACE DRONE spacecraft launched in 2020 to extend the life of two existing satellites, and is expected to generate revenues of more than $100 million.

The design of the SPACE DRONE spacecraft is a result of decades of experience in the field of small satellites. ‘Phase One’ services will see the spacecraft dock with existing satellites in Geosynchronous Earth Orbit that are reaching the end of their normal life expectancy. The SPACE DRONE spacecraft will provide station-keeping and attitude-control, relocation, deorbiting, orbit and inclination correction, and is capable of providing up to 15 years of overall life-extension service.

Tel Aviv’s Effective Space, founded in 2013, has raised $15 million from investment funds in previous rounds of financing. Effective Space is developing a unique, small spacecraft to extend the life of satellites in orbit, based on the vision to provide logistics services in the rapidly growing space economy. To this end, it has developed a unique and patented technology for rendezvous and docking to satellites in space through a small spacecraft called SPACE DRONE. (IAI 12.09)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Myki Raises $4 Million in Series A Funding

Beirut’s Myki has raised $4 million in a Series A round led by Dubai-based VC BECO Capital with participation from Beirut-based LEAP Ventures and B&Y Venture Partners, all of which are returning investors. This strategic funding will allow Myki to expand its US operations to tackle decentralized identity management in the enterprise space. Myki targets three user verticals:

-“Myki Password Manager & Authenticator” for consumers is a mobile application that allows users to seamlessly and securely store and manage passwords, credit cards, ID cards and secure notes. Myki allows users to login to accounts using biometric authentication such as touch ID and Face ID.

-Myki’s enterprise offering “Myki for Teams” gives administrators full visibility and control over their company’s access management.

-“Myki for Managed Service Providers” is a web portal that allows MSPs to manage the passwords of their clients in a secure, streamlined and scalable manner.

After having officially launched on the TechCrunch Disrupt Battlefield stage in September 2016, Myki has amassed global recognition and has been named one of the “Best Free Password Managers of 2018” by PCMag, and made the list of Apple’s ‘Most Powerful Password Managers’. Back in May, on the TechCrunch Disrupt Berlin stage, Myki announced a major partnership with self-sovereign identity application Blockpass – combining the power of identity sovereignty and cloudless password security that is Myki. In late 2016, the startup received a seed investment from BECO Capital, which Jebara said they will use to accelerate product development and go-to-market time. With over 250,000 users worldwide and a rapidly-growing user base, Myki is well positioned to address the security and identity management needs and concerns of consumers and businesses alike. (ArabNet 05.09)

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3.2 WellRight Partners with Manzil Healthcare Services to Bring Programs to the Middle East

Chicago’s WellRight, a leading provider of corporate wellness programs, announced their partnership with Manzil Healthcare Services in UAE. Manzil is an internationally accredited home healthcare and disease management company providing individualized care for patients in the comfort of their own environment. Manzil is adding the WellRight App to their wellness program offerings for corporate employers, insurance companies, and its own employees. The programs and services – including health risk assessments, nutrition, ergonomics, fitness, and wellness coaching – created by Manzil will reduce employee sick days, claims costs, and health premiums while improving employee health risk profiles, staff productivity, and retention. (WellRight 24.09)

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3.3 Monami Tech Closes $1 Million Offering from US-Based Investors

Monami Tech, a UAE-based Fintech payments startup, has successfully closed a seed funding of $1 million. This is the first tranche of a total Series A round which is expected to raise over $3 million over the next three months. This round was led by PGH Holdings, an investment vehicle led by renowned American payments innovator Henry Helgeson – the Founder and CEO of Cayan – in addition to Paul Vienneau – the CTO of Cayan – and Greg Cohen – the President of Paya, former President of ETA, and CRO of Cayan.

Founded in UAE in 2016, Monami Tech specializes in helping financial services companies leverage the benefits of digital technology to enhance customer experience by focusing on the delivery of the following pillars of value: increasing revenue, reducing risk, and increasing efficiency in operations. Aiming to reinforce current operations and capabilities in the region, Monami Tech will be using this cross-border investment to ramp up sales and marketing efforts as expansion plans in the Middle East gain momentum. Monami Tech is also planning to announce expansion across the GCC including Bahrain and Saudi Arabia in the near future. The company recently announced its partnership with Al Hail ORIX Finance PSC for the deployment of its technology for SAMA’s business and consumer lending project. (ArabNet 10.09)

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3.4 Cairo Angels Announces Investment in Buseet

Cairo Angels, a global network of angel investors focused on supporting start-up opportunities in Egypt, the Middle East and Africa, announced its investment in Buseet. Founded in 2016, Buseet is a Transport Tech start-up operating in Cairo and Dubai. Buseet provides an easy to use, comfortable and cost-effective technology solution to the everyday commute of thousands of customers. Buseet is the first bus fleet based Transport Tech start-up founded in Egypt.

After successfully joining Dubai’s prestigious start-up Bootcamp in 2017, the company is expanding operations to Dubai in 2018. Buseet plans to use investment to increase its product offering and to grow to other markets in the MENA region. The Cairo Angels investment is part of a seed investment round that includes 500 start-ups and other international angel investors from Singapore and the Gulf. The company is now well capitalized to grab a significant stake in this fast growing sector.

The Cairo Angels is Egypt’s first formal network of angel investors and is headquartered in Cairo, Egypt with operations in London, UK covering the European region and Dubai, UAE covering the GCC region. The Cairo Angels invests in and supports start-ups and early stage, high growth businesses across the Middle East and Africa. The Cairo Angels is a founding member of MAIN, a network of the leading angel investment networks in the MENA region. (DNE 25.09)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Israel’s Industrial Air Pollution Drops Significantly Over the Past Year

There has been a significant and continued reduction in industrial air pollution in 2017, Israel’s Environmental Protection Ministry announced on 2 October, although some pollution levels are still poor compared to Israel’s European neighbors. According to the ministry, since 2012 there have been reductions ranging from 8% to 62% in air pollutant emissions, primarily as a result of emission restrictions imposed by the ministry following the implementation of the 2011 Clean Air Law and the increased use in natural gas, rather than coal, to produce electricity.

The key reasons behind the reduction in pollution, the report says, lie in significant decreases in emissions in key regions, including a decrease of 500 tons of emissions in the Haifa Bay and Mishor Rotem areas following the closure of factories belonging to Haifa Chemicals. The ministry admits, however, that Israel still has a long way to go in terms of per capita nitrogen and sulfur oxide emissions compared to the country’s European Union neighbors. The primary cause behind the oxide emissions are the coal-fired power plants in Hadera and Ashkelon, which are operating without advanced pollution-reducing facilities.

Emissions of cancer-causing air pollutants, or pollutants suspected of being carcinogenic, rose slightly by 1% during 2017, but have decreased overall by 44% since 2012. The slight increase last year was primarily due to increased asphalt factory emissions.

Off-shore emissions from the Tamar natural-gas field, located 80 km. off the shore of Haifa, are expected to decrease by 98% in Q1/19 after the conclusion of construction work on pollution-reducing facilities at Israel’s only operational gas field. Due to its distance from the Israeli coast, its current emissions have a negligible impact on air quality onshore. The Leviathan gas field, situated 130 km. from Haifa, is due to become operational by the end of 2019 but is not expected to produce pollutant emissions as the treatment of the natural gas will take place within a closed system. (JP 02.10)

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5: ARAB STATE DEVELOPMENTS

5.1 Average Lebanese Inflation Rose by an Annual 6.29% by August 2018

According to the Central Administration of Statistics (CAS), Lebanon’s average inflation rate rose by 6.29% by August 2018 compared to the same period last year as all 13 components of the Consumer Price Index (CPI) posted average yearly upturns. The average costs of Housing and utilities (water, electricity, gas and other fuels) constituting a combined 28.4% of the Consumer Price Index or CPI, rose by 6.85% year-on-year (y-o-y) by August 2018. Owner-occupied rental costs, which comprise 13.6% of this category, rose by 4.11% y-o-y. As for the average prices of water, electricity, gas, and other fuels (11.8% of the housing & utilities component), they increased by an annual 10.36% by August 2018. The average prices for food and non-alcoholic beverages (constituting 20% of the CPI), transportation (13.1% of the CPI), and education costs (6.6% of CPI) registered yearly upticks of 4.80%, 8.76%, and 4.07% by August 2018. (CAS 23.09)

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►►Arabian Gulf

5.2 UAE Approves $16.4 Billion Budget for 2019 With No Deficit

The UAE approved a budget of $16.4b (AED60.3b) for 2019, an increase of 18% on last year. The UAE cabinet said 42.3% of the budget for the next year was allocated to the community development programs, 17% to the education system and 7.3% to develop the health sector and provide medical services. The UAE also approved a $49 billion (AED180b) budget for the next three years, with a significant portion amount going towards education and social development. UAE Prime Minister Sheikh Mohammed said 59% of the three-year budget would be allocated to education and social development. The UAE cabinet also approved a Federal Law regulating space sector, which Sheikh Mohammed said would “open the sector for investments, research and cooperation” from the private sector. (AB 30.09)

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5.3 Dubai Retains Ranking as World’s Fourth Most Visited City

Dubai has retained its ranking as the fourth most visited city in the world for the fourth straight year, according to Mastercard’s Global Destination Cities Index (GDCI) 2018. The city welcomed 15.79 million overnight visitors last year and with a projected growth rate of 5.5%, the emirate is expected to witness another year of steady expansion in 2018. Only Bangkok, London and Paris were ahead of Dubai in the global list.

Dubai also topped the list of global cities with the highest international overnight visitor spend for the third year in a row, with total international visitor spending of $29.7 billion in 2017, ahead of Saudi Arabia’s Mecca ($18.45 billion) and London ($17.45 billion). Abu Dhabi was also named the fastest growing city in the Middle East and Africa, with a compound annual growth rate (CAGR) of 18.21% between 2009 and 2017 in overnight visitor arrivals. The UAE’s capital city was also among the top 10 global cities that experienced the strongest growth in international arrivals in the Mastercard study. The GDCI expanded this year to look at 162 cities across the world. (AB 25.09)

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5.4 Saudi Inflation Forecast to Rise During the Remainder of 2018

Saudi inflation was unchanged between July and August but is expected to rise over the rest of this year as underlying price pressures pick up, according to analysts Capital Economics. The prediction was made after new figures showed consumer prices in Saudi Arabia rose by 2.2% year-on-year in August. That was unchanged from July, while inflation remained below its recent peak of 3% in January, when the introduction of a new value-added tax (VAT) and a raft of administered price hikes caused inflation to spike.

Analysis of the data showed that price pressures across the major price categories were broadly the same in August as they were in July. Food inflation – which accounts for around 20% of the country’s consumer price index basket – edged down last month, from 6.7% to 6.6%. Apparel inflation fell deeper into negative territory, taking it below its recent trough in April. Restaurants and hotels inflation hit a fresh five-year high, rising from 7.6% in July to 8.4% in August compared to the year-earlier period. (AB 26.09)

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5.5 Saudi Arabia Plans 10% Increase in Spending to Spur Economic Growth

Saudi Arabia plans to increase spending next year more than initially forecast as authorities take advantage of higher oil prices to spur economic growth and reduce unemployment. Public spending is expected to reach 1.106 trillion riyals ($295 billion) in 2019, 100 billion riyals ($27b) more than the government had projected last year, Finance Minister Mohammed Al-Jadaan said. Authorities expect spending to rise to 1.170 trillion riyals by 2021, he said, citing initial estimates.

The world’s biggest oil exporter is grappling with an economic slowdown that followed the collapse of crude prices in 2014. Measures to reduce the budget deficit and raise non-oil revenue weighed on business sentiment, pushing the unemployment rate among Saudi nationals to its highest level in more than a decade. Much of next year’s expected economic growth will be led by the oil industry, which is unlikely to create a significant number of jobs. Hence, the labor market will remain one of the largest economic challenges.”

The government expects GDP to expand 2.1% this year after contracting 0.9% in 2017. Growth, however, will stay below 2.5% through 2021, estimates show. That compares with an average of 4% between 2000 and 2014, according to IMF data.

The government believes revenue is expected to rise to 978 billion riyals in 2019 from 882 billion in 2018, while 2020 revenue is estimated to reach 1.005 trillion riyals, rising to 1.045 trillion riyals a year later. The budget deficit is seen narrowing to 3.7% of GDP in 2021 from 5% this year, while public debt is projected to increase to 25% of GDP from 20% in 2018

To reduce unemployment among Saudi nationals, the kingdom’s non-oil economy needs to expand between 3 and 4% a year, he said. That level is unlikely to be achieved before 2022, according to IMF projections. (AB 30.09)

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5.6 Saudi Arabia’s High-Speed Rail Project Launches at 300 km. per Hour

Saudi King Salman on 25 September inaugurated a high-speed railway linking Mecca and Medina, Islam’s holiest cities, described by local officials as the biggest transportation project in the region. The Haramain High-Speed Rail system will transport Muslim pilgrims, as well as regular travelers, 450 kilometers (280 miles) between the two cities via the Red Sea port of Jeddah in two hours. Thirty-five passenger trains capable of travelling at speeds of 300 kilometers per hour will slash the travel time from several hours to 120 minutes. The rail project, dogged by several delays, was built at a cost of more than $16 billion.

In 2011, Saudi Arabia signed a deal for a Spanish consortium to build the rail track, supply 35 high-speed trains and handle a 12-year maintenance contract. The kingdom is boosting its infrastructure spending and expanding its railways, including with a $22.5 billion metro system under construction in the capital Riyadh, as it seeks to diversify its oil-dependent economy. The annual hajj pilgrimage, which is to be held in September next year, attracts more than two million Muslims to the Mecca region. (AFP/Riyadh 26.09)

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►►North Africa

5.7 Egypt to Receive 56,000 Tank Rounds as Part of $99 Million US Arms Deal

The Defense Security Cooperation Agency (DSCA) announced that the Egyptian government has requested to buy forty-six thousand (46,000) 120 MM Target Practice-Tracer (M831A1) and 120 MM Target Practice, Cone Stabilized ,Discarding Sabot- (M865) rounds and (10,000) 120 MM 4th-Generation Kinetic Energy –Tungsten (KE-W) A4 Armor-Piercing Fin-Stabilized Discarding Sabot with Tracer (APFSDS – T) rounds. The estimated cost is $99 million and Egypt is going to use the rounds to maintain a strategic munitions inventory for its M1A1 tank fleet and to combat the activity of the IS affiliated group of ‘Sinai Province’ in North Sinai. On the implementation steps of the deal, the sale will involve multiple trips to Egypt with up to six US government and contractor representatives over a period of up to five years.

The deal also included (4,500) 120MM Insensitive Munitions High Explosive with Tracer (IM HE-T) tank rounds, in addition to U.S. government and contractor engineering and logistics support services. For nearly 15 years, Egypt has been producing this type of ammunition under a current co-production agreement with US, the main aim of the (APFSDS-T) rounds is to replace older model120MM KE-W, KE-W Al, and KE-W A2 ammunition.

