Fortnightly, 5 October 2016

According to Globes, the committee for raising the retirement age for woman has failed in its task. Sources said that Minister of Finance Moshe Kahlon told committee members that he was considering rejecting its recommendations, which were submitted to him on 29 September. Sources involved in the committee’s work said that its 12 members had not reached agreement on any of the topics on its agenda, headed by the questions of whether to raise the retirement age, and if so, to what age, and how to compensate women liable to be harmed by the decision.

The largest gaps between the parties were between the Bank of Israel, which believes that the retirement age should be the same for men and women, and should be linked to life expectancy, and the committee members from the Histadrut (General Federation of Labor in Israel) and women’s rights organizations, which opposed raising the retirement age. The Ministry of Finance, which supports raising the retirement age for women to 67, was willing to settle for raising it gradually to 64, but this compromise failed to achieve complete agreement among the committee members.

The current retirement age for women is 62, one of the lowest in Western countries, after many countries raised the retirement age in recent years. Women can ask to continue working until 67. Raising the retirement age is liable to affect women who lose their employment at age 62, because they will have to wait for years before receiving a pension.

The main reasons for raising the retirement age cited by the Bank of Israel were that experience shows that raising the retirement age increases the employment rate among women over 60 and their salary levels. In addition, the Bank of Israel presented figures showing that the monthly pension would rise by 8% for each year that retirement is postponed. The Bank of Israel also provided a comparison showing that the retirement age for women was lower than 62 in only eight of the 34 OECD countries. Assuming that the currently prevailing international policy of gradually raising the retirement age is implemented until 2030, only three countries besides Israel will have a retirement age for women of 62 or less: Chile (60), Poland (60) and Slovenia (61). (Globes29.09)

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2: ISRAEL MARKET & BUSINESS NEWS

2.1 Intel to Build ‘Smart’ Israel Development Center

Intel Israel is moving its 2,500 development personnel into a new building in Petah Tikva. This 34,000 square meter building will learn the habits of every employee who chooses to disclose personal information, customize his working environment, help save energy and continue learning and improving over time. Among other things, the building will know what coffee to make for each employee, when to send him to get a haircut and recommend where to park.

On 25 September, Intel laid the cornerstone of its Petah Tikva campus, which is one of company’s most advanced buildings worldwide and is a living demonstration of the various technologies it develops. Upon its completion, the personnel working in this building will be able to control their environment and adjust it to their needs using thousands of sensors and advanced processing capabilities. In addition, the new building will have integrated systems encouraging a healthy lifestyle, energy conservation and a green environment.

Employee time management and services offered by the building will not be limited to meals. Intel’s new smart campus, like any other Intel campus, will have a gym, two restaurants, meat and dairy, a café in the lobby and, of course, an entire area devoted to campus services – spa, hairdresser, laundry services and more. An employee interested in a certain service could order it and receive a notification when the service is available. Moreover, the building will be able to learn the employee’s habits – if he tends to get his hair cut every two months, it will send him an SMS when a haircut is due; if an employee works out in the gym, she will be able to receive recommendations for a menu suitable for her training regimen. (Globes 25.09)

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2.2 Hainan Airlines Adds Flights to Tel Aviv – Beijing Route

Hainan Airlines is adding another weekly flight on its route to Israel. The Chinese airline, which began flights on the Tel Aviv-Beijing route in April 2016, currently operates three weekly flights to Israel on Sunday, Tuesday, and Thursday, to be increased to four in November. The new flight will be on Mondays. Tickets will be offered for $550 on certain dates. The usual price for tickets starts at $600 for tourist class and $2,400 for business class tickets. The company’s passengers consist of 70% Israelis and 30% Chinese. The Ministry of Tourism and the others dealing in the sector have set a goal of increasing the number of Chinese tourists visiting Israel, currently less than 50,000 a year – the potential is enormous. Hotels are preparing for Chinese guests by adapting their rooms and menus, and the tourist websites will have information translated into Mandarin Chinese.

Hainan also announced the launching of a limo service in Israel for business class passengers, a service that already exists in Beijing and other company stops around the world. The service, which is available free of charge (for three ticket classes) in business class, and can be ordered in advance, includes collection from the airport and transportation to destinations from Beer Sheva in the south to Haifa in the north, and from those stops back to Ben Gurion Airport. Hainan is the largest private airline in China. (Globes 25.09)

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2.3 Netafim Purchases Costa Rica’s RyM

Netafim announced it acquired 60% of the Costa Rican irrigation company RyM. Netafim declined to disclose details of this deal, but the industry estimates that it totaled several million dollars, based on RyM’s annual sales, estimated at over $10 million. The remaining RyM stake will be owned by the company’s prior controlling stakeholders, Alberto Arguio and Enrique Gonzales. Until its acquisition by Netafim, RyM had distributed the Israeli company’s products in Costa Rica and several other Central American states. Following its acquisition of the Costa Rican company, Netafim has announced that it will establish a new subsidiary, the 29th in number, which will be called Netafim Central America and be devoted to bolstering Netafim’s status in the region, while targeting states such as Panama, Honduras, Nicaragua, Guatemala and El Salvador.

Kibbutz Hatzerim’s Netafim is the global leader in drip and micro-irrigation solutions for sustainable productivity. With 28 subsidiaries, 16 manufacturing plants and over 4,000 employees worldwide, Netafim delivers innovative solutions to more than 110 countries across the globe. Founded in 1965, Netafim pioneered the drip revolution, creating a paradigm shift toward low-flow agricultural irrigation. Half a century later, Netafim is celebrating 50 Years of Shaping the Future, offering a wide range of state-of-the-art irrigation and complementary solutions for agriculture, landscaping and mining. From drippers and dripper lines, through sprinklers and micro-emitters, to crop management technology (CMT) and greenhouse systems, Netafim’s market-leading products and services enable cost-effective irrigation for optimal and sustainable results. (Netafim 25.09)

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2.4 Folloze Raises $7.3 Million

Israeli Account Based Marketing (ABM) sales platform Folloze has closed $7.3 million in funding to further accelerate the company’s market traction and grow its sales, marketing and customer success teams. The investment was co-led by Canvas Ventures and NEA, the lead investor in the seed round, with participation by Cervin Ventures and others.

ABM has become a key Go-To-Market strategy for B2B companies, with double the customer adoption in 2016 compared to 2015 and more than 70% of companies now focused on driving revenue with ABM. Folloze is the first platform specifically designed for marketers to enable salespeople to use content campaigns, content automation, actionable account analytics and other marketing techniques, all from within their familiar sales tools. These capabilities enable sales to act as consultants and educators during the selling process, delivering significantly more value to customers through the buying journey. This account-oriented approach allows salespeople to manage “account-specific funnels” and drastically increase their pipelines.

Founded in 2013, Tel Aviv’s Folloze is a provider of an innovative Account Based Management (ABM) Sales Platform, which enables B2B sales teams to use marketing techniques to engage, develop and win their top target accounts. Built for scale, the platform allows Marketing to empower Sales to deliver account-specific content campaigns, content automation, actionable account analytics and more, all from within their familiar sales tools. (Globes 29.09)

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2.5 Anodot Raises $8 Million to Prevent Losses With Real Time Business Incident Detection

Anodot announced $8 million in funding led by Aleph Venture Capital with participation by Disruptive Technologies, bringing Anodot’s total funding to $12.5 million. The funds will be used to expand the company’s global sales and operations and meet demand for its service. In the nine months following Anodot’s launch, dozens of customers, including several Fortune 500 companies, have already implemented the product to prevent crises and drive revenues. Anodot brings machine learning and real-time streaming data together to identify, report, and visualize business incidents as they occur, enabling its customers – often Business Intelligence analysts serving all aspects of a company’s operations – to quickly and effectively manage crises and uncover business opportunities. Instead of the usual days or weeks it currently takes companies to detect and understand data anomalies, Anodot’s SaaS solution is capable of identifying and notifying customers about issues in mere minutes.

Ra’anana’s Anodot provides valuable business insights through anomaly detection. Automatically uncovering outliers in vast amounts of time series data, Anodot’s real time business incident detection uses patented machine learning algorithms to isolate and correlate issues across multiple parameters in real time, supporting rapid business decisions. Anodot customers in fintech, ad-tech, web apps, mobile apps and other data-heavy industries use Anodot to drive real business benefits like significant cost savings, increased revenue and upturn in customer satisfaction. (Anodot 22.09)

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2.6 Mobilize Raises $6.5 Million to Build the Future of Group Communications

Mobilize announced its Series A investment round and publicly launched the self-service version of its product. The $6.5 million round was led by Trinity Ventures and joined by Floodgate Ventures, Hillsven Capital, Array Ventures, Upwest Labs in addition to SaaS angels such as Eoghan McCabe, CEO of Intercom.io, and Sanjay Subhedar. Solving the huge challenges of organizing and communicating with large external groups, Mobilize is a comprehensive communication solution optimized to help companies manage and motivate external groups such as on-demand workers, developer groups, contractors, resellers, and influencers. In the past year while still in stealth mode, Mobilize worked with leading brands such as Microsoft, Docker, Etsy, MakerFaire, The United Nations, MasterCard, Salesforce and Prezi as design partners. These companies as well as just over 100 others have adopted Mobilize to allow over 5,000 network managers to manage over a quarter of a million global partners. Mobilize has now launched a self-service version of the platform to enable all organizations to benefit from the power of an optimized group management platform.

Tel Aviv’s Mobilize is a network relationship management platform enabling companies to effectively build, communicate across, and manage external groups. Mobilize was founded based on the observation that businesses have transformed how they create products, provide services and scale globally leveraging external networks of people. In the new economy, traditional pipeline business are overtaken by marketplace platforms, network relationships are fundamental, and Mobilize is a platform optimized to motivate and manage these networks. (Mobilize 21.09)

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2.7 CA Technologies to Acquire BlazeMeter to Drive Application Testing Practices

CA Technologies signed a definitive agreement to acquire BlazeMeter, a leader in open source-based continuous application performance testing. Terms of the agreement were not disclosed. The transaction is expected to close by year end. The acquisition of privately-held BlazeMeter will enable CA Technologies to extend its DevOps portfolio. BlazeMeter will seamlessly integrate with CA’s continuous delivery solutions to further improve testing efficiency and accelerate the deployment of applications. As development teams move to agile and continuous delivery practices to improve time-to-market of applications, enterprises are struggling to keep up. Testing speed is the major bottleneck in getting applications released faster. With BlazeMeter’s solution, developers and performance engineers can test earlier and more often in the application lifecycle.

BlazeMeter’s commercial, self-service continuous application performance testing solution is fully compatible with Apache JMeter as well as other open source software tools like Selenium, Gatling and Locust. Founded in 2011, BlazeMeter has offices in Tel Aviv, Israel and Palo Alto, Calif. (CA Technologies 20.09)

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2.8 OurCrowd Raises $72 Million in New Series C Funding Round

OurCrowd announced the closing of $72 million in Series C funding. Participants in this latest round include financial institutions, family offices, and private investors from five continents. OurCrowd has to date invested in 100 portfolio companies and funds on its platform. Total investment in companies and funds now exceed $300 million. OurCrowd has had nine exits to date from its portfolio investments: two IPO’s and seven acquisitions. These include ReWalk, Crosswise (bought by Oracle), Replay Technologies (bought by Intel) and NextPeer (bought by Viber).

Jerusalem’s OurCrowd is the leading global equity crowdfunding platform for accredited investors. Managed by a team of seasoned investment professionals, OurCrowd vets and selects opportunities, invests its own capital, and brings companies to its accredited membership of global investors. OurCrowd provides post-investment support to its portfolio companies, assigns industry experts as mentors, and takes board seats. The OurCrowd community of almost 15,000 investors from over 110 countries has invested over $300m into 100 portfolio companies and funds. (OurCrowd 21.09)

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2.9 Samsung Launches Israel Startup Investment Program

Samsung is stepping up its investments in Israeli early-stage startups by opening a branch of its early-stage technology investment program – Samsung NEXT Tel Aviv. The Korean electronics giant has been investing enthusiastically in Israeli startups over the past few years through the Samsung Venture Investment Corporation (SVIC) and the Samsung Catalyst Fund whose portfolios includes smartphone battery developer StoreDot, 3D photography company Mantis Vision, video company Interlude, consumer wearable company LifeBEAM, biometric sensing company Sensifree and camera sensor company Unispectral. Samsung also has a startup accelerator in Yakum between Herzliya and Netanya. (Globes 26.09)

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2.10 Aleph Closes $180 Million Israel Venture Capital Fund

Aleph has closed its Aleph II fund after reaching their target of $180 million. The closing of the fund was announced in a Rosh Hashanah New Year’s message on the Aleph website. This is Aleph’s second fund and larger than the $150 million, which was closed in 2013. Aleph declined to provide details about the new fund’s investors.

Tel Aviv’s Aleph is a venture capital fund focused on partnering with great entrepreneurs to help scale them into large, meaningful companies and globally recognized brands. It is an Equal Partnership of Eden Shochat, Michael Eisenberg and Aaron Rosenson. (Aleph 26.09)

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2.11 CUBE Arrives in Tel Aviv as a Matchmaker Between Israeli Startups & Global Corporations

CUBE, a global innovation ecosystem dedicated to connecting startups and corporations, is coming to DLD Tel Aviv to scout for local startups to join its ecosystem. CUBE’s delegation to Israel includes high-level execs from leading global corporations like: the Head of Communications at Bayer; and the Business Innovation Manager, Chief Customer Officer, and Head of Industry 4.0 at Volkswagen Group, to name a few. Located in the heart of Berlin, CUBE is connecting between startups in its ecosystem and partners. By placing teams side by side, CUBE intends to facilitate even greater connections between industry leaders and innovative B2B startups. CUBE will also meet with local investors and tech influencers to connect them to CUBE’s network.

Startups and corporations are cultural opposites; they don’t speak the same language. CUBE maintains various projects and modules to connect innovative startups and leading corporations – but that’s not enough. CUBE also acts as an interpreter between the two, understanding the needs of both startups and corporations, while also facilitating deals and digitalization faster than any other innovation scouting platform. Guided by the desire to make an impact and not just set forth business opportunities, CUBE is now coming to Israel to scout and meet startups focusing on a. Life sciences, including digital health and agritech, b. Machinery and manufacturing and c. Infrastructure and interconnectivity

CUBE then acts as matchmaker between those B2B startups and industry leaders that can benefit from the changes in operations and processes the young companies can provide. (CUBE 26.09)

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2.12 Nano Dimension Raises $12 Million in Public Offering of American Depositary Shares

Nano Dimension announced the pricing of its public offering of 1,850,000 American Depository Shares (ADSs) at a price of $6.50 per ADS. In addition, Nano Dimension has granted the underwriters a 45-day over-allotment option to purchase up to 277,500 additional ADSs at the public offering price. All of the ADSs are being offered by the Company. The Company expects to receive gross proceeds from the offering, excluding the exercise of the over-allotment option, if any, of approximately $12 million, excluding underwriting discounts and commissions and other offering-related expenses. Assuming the full exercise of the over-allotment option, the gross proceeds may reach $13.8 million. Nano Dimension intends to use the proceeds of this offering to fund sales and marketing activities of its printers, scaling up of its production facilities, production expenses relating to its printers and inks, research and development, potential licensing, as well as for general working capital and other corporate purposes. The offering is expected to close on 30 September, subject to customary closing conditions.

Ness Ziona’s Nano Dimension, founded in 2012, focuses on development of advanced 3D printed electronics systems and advanced additive manufacturing. Nano Dimension’s unique products combine three advanced technologies: 3D inkjet, 3D software and nanomaterials. The company’s primary products include the first 3D printer dedicated to printing multi-layer PCBs (printed circuit boards) and advanced nanotechnology-based conductive and dielectric inks. (Nano Dimension 27.09)

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2.13 Reporty Raises $5.15 Million

Reporty has raised $5.15m in a Series A financing round led by its chairman, former Israeli Prime Minister and Defense Minister Ehud Barak. The homeland security company has raised $7 million to date with the participation of investors from the US, Asia, Europe, and Israel. The company intends to use the funds to continue to develop its solution and bring it to market.

Reporty provides a national system to enhance first response to emergency events through real time video and audio. The app, now launching in 160 countries, allows users to instantly and automatically transmit critical information to local dispatchers through real time video and audio from the scene, including a pinpointed location accurate to one meter (including indoor floor levels). If the dispatcher is receiving multiple reports for the same car accident, he/she can select the report with the best quality transition or one with the highest reliability score. The solution features a free Android or iOS app, dispatch control system, and a call transferring/rerouting/prioritizing system which can pinpoint indoor and outdoor locations.

Israel’s Reporty has set out to bridge the gap between the people and the resources designed to help them. They are introducing the most innovative technology the public safety sector has ever seen. Using the power of the crowd, Reporty is revolutionizing the way first response and public safety agencies manage events in the field. Their ground-breaking communications platform shows the true nature of any event, emergency or non-emergency, as it unfolds. When dispatchers have a complete understanding of a situation they can more effectively allocate the resources that are necessary to get the job done and to save lives. (Globes 27.09)

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2.14 SecBi Raises $5 Million

SecBi has raised $5 million in a Series A financing round from Orange Digital Ventures, Connecticut Innovations, Amichai Shulman and previous investor Jerusalem Venture Partners (JVP). SecBi said the proceeds will be used to launch SecBI’s debut product, a software solution which automates threat detection and incident investigation. SecBi harnesses machine learning technology to monitor and analyze network log data, identify interesting patterns and hidden threats, and compile comprehensive narratives that help IT professionals ward off cyber-attacks swiftly. Some of the investment will be used for increasing marketing and sales in the US and Europe.

Beer Sheva’s SecBI provides an advanced threat detection system that uncovers the full scope of cyber-attacks, including all affected users, domains, assets and more. Based on proprietary machine learning technology, SecBI’s solution detects advanced threats that other systems miss, creates a comprehensive incident storyline with autonomous investigation, and enables rapid and accurate mitigation. SecBI’s team uniquely balances cybersecurity domain expertise with technological ingenuity, and entrepreneurship with large scale operational experience and business leadership. (SecBi 27.09)

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2.15 3DSignals Raises $3 Million

Founded in 2015, Kfar Saba’s 3DSignals has closed a seed financing round of $3 million from Grove Ventures. 3DSignals develops an ultrasonic acoustic sensor which predicts electro-mechanical failure long before it becomes production-interruptive. 3DSignals help factories and machine manufacturers improve production efficiency by reducing unexpected downtimes of critical assets and optimizing operational parameters.

Sound taps into a part of the brain and that allows humans to instantly know if a machine is working as it should or about to malfunction. In the case of industry and manufacturing, engineers have used this innate intuition to diagnose equipment problems using sound since the time of early machines. 3DSignals was designed to build upon this fundamental human capacity and enable engineers to monitor multiple pieces of equipment, access that data from any location, and make quick decisions that can avoid costly machine disasters. (Globes 30.09)

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2.16 Pixoneye Raises £2.4 Million

The popularity of Pixoneye’s groundbreaking mobile data analytics and personalization platform, which has been dubbed “the holy grail” for marketers shows no sign of waning, letting it raise another £2.4 million in series A funding. The boost to Pixoneye, follows an initial investment round that launched mid-April and closed after just two months as investors quickly spotted the potential of the platform to transform the accuracy in the way brands reach customers. The new investment will be used by Pixoneye to change the way that mobile data is aggregated and analyzed, eliminating the need to transfer it into the cloud for processing. In this way, the company will guarantee greater consumer data privacy and security, as well as helping businesses save resources by making data analysis more efficient. The money will also be used for the growth of Pixoneye’s London team, with four senior commercial hires planned in the coming months.

The success of this funding round marks the latest achievement in what has been a fruitful 18 months for Pixoneye. In June 2015, the company reached the final of Unilever’s Next Big Thing awards; in September 2015, the company was singled out as part of the top 1% of Israeli startups by Microsoft Ventures and in February 2016, it won first place in mobile marketing at Mobile World Congress. January 2016 saw Pixoneye, which already held an office in Tel Aviv, open up its first office in London. This latest funding round brings the total capital raised by Pixoneye to just under £3 million to date.

With Tel Aviv’s Pixoneye’s picture-perfect solutions, targeting and personalization abilities reach a whole new level. No longer do you have to rely on basic data such as age, gender, geolocation and browsing patterns, which create a false illusion of user-personalization. Using our strong image-understanding algorithm, you truly get the full picture of each user’s life story, extracting the exact data that you need to optimize your targeting capabilities. (Pixoneye 28.09)

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2.17 Codefresh Raises $7 Million

Codefresh, the end-to-end Docker and other container lifecycle management platform, closed a $7 million financing round. The investment was led by Carmel Ventures with the participation of Hillsven Capital, Streamlined Ventures and UpWest Labs. This new round will allow Codefresh to consolidate its position in the container-based development market. Codefresh is at the forefront of bringing Docker and other containers to the enterprise with a CI/CD platform built for Docker from the ground-up. Codefresh’s business is growing rapidly and the funds will be used to further accelerate growth of the company’s engineering, customer success, and business operations with the aim of making agile software development and release cycles using containers radically easier and faster.

Codefresh is already being used in production by dozens of companies such as IronSource, JFrog and HPE, who are benefiting from it as their CI/CD and Docker image management platform. Codefresh seamlessly integrates with best-of-breed container technologies and toolsets, such as testing, orchestration and registries, enabling a holistic approach to container lifecycle management.

Founded in 2014, Ramat Gan’s Codefresh builds Docker images on every change in a branch or pull request. It can then store the image in a Docker registry of your choice or in the Codefresh built-in registry. Codefresh can monitor your GIT repository or be triggered from any CI service. (Globes 29.09)

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2.18 Karamba Security Announces Strategic Investment from Fontinalis Partners

Karamba Security has secured an investment from Fontinalis Partners, a firm solely focused on investing in and scaling technology companies that are advancing next-generation mobility solutions. Fontinalis Partners led the $2.5 million round, with participation from existing investors YL Ventures and GlenRock. Unlike enterprise and mobile technologies, whose greatest cybersecurity risk is data loss, the risk from a hacked connected or autonomous car is much greater. Carwall, Karamba Security’s software, secures vehicles from cyberattacks by automatically locking down electronic control units (ECUs), according to factory settings. Carwall blocks operations outside of factory settings at the ECU level; hardening the car against hackers that try to compromise the ECU in order to take control of the car’s safety systems, such as brakes and airbags. Five months after emerging from stealth and raising its first round of financing, Karamba Security has completed technology proofs of concept with several industry Tier-1 providers, and has been experiencing strong demand for its solutions from vehicle OEMs and Tier-1 providers.

Hod HaSharon’s Karamba Security provides industry-leading autonomous cybersecurity solutions for connected and autonomous vehicles. Karamba’s software products automatically harden the ECUs of connected and autonomous cars, preventing hackers from manipulating and compromising those ECUs and hacking into the car. Karamba’s Autonomous Security prevents cyberattacks with zero false positives, no connectivity requirements and negligible performance impact. (Karamba Security 29.09)

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3: REGIONAL PRIVATE SECTOR NEWS

3.1 Saudi Arabian Airlines Eyes 63 New Aircraft in Fleet Revamp

Saudi Arabian Airlines (Saudia) will acquire 63 aircraft as part of a fleet modernization program. The airline will acquire 15 Boeing B777-300ER, 13 Boeing B787 Dreamliners and 35 Airbus A320 and A321-neo. Saudi Arabia’s air travel industry is benefiting from strong population growth and rising incomes since the country announced in 2012 that it would liberalize its domestic aviation market. At present the state-owned carrier’s only domestic competitor is budget carrier flynas. In 2015 Saudia said it would raise the number of its planes to 200 from 119 and add new international and domestic routes. (AB 24.09)

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3.2 Kewaunee Scientific Wins $18 Million Deal to Equip Kuwait University Laboratories

North Carolina’s Kewaunee Scientific Corporation has announced that it has been awarded a contract valued at $18.5 million for the new College of Science complex for Kuwait University’s Sabah Al-Salem University City. This is the second college at the new Sabah Al-Salem University City for which Kewaunee will be supplying laboratory furniture, fume hoods, and related products. It said it is nearing completion of its contract to provide similar products for the College of Engineering and Petroleum complex. Founded in 1906, Kewaunee Scientific Corporation is a global leader in the design, manufacture, and installation of laboratory, healthcare, and technical furniture products. (Kewaunee 01.10)

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3.3 Affordable Housing Demand Rising in Saudi Capital City

There is increasing demand for affordable housing in Riyadh as Saudi Arabia’s population growth continues to outstrip property market supply, according to Chestertons. Its Riyadh Real Estate Market Overview for Q2 said that Riyadh’s population has grown by 52% over the past 15 years and currently stands at 6.5 million in 2016. However, only 500,000 units have been built during the same period, leading to a dearth of low cost housing across the capital. “The Saudi government is all too aware of the acute shortage in low cost housing units, but continuing low oil prices have resulted in inevitable cuts in public spending, which has in turn hit public housing projects,” said Declan McNaughton, managing director UAE, Chestertons MENA. “So far the impact on rental rates has been minimal, but it is beginning to drive prices higher in some areas that have traditionally provided value-led accommodation for budget conscious tenants,” he added.

The report said average annual rental rates for apartments in Riyadh are currently $7,182. In the sought after central Riyadh area, where the most expensive rental rates are to be found, the Al Wahah district tops the list at $18,700 while the district of Jarir was the least expensive at $9,350. It added that average rental rates for villas in Riyadh are $31,510 with the city center once again proving to be the most expensive with districts Al Wahah, Al Muruj, Al Sulimaniyah, Al Wurud, and Al Olaya commanding prices of $66,665.

The average sales price for an apartment in Riyadh is currently $117,771. However, districts across Riyadh top out at $186,661 including the districts of Hittin in Northern Riyadh, Al Raid in Western Riyadh, Al Hamras in Eastern Riyadh and in Central Riyadh, Al Wahah is the most expensive at $239,993. Average sales prices for a villa are $476,768 with the highest averages typically being commanded in the city center with the lowest in South Riyadh. (AB 24.09)

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3.4 Papa John’s International Announces Development Deal to Expand in Egypt

Louisville, Kentucky’s Papa John’s International continues its expansion in Egypt with the signing of a restaurant development agreement. Vanatge Egypt, for Tourism and Entertainment (Vantage), a Papa John’s franchisee for the past 10 years, recently entered into a development agreement to open an additional 18 units. Vantage currently operates 36 Papa John’s restaurants throughout Egypt.

Papa John’s International is the world’s third-largest pizza delivery company. For 15 of the past 17 years, consumers have rated Papa John’s No. 1 in customer satisfaction among all national pizza chains in the American Customer Satisfaction Index (ACSI). (Papa John’s 30.09)

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3.5 Air Canada Adds Non-Stop Montreal-Algiers Flights Starting in Summer 2017

Air Canada announced the addition of a Montreal-Algiers route that will launch in June 2017, subject to government approvals. Building on Air Canada’s success in Casablanca with flights returning on a year-round basis in April 2017, the service to Algiers will be the only non-stop flight by a Canadian carrier between Montreal and the North African city, establishing Air Canada as an important player in the large and growing market between Canada and Algeria. The new seasonal route will be operated by Air Canada Rouge with a 282-seat Boeing 767-300ER aircraft, featuring a choice of three customer comfort options: Economy; Preferred seating offering additional legroom; and Premium Rouge with additional personal space and enhanced service. Flights are timed to optimize connectivity to and from Air Canada’s Montreal hub.