During the recent years, Egypt has sought to diversify its ammunition sources as a way to safeguard its supply of arms and military equipment. It depended on several countries such as France, however Russia has represented a significant arms supplier, with a host of major agreements having been signed. Russia returned to be a powerful supplier of ammunition in Egypt, especially in the wake of a visit paid to the Moscow by Egyptian President al-Sisi in 2014, during this visit the two countries signed arms deals worth approximately $3.5 billion that aimed to upgrade the Egyptian missiles systems through the acquisition by Egypt of Russian S300 anti-aircraft missiles. Egypt is expected to receive through a deal with Russia 50 MIG 29 fighters in different batches, delivered on an annual basis over several years, the deal came after Russian President Putin’s meeting with Sisi in February 2014. Beside the supply of MIG 29, Egypt is expected to receive from Russia MIG 35 and Su-30 fighter jets with goals to improve the performance of the Egyptian Air Force. (ES 19.09)

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5.8 Egypt Railways Signs Historic Deal for 1,300 Train Carriages in Major Revamp

Egyptian National Railways signed a deal on 25 September with the Russian-Hungarian consortium Transmashholding to import and manufacture 1,300 new railway carriages, the largest deal in the history of Egypt’s railways. The signing ceremony was attended by Prime Minister Madbouly, Minister of State for Military Production Al- Assar, Minister of Transport Arafat, as well as the Russian and Hungarian ambassadors in Cairo. Speaking at a press conference following the ceremony, Arafat said the deal, worth €1.2 billion, includes 800 air-conditioned train carriages. The first batch of train carriages will be delivered after 14 months, the minister said. The deal is an implementation of the government’s directives to develop all elements of the railways system. (MENA 25.09)

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5.9 Egypt Strains to Keep Up With Rising Corn Demand

Egypt is making a valiant effort to boost its domestic food production, but continues to struggle to keep up with demand caused by its rapidly growing population and changing consumer tastes. Corn production is expected to jump 6.25%, to 6.8 million tonnes in the 2018/19 season, and area planted to corn is expected to rise by 50,000 hectares to 850,000 hectares from last year, the USDA estimates. But those gains fall well short of meeting expected total corn consumption of 16.1 million tonnes for 2018/19, as the country’s population expands at a rate of 2.5% per annum. Imports, projected to rise 1% from last year to 9.5 million tonnes, will continue to make up the shortfall. Argentina, Ukraine and the US are Egypt’s top suppliers of imported corn. Egypt’s struggle with corn supplies mirrors situations with other major crops, including wheat and cotton, both of which the country once produced in much higher quantities.

Looking further ahead, Egypt’s corn domestic consumption will likely continue to grow as the country develops its poultry and dairy sectors. The USDA expects Egypt’s poultry industry to grow 2-3% annually, backed by commercial-producer consolidation and an increased need for chicken feed. Egyptian consumers are also showing a growing appetite for fresh dairy products, driving dairy industry growth of 3-4% per annum. Egypt will have to make great strides in corn production to keep up with increased domestic consumption now and into the future. (GRC 23.09)

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5.10 Fraser Institute Ranks Morocco 115th in the World in Economic Freedom

On 25 September, Fraser Institute has ranked Morocco 115th in its annual report on economic freedom among 162 countries. Morocco led the North African and ranked in the third quartile in economic freedom, with a rate of 6.37 out of 10, followed by Tunisia (121st), Mauritania (136th), and Egypt (147th). Algeria (159th) and Libya (161st) were among the 10 lowest-rated countries. Although Morocco’s economic freedom score has dipped since 2010, the most recent score is an increased by 0.01 from the previous year, moving the country up one ranking from 116th.

The Fraser Institute’s report showed that Morocco’s economic freedom has increased from 1990 to 2016. Morocco scored 4.29 in 1990 and ranked 71th. Morocco’s economic freedom score then increased to 5.93 (ranked 86th) in 2000 and to 6.41 (ranked 104th) in 2010. Morocco scored 5.93 in size of government and was ranked 111th worldwide. The North African country scored 5.40 in legal system and property rights (ranked 68th), 7.22 in sound money (ranked 118th), 6.93 in freedom to trade internationally (ranked 95th), and 6.35 in regulation (ranked 130th).

At the African continent level, Morocco ranked 13th after Mauritius (first in Africa and 8th in the world), Rwanda (40th), Botswana (44th), Uganda (46th), Kenya (61th), Tanzania (79th), South Africa (94th), Zambia (97th), Ghana (98th), Liberia (100th), Namibia (113th), and Nigeria (118th). Among Arab countries, Morocco ranked 9th after Bahrain (30th), the UAE (37th), Qatar (38th), Jordan (42nd), Lebanon (74th), Oman (89th), Kuwait (90th) and Saudi Arabia (103rd). (Fraser 29.09)

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6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Turkey’s Foreign Trade Deficit Down 59% Due To Shrinking Imports

Turkey’s foreign trade deficit saw an annual fall of 59% in August, the country’s statistical authority announced TUIK on 28 September. Turkey’s imports decreased by 22.7% year-on-year to $14.8 billion in August while exports fell 6.5% to $12.4 billion. From January to August, Turkey’s foreign trade balance showed a deficit of $49.2 billion, while the amount was $45.7 billion over the same period last year. In August, the country’s foreign trade deficit amounted to $2.4 billion, down from $5.9 billion in the same month last year.

In August 2018, the top country for Turkey’s imports was Russia with $1.55 billion, followed by China with $1.44 billion, Germany with $1.27 billion and the U.S. with $920 million. The main market for Turkish exports was Germany with $1.12 billion, followed by the U.K. with $900 million, Iraq with $648 million and the U.S. with $637 million. Over the past five years, the highest export-to-import ratio on a yearly basis was recorded in 2016 with 71.8%, while Turkey’s foreign trade deficit has fallen from $99.8 billion in 2013 to $76.8 billion in 2017. (TUIK 28.09)

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6.2 Study Says Greece Ranks Very Low in Economic Freedom

Greece ranks 108th among 162 countries and is placed in the third category in terms of indicators of economic freedom, a study by the Fraser Institute shows. Specifically, the study by the Canadian think tank places Greece in the same place (108th) with China and Swaziland this year. At the same time, it finds the country in the lowest position among all EU member states, as well as out of all countries of Southeast Europe.

The degree of economic freedom is calculated on the basis of institutions and policies implemented by each country in five areas: the size of the state, the rule of law, access to a strong currency, freedom in international trade, and the regulatory environment in bank credit and entrepreneurship.

Looking at the sub-indices, Greece, which has a total rating of 6.46 out of 10, has a mere score of 4.38 in the size of government and 5.78 in the legal system and ownership rights. It is characteristic that among the EU member states, the first country that ranks above Greece is Croatia in 75th place. In comparison with non-EU countries of Southeastern Europe, Greece is in worst position than Bosnia-Herzegovina which ranks 98th, 10 places higher. It is also indicative that Romania is in 20th place, Albania is 34th and Bulgaria 46th.

The countries with the best performance in all five indices globally remain the same as last year. Hong Kong is again at the top of the index with a score of 8.97 out of 10, followed by Singapore (8.84), New Zealand (8.49), Switzerland (8.39) and Ireland (8.07). Venezuela ranks at the very bottom of the 162 countries. The Fraser Institute is the top think tank in Canada for the 10th straight year and ranks in the top 25 among all think tanks worldwide. (Various 25.09)

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6.3 Greek Primary Budget Surplus Higher Than Target for January – August Period

The Greek state budget showed a primary surplus of €3.157 billion ($3.718 billion) in the January-August period, down from a primary surplus of €3.544 billion ($4,174 billion) in the same period last year, but up from a budget target for a surplus of €917 million ($1,080 billion). The Greek Finance Ministry said that the state budget (general government) showed a deficit of €1.220 billion in the eight-month period, down from a budget target for a shortfall of €3.384 billion and a deficit of €1.271 billion last year.

More specifically, budget revenue exceeded targets in the categories of: special category income tax (5.1%), property taxes (5.8%), direct taxes (8.4%), VAT on oil products (8.8%), other transaction taxes (6.9%), vehicle registration stamp (14.3%), other special consumption taxes (0.8%), indirect taxes (20.5%), EU receipts (23.3%) and other non-tax revenue (8.9%). On the other hand, budget revenue fell short of targets in the categories: income tax (0.6%), corporate tax (23.7%), other indirect taxes (93.0%), special consumption tax on energy products (0.7%), and privatization revenue (9.1%). The Public Investment Program revenue was €1.435 billion ($1,690 billion), down €166 million ($195 million) from targets. (A.M.N.A. 24.09)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Number of Women in Senior IDF Roles Continues to Climb

A record number of women are reaching senior ranks in the Israeli military and in the past few years, the number of women appointed to roles at the ranks of lieutenant colonel, colonel and brigadier general has risen by 20 to 30%. It is thought that within the next three years, at least one more woman would be promoted to the rank of major general, and possibly two.

According to IDF figures, there are currently seven women serving at the rank of brigadier general – the third-highest rank in the Israeli military – which is the highest number of women serving at this rank in the history of the IDF. As recently as 2013, there were only three women serving at the rank of brigadier general, the year when Orna Barbivai made history by becoming the first woman to be promoted to major general. Barbivai was put in charge of the IDF’s Personnel Directorate.

In 2018, there were 36 women serving at the rank of colonel. To compare, in 2013 there were only 24 women serving at the rank of colonel. Women have also made advances at the rank of lieutenant colonel, with 326 women serving at that rank in 2018 compared to 291 in 2013.

The issue of women’s military service has been a matter of public debate for some time, particularly when it comes to the question of opening combat roles to women. Some 90% of all positions in the IDF are now open to women and the remaining 10% are mostly combat positions in elite units. Senior IDF officials explain that the general trend in the country’s military is to promote women and bring them into as many professions as possible. However, they say, in some cases, women turn down offers of promotion, frequently because of family responsibilities. (IH 02.10)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 MeMed Raises Over $70 Million to Advance Pioneering Point-Of-Care Platform

MeMed announced on 20 September that it raised over $70 million from new and existing investors including Ping An Global Voyager Fund, Foxconn, Caesarea Medical Holdings, Clal Insurance, Phoenix Insurance, OurCrowd, Social Capital, WTI, Horizons Ventures and others. MeMed will use the funds to advance three projects: the market adoption of MeMed BV, an immune-system based test for distinguishing between bacterial and viral infections; the completion of the development, upscale manufacturing and clearance of MeMed Key, a point-of-care (POC) protein measurement platform and expand its pipeline of innovative tests that integrate machine learning and immune-based measurements to tackle big clinical challenges. Last year, MeMed secured a $9.2 million contract by the Defense Threat Reduction Agency (DTRA), a branch of the US Department of Defense (DoD) to improve clinical applications of its technology.

Haifa’s MeMed‘s .mission is to translate the complex signals of our immune system into simple diagnostic insights that transform the treatment of infectious and inflammatory diseases – at the right place and the right time. Over nearly a decade, MeMed has developed and validated a pioneering immune-based protein signature called MeMed BV for distinguishing between bacterial and viral infections – an indispensable tool in the fight against resistant strains of bacteria. (MeMed 20.09)

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8.2 Medtronic to Acquire Mazor Robotics

Dublin’s Medtronic, a global leader in medical technology, and Mazor Robotics announced the companies have entered into a definitive merger agreement under which Medtronic will acquire all outstanding ordinary shares of Mazor for $58.50 per American Depository Share, or $29.25 (104.80 ILS) per ordinary share, in cash, for a total of approximately $1.64 billion, or $1.34 billion net of Medtronic’s existing stake in Mazor and cash acquired. The boards of directors of both companies have unanimously approved the transaction. Medtronic’s acquisition of Mazor strengthens Medtronic’s position as a global leader in enabling technologies for spine surgery, and drives Mazor Robotics’ vision to bring its core technology to the forefront of the global market.

Mazor‘s proprietary core platform technology, including the Mazor X™ Robotic Guidance System (Mazor X), and the Renaissance® Surgical-Guidance System (Renaissance), are transforming spinal surgery from freehand procedures to accurate, state-of-the-art, guided procedures. By combining Medtronic’s market-leading spine implants, navigation, and intra-operative imaging technology with Mazor’s robotic-assisted surgery (RAS) systems, Medtronic intends to offer a fully-integrated procedural solution for surgical planning, execution and confirmation.

Caesarea’s Mazor Robotics, founded in 2001, pioneered the application of robotics technology and guidance for use during spinal procedures, and is the market segment’s leader. In 2011, the Company introduced the Renaissance system and in 2016 launched the next generation Mazor X system. To date, more than 200 Mazor systems are in clinical use on four continents and have guided the placement of more than 250,000 implants during some 40,000 procedures, enabling minimally-invasive spine surgery to become standard procedure in many hospitals. Mazor’s core technology has received more than 15 U.S. FDA clearances and has been the subject of more than 60 publications, leading the spine robotics market on the evidence front. Mazor is the holder of more than fifty patents worldwide. (Medtronic 20.09)

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8.3 CathWorks FFRangio Trial Meets Primary Endpoint and Exceeds Performance Goals

The journal Circulation published results from the CathWorks FFRangio FAST-FFR clinical trial in an article titled Accuracy of Fractional Flow Reserve Derived From Coronary Angiography. The FAST-FFR trial demonstrated that the sensitivity and specificity of the CathWorks FFRangio System were 93.5% and 91.2%, respectively, both of which exceeded the trial’s pre-specified performance goals. The diagnostic accuracy was 92% overall, and remained high when considering only FFR values in the critical zone between 0.75 and 0.85. As a result, the trial concluded that the CathWorks System has the promise to substantially increase physiologic coronary lesion assessment in the cath lab, potentially leading to improved patient outcomes.

The CathWorks FFRangio System is a non-invasive FFR platform that quickly and precisely delivers objective multi-vessel physiologic measurements to cost-effectively optimize and confirm intra-procedural percutaneous coronary intervention (PCI) therapy decisions. It is designed to deliver the objective FFR guidance needed to optimize PCI therapy decisions for every patient. The FAST-FFR trial was rigorous. CathWorks FFRangio System data was measured by 19 on-site cath-lab clinicians blinded to the invasive FFR measurements. Angiograms were acquired by dozens of operators at ten hospitals using all four of the major angiography systems (Siemens, Phillips, Canon, and GE). In addition, a majority of subjects were overweight or obese, and 20% had calcified lesions. In the presence of all of these real-world conditions, CathWorks FFRangio accuracy was still very high. The CathWorks FFRangio System is in development and is not yet FDA-cleared.

Kfar Saba’s CathWorks is a medical technology company focused on applying its advanced computational science platform to optimize PCI therapy decisions and elevate coronary angiography from visual assessment to an objective FFR-based decision-making tool for physicians. FFR-guided PCI decision-making is proven to provide significant clinical benefits for patients with coronary artery disease and economic benefits for patients and payers. The company’s focus is specifically on bringing the CathWorks FFRangio System to market to provide quick, precise, and objective intra-procedural FFR guidance that is practical for every case. (CathWorks 25.09)

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8.4 TransEnterix Acquires Assets and IP from MST – Medical Surgery Technologies

Research Triangle Park, N.C.’s TransEnterix, a medical device company that is digitizing the interface between surgeons and patients to improve minimally invasive surgery, has acquired substantially all of the assets of MST Medical Surgery Technologies (MST), an Israel medical technology company, in a cash and stock transaction with a total consideration. MST is a leader in the field of surgical technology, having developed a software-based image analytics platform powered by advanced visualization, scene recognition, artificial intelligence, machine learning and data analytics. The addition of MST’s technology, IP portfolio, and R&D team supports and accelerates TransEnterix’s vision to leverage its Senhance Surgical System to deliver digital laparoscopy, thereby increasing control in the surgical environment and reducing surgical variability.