Casablanca service returns on April 19, 2017 on a year-round basis with three flights a week, increasing to daily service in June 2017 and continuing with three flights a week during the winter season. Flights are operated by Air Canada Rouge with a 282-seat Boeing 767-300ER, featuring a choice of three customer comfort options: Economy; Preferred seating offering additional legroom; and Premium Rouge with additional personal space and enhanced service. (Air Canada 28.09)

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3.6 HAVELSAN Completes Acquisition of Quantum3D

Milpitas, California’s Quantum3D, a leading provider of training and simulation solutions for government and commercial applications, together with HAVELSAN, a prominent global software and systems provider based in Ankara, Turkey, announced that HAVELSAN has secured all necessary U.S. Government approvals and completed the process of acquiring the flight simulation business assets of Quantum3D. HAVELSAN’s U.S.-based subsidiary will retain the intellectual property and product lines of Quantum3D, and will continue to have offices in Milpitas, CA and Orlando, FL.

Quantum3D Government Systems will be a distinct and separate services-oriented company, selling complete training solutions and services to U.S. and foreign government entities. Quantum3D Government Systems, previously known as CG2 Inc., has a long and successful track record of delivering R&D, Engineering, and Design Services to U.S. Government customers. Going forward, the former CG2 entity will do business under the name “Quantum3D Government Systems.”

Headquartered in Ankara, Turkey, HAVELSAN is a global systems and software company serving the information and defense market around the world. HAVELSAN specializes in the fields of Command Control and Combat Systems, Cyber Security and Information Technologies, Management Information Systems, and Simulation, Training and Test Systems. (Quantum3D 04.10)

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4: CLEAN TECH & ENVIRONMENTAL DEVELOPMENTS

4.1 Top Innovations in Israeli Clean Energy Solutions to be Showcased at 7th Eilat-Eilot Conference

The 7th Eilat-Eilot Renewable and Clean Energy Conference (EilatRE2016), to be held 27 – 29 November 2016 at the Dan Hotel in Eilat, Israel, will bring together industry leaders, government officials and sector investors to focus on the next generation technologies that will advance the global transition to renewable energy. Hosted by the Eilat-Eilot Renewable Energy Initiative – a non-profit organization dedicated to promoting the use and development of renewable energy as a regional development catalyst – the conference provides an opportunity for global industry leaders and investors to see firsthand the disruptive technologies and game-changing innovations coming out of Israel, a world leader in clean energy startup companies per capita.

This year’s keynote speaker will be Greg Wasserman, Partner at former U.S. Vice President Al Gore’s Generation Investment Management. Other speakers include Itamar Orlandi, Head of Applied Research at Bloomberg New Energy Finance and Dr. Griffin M. Thompson, Director of the Office of Electricity and Energy Efficiency at the U.S. Department of State’s Bureau of Energy Resources. A delegation from the International Renewable Energy Agency (IRENA), headquartered in Abu Dhabi, will also participate in the event as part of the organization’s mission to create a strategic renewable energy plan for the Israeli government.

A highlight of the conference will be EnergyVest, which will be hosting the Cleantech Open competition, providing a platform for the most promising Israeli clean energy entrepreneurs to pitch their innovations to investors and for investors from across the globe to discover the under-the-radar local startups spearheading the latest advances in cleantech. The conference program will be complemented by a cleantech exhibition, offering attendees from industry, academia and government a unique opportunity to exchange ideas and network with relevant companies, vendors and technologies from Israel and abroad.

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4.2 IFC Arranges Financial Package to Build Solar Plant in Northern Jordan

International Finance Corporation (IFC), a member of the World Bank Group, has arranged a $76 million financing package for Fotowatio Renewable Ventures (FRV) to build a new 50 megawatt solar photovoltaic (PV) power plant in northern Jordan, the latest in a series of efforts to boost renewable energy investments in the oil-importing country. The financing package, which includes $21 million from the IFC-Canada Climate Change Programme, will support the construction of FRV’s first solar power plant in the city of Mafraq. The new plant will supply power at 6.9 cents per kilowatt-hour — a price far below Jordan’s average cost of electricity and among the lowest for solar energy worldwide.

The plant, which is due to start operating in 2018, represents approximately 1% of Jordan’s overall generation capacity and is expected to supply about 155 million kilowatt hours of electricity per year, sufficient to power over 40,000 average homes. It is also expected to create about 250 jobs during the construction phase and help reduce the carbon footprint by displacing over 80,000 metric tons of CO2 per year, equivalent to removing approximately 17,000 cars from the country’s roads. The Mafraq plant is the first PV solar plant to be financed out of the four planned under the Jordanian government’s second round of solar PV projects, said the statement.

In November 2013, IFC closed financing for the first commercial-scale renewable energy project, the 117-megawatt Tafilah wind farm. IFC followed this in 2014 with the financing of the Jordanian government’s first seven solar PV plants; the largest-ever private sector-led solar project in the MENA region, according to the statement. FRV is a global solar development company with a 4.3 GW development portfolio in the emerging solar markets including Australia, the Middle East, India, Africa and Latin America. (JT 25.09)

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4.3 Dewa Unveils Fully Solar-Powered Headquarters

When Dubai Electricity and Water Authority (Dewa) celebrates its 60th birthday in 2019, the public utility will gift itself a new fully solar-powered headquarters. Once completed, it is expected to be the largest and tallest “net-zero” energy building in the world. Energy consumption in net-zero energy buildings is equivalent to the amount of renewable energy it produces on site on an annual basis. Dewa’s new headquarters, Al Sheraa (Arabic for “The Sail”), was exhibited during the first Dubai Solar Show, which is part of the Water, Energy, Technology and Environment Exhibition (Wetex) 2016 that opened on 4 October. Al Sheraa, which will be built in Al Jadaf, will have six stories on one side and 70 stories on the other side. It is touted as a cultural symbol in the UAE for its seafaring heritage. The “Sail”, which holds 16,500 square meters of solar panels, acts as a shading source for the building. It faces the south-southwest direction to maximize harvested solar energy. Natural light during the day will stream through special opening in the sail, illuminating offices and giving sufficient light without the associated heat. The building will generate renewable energy amounting to more than 7,000 mWh annually. (GN 04.10)

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5: ARAB STATE DEVELOPMENTS

5.1 Lebanon’s Average Consumer Prices Dropped 2.05% y-o-y by August 2016

According to the Central Administration of Statistics (CAS), Lebanon’s average Consumer Price Index (CPI) declined by 2.05% y-o-y by August 2016, where the average CPI fell from 97.37 points during the first eight months of 2015 to an average of 95.38 points in the same period of 2016. In detail, average prices of food and non-alcoholic beverages (20.6% of CPI) fell 1.45% y-o-y by August 2016. Moreover, as oil prices are still on the downfall, transportation (13.1% of CPI) and water, electricity, gas & other fuels (11.9% of CPI) also recorded average yearly decreases of 5.90% and 12.48%, respectively. Similarly, health (7.8% of CPI) and communication (4.6% of CPI) registered a 2.57% and 0.30% y-o-y average declines, respectively.

On the other side, the education sub-index, constituting 5.9% of the CPI, rose by 1.49% y-o-yon average by August 2016. Moreover, due to the summer season and the occurrence of significant holidays, average restaurants & hotels prices (2.6% of CPI) increased by 2.69% y-o-y by August 2016. The actual rent sub-index for households (old and new rent), with a weight of 3.4% of the CPI, grew by an average of 2.70%. (CAS 27.09)

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5.2 Lebanon Ranked 101st out of 138 Countries in the Global Competitiveness Index

According to the World Economic Forum report, Lebanon ranked 101st out of 138 countries, with a score of 3.8 out of 7 in the Global Competitive Index (GCI) for 2016-2017, compared to a similar score and rank in GCI 2015-16, where the number of countries was 140. Lebanon achieved a score of 4.0 in its Efficiency Enhancers sub index. However, it had a score of 3.6 in the basic requirements sub-index. As for the country’s most competitive pillars, they were health & primary education; Goods market efficiency, business sophistication and innovation. Lebanon’s score in the GCI was among the worst compared to the countries of the Arab Region. Among the worst performers in the region, along with Lebanon, was Egypt with a rank of 115. (BLOMInvest 30.09)

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5.3 Total Number of Lebanon’s Registered New Cars Barely Changed by August 2016

According to the Association of Lebanese Car Importers, the total number of newly registered commercial and passenger cars marginally fell 0.04% year- on- year (y-o-y) to 27,355 cars by August 2016. The number of registered commercial cars increased by 21.48% y-o-y to 1,793, while the number of registered passenger vehicles dropped 1.27% to reach 25,562 cars during the first eight months of the year. Japanese model cars grasped the largest market share in total passenger cars, with a share of 37.67% by August 2016, followed by Korean cars, with a market share of 35.07%, and European cars with 20.18% of the total market share. Moreover, both American and Korean cars observed an increase in their sales with respective growths of 10.62% and 0.31% y-o-y, while European and Japanese cars’ sales slid 3.17% and 3.34%, respectively. In terms of car brands, Kia maintained its top rank, with the largest share of 19.78% of newly registered passenger cars, followed by Hyundai, Toyota and Nissan with respective shares of 15.13%, 13.70%, and 10.09%. As for sales per importer, Natco acquired the largest stake of newly registered cars with 18.48% of the total, followed by Century Motor Co. with 14.40%, BUMC and RYMCO with 14.35% and 12.02%, respectively. (ALC 26.09)

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5.4 Lebanon’s Fiscal Deficit Widens to $1.94 Billion by June 2016

According to the Ministry of Finance, Lebanon’s fiscal deficit broadened by 8.52% to reach $1.94B by June 2016, versus a deficit of $1.78B in the same period in 2015. Specifically, during the first half of the year, total revenues grew 6.61% y-o-y to $5.34B, while total expenditures expanded at a faster rate of 7.11% to $7.27B. The increase in revenues can be attributed to the 2.59% y-o-y rise in total tax revenues, where customs revenues and VAT revenues improved by 1.34% and 1.77% to $674.17M and $1.05B, respectively. As for telecom revenues, they witnessed an escalation of 12.27% y-o-y to $617.50M. In terms of expenditures, most expenses were allocated for transfers to EDL and the debt service. As global oil prices significantly dropped by June 2016 when compared to the same period of 2015; the value of transfers to EDL registered an annual drop of 46.71% to $334.41M. As for the debt service, it grew by an annual 7.61% to $2.43B by June 2016, due the higher interest payments on both domestic and foreign debt. The primary surplus, which excludes Lebanon’s debt service, stood at $495.19M by June 2016, a 4.21% rise from a surplus of $475.10M by August 2015. (LMoF 25.09)

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5.5 Jordan Signs $10 Billion Leviathan Gas Deal

Leviathan partners have signed a huge agreement to provide Jordan’s National Electric Power Company (NEPCO) with 45 BCM of natural gas, worth an estimated $10 billion. Under the terms of the agreement, the marketing firm owned by the Leviathan partners, NBL Jordan Marketing, will provide NEPCO with natural gas over a 15 year period. According to the export agreement, supply is to commence once gas from Leviathan is flowing and the pipelines to convey the natural gas between Israel and Jordan are laid. This deal is for one tenth of the gas in the Leviathan field. The agreement is linked to the price of a barrel of Brent crude and includes a lower threshold and a conveyance fee. The Leviathan partners estimate that the cumulative revenue from natural gas sale to NEPCO may reach $10 billion, assuming that the Jordanian company consumes the overall volume stipulated in the contract; this sum is based on estimates made by the partners regarding the price of natural gas during the term of the agreement. Actual revenue will be affected by various factors, including the volume of gas NEPCO actually buys and Brent prices during the period of the contract.

In September 2014, NEPCO signed a letter of intent with Noble Energy to research the possibility of supplying its power stations with around 300 million cubic feet of gas from the Mediterranean field off the coast of Haifa. The Arab Potash Company and the Jordan Bromine Company have also signed deals with Noble Energy in 2014 to import 2 billion cubic meters of natural gas from Israel. (Various 26.09)

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5.6 World Bank Approves $300 Million Loan to Jordan

The World Bank approved on 27 September a concessionary loan of $300 million to support Jordan’s efforts to improve the investment climate, attract investors, reform the labor market and grant access to the Syrian labor force to contribute to economic growth. The bank said the Economic Opportunities for Jordanians and Syrian Refugees Program, approved by the bank group’s board of directors, will support trade facilitation and investment promotion, especially in existing special economic zones, and foster Jordanian and Syrian entrepreneurship activities. The World Bank Group has been working with the government and donors to support the authorities in implementing the economic opportunities aspect of the Jordan Compact agreed on at the London conference in February, which involves, in particular, attracting investments and creating jobs for Jordanians and Syrian refugees.

The $300 million loan and credit is being provided on concessional terms through the Global Concessional Financing Facility. As part of the program and in support of the Jordan Compact implementation, an increasing number of Syrians will receive work permits to be able to access formal jobs and decent labor conditions. A partnership among the government, donor countries and development actors will improve the investment climate and investment promotion to attract international and domestic investments, it added. The foreign investments will most likely come from the Syrian business diaspora; regional investors; and investors targeting the EU market, the World Bank said. (JT 28.09)

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►►Arabian Gulf

5.7 UAE Named MENA’s Most Competitive Economy and 16th globally

The UAE has been named the most competitive economy in the Middle East and North Africa (MENA) and among the top 20 best performing economies in the world, according to the World Economic Forum (WEF). The WEF’s 2016 global competitiveness index ranks the UAE 16 out of 138 countries, one place up from last year and top in MENA. Qatar ranked 18 – two places lower than last year. Israel ranked 24, followed by Saudi Arabia at 29 and Kuwait at 38, followed by Bahrain at 48, Jordan at 63 and Oman at 66. Morocco was 70 in the list, while Algeria ranked 87 and Tunisia 95.

The WEF said the UAE continues to lead the MENA region, building on improvements in competitiveness in recent years. This year small gains in areas such as technological adoption and business sophistication are partially offset by deteriorating macroeconomic stability that is the result of lower energy prices, which have led to a rise in inflation and public debt and to the emergence of a fiscal deficit. (WEF 28.09)

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5.8 Two Thirds of Emiratis Hoping to Be Debt Free By End-2016

Some 77 % of Emiratis and 72% of expats surveyed in new research by National Bonds Corporation say that they are planning to become debt free by the end of this year. The research also showed that nearly three quarters (73%) of Emiratis surveyed said they did not a have Sharia-compliant (takaful) life insurance policy in place, while 89% said they had no policy against disabilities. For expats, 83% said they had no takaful coverage, with 17% said they had no life insurance coverage at all.

In August, research from same organization showed that more than half of the UAE’s Western expats want to increase their savings in 2016, compared with 68% of Arab expats and 60% of Emiratis. About 34% surveyed claimed to have saved less than they planned. The findings indicated that both nationals and expats were becoming increasingly aware of the importance of saving for a sound future, National Bonds said. (AB 27.09)

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5.9 Saudi Economic Growth Hits Three-Year Low in Second Quarter

Saudi Arabia’s economy grew at its slowest rate in more than three years between April and June, government data showed on 30 September. Some analysts said the figures might be understating the extent of the blow from low oil prices. Growth has been weakening since early 2015 as cheap oil slashes state revenues and pushes the government into spending cuts, which are weighing on the private sector and consumer spending. GDP, adjusted for inflation, rose 1.4% from a year earlier in the second quarter of 2016, after growth of 1.5% in the first quarter. It was the slowest growth since 0.3% in the first quarter of 2013.

The oil sector expanded 1.6% from a year ago, slowing from 5.1% growth, while the non-oil sector grew 0.4%, recovering from a fall of 0.7% in the previous quarter. The private sector grew just 0.1% in the second quarter. The figures suggested the Saudi economy was faring better in the face of oil’s slump than many people feared. Nevertheless, analysts said Saudi data could be erratic – growth for the fourth quarter of 2015 was ultimately revised down to 1.8% from an original estimate of 3.6% – and said there could be a similar revision in this case.

Recently, the Saudi cabinet announced it was cutting bonuses and other financial perks for public sector workers; since such allowances account for as much as 30% of many Saudis’ income, the policy may have a significant impact on consumer spending and saddle banks with more non-performing consumer loans. (Reuters 01.10)

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5.10 Saudi Central Bank to Inject $5.3 Billion to Boost Financial Stability

Saudi Arabia’s central bank said it would deposit about 20 billion riyals ($5.3 billion) at commercial banks and introduce two new money market instruments to fight a surge in market interest rates caused by low oil prices. It will inject the funds in the form of time deposits on behalf of government entities to “support financial stability”, it said on 25 September. It will also introduce seven- and 28-day repurchase agreements to lend money to banks when needed. Previously, the central bank has typically only used repo agreements with one-day maturities.

Low global oil prices have slashed government revenue and the volume of petrodollars flowing into the Saudi banking system. Total deposits at commercial banks, which grew continuously for years, were down 3.3% in June from a year earlier. This has strained liquidity in the banking system and pushed up interbank money rates. The one-year Saudi interbank offered rate has jumped by more than 1.5%age points in the past 15 months.

That in turn threatens banks’ ability to lend to the private sector at affordable rates, a key consideration as the government tries to limit damage to the economy from cheap oil, and raises borrowing costs for the government, which is selling bonds to the banks every month to finance a big budget deficit. The central bank has been battling to slow the rise in money rates since early this year, cutting back its sales of bills to banks. This announcement appears to be an effort to make its money market management more transparent and predictable, which could ease investors’ concerns. (AB 25.09)

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►►North Africa

5.11 Egypt Sees Slight Progress in Global Competitiveness Index 2016, Ranked 115th

Egypt stepped up one spot to rank 115th among 138 nations in the Global Competitive Index (GCI) 2016/17, released on 28 September by the World Economic Forum. The Arab nation remains stable within the index, scoring 3.67 out of 7 in 2016/17 up from 3.66 in the previous year, according to the GCI report. The index that highlighted the key economic weaknesses of a country in the midst of reform, ranks nations according to 12 “pillars,” including infrastructure, institutions, education, labor market, technological readiness and business sophistication, to determine overall economic competitiveness. The 12 pillars are shaping the GCI’s three sub-indexes of the basic requirements, which saw Egypt in 117th place out of total 138 countries, efficiency enhancers (100th) and innovation and sophistication factors (111th.) The most populous Arab country was ranked 135th in terms of labor efficiency. According to the report, the country’s ranks regarding the quality of primary and higher education recorded 134th and 135th respectively, “which is below the performance of peer economies.” The overall security situation ranked 133rd, “which remains fragile and imposes significant cost for business.” (WEF 28.09)

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5.12 Egypt Petrol Subsidy Bill Down 29% in 2015 – 2016

Egypt’s spending on petroleum subsidies dropped by 28.7% in the 2015-16 financial year to compared to one year earlier, Petroleum Minister Tarek El Molla said, a greater decline than previously announced. Egypt has been trying to wean itself off costly energy subsidies that eat up a large portion of the state budget. Tarek al-Hadidi, head of state oil company EGPC, told Reuters in August that the subsidies had fallen by 23%, to EGP 55 billion ($71.36 billion) for the 2015-16 financial year, which ended in June.

In 2014 the government cut spending on energy subsidies, causing domestic prices of natural gas, diesel and other fuels to rise by as much as 78%, but has delayed further cuts amid low energy prices that have kept spending down. The state’s 2016-17 budget aims to reduce subsidy expenditure further, targeting EGP 35.04 billion. Egypt made 38 new petroleum discoveries in 2015-16, including 24 for crude oil and 14 for natural gas. (Al-Masry Al-Youm 25.09)

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5.13 Egypt’s Incoming Tourist Numbers Fall by 51.2% During 2016

CAPMAS announced on 26 September that the number of foreign tourists visiting Egypt fell during the first half of 2016 to 2.3 million, compared to 4.8 million tourists during the same period of 2015. CAPMAS added that the decline in the number of foreign tourists visiting Egypt stood at 51.2%. Russian tourism decreased by 54.9%, followed by the UK with a 14.9% drop, and Germany a 6.4% drop. The number of tourists from all over the world in 2015 stood at 9.3 million tourists, compared to 9.9 million tourists in 2014, representing a decline of 5.6%. Russian tourists recorded the highest rate in 2015, with 67.9% of the total number of tourists who visited Egypt. This was followed by Eastern Europe with 37.7%, Western Europe with 35.1%, the Middle East with 15.2%, and Africa with 4.5%. (CAPMAS 26.09)

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5.14 Russia Revises Ban on Imports of Egyptian Plant Products

Russia’s food safety watchdog has revised its ban on imports of fruit and vegetables from Egypt after the lifting of Egyptian wheat import restrictions that have hurt Russia. Rosselkhoznadzor allowed imports of Egyptian plant products except potatoes following negotiations in Moscow with its Egyptian counterparts. This decision reverses a blanket ban on all Egyptian plant products introduced just four days before.

Russia introduced the ban after Egypt, the world’s largest wheat importer, changed its import regulations to ban any ergot fungus in imported wheat, a decision that enraged sellers worldwide and threatened supplies. As a result, the Egyptian Cabinet reinstated previous rules allowing imported wheat to contain up to 0.05% of ergot, a common fungus that is harmless in such amounts, in line with global standards. (AP 27.09)

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5.15 Morocco’s Economy to Grow 0.8% in Fourth Quarter of 2016

The Moroccan economy is expected to grow 0.8% in the fourth quarter of 2016, instead of 5.1% a year earlier, due to a regression of 12.4% of the agricultural value added, according to the High Commission for Planning (HCP). Production prospects of autumnal crops, notably citrus fruits and early vegetables are expected to be less favorable, given the lack of rain and temperatures above normal that characterized their flowering stage. Farming activities are to grow at a slower pace because of raising prices of animal foodstuff, notably straw and the local barley. Concerning global demand, it is expected to rise by 2.6% year-on-year in the fourth quarter of 2016. This increase would continue to benefit some industries, such as automotive and aerospace, noted the HCP, estimating that the value added, excluding agriculture, is projected to grow by 2% in the fourth quarter of 2016 year-on-year. (MWN 04.10)

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5.16 Morocco Becomes International Hub of the Aerospace Industry

Boeing Commercial Airlines CEO Raymond Conne and Moroccan Trade and Industry Minister Moulay Hafid Elalamy signed an agreement on 29 September to create a new manufacturing hub in the city of Tangier. The hub is estimated to create 8,700 jobs and generate $1 billion annually in export revenue. In addition, 120 suppliers and sub-contractors are expected relocate to the region. The signing was attended by King Mohammad VI and seen as a major success by Morocco’s already growing aerospace industry.

This agreement with Boeing was just one of many recent deals with major corporations highlighting Morocco’s expanding international aerospace presence. Another major aerospace corporation, Bombardier Aerospace, which already has a factory in Casablanca, announced last month that it will move a larger portion of its business operations from Northern Ireland to Morocco. As a strategic location with easy access to Europe, the Middle East and the rest of Africa, Morocco has become a popular destination for corporations like Bombardier and Boeing looking to expand internationally.

Morocco is now home to over 110 aerospace related corporations that specialize in metalworking, electronics and avionics, composite manufacturing, boiler making, maintenance, repair, technical support, assembly of sub-structures and manufacturing of auxiliary parts. With the influx of these new specialized corporations is also an influx of many new specialized jobs. Unemployment in Morocco is currently at 8.6%, based on official statistics, but according to L’economiste, just within the aerospace industry alone, 23,000 new jobs will be created by 2020. By successfully utilizing the youth population for production and fostering lasting relationships with the major corporations in the country, like Boeing and Bombardier, Morocco will become a major component of the global aerospace industry. (MWN 29.09)

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5.17 Morocco Leads North Africa in Economic Competitiveness

According to the World Economic Forum’s annual report, Morocco advanced two places compared to last year. In 70th place, Morocco dominates over all the other North African countries, including Algeria (87th), Tunisia (95th) and Mauritania (173rd). The Arab world generally has seen a decrease of 3.5% in global growth compared to the first decade of the millennium, due to the delicate world economic situation and regional conflicts, according to the report. In Africa, Morocco ranks as the continent’s fifth competitive economy, after Mauritius, South Africa, Rwanda and Botswana. A number of factors stand in the way of Morocco’s economic advancement. Such obstacles include lack of access to financing, an unqualified workforce, an inefficient bureaucracy, high tax rates, and corruption. With respect to higher education, Morocco lost two places, landing in 106th position. Similarly, productivity in Morocco’s labor market also declined. On a ten-point scale, Morocco received 4.25 for its infrastructure, 4.21 on its economic institutions, and 5.08 with respect to its macroeconomic environment. (MWN 03.10)

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6: TURKISH, CYPRIOT & GREEK DEVELOPMENTS

6.1 Turkey’s Trade Deficit Falls 17% in First Eight Months of 2016 Due to Oil Slump

Turkey’s foreign trade gap declined 17.3% in the first eight months of the year to $37.5 billion compared to the same period of 2015, mainly thanks to the ongoing oil slump. The country’s trade deficit regressed to $4.69 billion in August, a 5.3% decline compared to the same month of 2015, preliminary data from the Turkish Statistics Institute (TUIK) showed on 30 September. While exports rose by 7.7% to $11.87 billion in August, imports increased 3.7% to $16.55 billion compared to the same month of 2015. The country’s exports saw a decline of around 2.4% year-on-year, standing at 93.3 billion in the first eight months of the year. Imports were announced at $130.85 billion in the January-August period, a 7.2% decline from the same period of 2015. Economy Minister Nihat Zeybekci said their main aim was to achieve sustainable growth in exports again and create products with high added value to raise competitiveness in global markets.

The share of the EU in Turkey’s exports rose to 46.5% in August from 44% in the same month of 2015. Turkey’s largest export destination in August was Germany, with goods and services worth $1.19 billion, followed by the U.K. ($0.92 billion), Iraq ($0.7 billion) and the U.S. ($0.6 billion). Turkey’s energy imports were announced at $17.4 billion in the first eight months of the year, down from around $26 billion in the same period of 2015, mainly due to continuing lower energy prices. (TUIK 30.09)

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6.2 Greece Rated As Bad for Business by World Economic Forum

Political instability, rampant bureaucracy and high tax rates are not only discouraging foreign investment to Greece, but are contributing to an ever- increasing brain drain, according to the World Economic Forum (WEF), which has ranked Greece in 86th place among 138 countries in its report, published on 28 September, on Global Competitiveness for 2016-17. According to the survey, these factors are “the most problematic for doing business.”

Greece’s dire ranking this year – a drop of five places compared to last year – was fueled further by the blow to its banking system from the imposition of capital controls in 2015, and the need for a further batch of fiscal austerity measures. The five-point slide this year reversed an improvement, albeit slight, in the country’s competitiveness recorded in reports of previous years.

In 2012-13 Greece was 96th among 144 countries. It moved up five places in the report of 2013-14 to 91st place out of 148, while in 2014-15 it climbed significantly to 81st place out of 144 countries. In 2015-16 it remained in 81st but among 140 countries. The country’s brain drain appears to be of epic proportions as it placed 124th in the category that measures the ability of countries to keep talent at home. Greece fared dismally in the banking system development category, coming in at 136th out of 138 countries, while it was second from last, 137th, when it came to access to banking finance. The report also highlighted the difficulties faced by companies in Greece to secure money through other means, such as funding through collateral (136th) or through capital holding funds (135th).