TransEnterix acquired from MST substantially all of its assets, which includes technology and intellectual property, and will transfer MST’s Israeli-based R&D team to a newly formed subsidiary, TransEnterix Israel, Ltd. The transaction will be financed with a combination of cash and stock, delivered in two separate tranches. At the closing of the transaction, MST will receive approximately $5.8 million in cash and 3,150,000 shares of TransEnterix common stock. The second tranche of $6.6 million, payable in cash or stock, is to be paid within one year of closing. The timing and form of payment of the second tranche is at TransEnterix’s sole discretion. (TransEnterix 24.09)

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8.5 Venus Medtech Announces Agreement to Acquire Keystone Heart

Venus Medtech (Hangzhou), the preeminent Chinese transcatheter heart valve company, has signed an agreement to acquire Keystone Heart. The acquisition gives Venus Medtech international rights to TriGUARD 3, the first Cerebral Embolic Protection Device designed to provide complete coverage to all brain regions for patients undergoing cardiac procedures.

Keystone Heart is currently enrolling patients in the REFLECT trial in the US to evaluate TriGUARD 3, anticipating enrollment completion in the early part of Q1/19 and FDA review in the first half of 2019. CE mark approval for Europe is anticipated by the end of this year. The merger is expected to close in Q4/18, subject to customary closing conditions.

TriGUARD 3 is designed to help interventional cardiologists and electrophysiologists protect the brain during cardiovascular procedures. During these cardiovascular procedures, debris from the aortic valve, ascending aorta and other sources may embolize and cause cerebral infarction. Embolic brain lesions resulting from these procedures may lead to potentially devastating outcomes — stroke, dementia and cognitive decline. Moderate to mild brain injuries, which are caused by new lesions in the brain, can affect the patient’s processing speed, executive function, and fundamental skills such as memory, language, and balance. These lesions may be related to changes in the way your brain functions or processes information, and lesions in the brain stem can impact basic body functions such as breathing, swallowing, heart rate, blood pressure, consciousness, and whether one is awake or fatigued. The location of these lesions determines the damage and clinical symptoms, and where a lesion may occur is unpredictable. The TriGUARD 3 Cerebral Embolic Protection Device is designed to cover all three major cerebral branches to minimize the risk of brain damage during cardiovascular procedures.

Caesarea’s Keystone Heart is a medical device company developing and manufacturing cerebral embolic protection devices intended to reduce the risk of brain embolization associated with cardiovascular procedures. The company is focused on protecting the brain from emboli to reduce the risk of brain infarcts during TAVR, atrial fibrillation ablation and other cardiovascular procedures. The TriGUARD 3 product pipeline is designed to help interventional cardiologists, electrophysiologists and cardiac surgeons preserve brain reserve while performing these procedures. (Keystone Heart 25.09)

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8.6 Teva Announces Exclusive First-to-File Launch of a Generic Version of Cialis in the US

Teva Pharmaceutical Industries announced the exclusive first-to-file launch of a generic version of Cialis®1 (tadalafil) tablets (2.5 mg, 5 mg, 10 mg, 20 mg) in the U.S. Tadalafil tablets are a phosphodiesterase 5 (PDE5) inhibitor indicated for the treatment of erectile dysfunction (ED), the signs and symptoms of benign prostatic hyperplasia (BPH), and both ED and the signs and symptoms of BPH (ED/BPH).

With over 550 generic medicines available, Teva has the largest portfolio of FDA-approved generic products on the market and holds the leading position in first-to-file opportunities, with over 100 pending first-to-files in the U.S. Currently, one in seven generic prescriptions dispensed in the U.S. is filled with a Teva generic product.

Teva Pharmaceutical Industries is a global leader in generic medicines, with innovative treatments in select areas, including CNS, pain and respiratory. Teva delivers high-quality generic products and medicines in nearly every therapeutic area to address unmet patient needs. They have an established presence in generics, specialty, OTC and API, building on more than a century-old legacy, with a fully integrated R&D function, strong operational base and global infrastructure and scale. Headquartered in Israel, with production and research facilities around the globe, we employ 45,000 professionals, committed to improving the lives of millions of patients. (Teva 27.09)

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8.7 INSIGHTEC’s MR-Guided Focused Ultrasound Treatment Now Covered By Medicare in 25 States

INSIGHTEC announced Medicare benefit coverage by CGS Medicare and Palmetto GBA for MR-guided focused ultrasound (MRgFUS) for the treatment of essential tremor (ET). This brings the total number of states who cover the Neuravive treatment for medication-refractory ET to 25. With this announcement, patients are now covered in Alabama, Georgia, North Carolina, South Carolina, Tennessee, Virginia, West Virginia, Kentucky and Ohio. Earlier this year, INSIGHTEC announced Medicare coverage for the procedure in Connecticut, Maine, New Hampshire, Rhode Island, Vermont, New York, Massachusetts, Illinois, Wisconsin, Minnesota, Indiana, Iowa, Kansas, Nebraska, Michigan and Missouri.

In the United States, MR-guided focused ultrasound for the treatment of ET is available at the following institutions: Stanford University Medical Center (CA), Sperling Medical Group (FL), University of Maryland School of Medicine (MD), Brigham and Women’s Hospital (MA), Mayo Clinic (MN), Weill Cornell Medical College (NY), NYU Langone Medical Center (NY), The Ohio State University Wexner Medical Center (OH), Penn Medicine (PA), UVA Health System (VA) and Swedish Neuroscience Institute (WA).

Haifa’s INSIGHTEC is a global medical technology innovator transforming patient lives through incisionless brain surgery using MR-guided focused ultrasound. The company’s award-winning Exablate Neuro™ is used by neurosurgeons to perform the Neuravive™ treatment to deliver immediate and durable tremor relief for essential tremor patients. Research for future applications in the neuroscience space is underway in partnership with leading academic and medical institutions. (INSIGHTEC 01.10)

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8.8 Body Vision Medical Announces the Release of LungVision

Body Vision Medical announced the launch of its groundbreaking LungVision platform at the CHEST conference, San Antonio, TX. Body Vision provides a tool which has changed the way peripheral nodules are approached. Its unique technology creates augmented reality with the ability to see fluoroscopically invisible lesions and the pathways under the live fluoro, while tracking a patient breathing. Once the technology has guided the doctors to the lesion, they confirm the lesion’s relationship to the airway with radial-EBUS. They then use their off-the-shelf biopsy instruments via the LungVision catheter. The augmented fluoro image, integrated with the radial EBUS images, allows tissue samples with continuous real-time confirmation of location.

Ramat HaSharon’s Body Vision Medical is a software and medical device company specializing in lung cancer diagnostics, augmented real-time imaging, artificial intelligence, and intra-body navigation. The company was founded in 2014 to address the contemporary unfulfilled clinical need of early lung cancer diagnostics. (Body Vision Medical 01.10)

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8.9 Gamida Cell Files for $69 Million NASDAQ IPO

Gamida Cell has filed for a $69 million initial public offering on NASDAQ on 28 September under the ticker GMDA. No pricing terms were disclosed. The company previously filed confidently in June. BMO Capital Markets and RBC Capital Markets are joint bookrunners for the IPO.

Gamida Cell develops therapies for rare genetic conditions like sickle cell anemia, and also for blood cancers and malignant tumors. The company is currently in phase 3 clinical trials for its lead product NiCord, a graft intended to act as a universal bone marrow transplant solution for patients who cannot find a matching donor. The technology is also under phase 1 development in patients with relapsed or refractory B-cell lymphoma and multiple myeloma. In July, NiCord received orphan drug designation from the U.S. FDA.

Jerusalem’s Gamida Cell is a leader in the development of cellular and immune therapeutics, committed to changing the treatment paradigm for patients with cancer and rare genetic diseases. Their world-class scientists are harnessing epigenetic science to develop a broad platform technology that provides a safe and effective way to expand functional cells in culture to create curative treatments for patients. (Gamida Cell 02.10)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 MissingLink.ai Launches to Accelerate Deep Learning Progress

MissingLink.ai has launched as a comprehensive deep learning lifecycle management platform allowing data scientists and engineers to significantly shorten the time it takes to train and deliver effective business outcomes. MissingLink was born out of a desire to allow teams of data scientists and engineers to spend their time solving world-changing problems instead of doing menial tasks.

With MissingLink, data teams can get started with 3 lines of code: Setting up an experiment requires tedious work including log parsing, copying data, managing machines, running experiments manually and logging the analysis. With MissingLink, just three lines of code lets you effortlessly integrate code, data and existing infrastructure. While AI is one of the most cutting-edge fields in computer science, the industry is still using the same old tools like file systems. MissingLink offers a version-aware data store, eliminating the need to copy files and only syncing changes to data, resulting in reduced load time and easy data exploration. Data engineers at companies including Aidoc, Nanit and Way2VAT have been in production with MissingLink.ai for the past 12-18 months and are already experiencing faster results, higher quality outputs and easier management of deep learning work.

Tel Aviv’s MissingLink.ai is a powerful deep learning platform that helps data engineers streamline and automate the entire deep learning cycle: data, code, experiments and resources. It eliminates the grunt work and significantly shortens the time it takes to train and deliver effective models. MissingLink.ai is used by data engineers at companies including Aidoc, Nanit and Way2VAT. MissingLink is a part of Samsung NEXT. (MissingLink.ai 25.09)

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9.2 Mellanox InfiniBand to Accelerate U.S. Department of Energy’s New Supercomputer

Mellanox Technologies announced that InfiniBand has been chosen to accelerate the U.S. Department of Energy’s (DOE) National Renewable Energy Laboratory’s (NREL) new supercomputer. The new 8 Petaflop system named “Eagle” will consist of more than 2100 nodes and deliver 3 times the performance compared to NREL’s current supercomputing platform. Eagle will be put into production in January 2019.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet 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 and unlocking system performance capability. Mellanox offers a choice of fast interconnect products: adapters, switches, software and silicon that accelerate application runtime and maximize business results for a wide range of markets including high performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services. (Mellanox 24.09)

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9.3 Octopai Named a Gartner Cool Vendor in Data Science and Machine Learning

Octopai has been recognized in Gartner’s September 2018 “Cool Vendors in Data Science and Machine Learning” report as one of 5 Cool Vendors. According to Gartner, “Data and analytics leaders should engage with vendors in areas such as data management, unstructured data analysis and model operationalization.” According to the report, “as citizen data science, enabled by augmented analytics, dramatically increases the volume of models created, discipline in data management and operationalization becomes even more critical….Data and analytics leaders are seeking technologies with innovative approaches to ensuring the fundamentals of data science and machine learning. They are looking to both startups and megavendors to provide support for handling the tasks outside the flashier work of data scientists: data management, governance and machine learning operationalization.”

Octopai’s automation enables data and analytics leaders to centralize metadata for analytics, rationalize it and provide consistent data interpretations across multi-vendor environments. Octopai’s technology solves the difficult problem of interpreting non-meaningful data names to create data trust even when third party data is involved, thereby enabling users to understand the data journey in seconds rather than the weeks or months it traditionally takes to manually reverse engineer such processes. Octopai’s SaaS solution is extremely simple to use and can be up and running within a day on AWS, Azure or a private cloud.

Rosh HaAyin’s Octopai is a centralized, cross-platform metadata management automation solution that enables data and analytics teams to quickly and precisely discover and govern shared metadata. Utilizing machine learning, Octopai automates metadata management dramatically increasing productivity and trust, shortening time to market, and reducing risks associated with erroneous data. (Octopai 25.09)

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9.4 Camtek Receives a Multiple Systems Order of $4.5 Million from a Major OSAT

Camtek announced that it received an order from a tier-one OSAT (Outsourced Semiconductor Assembly and Test). The order received is for Camtek’s latest high-throughput 2D inspection system. The tools are expected to be installed in Q4/18.

Migdal HaEmek’s Camtek is a leading manufacturer of metrology and inspection equipment and a provider of software solutions serving the Advanced Packaging, Memory, CMOS Image Sensors, MEMS, RF and other segments in the Semiconductors industry. Camtek provides dedicated solutions and crucial yield-enhancement data, enabling manufacturers to improve yield and drive down their production costs. (Camtek 25.09)

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9.5 AudioCodes to Deliver End-to-End Voice Quality Monitoring of Microsoft Teams

AudioCodes has worked with Microsoft to deliver end-to-end voice quality monitoring for Microsoft Teams environments. The new monitoring capabilities are facilitated by AudioCodes’ Microsoft-certified Mediant session border controllers (SBCs) in collaboration with the One Voice Operations Center (OVOC), both components of the AudioCodes One Voice for Microsoft 365 portfolio of products and solutions for Microsoft voice implementations.

AudioCodes was one of the first vendors whose session border controllers (SBCs) were certified for Direct Routing functionality, enabling seamless PSTN and SIP trunk voice connectivity for Teams environments. Support for Direct Routing means that AudioCodes SBCs connect directly to the Teams Front End servers giving them end-to-end visibility into Teams calls. Call quality information is extracted from Microsoft reports, combined with relevant parameters collected from SIP trunks and reported to the One Voice Operations Center (OVOC) centralized network and monitoring tool. OVOC analyzes the call quality information to help network administrators identify trends and troubleshoot issues which could result in service-affecting problems. AudioCodes also plans to support Microsoft’s Event Hub API in the future, which will enable quality monitoring of calls between individual Teams clients.

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 25.09)

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9.6 Arbe Robotics Wins the Most Exciting Start-up Silver Award at AutoSens Awards 2018

Arbe Robotics was named a Silver Award winner for the Most Exciting Start-up award at AutoSens Awards 2018. Part of the international AutoSens Vehicle Perception Conference and Exhibition, the Awards, now in their second year, were judged by a world-class panel drawn from original equipment manufacturers (OEMs), tier one and two suppliers, industry organizations, and academia to assure a robust process.

Tel Aviv’s Arbe Robotics is the world’s first company to demonstrate ultra-high-resolution 4D imaging radar with post processing and Simultaneous Localization and Mapping (SLAM). It is disrupting autonomous vehicle sensor development by bridging the gap between radar and optics with its proprietary imaging solution that provides optic sensor resolution with the reliability and maturity of radar technology for all levels of vehicle autonomy. The company was founded in 2015 and is backed by 360 Capital Partners, Canaan Partners Israel, iAngels, Maniv Mobility, OurCrowd, O.G. Tech Ventures and Taya Ventures. (Arbe Robotics 26.09)

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9.7 Tactile Mobility Launches Tactile Sensing for Driving With $9 Million Raised

Tactile Mobility announced the official launch of its tactile sensing and data analytics platform. The launch includes the announcement of five paid POCs, additional funds which bring the company’s total funding to $9 million. Tactile Mobility is pioneering the tactile sensing space with its unique software which collects “first order” data using a vehicle’s built in, non-visual sensors including wheel speed, wheel angle, RPM, paddles position, gear position, and then analyze it to yield actionable insights in real-time.

These actionable insights, are subsequently fed back to the vehicle’s on-board computers, where it is used to make better driving decisions. Concurrently, the data collected is anonymized and uploaded from the vehicles to the cloud, where big data analysis is applied to create crowd-sourced mapping that is critical for enabling an accurate, continually updated overview of road conditions.

Tactile Mobility’s mapping service has been launched by the city of Haifa and the company has already collected over ten million kilometers of road data across four continents with plans to roll out in several other cities in the coming months. In addition, the company has signed paid Proof of Concepts (POCs) with five major OEMs, one of which is Ford. Two Request for Proposals (RFPs) were also signed with major European OEMs.

Haifa’s Tactile Mobility [formerly Mobiwize] is the world’s leading tactile sensing technology and data provider, enabling actionable insights for autonomous vehicles, municipalities, insurers and fleet managers. Tactile Mobility’s unique technology collects “first principle”, crucial, real-time data generated from cars’ sensors and turns it into actionable insights such as road quality, tire grip, vehicle weight and other vehicle- and road-specific models. Insights provided by Tactile Mobility greatly enhance vehicle intelligence and the ride safety, efficiency and experience. (Tactile Mobility 26.09)

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9.8 Cyberbit & CloudRange Cyber Announce the First Cyber Range “As a Service” in North America

Cyberbit and Nashville, Tennessee’s CloudRange Cyber, a pioneer in cybersecurity simulation training, announced the launch of CloudRange’s Cyber Attack Simulation Training Platform as a Service (CASTaaS) – the first cyber range offering available through the IT channel in North America. With the new CloudRange service, cybersecurity technology manufacturers, managed security service providers (MSSPs), value-added resellers (VARs), and technology distributors can offer their customers advanced, simulated cybersecurity training powered by the Cyberbit Range platform – the world’s leading cyber simulation platform. CloudRange provides the first consumption-based cyber range for enterprises and MSSPs. Organizations can now take advantage of the most advanced cybersecurity training available while bypassing the need to invest in cyber range infrastructure, technology, trainers and administrators, thereby reducing capital expenditures.

CloudRange selected Cyberbit based on the company’s unique ability to provide hyper-realistic simulation. The Cyberbit Range platform can emulate each customer’s specific network environment by using industry leading cybersecurity technologies including IBM QRadar, Micro Focus ArcSight, Splunk, Palo Alto Networks and Checkpoint. Customers can train security teams, assess candidates, onboard new hires, and improve cybersecurity team skills on a customizable virtual network environment that mirrors their own. CloudRange, powered by Cyberbit, offers a complete training platform with unlimited simulated attack scenarios with sessions that are recorded for playback and assessment.

Ra’anana’s Cyberbit provides a consolidated detection and response platform that protects an organization’s entire attack surface across IT, OT and IoT networks. Cyberbit products have been forged in the toughest environments on the globe and include: endpoint detection and response powered by behavioral analysis, security automation, orchestration and response (SOAR), ICS/SCADA security (OT security), and the world’s leading cyber range for simulated cyber training. Since founded in mid-2015 Cyberbit’s products were rapidly adopted by enterprises, governments, academic institutions and MSSPs around the world. Cyberbit is a subsidiary of Elbit Systems. (Cyberbit 27.09)

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9.9 ColorChip to Showcase Family of Next-Generation PAM4 200G/400G Optical Transceivers

ColorChip will be presenting a family of next generation PAM4 optical interconnects ranging from 100G to 400G at the 2018 Open Compute Project (OCP) Regional Summit in Amsterdam, Netherlands. ColorChip’s PAM4-based 200G and 400G optical interconnects, expected to be commercially available by the end of the year, offer high-speed and energy-efficient solutions that are robust by design and production ready. Based on proprietary SystemOnGlass technology, ColorChip’s multi-generational optical engine platform has been refined over several generations of transceivers and can truly cater to the pressing challenges of massive data flows worldwide.

Yokneam’s ColorChip, established in 2001, is a technology innovator in the field of photonic integrated hybrids whose vision is to break open the optical interconnect bandwidth barrier with high-speed optical transceiver solutions to support the explosive bandwidth demand of the Datacom and Telecom markets. ColorChip leverages its fully owned, industrialized optics-based FAB dedicated to the production of PLC based SystemOnGlass optical engines, whose glass platform is the ideal medium for emerging PAM4 applications. (ColorChip 27.09)

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9.10 Morphisec Announces Interoperability with RSA NetWitness Platform

Morphisec announced that RSA has certified the interoperability between Morphisec’s Endpoint Threat Prevention platform and RSA NetWitness Platform. Enterprises with RSA NetWitness deployed can now integrate valuable, real-time threat intelligence and threat prevention data collected by Morphisec directly into their workflows for added visibility and to prioritize incident response.

Enterprises are increasingly under attack by sophisticated threats that bypass their other security controls. Morphisec’s innovative Moving Target Defense technology dynamically morphs the memory environment, stopping all known and unknown advanced threats, such as APTs, zero-days, ransomware, evasive fileless attacks, supply chain hacks and browser-based exploits. Attempted attacks are logged and the full attack fingerprint plus incident response details are immediately visible in NetWitness. Moreover, Morphisec only logs real attacks, helping security personnel cut through the noise of false positives and irrelevant data so they can prioritize an effective response strategy.

Beer Sheva’s Morphisec offers an entirely new level of innovation to customers in its Endpoint Threat Prevention platform, delivering protection against the most advanced cyberattacks. The company’s patented Moving Target Defense technology prevents threats others can’t, including APTs, zero-days, ransomware, evasive fileless attacks and web-borne exploits. Morphisec provides a crucial, small-footprint memory-defense layer that easily deploys into a company’s existing security infrastructure to form a simple, highly effective, cost-efficient prevention stack that is truly disruptive to today’s existing cybersecurity model. (Morphisec 01.10)

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9.11 Telrad Partnership with OmniPoint to Provide Services to Wireless Internet Providers Nationwide

Telrad Networks announced its partnership with OmniPoint Technology, to provide Over-The-Top (OTT) Media Services to wireless Internet service providers (WISPs) nationwide. The OTT service, developed by OmniPoint, enables WISPs around the United States to offer this value-added service to increase revenues, while enabling end customers to cut the cord from traditional, big name cable and TV providers and save money each month. Together, OmniPoint and Telrad will be offering the OTT media services to operators with a white labelling option so they can brand and resell the service as their own.

OmniPoint Technology is leveraging Telrad’s LTE solution for the delivery of internet services to previously underserved subscribers in Virginia, New York, Maryland, Massachusetts and soon in Pennsylvania. OmniPoint selected Telrad after a rigorous competition between three major market players.

Lod’s Telrad Networks is a global provider of innovative LTE telecom solutions, boasting over 300 4G-deployments in 100 countries. Telrad stands at the forefront of the technology evolution of next-generation TD-LTE solutions in the sub-6 GHz market. Since 1951, the company has been a recognized pioneer in the telecom industry, facilitating the connectivity needs of millions of end-users through operators, ISPs and enterprises around the world. (OmniPoint 01.10)

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9.12 SafeRide Launches CAN Optimizer, Enhancing Cloud Anomaly Detection Capabilities

SafeRide Technologies announced the launch of its CAN Optimizer solution, to be demonstrated this week at the Paris Motor Show. While uploading raw CAN data to the cloud enables advanced anomaly detection capabilities, the process consumes a significant amount of bandwidth. SafeRide’s CAN Optimizer dramatically decreases the bandwidth needed to do so by providing 98 – 99% reduction in data size, with a typical lossless compression ratio more than 15 times better than other compression algorithms that are currently on the market. This will greatly benefit OEMs and fleet managers by further helping to uncover unknown cybersecurity vulnerabilities, identifying malfunctions before they happen, and even detecting misuse and abuse of vehicles.

Tel Aviv’s SafeRide Technologies is the provider of vSentry, the industry-leading multi-layer cybersecurity solution for connected and autonomous vehicles that combines state-of-the-art deterministic security solution with a groundbreaking AI profiling and anomaly detection technology to provide future-proof security. SafeRide provides OEMs, fleet operators and automotive suppliers early detection and prevention of cyberattacks and helps to avoid financial damage, prevent reputation loss and save lives. (SafeRide 01.10)

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9.13 Vayyar Imaging is Bridging the Gap between LiDar and Radar

Vayyar Imaging announced the launch of its new Automotive Evaluation Kit (EVK), representing a significant leap forward in the application of radar technology. The company’s new sensor kit delivers the world’s most advanced System on a Chip (SOC) for mmWave 3D imaging to the automotive industry. With this new sensor kit, Vayyar brings point cloud technology to radar, increasing radar’s resolution and capabilities, while reducing costs and minimizing the need for other sensors within the vehicle.

Vayyar’s new automotive sensor kit includes Vayyar’s 77-81Ghz ASIC, including 48 transceivers on a chip with internal DSP. It includes a sophisticated array of antennas and a USB interface. The company’s powerful sensors reduce the overall cost and number of sensors needed for the vehicle, resulting in a better driving experience and increasing the possibilities for in-car sensor capabilities for tier 1 customers and original equipment manufacturers (OEMs).

Yehud’s Vayyar Imaging is a leading company in changing global markets for imaging and sensing with its cutting edge 3D imaging sensor technology. Vayyar’s exclusive sensors quickly and easily look into objects or any defined volume and detect even the slightest anomalies and movements to bring highly sophisticated imaging capabilities to your fingertips. Utilizing a state-of-the-art embedded chip and advanced imaging algorithms, Vayyar’s mission is to help people worldwide improve their health, safety and quality of life using mobile, low-cost and safe 3D imaging sensors. (Vayyar Imaging 02.10)

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9.14 Valeo Selects Vayyar Imaging to Implement Life-Saving Technology in Automotive Vehicles

Vayyar Imaging announced from the Paris Motor Show it will provide France’s Valeo, a leading automotive supplier, with its advanced automotive sensors to enhance infant passenger safety in vehicles. Vayyar’s highly-sophisticated radar sensors enable Valeo to monitor infants’ breathing and trigger an alert in the case of emergency, including if an infant has been left inside a vehicle alone. Through this partnership, the companies will work together toward mass production readiness to radically change the standard of safety in the automotive industry.

Unique in their field, Vayyar’s sensors consolidate multiple antennas and multi-transceiver radar capabilities to identify the respiration patterns of an infant and alert upon the detection of any anomalies. Unlike other technologies, these sensors work in any light condition and beyond the line of sight to constantly monitor and provide real-time updates on an infant’s health status.

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9.15 Karamba Security Introduces ThreatHive Solution for Cybersecurity Vulnerabilities

Karamba Security announced ThreatHive, which provides automobile OEMs and Tier-1 suppliers a view of actual, online attacks on their ECUs during development. This service offering enhances Karamba’s ECU protection portfolio with Automotive Threat Intelligence, giving the automotive security industry a platform for early discovery of security vulnerabilities. Karamba Security’s ThreatHive implements a worldwide set of hosted automotive ECUs in simulation of a “car-like” environment. These ECU software images are automatically monitored to expose automobile attack patterns, tools, and vulnerabilities in the ECU’s operating system, configuration, and code. The real attacks on the ECU during the development lifecycle provide actionable insights into security vulnerabilities, including industry software (like OS, development tools, and common libraries) that benefit the automotive security community.

By utilizing hackers’ crowd effect, attacking the ECU software hosted in the honeypots, Karamba Security’s offering expedites vulnerabilities discovery, and reduces OEMs’ and Tier-1 suppliers’ investment in penetration testing during product acceptance tests, in a narrow time window, which may limit vulnerabilities discovery. The findings from the threat analysis tool are shared in an aggregated and anonymized way to help vehicle OEMs and Tier-1 suppliers secure ECUs from hackers, as part of Karamba Security’s strategic partnership with US Auto-ISAC.

Hod HaSharon’s Karamba Security provides industry-leading automotive cybersecurity solutions for autonomous and connected cars. Its Autonomous Security software products, including Carwall and SafeCAN, provide end-to-end in-vehicle cybersecurity for the endpoints and the internal messaging bus. Karamba is engaged with 17 OEM and tier-1 customers and received numerous industry awards. (Karamba Security 02.10)

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9.16 Ethernity Networks Releases the 100G ACE-NIC100 FPGA-Based Smart NIC

Ethernity Networks has launched the ACE-NIC100, its second-generation Smart NIC, offering 100Gbps data processing and security offload. The flexible ACE-NIC100 comes with 10G, 25G, 40G, and 100G interface configurations and includes an all-programmable FPGA equipped with Ethernity’s proven patented ENET Flow Processor firmware. This enables support for high bandwidth applications over COTS servers to enable the next-generation network edge, mobile 5G, advanced business and security services, and the telco cloud. With its carrier-class ENET Flow Processor firmware, the ACE-NIC100 can support complete Carrier Ethernet Switch Router (CESR) offload with hierarchical QoS, performance monitoring, tunneling, IPSec functionality, and much more. This allows high capacity deterministic performance for virtualized networking appliances such as vSwitch (OVS), vRouter, vCPE, vEPC, and vBRAS/vBNG.

The ACE-NIC100 is the newest addition to Ethernity’s complete networking solution, which includes programmable FPGA-based hardware, patented ENET Flow Processor firmware, and the comprehensive ENET Software Suite. While the product’s rich set of networking features are designed to meet the needs of most telco providers, additional customizations are available per customer.

Lod’s Ethernity Networks is a leading innovator of network data processing technology and products. Mounted on low-cost COTS FPGAs and with a rich set of networking features, Ethernity’s ACE-NIC smart network adapters, ENET SoCs, and network appliances offer best-in-class all-programmable platforms for the fixed and mobile telecom, enterprise security, and data center markets. Their complete offering, incorporating hardware, FPGA firmware, and software applications, enables full programmability at the pace of software development, quickly adapting to changing market demands and applications and facilitating the deployment of edge computing, 5G and SDN/NFV. (Ethernity Networks 02.10)

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10: ISRAEL ECONOMIC STATISTICS

10.1 Israeli Startups Raised Nearly $500 Million in September

Israeli startups raised nearly $500 million in September, according to press releases issued by companies that have completed financing rounds. The figure may be more as some companies prefer not to publicize the investments they have received. This sum can be added to the more than $3.1 billion that Israeli startups raised in the first half of 2018, according to IVC-ZAG. The country’s startups also raised an estimated $650 million in July and $300 million in August, bringing the amount raised by startups in the first nine months of 2018 to over $4.5 billion, well on course to beat last year’s record of $5.24 billion, according to IVC-ZAG.