It was found wanting with regard to tax incentives to promote investment, coming in 136th place, while it also lagged in transparency of government policy, placing 121th. On a brighter note, it ranked 10th in the amount of surplus engineers and scientists. Switzerland, Singapore and the United States remain the world’s three most competitive economies, according to the report. (Various 29.09)

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7: GENERAL NEWS AND INTEREST

*ISRAEL:

7.1 Nearly 187,000 Israeli Babies Born Over Past Year

The Central Bureau of Statistics announced on 27 September that Israel experienced a population growth rate of almost 2% over the past Jewish year, consistent with previous years. Israel’s population now stands at 8.585 million, an increase of 172,000 from the same time last year. The country’s birthrate is more than four times the death rate: 189,000 babies were born during the past year compared to 46,000 people dying.

Israel’s Arab population grew by 2.2%, a slightly higher growth rate than that of the Jewish population, which experienced a 1.9% increase. Muslims grew by 2.4% and Christians by 1.5%.

The CBS found that 186,923 babies were born in Israel over the past year, while 45,033 Israelis passed away. The survey also found that 26,990 people made aliyah over the past 12 months. In addition, 82,315 Israelis married and 23,855 divorced during the same period. The survey also found that the Interior Ministry printed 732,812 new Israeli identity cards over the past 12 months.

According to the data, some 939,000 senior citizens were living in Israel at the end of 2015, representing 10.4% of the general population. The CBS said seniors are expected to make up some 14.6% of the population by 2035, more than tripling their share of the population at the state’s founding in 1948, when they represented 4% of Israelis. The bureau said that at the end of 2015, there were 3,105 Israelis who were over 100 years old, while the number of Israelis aged 85 and up stood at about 110,000. The data also showed that some 44% of senior citizens were at least 75 at the end of 2015. (CBS 27.09)

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7.2 Israeli & World Leaders Bid Farewell to Shimon Peres

Israel’s ninth president, Shimon Peres, was laid to rest on 30 September in a state service held at the Great Leaders of the Nation plot on Mount Herzl, in Jerusalem. Israeli leaders from across the political spectrum, alongside dignitaries from 70 countries worldwide, attended funeral. Peres’ flag-draped coffin was laid in state in the Knesset Plaza the day before to allow the public to bid farewell to the last of Israel’s founding fathers. Over 50,000 arrived at the Knesset throughout the day to pay tribute to the country’s most veteran statesman. The official state service was held with some 5,000 people in attendance.

President Reuven Rivlin, Prime Minister Benjamin Netanyahu, Knesset Speaker Yuli Edelstein, former U.S. President Bill Clinton, author Amos Oz, and the late president’s three children, Tsvia, Yoni and Chemi spoke at the service. U.S. President Barack Obama was the last to pay tribute to the late Israeli president. At the family’s request, singer David D’Or performed the Avinu Malkeinu prayer. Following state service, which ended at noon, a procession of some 500 people continued to the Great Leaders of the Nation plot, where Peres was buried. Peres himself choose his final resting place: between Prime Minister Yitzhak Rabin, who was assassinated in 1995, and Prime Minister Yitzhak Shamir, who passed away in 2011.

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7.3 Two Female Lawyers Appointed as Israel’s First Ethiopian Judges

In a historic first, two female lawyers were appointed as Israel’s first Ethiopian judges on 29 September, as the Judicial Nominating Committee has named Adenko Sebhat-Haimovich to the magistrates’ court, and Esther Tapeta Gardi to the traffic court. Justice Minister Shaked welcomed the new appointees, saying she also saw the appointment of two women2from the Ethiopian community as judges a fulfillment of late President Shimon Peres’ wishes. Peres was prime minister at the time of Operation Moses, which brought many Ethiopian Jews to Israel in 1984. Attorney and former MK Pnina Tamano-Shata spent years working to promote the appointment of Ethiopian-Israeli judges. She called the historic appointments “an important step for the legal system, which belongs to everyone regardless of religion, color or gender. This is an exciting moment, and I have no doubt that the two new judges are a source of pride and a contribution to Israeli society as a whole. Fentahun Assefa-Dawit, executive director of the Tebeka advocacy group for justice and equality for Ethiopian Israelis, said that “this is an important, historic step.” (Various 29.09)

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*REGIONAL:

7.4 Jordan’s King Abdullah Swears in Mulki’s New Government

Prime Minister Hani Mulki and members of his new Cabinet were sworn in on 28 September before King Abdullah. Besides Mulki, who was designated by King Abdullah to form a new government, the Cabinet consists of 29 ministers. Mulki formed his first government on 1 June 2016. The premier kept three deputy prime ministers from the previous government but the portfolio of Jawad Anani, who was deputy prime minister for economic affairs and minister of industry, trade and supply, changed to deputy prime minister for economic affairs and minister of state for investment affairs. This is the first time the government appoints a minister to be in charge of the investment sector. Mohammad Thneibat, deputy prime minister for services and minister of education, and Nasser Judeh, deputy prime minister and minister of foreign affairs, kept their portfolios.

Twenty-two ministers from the previous government remained, while six others were not included in the new Cabinet, and seven new ministers were introduced, among them are five first-timers. Three new portfolios were introduced in the new government: ministry of state for investment affairs, ministry of state for economic affairs and ministry of state for foreign affairs. (RJ 29.09)

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7.5 Jordanian Parliament’s Ordinary Session to Start on 7 November

A Royal Decree was issued on 28 September, postponing the first ordinary session of the two Chambers of Parliament to 7 November 2016, according to a Royal Court statement. Under Article 78 of the Constitution, the King summons Parliament to an ordinary session on the first day of October, but the Monarch, by Royal Decree, has the authority to postpone the start “for a period not exceeding two months”.

On 27 September, a Royal Decree was issued dissolving the Senate, while another listed the names of the 65 members of the Upper House, presided over by Faisal Fayez, who kept his title from the previous Senate. In total, the makeup of the new Senate includes 47 figures that were not in the previous Chamber, while 18, including the president, retained their seats. The line-up includes 10 women, up from eight in the previous Upper House.

The dissolution of the Senate was expected, in line with Article 63 of the Constitution which stipulates that the number of senators should be half the number of deputies in the Lower House or less. The new Elections Law, under which the September 20 parliamentary polls were conducted, reduced the number of Lower House members from 150 to 130. As for the 18th Lower House, it brought 74 first-time MPs and 56 former lawmakers to the Dome. Among the former legislators, 39 kept their seats from the 17th Parliament and 17 had held seats in previous legislatures.

Women MPs represent 15% of the 130-member House, as five female candidates won seats outside the 15 seat-quota. With 20 female MPs, the new Lower House has the highest number of women in Parliament’s history. (JT 29.09)

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7.6 Iraqi Finance Minister Zebari Sacked

Iraq’s finance minister, Hoshyar Zebari, was been voted out of office by the country’s parliament on 21 September. Lawmakers voted 158 to 77 against Zebari, after a parliamentary inquiry last month into charges of corruption and mismanagement of public funds. Zebari, a senior Kurdish official who previously served as foreign minister, denies all wrongdoing. Members of the Kurdish Democratic Party (KDP) said they would mount a legal challenge to the decision. He is the second minister in a month to lose his post. In late August defense minister Khalid al-Obaidi lost a confidence vote after he mocked lawmakers in an inquiry into corruption allegations against him. (Various 22.09)

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7.7 Dubai Ruler Orders Second Shake-Up of Municipality Senior Officials

Dubai ruler Sheikh Mohammed bin Rashid Al Maktoum has ordered a second shake-up of senior executives working for Dubai Municipality. Sheikh Mohammed, who is also Vice President and Prime Minister of the UAE, has ordered a number of management changes including the promotion of four senior staff to the position of assistant director general, five to the position of head of department, and the retirement of eight others. The move is part of the Municipality’s continuous development efforts and its aim to provide greater opportunities for the younger generation to contribute to the enhancement of various vital sectors in Dubai. Last month, Sheikh Mohammed ordered immediate management changes which include the retirement of nine members of Dubai Municipality’s executive team. (WAM 26.09)

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7.8 Egypt Approves Tougher Jail Terms for FGM

Egypt has approved a law that will increase jail terms for those who perform female circumcisions, raising the maximum sentence to seven years from two. Genital cutting of girls, often referred to as (FGM), is banned in Egypt but the practice remains common as a rite of passage and is often viewed as a way to protect their chastity. More than nine in 10 women and girls aged 15 to 49 in Egypt have undergone FGM, but the number has declined in recent years, according to data collected by the United Nations. Female genital cutting is performed on both Muslim and Christian girls in Egypt and Sudan, but is rare elsewhere in the Arab world. It is also common in Eritrea, Ethiopia and Somalia. The new law stipulates jail sentences of between five and seven years for doctors who perform the operation and one to three for parents who order it. Egypt’s parliament passed the bill on increased sentences in August, but it required presidential approval to come into law. (Reuters 29.09)

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7.9 Morocco Submits Official Request to Return to the African Union

Morocco’s Royal Advisor for Foreign Affairs met the Chairperson of the African Union Commission, On 23 September, on the sideline of the UN General Assembly, to present an official request to return to the African Union. Morocco’s request to rejoin the African Union is expected to be on the agenda during the next AU summit, which will take place in Addis-Ababa next January. The presence of the king’s advisor and not the Minister of Foreign Affairs demonstrates that the king is personally monitoring the initiative.

Last July, Morocco’s king, King Mohamed VI, formally stated Morocco’s intention to return to the African Union in a message to the AU summit in Rwanda, and urged the UN to reconsider the membership of the self-proclaimed SADR. One day after the Moroccan monarch’s announcement, 28 member states welcomed the decision in a motion. A number of African presidents have expressed their support for the initiative. (MWN 23.09)

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8: ISRAEL LIFE SCIENCE NEWS

8.1 Israeli Researchers Make Breakthrough Discovery in Fight Against Breast Cancer

While researchers across the world are frantically working on progress in treating and curing breast cancer, one Israeli study has found that combining genetic therapy with chemotherapy delivered to the tumor is particularly effective in preventing the spread of breast cancer. In their study, TAU researchers delivered microRNAs (small RNA molecules) to primary tumors in mice to halt the spread of cancer. Their mission was to block a cancer cell’s ability to change shape and move. Cancer cells alter their structure in order to squeeze past other cells, enter blood vessels and ride along to their next stop: the lungs, the brain or other vital organs. The researchers explored the span of mutations in a tumor in order to identify precisely which ones to target. The scientists then procured an RNA-based drug to control cell movement and created a safe nano-vehicle with which to deliver the microRNA to the tumor site.

Looking at mutations that “other researchers have ignored” – those at the tail end of a gene (as opposed to those situated within the coding region of the gene) – the team noticed that mutations there were involved in metastasis. Two weeks after initiating cancer in the breasts of their mouse “patients,” the researchers injected into primary tumor sites a hydrogel that contained naturally occurring RNAs to target the movement of cancer cells from primary to secondary sites. Two days after this treatment, the primary breast tumors were excised. The mice were evaluated three weeks later using CT imaging, fluorescent labeling, biopsies and pathology. The researchers discovered that the mice that had been treated with two different microRNAs had very few or no metastatic sites, whereas the control group — injected with randomly scrambled RNAs — exhibited a fatal proliferation of metastatic sites. (No Camels 25.09)

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8.2 Agrinnovation – Yissum’s Agritech Investment Fund, Invests in Cannabi-Tech

Yissum Research Development Company of the Hebrew University of Jerusalem, the technology-transfer company of the Hebrew University, announced that Agrinnovation, an investment fund focused on agricultural inventions, has entered into an agreement for an investment in Cannabi-Tech, a medical cannabis company established in 2015 and based on research preformed at the Hebrew University’s Robert H. Smith Faculty of Agriculture, Food and Environment.

Cannabi-Tech is developing the world’s first accurate, affordable and easy-to-use device, for the non-destructive detection, analysis and automated sorting of individual medical cannabis flowers. The Company’s proprietary technology combines Near Infra-Red (NIR) spectrometry and imaging tools to provide a sensitive method to detect and quantify the active compounds of the cannabis plant and a unique spectral fingerprint for each flower. The addition of a sorter will enable automated sorting of cannabis flowers by pre-set criteria suitable for mass production. An optional attachable label generator and automated packaging unit will pack flowers individually ensuring full composition and potency traceability and tracking for each and every flower from farmer to patient.

Founded in 2015, Agrinnovation is an investment fund focused on agricultural inventions originating from The Hebrew University’s Robert H. Smith Faculty of Agriculture, Food and Environment. Its portfolio currently includes four technologies: protective coating for extension of shelf-life of fruits and vegetables; injectable controlled release platform for single-dose veterinary therapy; a new approach for electronic pest and insect control; and non-destructive detection, analysis and sorting of medical cannabis flowers. Yissum Research Development Company of the Hebrew University of Jerusalem was founded in 1964 to protect and commercialize the Hebrew University’s intellectual property. Products based on Hebrew University technologies that have been commercialized by Yissum currently generate $2 Billion in annual sales. (Yissum 22.09)

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8.3 Teva Announces Positive Data from Second Phase III Study of SD-809 in Tardive Dyskinesia (TD)

Teva Pharmaceutical Industries announced SD-809 (deutetrabenazine) showed statistically significant results in the second Phase III registration trial studying the potential of SD-809 for the treatment of tardive dyskinesia (TD). These new results for the AIM-TD trial follow positive results from the ARM-TD trial announced in June 2015. Both ARM-TD and AIM-TD were 12 week treatment studies. The U.S. FDA granted Breakthrough Therapy Designation for SD-809 for the treatment of TD in November 2015. Teva expects to make a regulatory submission to the FDA by the end of 2016. During the 12-week treatment, SD-809 demonstrated a favorable safety and tolerability profile. The frequency of overall adverse events and adverse events leading to withdrawal were similar among all treatment groups. The safety profile of SD-809 was consistent with data from previously reported clinical trials.

Tardive dyskinesia is a hyperkinetic movement disorder characterized by repetitive and uncontrollable movements of the tongue, lips, face, trunk and extremities. The often debilitating disorder affects about 500,000 people in the United States and is a result of treatment with medications used to treat psychiatric conditions such as schizophrenia and bipolar disease. There are currently no approved medications for this condition in the United States.