The amount raised in September was especially impressive taking into account the number of holidays during the month. Most of the sum was raised in large financing rounds from more veteran startups led by business analytics company Sisense, which raised $80 million. MeMed Diagnostics, which has developed a rapid test to differentiate bacterial and viral infection and combat antibiotic resistance, raised $70 million and fraud prevention company Forter raised $50 million. Digital adoption company WalkMe raised $40 million, AI sports production company Pixellot raised $30 million, and marketing data startup Singluar raised $30 million. Radiation cancer therapy company Alpha Tau Medical raised $29 million and open source security company Snyk raised $22 million. (Globes 02.10)

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10.2 Israel Ranked 6th Internationally for Health Care Efficiency

Israel is among the world’s six leading countries in health efficiency, according to the latest Health Care Efficiency Index published by Bloomberg. The index, published annually, rates the health care efficiency of 56 countries with life expectancies of over 70, per capita GDP of over $5,000 and populations of over five million. Israel was rated one place higher than in last year’s index. The five countries ahead of Israel in health care efficiency are Hong Kong, Singapore, Spain, Italy and South Korea. At the bottom of the list are Bulgaria, the US, Azerbaijan, Russia, Serbia and Brazil.

The Bloomberg index has three components, each of which is assigned a different weight: life expectancy (60%), national per capita health care spending as a proportion of GDP (30%), and per capita spending on health in dollars (10%). Israel’s weighted rating is 67, while Hong Kong tops the list with 87.3. The US is at the bottom of the ranking with a 29.6 rating because its life expectancy is only 79, despite spending 16.8% of GDP on health, mainly because of its expensive and largely private health system.

Israel’s life expectancy of 82.5 is among the world’s highest, putting it in a high place on various global health indices. Israel’s national (public and private) spending on health as a proportion of GDP is 7.3%, substantially lower than the 9% OECD average. Per capital health spending in Israel is $2,750, compared with the OECD average of nearly $4,000. Although the gap between Israel’s high life expectancy and low health spending indicates an efficient health system, it also shows that the health achievements of which Israel boasts are unlikely to persist.

Public spending on health in Israel as a proportion of total national health spending has fallen to 63% at present, the lowest in the OECD, while private health spending has increased to 36%, compared with a 28% OECD average. This trend has resulted in neglect of investment in infrastructure and personnel in the health system in recent years, leading to increased use of private medicine. This means that some of the achievements of the health system in Israel are the result of private money – a trend that contributes to widening of social gaps and undermines the foundations of the public health system in Israel.

The inadequate public budget for the health system in Israel is reflected in a low number of hospital beds per 1,000 people (three beds, compared with the 4.7 OECD average), a low number of nurses per 1,000 people (five, compared with the 9.3 OECD average), and a low number of MRI devices per million residents (4.9, compared with an OECD average of almost 16). The hospital bed occupancy rate (number of hospitalization days in general wards, compared with the potential number) is among the highest in the OECD: 94, and compares with an OECD average of 75. (Globes 25.09)

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11: IN DEPTH

11.1 ISRAEL: Israel’s International Investment Position, Second Quarter 2018

The Bank of Israel announced on 20 September that during the second quarter of 2018, the balance of assets held abroad by Israeli residents increased by about $1 billion (about 0.2%). Net investments (financial and direct) in equities were partly offset by withdrawals from deposits abroad by Israelis and by a decline in the value of customer credit.

Outstanding liabilities to abroad increased by approximately $11.8 billion (4%) in the second quarter. There was an increase in equity prices of Israeli companies traded abroad, net direct investments by nonresidents in Israeli share capital and investments in makam.

The ratio of gross external debt to GDP increased during the course of the second quarter by about 1.2%age points, to 26.4% at the end of June—reflecting an increase in the balance of gross external debt that was greater than the increase in GDP.

Israel’s surplus of assets over liabilities vis-à-vis abroad decreased in the second quarter by approximately $10.8 billion (7.7%), to about $130 billion at the end of June, mainly as a result of an increase in the prices of Israeli equities held by nonresidents that increased the balance of liabilities.

The surplus of assets over liabilities vis-à-vis abroad in debt instruments alone (negative net external debt) declined by about $6.6 billion (4%) in the second quarter, to approximately $157 billion at the end of June.

Table 1: Asset & Liability Balances

The value of Israel’s assets abroad

In the second quarter of 2018, the portfolio value of assets abroad held by Israeli residents increased by about $1 billion (about 0.2%), to approximately $438 billion at the end of June. The increase in the asset portfolio derived mainly from net investments in foreign equities.

The value of direct investments increased by about $0.5 billion (0.5%) in the second quarter. This was mainly as a result of net direct investments in share capital totaling about $2 billion, which were partially offset by net redemption of owners’ loans.

The value of the financial investments portfolio increased by about $1.9 billion (1.3%) in the second quarter, mainly the result of an increase in prices of foreign equities held by Israeli residents—totaling about $1.5 billion—and by net investments in financial equities of about $1.4 billion.

The investments in equities were made mostly by households ($1.2 billion). The banking sector and institutional investors invested similar amounts, (for a total of about $1.6 billion). Those investments were partly offset by net realizations of about $1.2 billion by the business sector.

The value of other investments abroad declined in the second quarter by about $0.5 billion (0.6%). There was an increase of about $2.3 billion in the balance of loans extended by Israeli residents to nonresidents, mostly by one company in the computer manufacturing and software industry, and an increase in the balance of other assets of Israeli residents abroad totaling about $1.2 billion. These increases were more than offset by withdrawals from deposits of Israeli residents abroad and from deposits of Israeli banks abroad of about $1.4 billion and $1 billion, respectively. In addition, there was a decline in customers’ credit of about $1.3 billion.

The composition of Israelis’ securities portfolio abroad: In the second quarter, as a result of the increase in value of investments in foreign shares (capital assets), together with a very small decrease in the value of investments in bonds (debt assets), there was a continued increase in the share of capital instruments in the portfolio of Israeli residents’ assets abroad, to 43% of the total portfolio.

The value of the foreign exchange reserves decreased in the second quarter by about $1.3 billion (1.1%), to $114.8 billion at the end of the quarter.

Israel’s liabilities to abroad

The balance of Israel’s liabilities to abroad increased in the second quarter of 2018 by about $11.8 billion (4%), to about $308 billion at the end of June.

The value of direct investments in Israel increased by about $4.8 billion (3.6%) in the second quarter. The increase derived from nonresidents’ net direct investments in Israeli share capital and by an increase in their prices.

The value of financial investments (stocks and bonds) increased in the second quarter by about $6.3 billion (5.6%). The increase was primarily due to an increase of about $7.3 billion in prices of Israeli equities traded abroad. Net investments by nonresidents in Israeli bonds totaled $1.2 billion, mostly in makam. These investments were mostly offset by nonresidents’ net realizations of Israeli shares totaling about $1 billion.

The value of nonresidents’ financial portfolio on the Tel Aviv Stock Exchange, which makes up a part of nonresidents’ financial investments in Israel, increased in the second quarter by about $4.5 billion, to about $45.6 billion at the end of June. Most of increase in the value of financial portfolio in the second quarter was due to purchases of makam by nonresidents of about $2 billion.

The value of other investments increased by about $0.8 billion (1.6%) in the second quarter. This was mainly due to net deposits by foreign banks in Israeli accounts totaling $0.8 billion and an increase of $0.8 billion in the balance of loans received by Israeli residents from nonresidents. These increases were partly offset by a decline in the value of suppliers’ credit totaling $0.4 billion, and a similarly sized decline in the balance of nonresidents’ deposits in Israel.

The balance of liabilities in debt instruments alone, which makes up Israel’s gross external debt, increased by about $1.6 billion (1.7%) in the second quarter of 2018, to about $93 billion, mainly due to net investments by nonresidents in makam, an increase in the balance of foreign banks’ deposits in Israel and by an increase in the balance of loans received by Israeli residents from nonresidents.

The ratio of gross external debt to GDP increased by 1.2%age points in the second quarter, to 26.4% at the end of June, reflecting an increase in gross external debt that was greater than the increase in GDP.

Israel’s surplus assets over liabilities abroad

Israel’s net assets abroad (the surplus of assets over liabilities) decreased by $10.8 billion (7.7%) in the second quarter of 2018, to around $130 billion at the end of June. The decrease in surplus assets over liabilities abroad mainly derived from an increase in the prices of Israeli shares held by nonresidents, which increased the balance of liabilities.

The net external debt

The surplus of assets over liabilities vis-à-vis abroad in debt instruments alone (negative net external debt) declined in the second quarter by about $6.6 billion (4%), to about $157 billion at the end of June.

The balance of short-term debt assets (repayment/realization within a year) was about $164 billion at the end of the second quarter, mostly in the Bank of Israel’s foreign exchange reserves, reflecting a coverage ratio of 4 times short-term debt.

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11.2 ISRAEL: Foreign Trade, Export & Import of Goods for August 2018

In August 2018, imports of goods totaled NIS 25.7 billion, exports of goods totaled NIS 15.7 billion and the trade deficit of goods totaled NIS 10.0 billion. The cumulative trade deficit since the beginning of 2018 totaled NIS 61.6 billion (NIS 92.5 billion in annual terms).

Exports of Goods

Exports of goods in January – August 2018, as a percentage of imports (excluding ships, aircraft and diamonds), constituted 65.1%, compared with 75.0% in the same months in 2017.

The trade deficit (of goods only) in January-August 2018 totaled NIS 61.6 billion, compared with NIS 32.8 billion in January – August 2017.

Imports of goods (excluding ship, aircraft, diamonds and fuels) increased by 7.3% at an annual rate in June – August 2018, according to trend data, following an increase of 19.4% at an annual rate in March – May 2018.

Exports of goods (excluding ships, aircraft and diamonds) increased by 3.6% at an annual rate in June – August 2018, according to trend data, following an increase of 6.7% at an annual rate in March – May 2018.

Trade in goods in August 2018 was influenced by changes in the value of the NIS relative to the other currencies in which import and export transactions were conducted. In August 2018 the NIS weakened by: 0.6% relative to the US Dollar (the fifth consecutive month in which the NIS weakened relative to the US Dollar), 1.0% relative to the Japanese Yen, 1.2% relative to the Swiss Franc and 1.3% relative to the Canadian Dollar. In contrast, the NIS strengthened by 0.6% relative to the Euro and by 1.7% relative to the Pound Sterling.

Imports of Goods

Imports of goods in August 2018 totaled, as mentioned above, NIS 25.7 billion. 41% of the total imports were imports of raw materials (excluding diamonds and fuels); 21% were imports of consumer goods; 16% were imports of machinery, equipment and land vehicles for investment; and 22% were imports of diamonds, fuels, ships and aircraft.

*The last points are subject to substantial revisions

Trend data point to an increase in imports of raw materials (excluding diamonds and fuels) of 12.8% at an annual rate in June – August 2018, following an increase of 18.8% at an annual rate in March – May 2018. A breakdown by groups shows that imports of raw materials for agriculture increased by 34.9% at an annual rate (2.5% monthly average) and imports of fabrics and yarn increased by 30.7% (2.3% monthly average). In contrast, imports of iron and steel decreased by 8.5%.

Trend data point to a decrease in imports of investment goods (excluding ships and aircraft) of 14.0% at an annual rate June – August 2018, following an increase of 11.4% at an annual rate in March – May 2018. Imports of machinery and equipment (59% of investment imports) decreased by 12.8% at an annual rate, and imports of transport equipment for investments decreased by 14.6% at an annual rate.

According to trend data, imports of consumer goods increased in June – August 2018 by 16.3% at an annual rate, following an increase of 26.9% at an annual rate in March – May 2018 (2.0% monthly average).

Imports of non-durable goods (medicines, food and beverages, and clothing and footwear) increased by 21.5% at an annual rate in June – August 2018 (1.6% monthly average), where the largest increase was of imports of clothing and footwear.

Imports of durable goods (furniture, electrical equipment and transport equipment) increased by 2.8% at an annual rate in June – August 2018, where the largest increase was of imports of furniture and electrical equipment.

Imports of diamonds (net, rough and polished) in January – August 2018 totaled NIS 13.0 billion, compared with NIS 13.3 billion in the same period of 2017.

Imports of fuels (crude oil, distillates and coal) in January- August 2018 totaled NIS 24.5 billion; an increase of 40.5% compared with January – August 2017.

Exports of Goods

Exports of goods totaled, as mentioned above, NIS 15.7 billion in August 2018. Manufacturing, mining and quarrying exports (excluding diamonds) constituted 89% of all exports of goods, exports of diamonds constituted 10%, and the remaining 1% were exports of agriculture, forestry and fishing exports.

*The last points are subject to substantial revisions

Trend data point to an increase in manufacturing, mining and quarrying exports (excluding diamonds) of 3.8% at an annual rate in June – August 2018, following an increase of 7.1% at an annual rate in March – May 2018.

Trend data of manufacture exports, by technological intensity

Trend data point to an increase in exports by high technology industries (44% of total manufactured exports excluding diamonds) of 16.8% at an annual rate in June – August 2018, following an increase of 6.1% at an annual rate in March – May 2018. A breakdown by economic activity shows that the largest increase was in the exports of the manufacture of pharmaceutical products industry.

Trend data point to a decrease in exports by medium-high technology industries (33% of total manufactured exports) of 3.3% at an annual rate in June – August 2018, following an increase of 11.5% at an annual rate in March – May 2018. A breakdown by economic activity shows that exports of the manufacture of chemicals and chemical products industry decreased by 12.5% at an annual rate.

Trend data point to a decrease in exports by medium-low technology industries (16% of total manufactured exports) of 6.8% at an annual rate in the last three months, following an increase of 3.6% at an annual rate in March – May 2018. A breakdown by economic activity shows that exports of the manufacture of basic metals industry decreased by 13.3% at an annual rate.

Trend data show that exports by low technology industries (7% of total manufacture exports) decreased by 0.7% in the last three months at an annual rate, following an increase of 9.4% at an annual rate in March – May 2018. A breakdown by economic activity shows that exports of the manufacture of wood products, furniture and paper products industry decreased by 29.0% at an annual rate (2.8% monthly average).

Exports of diamonds (net, polished and rough) in January – August 2018 totaled NIS 16.5 billion (original data), compared with NIS 17.2 billion in the same period of 2017.

Agricultural, forestry and fishing exports in January – August 2018 totaled NIS 2.9 billion (original data), a decrease of 7.6% compared with the same period in 2017. Exports of growing of citrus fruits decreased by 21.3% in this period. (CBS 17.09)

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11.3 JORDAN: Jordan ‘B+/B’ Ratings Affirmed; Outlook Remains Stable

On 21 September, S&P Global Ratings affirmed its ‘B+/B’ long- and short-term foreign and local currency sovereign credit ratings on Jordan. The outlook remains stable.

At the same time, we affirmed the ‘B+’ long-term foreign currency issue rating on the sovereign-guaranteed bond of senior unsecured debt issued by The Development and Investment Projects Fund of the Jordan Armed Forces.

Outlook

The stable outlook balances our expectation that donor funding will continue to support public finances and low interest costs against the risk that the government will reverse planned fiscal consolidation to alleviate social and economic challenges.

We could lower our ratings on Jordan if strong bilateral and multilateral donor support were to diminish, or the pace of fiscal consolidation were to slow significantly. This could result in higher debt accumulation by the central government and/or state owned enterprises like state-owned National Electric Power Company (NEPCO), and raise government debt-servicing costs.

We could raise the ratings if Jordan’s external imbalances were to significantly narrow for a sustained period, or if terms of trade were to stabilize. We could also raise the ratings if the economic outlook were to markedly improve.

Rationale

The ratings on Jordan are constrained by its high public debt levels and the economy’s large external financing needs, which are driven by large current account deficits. Ongoing pressures from regional conflicts have significantly increased the country’s population through refugee inflows, while slowing the country’s growth trajectory.

The ratings are, however, supported by the authorities’ efforts to implement fiscal consolidation and measures to reduce losses in state-owned enterprises, which we expect will result in gradually falling government debt levels over the forecast horizon through 2021. International assistance from the U.S. and the Gulf Cooperation Council (GCC; Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) continue to support the ratings.

Institutional and Economic Profile: Economic growth will likely remain subdued:

-Social pressures are high, and we anticipate the government will only gradually implement planned fiscal measures.

-We expect donors to continue to support Jordan through grants and concessional funding to maintain political stability.

-We forecast that economic growth will be low, averaging 2.5% over 2018-2021, compared with 6.5% over 2000-2009.

The country’s policymaking and institutional capacity have been strained by both the regional protests and revolutions of 2011 and the Syrian crisis. Large refugee inflows, resulting in an increase in the population by 50% since 2011, and security concerns have weighed on public resources. In particular, rising military, medical, and education costs have led to a deterioration in Jordan’s fiscal position and rising debt levels, as well as high dependence on donor support.

Given the challenging environment, we expect that risks to Jordan’s public finances will persist and that improvements will only gradually become visible over the forecast period. While the three-year Extended Fund Facility (EFF) program from the International Monetary Fund (IMF) has provided a policy anchor, we do not expect the government to meet initial program targets. We also note that there have been some delays in IMF fund disbursements. However, the authorities expect to conclude the second review in the coming months and we anticipate some revisions to the macro-fiscal targets under the program.

A myriad of government austerity measures introduced in the first six months of 2018, including a draft law proposing changes to the income tax, resulted in large-scale protests in June over the rising cost of living. In response to the public discontent, on 4 June, Prime Minister Hani Mulki resigned and was replaced by Omar al-Razzaz, a former World Bank economist. The new government is focusing on building public consensus on necessary reforms and is going to introduce a revised draft income tax law in the coming months. While protests against further fiscal reforms are possible, we do not expect them to be large enough to result in social upheaval in our base-case scenario. Yet, in our view, centralized decision-making reduces the predictability of future policy responses, especially given Jordan’s changing demographics and the rising desire for more political participation among parts of the population.

We expect international support for Jordan to remain strong. Jordan is one of the most politically stable countries in the region, and maintaining this relative stability in the region is an important foreign policy objective for the U.S. and the GCC. In January 2018, the U.S. committed to providing economic and military aid of at least $1.275 billion annually (approximately 3% of 2018 GDP) over five years, representing a 28% increase from 2017, and the first five-year memorandum of understanding (MOU) with Jordan. To demonstrate strong U.S. commitment to Jordan, the U.S. Congress approved aid of $1.52 billion in March for 2018, which is $250 million higher than the MOU amount. The GCC also stepped in following the protests in June, and GCC countries (excluding Qatar) pledged an aid package of $2.5 billion over 2018-2022 in the form of deposits, project finance, and a very small grants portion. Qatar has promised to provide $500 million and jobs for around 10,000 Jordanians in Qatar, which would boost remittances.

Jordan also benefits from concessional lending from bilateral partners and multilateral agencies (close to 20% of GDP outstanding as of end-2017), which have been important sources of financing for Jordan’s twin fiscal and external deficits. In addition, the U.S. has guaranteed Eurobonds of $3.75 billion issued over 2013-2016. In 2019, the IMF’s EFF program of $723 million will end and the first U.S.-guaranteed bond of $1 billion will mature. If the guarantees are not extended, we expect that U.S. bilateral support will nevertheless continue in other forms as per the MOU.

We estimate that real GDP growth will remain subdued in 2018 and stable from 2017 levels at 2%. Regional developments have significantly affected foreign investment, while weakened macroeconomic activity in the GCC has reduced remittances and investment inflows. We do not anticipate a quick resolution to the Syrian conflict and security risks will remain high, which will weigh on economic growth. Moreover, higher taxes, along with the high unemployment rate of 18.4%, will likely reduce private consumption growth.

That said, we expect a slight rebound in growth over the next four years, supported by rising exports and investment projects, particularly in the transport and energy sectors. The opening of the border with Iraq in late August 2017 helped increase exports to Iraq by 33% year on year in the first half of 2018. The authorities could also reopen the Nassib border with Syria in the medium term following the Syrian regime’s repossession of control over the border Daraa area. The border reopening should support higher Jordanian exports and transit fee receipts. Nevertheless, infrastructure damage, logistical issues, and ongoing security concerns pose downside risks to the normalization of trade to pre-2015 levels.

Jordan’s economic growth has not kept pace with the rapid rise in its population. We estimate GDP per capita of $4,050 in 2018. Including our growth forecasts through 2021, 10-year weighted-average real GDP per capita is expected to contract by about 2%, significantly lagging peers at similar income levels. However, population growth has normalized because refugee inflows have slowed since the closing of the borders with Syria in June 2016. We do not see a material risk of large Syrian refugee inflows even if the border reopens, but we also do not anticipate a large number of refugees returning to Syria at this time.

Flexibility and Performance Profile: The government’s gross debt stock is very high, and current account deficits will remain large:

-The gradual advance of fiscal reforms should help slowly reduce high government net debt levels.

-However, financial pressures at state-owned enterprises, in light of higher oil prices, could offset some of the fiscal gains at the central government level.

-We expect external financing needs will remain high through 2021 and external debt levels will continue rising.

Jordan’s central government debt levels have increased substantially to 96% in 2017 from around 62% of GDP in 2011. The increase stems from high fiscal deficits and loan advances to government-guaranteed debt at NEPCO and the Water Authority of Jordan (WAJ). To calculate general government debt, we net out the social security sector’s (SSIF) holdings of government paper because the SSIF falls within the definition of general government, under our criteria. At almost 80% of GDP in 2017, this level of general government debt makes Jordan vulnerable should it face additional financial or economic shocks, in our view. We also see as credit constraints the large banking exposure to government debt of more than 20% of total assets, as well as higher government exposure to foreign currency debt of around 41% of total government debt at end-July.

We anticipate that the government will issue more international bonds to meet its funding needs and as an attempt to lengthen its debt maturity profile. As the proportion of external commercial debt rises, interest costs would also increase, though we expect these to remain under 10% of total revenues over 2018-2021.

The government’s fiscal consolidation efforts in 2017 were broadly on track, although the removal of several general sales tax (GST) exemptions were delayed. Alongside the implementation of growth-enhancing reforms, the government’s reform program targets a mix of revenue and expenditure measures, including the removal of tax exemptions. These relate to an array of GST, customs, and income tax exemptions, which contributed to the decline in tax revenues to 15% of GDP in 2017, from 23% in 2006. In January 2018, the government raised GST on several basic commodities to 10% (previously, exemptions had brought down rates to 0%, 4%, and 8%), eliminated flour subsidies and increased taxes on imported cars, carbonated drinks and cigarettes. The government has also been increasing electricity tariffs on a monthly basis based on a formula linked to global oil prices, barring a temporary freeze in June.

We expect general government debt to decline only gradually to around 74% of GDP by 2021. Increasing taxes further is politically more contentious in the context of the low-growth environment, high unemployment, and ongoing regional instability. Despite the introduction of cash transfers to citizens and other welfare measures in the 2018 budget, several public protests have ensued. As a result, we expect the new draft of the income tax law to be watered down from the initial version and for the government to delay plans for further GST rises to reach to a unified rate of 16% on all products.

The weak performance of NEPCO and WAJ in recent years has also resulted in significant financial costs to the government. The government has been directly servicing NEPCO’s debt payments since 2013, and is now doing the same for WAJ to reduce WAJ’s interest costs. We therefore include the government-guaranteed debt of NEPCO and WAJ of around 12% of GDP in 2017 in our general government debt stock calculations.

Although financial pressures at NEPCO have eased, we understand that it has been loss-making again since 2017 due to higher oil prices. Since the start of this year, the government has been implementing an automatic tariff adjustment mechanism to pass onto consumers any increases in oil prices over NEPCO’s operational breakeven via a fuel surcharge. However, we believe that either the mechanism is being only partially implemented or the tariff formula is insufficient for NEPCO to curb its losses. Absent further measures, this would make it tougher for the government to achieve fiscal consolidation if NEPCO requires additional transfers. We note, however, that the expected start of gas imports from the Leviathan Field in Israel in 2020 could help to reduce costs. Although losses at WAJ continue, it has a target date for operational cost recovery by 2020.

Jordan’s external financing needs increased to over 150% of current account receipts and usable reserves in 2017, owing mainly to larger current account payments and a high proportion of short-term bank debt. Jordan’s current account deficit increased in 2017 to 10.6% of GDP, from 9.5% in 2016. The deterioration reflects weaker trade activity since the closure of key channels with Iraq and Syria, falling remittances since 2014, relatively weak prices of key mineral exports such as phosphate, and higher oil prices forcing up oil imports. We forecast that the current account position will improve gradually, with growth in exports from 2018, but that deficits will remain elevated at an average of 9.6% of GDP over 2018-2021. We expect these deficits will continue to be financed by foreign direct investments, debt inflows (mostly government external debt), grants, and project lending.

Mainly because of the weak external position, central bank gross reserves (including gold) have been declining since 2015, reaching $15.6 billion at end-2017 from $16.5 billion at end-2015. There were also one-off capital outflows in 2017 linked to the sale of a foreign stake in Arab Bank to resident investors. Despite the issuance of U.S. dollar domestic bonds of $500 million and Eurobonds of $1.5 billion, total reserves did not increase from 2016 levels. Instead, reserves continued to decline in 2018, and stood at $13.7 billion at end-July, reflecting partly the lower valuation of gold and the schedule of foreign grants, which mainly arrive in the fourth quarter of the year. We also expect deposit inflows from some GCC countries to shore up foreign currency reserves in 2018.

At the current level, we believe Jordan has sufficient external assets to uphold the currency peg to the U.S. dollar. The Jordanian dinar’s peg supports price stability, although it also limits the central bank’s room for policy maneuver. Despite weak economic growth, the central bank has followed the U.S. Federal Reserve in hiking interest rates to maintain competiveness of the Jordanian dinar. We expect that continued monetary tightening and fiscal consolidation will dampen credit growth and consumption to some extent over the next two years. We expect inflation to rise to 5% in 2018, given the impact of the recent fiscal measures and higher oil prices, before trending toward 2.5% thereafter.

Nonresident deposits in the financial sector make up around 40% of total external short-term debt. Although these deposits have steadily increased over the years, and we understand that they mainly relate to the Jordanian diaspora, we view their reversal as a potential risk. (S&P 21.09)

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11.4 UAE: IMF Staff Completes 2018 Article IV Mission to the United Arab Emirates

An IMF team visited the UAE during 16 – 30 September 2018 to conduct discussions for the 2018 Article IV Consultation. Upon conclusion of the visit, the IMF issued the following statement:

“The UAE economy continues to adjust to a prolonged decline in oil prices since 2014. Non-oil activity remains subdued amid continued corporate restructuring, real estate overhang, and tightening financial conditions. With oil production and government spending set to rise, overall growth is projected to strengthen to 2.9% this year and 3.7% next year. Inflation is projected at 3.5% this year owing to the introduction of the value-added tax and should ease afterwards. The fiscal deficit is expected to remain stable at about 1.6% of GDP this year and turn to a surplus next year. The current account surplus will exceed 7% of GDP this year.

“Given large fiscal buffers, ample spare capacity, and rising investment needs for Expo 2020, the government has appropriately switched to providing stimulus to the economy. Front-loading stimulus measures and focusing them on productive spending, consistent with the Vision 2021 goals of diversifying the economy and raising productivity, would augment their impact on growth. Over the medium term, as oil prices are projected to soften, a return to the path of gradual fiscal consolidation would help save an adequate portion of the exhaustible oil income for future generations. Continued improvements in spending efficiency and strengthening non-oil revenue, including by gradually replacing a system of numerous and regressive fees with corporate taxation, would help achieve these goals.

“Improving medium-term growth and job prospects and advancing to a competitive knowledge-based economy require deepening and broadening structural reforms aimed at increasing the role of the private sector and fostering talent and innovation. The authorities’ recently announced plans to liberalize foreign investment, introduce long-term visas for professionals, and ease licensing requirements and business fees—once implemented—will be a welcome step in this regard. Other reform priorities include promoting competition, privatizing nonstrategic government-related enterprises (GREs), and improving SME access to finance. In particular, developing domestic government debt markets would catalyze financial market development and expand sources of financing for SMEs. Enhancing the quality of education and healthcare and promoting gender equality would cultivate talent.

“Tightening financial conditions and increased global and regional uncertainty call for continued vigilance in monitoring financial sector risks, including those from a prolonged downturn in real estate and concentrated loan portfolios. Ensuring consistency of the draft central bank and banking laws with international best practices and approving them swiftly would buttress the prudential framework. Continued upgrading of bank regulations and strengthening bank supervision are essential to maintain the resilience of the banking system.

“Continued improvement of economic policy frameworks and coordination, and statistics would help align policies with the Vision 2021 goals. Stronger fiscal anchors would help mitigate the impact of adverse shocks on the economy while ensuring long-term debt sustainability and saving for future generations. Better monitoring and analysis of contingent fiscal liabilities stemming from GRE borrowing, delays in payments, and public-private partnerships, would help mitigate risks. Further improvements in the frequency and quality of economic statistics would support policy-making and inform business decisions.” (IMF 30.09)

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11.5 SAUDI ARABIA: The Gray Zone of Social Reforms in Saudi Arabia

Eman Alhussein and Sara Almohamadi posted on 24 September in the Arab Gulf States Institute that the Saudi government is moving forward steadfastly with its social modernization project, but the new policies are clashing with established norms, creating inconsistencies and uncertainties in social spaces.

Since 2017, the pace of social reform in Saudi Arabia has been fast and dramatic. This year alone, the driving ban on women was lifted, cinemas were opened and musical performances started taking place in major cities around the kingdom. Another noteworthy change has been the loosening of the strict dress code for women, which in the past was subject to constant policing. However, some of the changes implemented so far have been confusing and mark a significant departure from longstanding norms. This inconsistency has created a “gray zone” wherein newly imposed standards are clashing with older norms.

For decades, the assumption that conservative elements were against change was constantly employed to explain the lack of social and cultural reform. While possible conservative backlash against the recent social reforms remains a concern, there has not been any major backlash on the ground. Additionally, the prevailing nationalist sentiment influencing Saudi social media has served as an obstacle to voices disapproving of these social reforms. Voices of opposition to the new social reform wave are increasingly concealing their identities on social media platforms. Moreover, curbing the powers of the religious police and appointing “moderate” religious figures to senior positions (such as Mohammed al-Issa, secretary general of the Muslim World League and Suleiman Aba al-Khail, member of the Council of Senior Scholars and the president of Imam Mohammed ibn Saud Islamic University) point to the changing dynamics of the relationship between the government and traditional religious establishment.