Teva Pharmaceutical Industries is a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions used by millions of patients every day. Headquartered in Israel, Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,800 molecules to produce a wide range of generic products in nearly every therapeutic area. In specialty medicines, Teva has a world-leading position in innovative treatments for disorders of the central nervous system, including pain, as well as a strong portfolio of respiratory products. (Teva 22.09)

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8.4 AV Medical’s Chameleon PTA Balloon Catheter Featured in Radiation Protection Pavilion at CIRSE

The Chameleon angioplasty balloon catheter from AV Medical Technologies was featured in a presentation at the recent Cardiovascular and Interventional Radiology Society of Europe (CIRSE) annual conference held in Barcelona, Spain. The Chameleon was among a select group of products featured in the Radiation Protection Pavilion to increase awareness of radiation protection and dose management. With its Supervision design, Chameleon is the only angioplasty balloon catheter that allows for simultaneous balloon inflation and injection of fluids in one device. Chameleon allows physicians to visualize by injecting contrast through the catheter, whether the balloon is inflated or deflated, all while maintaining wire position.

AV Medical Technologies, a privately held medical device company headquartered in Israel, is dedicated to the development of advanced and efficient solutions in catheter-based interventions. The company is now focusing on its flagship catheter, the Chameleon, targeted for dialysis patients undergoing routine angioplasty procedures. (AV Medical Technologies 21.09)

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8.5 BioLineRx Signs In-licensing Agreement for Novel Treatment for Liver Failure Conditions Under Multi-University Strategic Collaboration

BioLineRx signed an exclusive, worldwide agreement with BGN Technologies, the Technology Transfer Company of Ben-Gurion University, and Hadasit, the Technology Transfer Company of Hadassah Medical Organization, for the in-licensing of a novel treatment for various liver failure conditions such as end-stage liver disease (ESLD) and for conditions potentially leading to liver failure such as non-alcoholic steatohepatitis (NASH). This novel treatment, to be named BL-1220, is the second project in-licensed under the framework of the Company’s strategic collaboration with Novartis Pharma AG for the screening and development of novel drug candidates. BL-1220 is an orally administered, novel composition of sodium alginate. Pre-clinical results obtained in animal models of liver impairment suggest that BL-1220 has strong hepato-protective effects. Collectively, the data demonstrate that BL-1220 is able to restore liver function. This technology could be directed toward rapid regeneration of normal liver in both acute and chronic conditions of liver injury.

In December 2014, BioLineRx and Novartis Pharma AG entered into a multi-year strategic collaboration to facilitate development and commercialization of Israeli-sourced drug candidates. Leveraging BioLineRx’s close and long-lasting ties with academic institutions, hospitals and biomedical companies in Israel, as well as its proven project screening process and development expertise, Novartis will evaluate projects identified and presented by BioLineRx for co-development and potential future licensing under the collaboration. The companies intend to co-develop a number of pre-clinical and early clinical therapeutic projects through clinical proof-of-concept. As part of the agreement, Novartis made an equity investment in BioLineRx of $10 million.

Modi’in’s BioLineRx is a clinical-stage biopharmaceutical company dedicated to identifying, in-licensing and developing promising therapeutic candidates. The Company in-licenses novel compounds, primarily from academic institutions and biotech companies based in Israel, develops them through pre-clinical and/or clinical stages, and then partners with pharmaceutical companies for advanced clinical development and/or commercialization. (BioLineRx 23.09)

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8.6 Regentis Receives IDE Approval for Pivotal GelrinC Clinical Trial

Regentis Biomaterials received U.S. FDA Investigational Device Exemption (IDE) approval to initiate a pivotal Phase III clinical study of GelrinC, a novel treatment for focal cartilage defects in the knee. This clinical study will be used to support a Premarket Approval Application (PMA) which will allow Regentis to market GelrinC in the U.S. The GelrinC procedure is easy and quick for surgeons to perform and can be carried out using a minimally invasive approach. It is administered as a liquid allowing it to fill any size and shape of defect, making it suitable for all lesion types. After a short exposure to ultra-violet light, GelrinC is converted into a solid implant completely filling in the lesion. The implant naturally degrades within 6-12 months and is gradually replaced with functional and durable cartilage. This FDA trial will evaluate the safety and efficacy of GelrinC compared to the raw level data of a historical microfracture control arm. The study design overcomes the limitation of randomized control studies in this field, which is expected to result in faster patient enrollment and significantly reducing the time for product approval.

With offices in Or Akiva, Israel and Princeton, NJ, Regentis Biomaterials is a privately held company focused on developing and commercializing proprietary hydrogels for tissue regeneration. The company’s core technology is a biodegradable hydrogel called Gelrin. It is based on polyethylene glycol diacrylate and denatured fibrinogen originally developed at the Technion – Israel Institute of Technology by Dr. Dror Seliktar. The Gelrin hydrogel platform combines the stability and versatility of a synthetic material with the bio-functionality of a natural substance for a range of clinical applications. (Regentis Biomaterials 26.09)

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8.7 Israeli Researchers Make Breakthrough in Autism Research

Researchers at Ben-Gurion University in the Negev have made a significant breakthrough in a unique study to better understand autism, discovering a particular evolutionary signature in autism genes. The breakthrough brings doctors one step closer to understanding the genetic mechanism for the disorder, and being able to diagnose it prior to birth. Dr. Idan Menashe and his colleagues, Erez Tsur and Prof. Michael Friger, studied over 650 genetic variations out of the 1,000 genes linked to autism, and found characteristics that differentiate them from other genes in the human genome. The unique characteristics of genes associated with autism spectrum disorder, among others, are unusual genomic length, longer than other genes manifested in the brain; and a genetic similarity to diseases such as Alzheimer’s disease and schizophrenia. Additionally, researchers found that ASD-related genes carry a signature typical of the genetic process known as negative evolutionary selection. This process is responsible for purging deleterious impacts on the genome, through a gradual process that spans generations.

Menashe and his colleagues also searched for signs of positive selection in these genes. This mechanism, according to Menashe, is responsible for increasing a mutation’s frequency in a certain genome until it is fixed, and can explain the existence of autism in humans. However, no signs of positive selection were detected in these genes. Regardless, the researchers suggest that the mutations linked to autism are a constant component of the human genome, because they lead to the appearance of the disorder only when combined with other genetic or environmental factors. Finally, the researchers showed that the evolutionary signature associated with autism genes can be used to discover other genes with similar genomic characteristics, which could possibly also be linked to autism. (No Camels 27.09)

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8.8 Kitov Reports Successful Results for KIT-302 Pharmacokinetic Bioequivalence Study

Kitov Pharmaceuticals Holdings announced that its lead drug candidate KIT-302 has successfully completed an additional pharmacokinetic (PK) bioequivalence (BE) study and once more successfully met the U.S. Food and Drug Administration’s (FDA) standards for establishing bioequivalence to the reference drugs. The current study evaluated a lower dosage (2.5 mg) of amlodipine than in Kitov’s previous PKbioequivalence study for the KIT-302 product containing 10 mg of amlodipine, the results of which were announced by Kitov on May 10, 2016.

The study compared the PK of Kitov’s combination drug KIT-302 in a fixed dose combination consisting of 200 mg of celecoxib, indicated for osteoarthritis pain, and 2.5 mg of amlodipine, indicated for high blood pressure, to off-the-shelf branded 200 mg celecoxib capsules and 2.5 mg amlodipine tablets. These evaluations were conducted under both fed and fasted conditions. The results demonstrated that for both the Cmax (the maximum blood level achieved) and Area Under the Curve (the area under the concentration time curve for drug levels), the 90% confidence intervals for both the amlodipine and celecoxib components of KIT-302 were documented to be between 80% and 125% of the values obtained with the off-the-shelf drugs. With these study results, Kitov has again met the FDA standard for demonstrating BE under both fed and fasted conditions.

Tel Aviv’s Kitov Pharmaceuticals is an innovative biopharmaceutical company focused on late-stage drug development. Leveraging deep regulatory and clinical-trial expertise, Kitov’s veteran team of healthcare professionals maintains a proven track record in streamlined end-to-end drug development and approval. Kitov’s pipeline currently features two combination drugs intended to treat osteoarthritis pain and hypertension simultaneously, including one that achieved the primary efficacy endpoint for its Phase III clinical trial. By lowering development risk and cost through fast-track regulatory approval of novel late-stage therapeutics, Kitov plans to deliver rapid ROI and long-term potential to investors, while making a meaningful impact on people’s lives. (Kitov 27.09)

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8.9 Quanterix & ImmunArray Teaming Up to Address Neurodegenerative Disease

Lexington, Massachusetts’ Quanterix Corporation, a company digitizing biomarker analysis to accurately measure change for precision health, today announced it is making a strategic investment in ImmunArray, a molecular diagnostics company advancing the development of novel, multi-marker tests for complex diseases with compelling levels of accuracy. As part of the deal, ImmunArray gains access to Quanterix Simoa technology. Both companies are pioneering new approaches to medical diagnoses in complementary areas of neurological disease, focusing on the identification and analysis of molecular biomarkers in the blood.

With this agreement, Quanterix and ImmunArray will work together to continue advancing research and technology in order to provide an accurate method for detecting mild to moderate traumatic brain injury in the future. Also, Quanterix will add select ImmunArray markers to its multiplexing panel for the neurology research market. These additions provide researchers with the ability to measure multiple proteins simultaneously at the single molecule level using Quanterix’ Simoa technology. ImmunArray and Quanterix are both privately held, funded largely through venture capital investments and have been grant recipients of the GE-NFL Head Health Challenge to continue their work in improving diagnosis and treatment for mild to moderate traumatic brain injury.

Co-located in Rehovot, Israel and Richmond, Va., ImmunArray is a privately funded molecular diagnostics company dedicated to the development of novel blood-based tests that support the diagnosis and management of complex acute and chronic immune and neurodegenerative diseases. The company designs and analyzes sets of biomarkers known to be linked to a particular condition and develops tests on platforms that are most appropriate to facilitate the adoption of additional tests. The company, which has introduced its first commercial tests based on its iCHIP platform, is currently conducting research in collaboration with leading clinicians and medical centers in the U.S. and Israel. (Quanterix 29.09)

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8.10 Foamix Pharmaceuticals Announces Pricing of its $57 Million Follow-on Offering of Ordinary Shares

Foamix Pharmaceuticals announced the pricing of an underwritten public offering of 6,000,000 ordinary shares at a price to the public of $9.50 per share. Of the ordinary shares, 5,700,000 shares will be sold by Foamix and 300,000 shares will be sold by certain selling shareholders. In addition, Foamix has granted the underwriters a 30-day option to purchase up to 900,000 additional ordinary shares. The offering is expected to close on Friday, September 30, 2016, subject to customary closing conditions. Barclays Capital Inc., Credit Suisse Securities (USA) LLC and Cowen and Company, LLC are acting as joint book-running managers for the offering. Guggenheim Securities, LLC is acting as lead manager.

Rehovot’s Foamix is a specialty pharmaceutical company focused on the development and commercialization of proprietary, innovative and differentiated topical drugs for dermatological conditions. Their clinical stage product candidates include FMX101, a novel minocycline foam for the treatment of moderate-to-severe acne, FMX103 for the treatment of moderate-to-severe rosacea, FMX102 for the treatment of impetigo, and FDX104, a doxycycline foam for the management of acne-like rash induced by EGFRI anticancer drugs. (Foamix 28.09)

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8.11 CephX Launches AlgoCeph – Automated Cephalometric Analysis Technology

CephX is launching AlgoCeph at the ADA in Denver. The solution is a fully automated first-of-its kind innovation to generate immediate and highly accurate landmark tracing and enable over 50 different Cephalometric analyses in a matter of seconds. AlgoCeph saves valuable time for practitioners, reduces human error and contributes to better efficiency and improved patient handling right from the first appointment. Rather than spending valuable time on training, supporting and monitoring the work of others, practitioners can rely on sophisticated software drawing on one of the largest cephalometric databases in the world and focus on the value-generating throughput of patients.

Tel Aviv’s CephX.com is a SaaS platform for dental and orthodontic practitioners, providing them with solutions for Cephalometric X-Ray analyses, image archiving and patient record management. By using CephX, dentists, orthodontists, oral & maxillofacial surgeons and other dental practitioners save money on software they would otherwise have to purchase, install and maintain. CephX also allows practitioners to manage their patients’ records in a cloud where they are fully secured and backed-up. The platform is compatible will any operating system and devices. Users are also able to access records from anywhere, even when using a mobile device. (CephX 28.09)

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8.12 Neurim Announces First Patients’ Enrollments in ReCOGNITION for Mild Alzheimer’s Disease

Neurim Pharmaceuticals announced that the first patients have been enrolled in the ReCOGNITION study of its novel drug, piromelatine, for Alzheimer’s disease (AD). ReCOGNITION is a Phase 2, randomized, placebo controlled, dose ranging study of Piromelatine (5, 20, and 50 mg daily) versus placebo to determine an effective dose based on efficacy (cognitive performance), safety and tolerability in patients with mild dementia due to Alzheimer’s disease (AD). The 26-week trial will compare once-daily oral doses of Piromelatine to placebo in approximately 500 patients diagnosed with mild AD and treated with stable doses of acetylcholinesterase inhibitors. ReCOGNITION was designed following pre-clinical studies with Piromelatine demonstrating neuroprotection and neurogenesis potential. Additionally, in a previous phase II study Piromelatine demonstrated improvements in sleep maintenance and specifically, enhanced deep, slow-wave, sleep (SWS).