The government seems to be moving forward steadfastly with its social modernization project. However, the new policies are clashing with established norms that have been maintained for decades, creating inconsistencies and uncertainties in social spaces. For example, while concerts are finally being held in Saudi Arabia, a number of rules and regulations are recited at the beginning of each concert, most starkly instructing the audience to refrain from dancing. At the same time, dancing was widely tolerated during the annual Janadriyah national heritage and culture festival in February. Similarly, strict gender segregation is not observed in cinemas and at festivals yet is still maintained in restaurants and at concerts.

In the past, what was acceptable or not was fairly clear due to constant policing; now, however, the inconsistencies with the new policies are resulting in a number of different consequences. Several individuals have been penalized for what they have wrongly presumed to be acceptable, given the recent wave of social change. For example, a video of a man and woman dancing in Abha went viral around the same time as a video of a man proposing to a woman on the Jeddah seafront. The dancing Saudi couple infuriated people on social media. Saudi news sources picked up the story and reports of the couple’s arrest were widely circulated. The couple in Jeddah, who were expatriate workers from the Philippines, were penalized, though this was hardly reported by local news outlets. The inconsistency in approach suggests that expatriates and locals are held to different standards, which confuses people as to what is acceptable during this period of rapid social change.

At a recent concert in Taif, a fully covered woman ran on stage and hugged the male singer Majid al-Muhandis during his performance. Saudi social media users blamed the new modernization wave for the woman’s action. Instead of calling for her to be fined, some people on social media wanted a harsher penalty, and many even called for her conviction under the newly introduced Sexual Harassment Law. News coverage of the incident was often lacking in detail; reports stressed that the woman will face a penalty, but details on what that penalty may be have not been disclosed.

In addition, even though the dress code for women has been loosened, when a video of Shireen al-Rifaie, a Saudi female anchor wearing a colorful abaya and loose headscarf went viral, many on social media expressed discontent at her choice of clothing. As a result of the social media frenzy, Rifaie fled the country shortly before the General Commission for Audio and Visual Media issued a statement that it would investigate the incident. As Rifaie’s case was widely circulated, many social media users shared some of their own experiences. A number of women who said they had attempted to go out publicly without wearing an abaya were reportedly stopped by the police and asked to sign a pledge to refrain from such behavior. Some women even reported that they were let off the hook. While Rifaie was publicly shamed to the point where she felt the need to leave the country, others have received a relatively light penalty, or none at all.

At the moment, it seems that due north on Saudi society’s behavioral compass is determined by social media: If an act goes viral and is received negatively, it stands the risk of penalty, ranging from signing pledges to stop the behavior in question, to imprisonment. As a result, many people are unknowingly falling into the trap of the gray zone and are being penalized for committing acts solely because they caused a wave of disgruntlement on social media. As more cases emerge, and more videos go viral, holding “wrongdoers” to different standards will prove unsustainable in the long run.

The Saudi government has gone to great lengths to forward its social modernization project and thus far has managed to deter major opposition. However, without setting clear parameters for what is acceptable, the gray zone is likely to stretch further, and could jeopardize social reform. (AGSIW 24.09)

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11.6 TUNISIA: IMF Executive Board Completes Fourth Review Under EFF Arrangement for Tunisia

On 28 September 2018, the Executive Board of the International Monetary Fund (IMF) completed the Fourth Review of Tunisia’s economic program supported by an arrangement under the Extended Fund Facility (EFF). The Board’s decision makes available to Tunisia SDR 176.7824 million (about $247 million), bringing total disbursements to SDR 984.9309 million (about $1.4 billion). The four-year EFF arrangement in the amount of SDR 2.045625 billion (about $2.9 billion, or 375% of Tunisia’s quota at the time of approval of the arrangement) was approved by the Executive Board on 20 May 2016.

Priorities of the government’s economic reform program that is supported by the EFF arrangement include growth-friendly and socially conscious reforms. Fiscal policies aim at mobilizing revenue and containing current expenditure to reduce Tunisia’s debt burden, and increase public investment and social spending to support sustainable and inclusive growth. Monetary policy focuses on curbing inflation, and continued exchange rate flexibility will help to strengthen international reserves. To maintain adequate social protection, the authorities have increased social transfers to vulnerable households, are working on the better targeting of social expenditure, and submitted a pension law proposal to Parliament. Structural reforms supported under the arrangement include strengthening governance, the business climate, fiscal institutions, and the financial sector.

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

“The Tunisian authorities’ efforts to reduce macroeconomic imbalances are bearing fruit. Growth accelerated in the first half of 2018, but unemployment and inflation remain high. High oil prices continue to weigh on the external and fiscal balances, investment is weak, and international reserves cover less than three months of imports.

“Policy and reform implementation has improved further since the Third Review. The Tunisian authorities remain committed to the socially-balanced approach to macroeconomic adjustment supported by the four-year EFF arrangement.

“Strong efforts are required to achieve the agreed fiscal targets. Policy priorities include stronger revenue collection, regular energy price adjustments, strict wage bill management and reforms to ensure the financial viability of pensions.

“Further monetary tightening is warranted to reduce inflation. The CBT demonstrated its commitment to price stability by policy rate hikes, but key interest rates remain negative in real terms. Thus, policy rate should increase further to avoid further erosion of the purchasing power of the local currency and anchor inflationary expectations.

“Reducing external imbalances hinges on a market-determined exchange rate. Competitive foreign exchange auctions, backed by effective communication, would support this strategy. Sustained tightening of macroeconomic policies will help to mitigate the impact of the exchange rate depreciation on debt.

“The authorities’ reform agenda depends on maintaining adequate social protection. The recent decision to broaden coverage of vulnerable families benefiting from social transfers, also captured in the new QPC on social spending, should be implemented quickly. Completing the database of vulnerable households will be critical for better social targeting. Any changes in subsidies for food staples should only be considered once adequate safety nets are in place.

“Continued business climate, governance, and financial sector reforms are critical. The authorities should maximize the impact on growth of the new one-stop shop for investors, the negative list of investment authorizations, and the Start-up Act. The appointment of the members of the High Anti-Corruption Authority would be an important step to strengthen enforcement of existing laws and regulations. In the financial sector, the resolution of the BFT, further strengthening of supervisory framework, and progress on the AML/CFT regime are needed.

“Strong program implementation is necessary to reduce macroeconomic imbalance and foster inclusive growth in the difficult political and security environment. Continued support of the donor community is critical for Tunisia’s successful transition.” (IMF 01.10)

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11.7 ALGERIA: Algeria’s Succession Crisis: Plenty of Divisions, but No One Conquers

Abdelillah Bendaoudi wrote in the Fikra Forum on 23 September that in the years since the Arab Spring, Algeria has remained largely insulated from the rapidly-spreading unrest and turmoil affecting the MENA region. Yet dissatisfaction in Algeria is growing, and the country is increasingly facing a recipe for crisis. Depressed oil prices, the demands of a growing youth population, and the insecurity in neighboring countries like Libya and those of the Sahel all pose serious challenges to the Algerian government. While the regime has shown a capacity to manage these crises in a controlled manner, the key issue for Algeria in the coming years will be the transition of power should President Bouteflika pass away or leave office unexpectedly.

As Bouteflika is the most visible member of the Algerian elite, the issue of succession is often misunderstood, even within the rest of the Arab world. Understanding the forces at play behind the regime that will affect succession politics requires an understanding of Algeria’s governing system and the patterns that have shaped the Algerian political landscape. Algeria’s complex political system has dispersed power centers and is not controlled by any single person or institution, as opposed to the more common autocratic model of several other Arab states.

Since independence, Algeria’s political system has instead relied on two crucial dynamics to balance power. First, the bulk of the president’s credibility has always derived from the collective memory of Algeria’s War for Independence and his participation in it. Second, power-sharing between the “Tlemcen clan” of western Algeria and “The Eastern clan”—to which all major segments of the Algerian population belong—provide both with a permanent share of power within the governmental system. This system is often a balancing force within the government and opposition system, where ruling coalitions rotate among various parties over time. Since Algerian independence, power-sharing between the two clans has led to a wide array of political arrangements in which the principal elements of the two clans were guaranteed both official government positions and less quantifiable ‘influence.’

These dynamics of power-sharing are just as clear in the Bouteflika period as in previous eras. The alliance between the president, who represents the Tlemcen clan, and the military chief of staff Gaid Salah, who hails from the Eastern clan, has created a pyramidal power structure, in which the interests of the military, the presidency, and members of the political elite are intertwined in decision making.

In the half-century since its inception, the dynamics of the Algerian system have locked the country into a mode of permanent transition. However, its governing rules no longer apply, since most veterans who fought against the French have died. Thus, a compromise based on the second metric of social cleavages will still not provide the legitimacy derived from participation in the fight for Algeria’s independence. A president from the post-independence generation would lack the substantive legitimacy and credibility Bouteflika currently possesses. Furthermore, it is increasingly unclear who holds the power of veto over government action, including choosing the successor of the president. Thus, due to protracted disagreements, the search for consensus over the succession has turned into a “Cold War.” This “Cold War” has led to political blackmail, governance stagnation, and quick shifts in policy-making, as a changing pool of influencers seek to control the choice of Bouteflika’s successor.

Preparing for 2019

After suffering a stroke in 2013, President Bouteflika limited his public visibility, fueling domestic media speculation over his ability to serve out his mandate. Bouteflika described himself as “politically tired” and claimed that “my generation has had its day.” However, he surprised observers when he went on to win a fourth term in 2014, casting his vote from a wheelchair.

Speculation is increasingly rife in the lead-up to the 2019 elections, including the suggestion of activating article 88 from the Algerian constitution. This article stipulates that “if it is impossible for the President of the Republic to exercise his duties due to a serious and chronic illness, the Constitutional Council unanimously proposes to the Parliament to disclose the reason for the impediment.” The article also states that “The President of the National Assembly shall be entitled to assume the presidency of the acting State for a maximum of (45) days.” However, in case “The President is still unable to continue his duties after (45) days, the Parliament shall announce the vacancy of President of the Republic.”

Under these conditions, selecting a successor is paramount in ensuring a smooth and peaceful transition of power. Evidently, plans are in place to attempt a stable transition, but it is unclear whether the president’s inner circle can prepare the ground for a stable fifth term that maintains the status quo until a consensual candidate emerges.

The Cold War over succession has escalated since the president’s re-election in 2014. Rather than securing the stability needed in the post-Bouteflika period, this in-fighting has removed a number of potential candidates for the future Presidency while failing to provide alternatives. A series of dismissals inside the Algerian regime has led to major shifts in the political landscape, some orchestrated by Bouteflika himself. First, the president maneuvered to dismantle the infamous agency of Algerian Power, the DRS (Département du Renseignement et de la Sécurité), by dismissing the veteran chief of the DRS Mohamed Mediene in 2015. Bouteflika then rebranded the DRS, replacing it with a new presidentially-controlled intelligence service, the DSS (Département de Surveillance et de Sécurité), as a final move to strengthen his grip on power. Mediene had been known as the “God of Algeria,” and his removal allowed Bouteflika more scope to opt for a soft transition. Now, the DSS does not have the power of decision over Algeria’s political destiny, including the choice of a successor.

However, other forces besides the president have also been involved in this succession battle. Special forces from the Algerian Navy boarded a ship sailing from Valencia and seized 701 kgs. of cocaine in the western Algerian port of Oran, and the list of involved suspects included a number public figures. Judges, prosecutors, and mayors, as well as the “personal driver” of Abdelghani Hamel—the head of General direction for National Security (DGSN) and member of a very select inner circle within the Algerian political elites. Hamel denied the allegations and considered it as a personal attack from the military chief of staff Gaid Salah. Indeed, subsequent pressure from Salah pushed Hamel, who is now finished politically, from his former position as a potential candidate to succeed Bouteflika.

Abdelmadjid Tebboune, the former Prime Minister, is another victim of these power struggles; he was relieved of his duties only three months after his appointment as Prime Minister. Many considered Tebboune Gaid Salah’s man inside the regime and a potential candidate of the Eastern clan, and his dismissal weakened the military chief of staff’s position to choose a candidate. Government sources mentioned communication issues between him and the president, but the understood reason of his departure emanated from his push to limit the power of certain oligarchs, including the head of the Business Leaders Forum (FCE) Ali Hadad, who belongs to the presidential faction. This was a red line for the president’s inner circle.

In these power struggles, both clans have so far refrained from resorting to violence to solve disputes, but neither have they embarked on a serious process of reconciliation in order to ensure a stable transition. The “winner” of this cold war currently appears to be Gaid Salah, but he still cannot influence the process of choosing a president without taking into account the Tlemcen clan, and the increasing acrimony between the two side’s elites will make this only more difficult to reach a lasting compromise.

Given these machinations, it is no surprise that both clans continue to prefer Bouteflika, even aging and ailing, over facing the issue of succession during the next election. However, this ‘housekeeping’ is not making the adoption of a consensual candidate easier, as the conditions that established Bouteflika’s legitimacy are no longer present. The Algerian political establishment will ultimately have to find a new dynamic stable enough to replace the stability provided by participation in Algeria’s fight for independence, or else face the country’s other challenges without the political stability that has so far characterized Algeria.

Abdelillah Bendaoudi is a freelance writer based in Maryland with a particular focus on counterterrorism. He is also a reporter and contributor at the Muslim Link Newspaper. (23.09)

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11.8 TURKEY: Moody’s Lowers Turkey’s Country Ceiling on Foreign Currency Bank Deposits to B2

On 24 September, Moody’s Investors Service lowered Turkey’s country ceiling for long-term foreign currency bank deposits to B2 from B1. Other ceilings are unchanged: the ceiling for short-term bank deposits remains Not Prime (NP); the foreign currency bond ceiling remains Ba2/NP; and the local currency country ceilings for bonds and deposits remain Ba1. This decision does not constitute a rating action. It has no implications for Turkey’s sovereign rating (Ba3, with a negative outlook).

Ratings Rationale

Moody’s country risk ceilings determine the maximum credit rating achievable for different classes of debt issuer domiciled in a particular country or for securitizations whose cash flows are generated from domestic assets or residents. The foreign currency deposit ceiling determines the highest rating that may be assigned to deposits held with domestic institutions denominated in foreign currency. It essentially reflects the risk that action by the government would intervene in some way to constrain deposit holders’ access to their foreign currency deposits.

Moody’s decision to lower the foreign currency deposit ceiling reflects the rating agency’s view that the risk of the government intervening to prevent the withdrawal of foreign currency-denominated deposits in order to conserve Turkey’s foreign currency reserves has risen. That in turn reflects recent and prospective pressure on those reserves, the large overall value of foreign currency deposits in the banking system relative to those reserves and the recent steep currency depreciation. Turkey’s central bank reserves remain very low by comparison to currency debt payments falling due over the next year, in particular by the banks and non-financial private sector companies and continue to shrink. Moody’s expects this negative trajectory to continue in the months ahead in view of the large external debt repayments coming due.

Today’s announcement also reflects the ongoing weakening of Turkey’s institutions and the increasingly unpredictable policy environment, as exemplified by the recent presidential decree forcing the redenomination of property contracts between Turkish entities. The decision to lower the foreign currency deposit ceiling to two notches below the government bond rating reflects Moody’s view that the government may come to conclude that inhibiting access to foreign currency deposits is necessary if pressures on the balance of payments and thereby on its own debt are to be alleviated. The risk that the government places constraints on deposit holders’ access to their foreign currency deposits is therefore higher than the risk that it defaults on its own debt. (Moody’s 24.09)

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11.9 TURKEY: Medicine Shortages Leaving Turks Desperate for Help

Pinar Tremblay posted in Al-Monitor on 28 September that Turkish patients who depend on pharmaceutical imports for the treatment of cancer and other chronic illnesses suffer as the government fails to reach a price agreement with suppliers.

In January, Dilek Ozcelik, a 27-year-old lymphoma patient, passed away. Ozcelik had made the news in 2013 when she asked for help from Erdogan Bayraktar, who was then Turkey’s minister of environment and urban planning. Ozcelik refused the roll of cash Bayraktar handed to her. “I am not a beggar,” she said. She needed access to medicines that weren’t available in Turkey.

Since then, the Turkish government has repeatedly talked about grandiose plans to launch “national medicine” projects. Yet, with a growing, aging population, the need for lifesaving medicines also has increased. The data about availability and accessibility of prescription medications shows a problem that has snowballed during the past decade. For example, in 2015 alone, 1,700 pharmacies nationwide closed. Among 25,000 pharmacies, 13,000 are expected to go bankrupt at any time. From 2005 to 2015, the Turkish Pharmacists Union recorded 572 instances in which the Health Ministry called for a drop in drug prices.

This dim picture has only gotten worse with the weakening Turkish lira. In the past couple of months, an increasing number of patients have struggled to get their medication, resorting to creative methods. Not a day passes without a call on social media for help obtaining a needed prescription medication. Most of the time, patients are so desperate they are willing to pay whatever they can to save their loved ones. Even some pharmacists themselves have tried this method to assist their patients. Just like Ozcelik, many patients suffer due to the scarcity of anti-cancer drugs in Turkey. Since those drugs require prescriptions in Turkey, it’s not as simple as buying them over the counter abroad and bringing them back to Turkey.

Al-Monitor spoke with doctors, pharmacists and patients to evaluate the current situation. All medical experts fear that the shortages are going to get worse and soon. Semih Gungor, former chair of the Istanbul chapter of the Turkish Pharmacists Association, noted that economic challenges threaten to overwhelm the medical industry. All the pharmacists Al-Monitor spoke with explained that most of the active ingredients in medicines are imported and no substitutes are produced in Turkey. The import rate is based on euros and the conversion rate was fixed at around 2.6 Turkish liras. Now, 1 euro equals 7.6 liras. With such a large gap, neither companies that import medications, nor the ones that import the essential chemicals to produce the medicine domestically, can operate.

A pharmacist of 10 years from Ankara who works across from a state-run hospital said, “I’ll simply explain how rigid and counterproductive the regulations on pharmacies are in Turkey from my own experience. Let’s assume I’m selling a pill for $11 and I bought it from the depot for $10. Whenever the government wishes, it can — and it has — dictate that [pharmacies] lower the price, let’s say to $8 per unit. Now I am selling [each pill] for a $2 dollar loss. If I purchase goods worth $40,000 and sell them for $30,000, I not only have a net loss of $10,000, but I’ve also paid taxes on the purchase of $40,000.”

Ilfan Erdem, a pharmacist in Gebze for more than 30 years, emphasized that neither individual pharmacies nor pharmaceutical cooperatives are responsible for the growing drug shortages. She and others concurred that currently the most dire shortages of prescription medications are in cancer treatments, eye drops and other optometry-related drugs, and medicine for hypertension, diabetes and chronic lung diseases.

The knot in this issue is the government, particularly the Social Security Institution (SGK), which conducts almost all medical procurement agreements, including pharmaceuticals. Another pharmacist who has worked in Istanbul for more than 25 years told Al-Monitor, “The SGK pays for more than 85% of all prescription drug costs in Turkey. Considering the growing demand and rising prices, the SGK has a major struggle to keep the prices down. The prices they would like are no longer acceptable for several categories of medicine, or active ingredients in these meds. Therefore, their agreements collapse — so, no more imports. Once we are out of stock in the country, shortages start.”

Similar problems are seen with imported medical equipment as well, due to the SGK’s inability to get the prices it prefers. For example, Hurriyet reported on 25 September that bionic ear implant operations for minors have been halted simply because the SGK can’t import more of the implants.

Erdem explained that her pharmacy receives calls from all around Turkey from families of patients desperately asking for certain medications, simply trying their luck. Another pharmacist from Ankara explained, “If a patient has a prescription for a three-month supply of a medication that is on low supply, we explain the situation and give them a month’s supply so that we can spread the medicine to more patients. And we hope that the next month, this crisis will be resolved.”

The Turkish Pharmacists Association also has the ability to independently import certain rare medications for patients. However, the bureaucratic process is slow and most of the time requires hefty payments directly from the patients. When patients realize they can no longer find their pills in any pharmacy in Turkey, acquiring them from abroad is a race against time and sometimes a gambit with legal hurdles.

One medical doctor who works at a state hospital confirmed the observations of several patients. “We are asked to work with the bare minimum: cheaper X-ray machines, limited local anesthetics, even these plastic gloves we wear, and we have to count them. So each day is worse than the day before because the government is counting every penny to cut the costs, but the quality of the services drops as both staff and patients suffer.”

So what can we expect in the coming weeks? Further shortages of imported medications and more pharmacists declaring bankruptcy and shutting down their stores, while an underground economy thrives that promises to deliver prescription medications. They are called “cantaci” and they are an open secret in Turkey. They particularly operate online and near hospitals, and they can provide unregulated medications to those who are able to pay exorbitant fees. Leyla Ozturk, the mother of a 14-year-old cancer patient in Ankara, told Al-Monitor, “I sold my wedding gold for my son’s cancer treatment. Now we get the pills from cantaci. I don’t know if they are counterfeit, or how accurate the dosage is. I know I may be paying such high prices for substandard pills, but it is either this or nothing.”

The Turkish government is once more failing to protect the most vulnerable sectors of society. The government refuses to accept the reality of shortages until the SGK agrees to a strong price hike, one can only expect the situation in the medical field to deteriorate rather quickly.

Pinar Tremblay is a columnist for Al-Monitor’s Turkey Pulse and a visiting scholar of political science at California State Polytechnic University, Pomona. She is a columnist for Turkish news outlet T24. Her articles have appeared in Time, New America, Hurriyet Daily News, Today’s Zaman, Star and Salom. (Al-Monitor 28.09)

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11.10 TURKEY: Turkey Downsizes Economic Growth Outlook as Crisis Bites

Al-Monitor observed that Turkey expects economic growth to slow sharply in the next three years as the government cuts spending and combats inflation, Finance Minister Berat Albayrak said, seeking to shore up the $800 billion economy amid a crisis that crashed the lira and hit banks and corporate balance sheets hard.

Albayrak revealed the government’s revised expectations in a medium-term economic program (MTP) that covers the period until 2021. The presentation had been widely anticipated by rattled investors as a prescription for recovery in yet another test for the neophyte finance minister, who was named to the post by his father-in-law, President Recep Tayyip Erdogan, on 9 July.

Since then, the lira has lost more than a quarter of its value as investors dumped Turkish assets, worried about Erdogan’s control over the economy. Now they want to see Turkey implement austerity measures, even as Erdogan continues to push for lower interest rates to keep credit cheap and the economy growing.

For the moment, tighter fiscal policy appears to have won out as Albayrak unveiled the government’s forecasts for the next three years. Gross domestic product is seen increasing 3.8% this year before slowing to 2.3% next year, compared with previous government forecasts of 5.5% for both years, according to Albayrak’s presentation. Slower growth will persist in 2020 and 2021. Last year, the economy expanded by 7.4%, the fastest in the G20. “Our main motivation is to write a new success story. That’s why we called this the New Economy Program,” Albayrak said.

Market reactions to his plan were mixed. The lira initially rallied, but erased its gains later in the day. Turkish banking bonds strengthened slightly. Refet Gurkaynak, an economist at Bilkent University in Ankara, said the growth targets were “realistic, if optimistic,” adding, “This may be, but the contraction may be much more severe without proper policies.”

Albayrak pledged to develop policies to support exports and production, moving Turkey away from the construction-fueled growth that has ballooned Turkey’s trade deficit and upended budgetary balances. Some two million new jobs will be created over the next three years, he said, even as unemployment climbs to 12.1% next year from 10% now. “We have created a lot of employment in construction in the last few years,” Gurkaynak told Al-Monitor. “Since much of the problem is in the construction industry, it will choke up the employment it had absorbed, so we are going to see unemployment go up way faster than foreseen in the MTP.”

Consumer price inflation will accelerate to 20.8% by the end of the year, nearly triple the previous forecast of 7%, the program showed. Prices will rise more slowly in 2019 at 15.9%, compared with an earlier forecast of 6%. “The Central Bank will continue to use all instruments it possesses in a determined and independent manner to ensure price stability,” said Albayrak.

Questions about its ability to act without Erdogan’s consent have dogged the Central Bank. The president, who subscribes to an unconventional economic theory that high interest causes inflation, has badgered policy-makers not to raise rates.

But the Central Bank hiked its benchmark rate by 6.25%age points last week to underpin the lira, its first increase since early June. It did so just two hours after Erdogan called interest rates “a tool of exploitation,” leading analysts to ask if the bank was finally exerting its independence or if it was engaged in a good-cop-bad-cop act with the president. Albayrak said the banking system remains strong, pointing to a capital adequacy ratio hovering at 16% in July, but promised a comprehensive assessment to see what problems they face. Turkish lenders face an expected crunch by the end of this year, when banks must service $6 billion in foreign loans.

“If they only address the banks’ problems, then we will have banks that can lend but firms that are not lendable. So something has to be done for the real sector too. Both of those are absent in this program,” Gurkaynak said. Albayrak promised to reduce the budget deficit and implement savings and income-generating measures worth 76 billion lira ($12 million).

The program was also thin on details on how Turkey will meet these fiscal targets, wrote Timothy Ash, senior emerging markets strategist at BlueBay Asset Management, in a note to investors. But he added, “I think Albayrak gets a pass on the MTP,” noting that the program typically lacks specifics. One way Turkey will save money is by suspending large-scale infrastructure projects that have not yet been tendered, Albayrak said. Slashing public investments by 36% this year will help the government meet its deficit targets, said Ash. Albayrak ascribed some blame for Turkey’s economic predicament elsewhere: “We are going through a period in which economic sanctions are being used as a weapon.”

In July, US President Donald Trump threatened to sanction Turkey for its refusal to free an American pastor held on charges he plotted to overthrow Erdogan, plunging relations between the NATO partners to their worst in decades and propelling the lira’s tumble. Erdogan has repeatedly accused Washington of “economic warfare.”

Recently, Erdogan denied the country was in the throes of an economic crisis. “We are in a period of recovery now. Do not believe that there’s crisis, this is all manipulation,” he said in a speech on 19 September, singling out shopping centers for charging tenants rent in foreign currencies. “Do not be deceived by those who are undertaking manipulation at shopping centers and elsewhere. There will be no rent [paid] in dollars or euros. From now on, the Turkish lira will be used, or they will pay the price. This is Turkey, not the United States. Here, the lira has authority. You will rent your store in Turkish lira and do your shopping in lira.”

About 70% of rent at Turkey’s 403 malls is denominated in foreign currency. Erdogan gave them and other businesses with contracts in foreign currency a month to switch to agreements denominated in lira.

Turkey’s total corporate debt is calculated at $520 billion, of which foreign-exchange loans total $300 billion. Businesses that contract in foreign currency often do so because they have borrowed in euros or dollars during the credit boom. Now they too may face a hit. (Al-Monitor 20.09)

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11.11 CYPRUS: Cyprus Aims to Export Gas Via Egypt

Simon Henderson posted in The Washington Institute for Near East Policy Alert on 21 September that a new pipeline agreement will further establish Egypt as the energy hub of the Eastern Mediterranean.

During a 19 September meeting in Nicosia, the energy ministers of Egypt and Cyprus agreed to set up a committee within thirty days to work out details for an undersea pipeline connecting the offshore Aphrodite natural gas field with an Egyptian liquefaction plant. In an apparent bid to win European Union backing, Cypriot minister George Lakkotrypis stated, “We are essentially talking about a European pipeline, intended to transport Cypriot natural gas to Egypt for re-export to Europe in the form of liquefied natural gas.” In reality, tankers could transport these LNG exports anywhere in the world.

The proposal is the most commercially logical way of exploiting the Aphrodite field, which lies in water more than 6,000 feet deep about 100 miles from the southern coast of Cyprus. The gas was discovered in 2011 by the U.S. firm Noble Energy, which also found Israel’s offshore fields. The apparent intention is to link it by pipeline with the network servicing Egypt’s giant Zohr offshore field, discovered in 2015 and already producing gas in significant quantities.

Noble is also in talks with Egyptian companies to transfer excess gas from Israel’s offshore Leviathan field via pipeline across northern Sinai. The Egyptians would then convert it to LNG and sell it internationally.

Cairo is already the main gas player in the Eastern Mediterranean by virtue of its large reserves and production capacity. Its ace in the hole is two coastal LNG plants, which have been largely idle in recent years because of soaring domestic demand and political chaos. Israel’s gas potential is deemed smaller than Egypt’s, and efforts to develop it have been limited – some would say hampered – by domestic political opposition and regulation.

The initial challenge to exploiting Aphrodite is financial. Noble and its partners on the project, Royal Dutch Shell and Delek of Israel, must first raise funds to cover the cost of developing the field. They recently began renegotiating with Cyprus to make the contract more profitable for them. The planned pipeline connection to Egypt is an additional expense.

The main political challenge could come from Turkey, which argues that revenue from Cypriot gas sales should benefit all of the island’s citizens, including those in the so-called Turkish Republic of Northern Cyprus, set up after Turkey’s 1974 military intervention. Although Nicosia has accepted this argument, President Recep Tayyip Erdogan still delivered an ominous warning earlier this month when he declared that more Turkish troops would be deployed there. In February, Turkish warships prevented an Italian-contracted drilling ship from operating in southeastern waters that form part of the island’s exclusive economic zone.

If these obstacles are surmounted, the Egyptian route would enable Cyprus to set aside less favorable options such as building its own LNG plant at great expense or exporting gas via pipeline to Turkey. In addition, a new field named Calypso was discovered west of Aphrodite this January, though it needs more appraisal drilling before its commercial prospects can be ascertained. Eni of Italy and ExxonMobil have committed to drill several other exploratory wells before 2020.

These developments reflect Washington’s quiet efforts to encourage and link Eastern Mediterranean energy initiatives among its regional allies. Cyprus is seeking European backing as well, using its EU membership as leverage. Turkey is necessarily part of these discussions, but it should not be allowed to play a spoiling role.

Simon Henderson is the Baker Fellow and director of the Bernstein Program on Gulf and Energy Policy at The Washington Institute. (TWI 21.09)

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Fortnightly, 3 October 2018

Fortnightly, 3 October 2018

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