Tel Aviv’s Neurim Pharmaceuticals, founded in 1991, is a drug discovery and development company. The company focuses on developing innovative medicines that help patients prevail over debilitating diseases and improve quality of life. Its first approved drug Circadin is commercially available in more than 45 countries around the world. Neurim has a strong and innovative product pipeline under clinical development, intended to treat Alzheimer’s disease, dementia, glaucoma and pain. (Neurim 28.09)

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8.13 Granalix Novel Additive Based on Pomegranate Oil From Neurodegenerative Diseases

Granalix BioTechnologies announced the commercial launch of GranaGard a food supplement based on pomegranate oil that was shown to prevent neurodegeneration diseases in mouse models. GranaGard, is a submicron Pomegranate Seed Oil (PSO) emulsion, and is an innovative formulation of one of the strongest natural antioxidants, Punicic acid (an Omega 5 lipid), which constitutes 80% of PSO. The novel patented formulation was shown to delay disease onset and prevent neuronal death in a model of genetic prion disease (a form of Mad Cow Disease)[i] and to reduce disease burden in a mouse model of Multiple Sclerosis[ii], while showing no toxicity after long term administration. In both diseases, GranaGard administration results in reduction of brain lipid oxidation, which is caused by increased levels of reactive oxygen species (ROS).

PSO submicron droplets have several advantages. First, the nano formulation may avoid the first passage of the oil through the liver, thereby enhancing the availability of the droplets to other organs such as the CNS. GranaGard is then able to enter the brain and protect membrane lipids from ROS attacks that occur as a result of both every-day efforts and pathological events. In vivo, Punicic Acid is metabolized into Conjugated Linoleic Acid (CLA), a compound known for its neuroprotective and other beneficial effects. When mice are given the GranaGard formulation, CLA was found to accumulate in the brain and can directly exert its neuroprotective effect.

Jerusalem’s Granalix BioTechnologies focuses on developing science-based novel formulations of natural antioxidants that can be used for the prevention and treatment of neurodegenerative conditions. The company was established in 2014 as a spinoff of Yissum Research Development Company of the Hebrew University of Jerusalem, the technology-transfer company of the Hebrew University, and Hadasit, the Technology Transfer Company of Hadassah Medical Organization. (Granalix BioTechnologies 28.09)

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8.14 Teva Completes Acquisition of Anda

Teva Pharmaceutical Industries has completed its acquisition of Anda, Inc., a leading distributor of generic pharmaceuticals in the U.S., from Allergan plc. Teva currently has over 300 product registrations pending FDA approval and holds the leading position in first-to-file opportunities, with over 100 pending first-to-files in the U.S. Currently, one-of-every six generic prescriptions dispensed in the U.S. is filled with a Teva product. Teva Pharmaceutical Industries is a leading global pharmaceutical company that delivers high-quality, patient-centric healthcare solutions used by millions of patients every day. Headquartered in Israel, Teva is the world’s largest generic medicines producer, leveraging its portfolio of more than 1,800 molecules to produce a wide range of generic products in nearly every therapeutic area. In specialty medicines, Teva has a world-leading position in innovative treatments for disorders of the central nervous system, including pain, as well as a strong portfolio of respiratory products. (Teva 03.10)

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8.15 China’s Neusoft & Infinity Set Up $250 Million Israel Med-Tech Fund

Chinese IT corporation Neusoft and Israeli-Chinese private equity fund Infinity Group have set up a $250 million investment fund and platform for Israeli med-tech companies operating in China. The establishment of the new fund was announced at Innonation – the Second China-Israel Investment Summit, in Tel Aviv. The aim of the fund is to create a model by which Israeli medical technology companies can connect to China by integrating into the cloud being developed by Neusoft. The cloud and Neusoft’s connections will offer Israeli companies access to and approval from the SPDA (the Chinese equivalent of the US Food and Drug Administration FDA) as well as end-user customers. This is the first such cooperation between Infinity Fund and Neusoft at a huge investment of $250 million over three years. (Globes 25.09)

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9: ISRAEL PRODUCT & TECHNOLOGY NEWS

9.1 Mattel Teams with Israeli Startup to Give Barbie Digital Life

American toy giant Mattel has recently partnered with StartApp, an Israeli developer of advertising platforms for mobile application and websites, to create a digital presence for Barbie and other toys, including Thomas the Tank Engine and Fireman Sam. Mattel has reportedly asked StartApp to catapult Barbie into the digital age, with applications, avatars, emojis, memes, gifs and other online instruments. StartApp has already launched two applications for Barbie and Hot Wheels miniature cars for iPhones and iPads.

StartApp was founded in 2010 with the goal of consistently developing and providing the most innovative and effective mobile solutions for its partners. The company “currently partners with over 220,000 applications with a user base of over 477 million monthly active users worldwide.” Now headquartered in New York City, StartApp maintains offices in Tel Aviv, San Francisco, Shanghai, Beijing, Moscow, and Sao Paolo. Its Israeli research and development center employs 150 people. (IH 23.09)

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9.2 Playtrex Looks to Shake Up Social Poker Market with “Wild Poker”

Tel Aviv-based social gaming start-up Playtrex is looking to breathe new life into the social poker market with “Wild Poker”, a highly compelling new freemium poker game with an exclusive strategic twist, released on 25 August 2016 as an open-beta. Wild Poker is Texas Hold’em but with an added layer of strategy that draws, in a very simple way, from the popularity of turn-based digital strategy games like Hearthstone. Users can play as one of an array of colorful characters, each with its own particular strategic “power up”. Players must harness their special “animal instincts” to master the game. Wild Poker was created after over 12 months of thorough research undertaken to better understand users’ needs and behavior. After studying the current social poker sector, Playtrex found issues with monetization and low levels of retention and has built a game that tackle these issues. With a focus on high engagement and a compelling player journey, Playtrex aims to shake up the market with an offering that will create high retention and monetization. (Playtrex 20.09)

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9.3 Versa Networks Certifies Silicom’s Virtual CPE Appliances For Its NFV-Based Solutions

Silicom announced that its Virtual Network Edge/CPE appliances have been certified by Versa Networks as a branch hardware platform offering for managed software-defined WAN (SD-WAN) projects which Versa is now pursuing with several large service providers. The certification is for appliances that run Versa SD-WAN and SD-Security software in enterprise branch offices, and operated by Versa’s service provider customers as part of a managed network and security service for their end customers. The combination of Versa software and Silicom’s hardware design provides a unique price performance balance which is desired by many telcos and service providers. Versa has already introduced Silicom to several potential telcos and service providers and Silicom is now a part of Versa’s offering to such important customers.

Kfar Sava’s Silicom is an industry-leading provider of high-performance networking and data infrastructure solutions. Designed primarily to increase data center efficiency, Silicom’s solutions dramatically improve the performance and availability of networking appliances and other server-based systems. (Silicom 20.09)

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9.4 RADWIN JET Beamforming Wireless Broadband Improves Efficiency for Tier-1 Mining Companies

RADWIN announced that RADWIN JET Beamforming Wireless PtMP solutions were deployed by leading mining companies in Australia and Chile to deliver ultra-capacity connectivity in open-pit mines. JET Beamforming delivers up to 750Mbps per base station and up to 3Gbps per cell needed to run multiple applications in open-pit mines including backhaul for LTE and Wi-Fi communication trailers, industrial IoT devices, stackers, reclaimers, dewatering systems and sensors as well as high-definition video surveillance. JET Beamforming’s multi-band support feature (3.3-3.8GHz and 4.9GHz-5.8GHz) assures optimal deployment flexibility; the solution provides outstanding uplink capacity (up to 90%) and SLA for mission critical applications. Tel Aviv’s RADWIN is a leading provider of carrier-grade broadband wireless solutions. Deployed in over 150 countries, RADWIN’s solutions power applications including backhaul, broadband access, private network connectivity, video surveillance transmission as well as delivering broadband for trains and metros. (RADWIN 23.09)

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9.5 Variscite’s System-on-Module Based on NXP Dual Core i.MX 7 With a Real-time Coprocessor

Variscite extends its highly successfully i.MX-based System-on-Module portfolio with the introduction of the VAR-SOM-MX7, based on the NXP i.MX 7 application processor family. This highly flexible SoM carries a dual 1GHz ARM Cortex-A7 core, alongside real-time 200MHz Cortex-M4 coprocessor. The SoM’s optimized multicore architecture allows Variscite’s customers to easily design embedded products that require real-time processing, as well as high-level applications on a standard Linux operating system. The VAR-SOM-MX7 provides a variety of high-speed interfaces and connectivity options. This includes dual GbE and certified Wi-Fi/BT – all integrated within an optimized power, size and cost package. In addition, Variscite offers longevity of at least 10-years for the VAR-SOM-MX7, delivering an ideal solution for embedded applications requiring long-term availability for the end product. The VAR-SOM-MX7 highly integrated connectivity includes a certified Wi-Fi 802.11 b/g/n, Bluetooth 4.1 / BLE, dual GbE with integrated PHY, dual USB, audio, display with touch panel, camera, PCIe, 32-bit parallel bus and multiple serial interfaces.

Lod’s Variscite is a leading System on Modules (SoM) and Single-Board-Computer (SBC) design and manufacture company. A trusted provider of development and production services for a variety of embedded platforms, Variscite transforms clients’ visions into successful products. (Variscite 26.09)

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9.6 AudioCodes and AVST Collaborate on Unified Communications Productivity

AudioCodes is collaborating with California’s AVST, a leading unified communications (UC) company. The joint effort improves productivity and reduces complexity for organizations looking to maximize the potential of their unified communications environment. AudioCodes’ CloudBond 365 and SmartTAP recording solution have been tested alongside AVST’s CX-E suite for compatibility with Skype for Business. Combined, the result is a powerful, enterprise-class solution for Skype for Business.

When combined, the two companies’ respective offerings provide a fully tested solution for Skype for Business that includes call control, UC productivity and call recording. AVST’s robust CX-E suite includes such features as standalone voice messaging, sophisticated automated attendant, IVR, mobile client and informal call center solutions. CX-E is enhanced by integrating AudioCodes’ CloudBond 365, which provides flexible Skype for Business deployment models including on-premises and hybrid cloud. AudioCodes’ SmartTAP recording solution is also integrated into the platform to provide compliant, qualified Skype for Business voice and IM recording, as well as an embedded Skype for Business toolbar and record/save on-demand function, which extends recording throughout the enterprise.

Lod’s AudioCodes designs, develops and sells advanced Voice-over-IP (VoIP) and converged VoIP and Data networking products and applications to Service Providers and Enterprises. AudioCodes is a VoIP technology market leader, focused on converged VoIP and data communications, and its products are deployed globally in Broadband, Mobile, Enterprise networks and Cable. The Company provides a range of innovative, cost-effective products including Media Gateways, Multi-Service Business Routers, Session Border Controllers (SBC), Residential Gateways, IP Phones, Media Servers, Value Added Applications and Professional Services. (AudioCodes 26.09)

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9.7 IntSights & Check Point Deliver Threat Intelligence Capabilities for Thwarting Cyber Attacks

IntSights announced a partnership with Tel Aviv’s Check Point Software Technologies. As part of this partnership, Check Point will integrate IntSights’s cyber threat intelligence platform with its security suite. The combined offering will help customers leverage real-time threat intelligence to detect and remediate cyber threats. Organizations consume endless amounts of information, but due to lack of context and automation they fail to create a cohesive view and act upon it. Often a crucial piece of intelligence is left unutilized due to an analyst’s error or is simply lost in the siloed data stream.

IntSights provides extensive intelligence coverage that is easy to understand and act upon by a single analyst. This joint product offering will provide advanced warning and customized insight for customers, as well as continue to improve on and increase automated security and threat remediation. This cooperation between IntSights and Check Point also extends the companies’ existing research collaboration. Through intelligence cooperation, IntSights will complement Check Point’s current research capabilities, collecting information from the many difficult-to-penetrate, closed communities and forums on the dark web.

Herzliya’s IntSights intelligence solution automatically detects cyber threats in real time, in open, deep and darknet platforms, aggregates the information and presents it to the customer in one consolidated view. IntSights’s data mining algorithm and machine learning capabilities are utilized to analyze, categorize and prioritize this information, and then react by enabling one-click remediation of the identified threat. This actionable information is automatically transferred to the relevant security product (i.e. Firewall) in order to make the necessary adjustments and block any new, impending threats.

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9.8 Argus Cyber Security Named One of LA Auto Show & AutoMobility LA’s 2016 Top Ten Startups

Argus Cyber Security, the world’s largest, independent automotive cyber security company, announced today that it was named one of LA Auto Show and AutoMobility LA’s Top Ten Automotive Startups. Top Ten winners were selected based on a combination of the following criteria: vision, innovation, broad applicability, likelihood of adoption/success, execution and management, determination, existing customers, partners and endorsers, revenue potential, business model and demonstrable product. Argus offers comprehensive solution suites and services built by a team of experts with decades of experience in both cyber security and the automotive industry. Committed to helping its customers stay ahead of threats, Argus provides truly innovative solutions based on 20 pending automotive patents and the largest dedicated automotive cyber security research team in the industry. Argus’ award winning research team stays ahead of the pack with current and future cyber threats to ensure the company remains on the cutting edge.

The Top Ten Automotive Startup Competition will feature companies that are redefining mobility, converging business sectors, and driving change in transportation. With so many startups coming onto the scene each year, it’s important to highlight the most unique ones that are poised for success. AutoMobility LA will take place from 14-17 November and the LA Auto Show is open from 18-27 November at the Los Angeles Convention Center.

Founded in 2013, Tel Aviv’s Argus Cyber Security is the world’s largest, independent automotive cyber security company. Argus’ comprehensive and proven solution suites protect connected cars and commercial vehicles against cyber-attacks. With decades of experience in both cyber security and the automotive industry, Argus offers innovative security methods and proven computer networking know-how with a deep understanding of automotive best practices. (Argus Cyber Security 22.09)

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9.9 Mellanox Advanced Network Capabilities with New Innova IPsec 10/40G Ethernet Adapters

Mellanox Technologies announced the availability of its new Innova IPsec Ethernet adapter. The Innova IPsec network adapters offload and accelerate security protocols and advanced network functions, enabling the ubiquitous use of encryption across the data center with low CPU utilization and without compromising application performance. The Innova adapters deliver seamless encryption for every server port by combining the network adapter function together with the crypto protocol offload in a single small PCIe adapter form-factor. Innova integrates the Mellanox ConnectX advanced network controller together with flexible FPGA-based IPsec protocol processing to enable an end-to-end data protection and acceleration solution. The adapters support multiple encryption and security protocols and perform the encryption/decryption operations independently from the server’s CPU, thus increasing both performance and security.

By terminating the network security protocols in-line before traffic is processed by the ConnectX-4 Lx intelligent network controller, Innova unleashes all of the adapters’ offload capabilities, since many offload functions must operate on the plaintext innermost content. This approach results in lower latency and additional savings of CPU resources compared to other IPsec protocol implementations, whether through software or alternative accelerators.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end Ethernet and InfiniBand intelligent interconnect solutions and services for servers, storage, and hyper-converged infrastructure. Mellanox intelligent interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance. (Mellanox 28.09)

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9.10 RADWIN & MaximaTelecom Demonstrate 500 Mbps Throughput Onboard Moscow Metro Trains

RADWIN and MaximaTelecom, operator of the largest worldwide Wi-Fi network onboard Moscow Metro, announced results of RADWIN’s recently-launched Next Generation Train-to-Ground solution. RADWIN’s new platform delivered 500 Mbps actual Ethernet throughput onboard Moscow Metro Line 11 (Kakhovskaya), setting a new benchmark in the industry. The Wi-Fi network deployed by MaximaTelecom and RADWIN in the Moscow Metro system has been operational for almost 3 years, providing internet access to up to 2.5 million commuters daily, who generate traffic of up to 70 TeraBytes each day. The Wi-Fi network spans over 650 trains along 660 km of tracks and tunnels. The constant growth in network traffic and the need to support multiple services and additional applications – such as HD streaming for passengers and CCTV onboard trains – necessitated a network upgrade. Using RADWIN’s Next Generation Train-to-Ground solution, MaximaTelecom was able to demonstrate up to 500 Mbps of net Ethernet throughput per train that will support a wide range of existing and future applications.

Tel Aviv’s RADWIN is the leading provider of the FiberinMotion train-to-ground solution designed for rail and metro operators which delivers wireless broadband in-motion. RADWIN’s FiberinMotion train-to-ground solution provides 500 Mbps throughput and superior performance in non-line-of-sight and tunnel topologies, and powers a range of applications including high-speed WiFi, real-time CCTV, PIS and CBTC. (RADWIN 28.09)

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9.11 Jungo Redefines Driver Monitoring With CoDriver 1.0

Jungo Connectivity, a divestiture of Cisco Systems, announced its new Driver Monitoring System (DMS), CoDriver, poised to be the leading, next generation, personalized DMS in the rapidly growing Advanced Driver Assistance Systems (ADAS) space. Through the valuable information that CoDriver generates about the driver, car makers can now create safer cars and reduce accidents. Using CoDriver, cars can now know whether or not the driver is alert and paying attention to the road, and can tell if the driver is ready to take control of a vehicle in a semi-autonomous scenario. In a fully-autonomous experience, the car can get valuable information about the passengers and their overall condition while in the vehicle. The CoDriver Software Development Kit (SDK) is now available to customers and partners, providing complete APIs and SDK to enable rapid development of next generation Driver Monitoring Systems.

Netanya’s Jungo Connectivity was founded in 2013 as an automotive software divestiture from Cisco Systems. Jungo’s CoDriver – in-cabin driver monitoring solution – enables automakers to create safer cars today, and transition into autonomous vehicles of tomorrow. Additional products from Jungo include WinDriver, award winning PC driver development toolkit, MediaCore, automotive multimedia middleware and DriverCore, PC USB communication drivers. (Jungo Connectivity 28.09)

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9.12 Autotalks Was Selected by DENSO for a Mass Market V2X System

Autotalks’ next generation V2X device was selected by DENSO, a top global auto parts supplier and a V2X ECU pioneer. Autotalks’ chipset will be at the center of DENSO’s global V2X platform for car-makers mass market projects. Prototyping phase has already started towards an unprecedented high-volume SOP (Start of Production) in 2019, targeting North America market. V2X Communication connects vehicles to other vehicles (V2V), infrastructure (V2I), motorcycles (V2M) and pedestrians (V2P) within wireless range for safety and mobility applications. It adds a new layer of confidence and certainty for drivers as it helps prevent car accidents. It complements the information of other sensors, especially in situations of non-line-of-sight, rough weather or poor lighting conditions. The pivotal mass-deployment of V2X demonstrates the importance of the technology and the belief that it will achieve a dramatic improvement in road safety.

Autotalks’ next generation devices embed a mobility optimized modem, support dual-antenna with optimal and flexible RX/TX diversity, perform line-rate message ECDSA verification of the entire link capacity and embed an ultra-low-latency V2X HSM. In addition, Autotalks’ next generation was designed for cryptoagility and scalability, and is capable of operating at a high temperature range. All these advantages combined, coupled with a rigorous benchmark, crowned Autotalks’ next generation as optimal for DENSO’s global mass market V2X platform.

Kfar Netter’s Autotalks enables the V2X communication revolution by providing an automotive qualified chipset that supports all functions required from a V2X ECU. The unique technology of Autotalks addresses all key V2X challenges: communication reliability, security, positioning accuracy and vehicle installation. Autotalks’ ready solution is used in series production units. Autotalks and STMicroelectronics have formed a strategic partnership for the V2X market, and are working to produce a mass market optimized second-generation V2X chipset. (Autotalks 28.09)

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9.13 Humavox Partners with Asahi Kasei to Make Wireless Charging Mainstream

Humavox and Asahi Kasei Microdevices Corporation (AKM), a designer and manufacturer of high performance electronics operating under the Japanese Asahi Kasei Corporation, are partnering to create a wireless charging chip-set smaller than ever before. Together they will provide mass production of high quality chips with Humavox’s unique radio-frequency (RF) based wireless charging technology, in order to expand wireless charging availability to the masses for countless devices, including wearables, hearables, and IoT devices. This cooperation signals a significant step in Humavox’s progression into the commercial space, making the company’s chips highly accessible and available to various device manufacturing clients. As a tier-one semiconductor, AKM will enable higher availability and easier integration of Humavox’s proprietary technology. Moreover, AKM’s specialty in RF promises quality chip-sets for small devices that currently lack a feasible wireless charging solution.

As part of the collaboration, by the first quarter of 2017, Humavox’s development partners and selected companies will be able to evaluate the chip-sets. This option will be made available first and foremost to Humavox’s current customers in the wearable space (e.g. earbuds and hearables, etc.) and AKM’s customers. By the third quarter of 2017, the chip-set is intended to be fully commercialized for widespread use.

Kfar Saba’s Humavox, founded in 2010, is an innovative developer of groundbreaking technology in the field of wireless power. With its ETERNA platform, Humavox uses near-field radio frequency (RF) technology, and provides users with a simple and intuitive charging experience (“drop & charge”). The technology can be implemented in the smallest of devices, such as wearables and IoT devices. (AKM 29.09)

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9.14 Karamba Launches Autonomous Security for Cars, Empowering Electronic Control Units (ECUs)

Karamba Security announced Autonomous Security for connected and autonomous vehicles, which empowers their electronic control units (ECUs) to protect themselves from hackers. Autonomous Security, a significant extension to the company’s Carwall ECU security platform, enables automotive technology providers to achieve the goals set out in the U.S. Department of Transportation’s guidelines for the safe deployment of autonomous cars. Karamba Security’s automated ECU technology eliminates this risk by providing zero false positives.

Karamba Security’s Autonomous Security technology allows any car’s ECU to protect itself from this threat by automatically locking it down to the ECU’s factory settings. The ECU then blocks operations that aren’t part of its factory settings, with a negligible performance impact, which prevents hackers from accessing the car’s safety systems and commandeering them. This deterministic decision is made locally on the ECU. Autonomous Security doesn’t require the ECU be connected to protect itself, nor does it need anti-malware updates.

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10: ISRAEL ECONOMIC STATISTICS

10.1 Export Institute Says Israel’s Exports Fell to a 6 Year Low

On 25 September, the Israel Export and International Cooperation Institute released data showing a 5.7% drop in exports of goods, excluding diamonds, during H1/16. Exports of goods hit their lowest point in the past six years, compared with the corresponding period in previous years. Exports of goods, excluding diamonds, totaled $24 billion in January-June, compared with $25.3 billion in H1/15. The Export Institute attributed the decline in exports of goods to highly concentrated sectors: pharmaceuticals, electronic components, and chemicals. In addition, there was a decline in Israel exports to key markets around the world accounting for a third of total exports, such as the US, UK and China. Israeli exports of goods to countries like Turkey and India also fell.

The figures showed that Israeli exports of goods to the US dropped by 3% to $5.4 billion in H1/16, with exports of chemicals, electronic components and pharmaceuticals leading the fall. Exports of goods to the UK, Israel’s second largest export market, dropped by a steep 17% to $2 billion in H1/16. The Export Institute attributed the fall in exports of goods to this market to export of pharmaceuticals, which account for two thirds of all Israeli exports of goods to the UK. At the same time, excluding pharmaceutical exports, Israeli exports of goods to the UK were unchanged. The Export Institute also explained that some of the decline in exports of goods to the UK resulted from the devaluation of the pound against the dollar in dollar-denominated export deals, even before the full effects of the UK’s exit from the European Union on the exchange rates are included.

Israeli exports of goods to China, Israel’s largest export market in Asia, were also hard hit in H1/16, falling by 8%. The decline was led by exports of minerals, which plunged 77%, compared with the corresponding period last year, and electronic components, in which exports fell 28%, compared with the first six months of 2015. At the same time, excluding the decline in these two sectors, exports of goods to China were up 9%, compared with the corresponding period last year.

Exports of goods to India and Turkey were also down: exports of goods to India totaled $580 million, down 9%, compared with the corresponding period in 2015, when exports of goods to India jumped 21% as a result of defense industries’ deals with Indian defense agencies. These deals expired in the first half of this year, causing a fall in exports of goods to India. Exports of goods to Turkey sank 35% to $625 million, following a 40% decline in exports of goods in 2015. On the other hand, exports of goods to some countries rose, such as to Spain (+13%), Italy (+4%) and Germany (+3%). (IEIEC 25.09)

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10.2 Israel’s Unemployment Rate Reaches New Low

On 22 September, the Central Bureau of Statistics announced that Israel’s unemployment rate fell again in August, dropping by 0.1% to 4.6%. There were 3,932,000 people aged +15 in the labor force in August, of whom 3,752,000 were employed and 180,000 unemployed. The employment rate in this age bracket fell from 61.4% in July to 61.2% in August. The number of those with full-time employment fell 0.3%, compared with July (during the week in which the survey was conducted), while the number of those with part-time employment (less than 35 hours per week) was up 1.7%, compared with July.

In the formula used by the Central Bureau of Statistics (and by all other OECD countries), an employed person is one who worked at some job at least one hour during the past week. Employed persons include, among others, those serving in the IDF (in compulsory service or the permanent army) and people who usually work, but were temporarily absent from work during the week of the survey. An unemployed person is one who did not work at all, and actively searched for work during the four weeks preceding the survey date (non-voluntary unemployed). (CBS 22.09)

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10.3 Foreign Tourist Overnights Down 15% in August

On 22 September, the Israel Hotel Association reported that Israeli overnights totaled 1.76 million, 4% less than in August 2015. In August 2016, the peak month of the tourist year, hotel occupancy in Israel was 67%. Hotel overnights in Israel totaled 2.4 million in August, including 610,000 foreign tourist overnights, down 15% compared with August 2015, and 27% more than in August 2014 during Operation Protective Edge. Using combined figures for July-August in order to eliminate the effect of the three-week mourning period before the Tisha B’Av fast, which was on 14 August this year, the number of foreign tourist overnights during these months was 1.28 million, 7% less than July-August 2015, 19% more than in July-August 2014 (Operation Protective Edge), and 18% less than in July-August 2013. Hotel occupancy in July-August was 67%, 4% less than in July-August 2015.

Most foreign tourists – 212,000 – stayed in Tel Aviv hotels, 17% fewer than in the corresponding period in the preceding year. There were 134,000 tourist overnights in Jerusalem, 18% fewer than in the corresponding period in 2015; 37,000 in Netanya; 36,000 in Tiberias and the vicinity of the Kinneret (Sea of Galilee); and 23,000 in Eilat – 33% fewer than in the corresponding period last year.

As expected, Eilat had the strongest showing in Israeli overnights in August with 773,000, 5% fewer than in August 2015. There were 226,000 Israel overnights in Tiberias and the vicinity of the Kinneret, also a 5% decline; 132,000 in Jerusalem (down 14%); 79,000 in Tel Aviv (down 20%); and 38,000 in Haifa. In Netanya, where several hotels were recently opened, there were 30,000 Israeli overnights, 33% more than in August 2015, and the number of Israeli overnights in Herzliya jumped 80% to 30,000, also due to newly opened hotels. Another destination with an increase in internal tourism was Nazareth, with 25,000 Israeli overnights, 46% more than in August last year.

Foreign tourist and Israeli overnights totaled 14.7 million in January-August, consisting of 5.4 million tourism overnights (the same as last year) and 9.3 million Israeli overnights, also unchanged. Hotel occupancy in January-August was 61%, the same as in the corresponding period last year, 4% less than in 2014, and 5% less than in 2013. (IHA 22.09)

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10.4 Israeli Teachers Worst Paid in OECD

In the latest OECD report comparing the salaries of elementary school teachers (first to sixth grade) in member countries, Israel is ranked at the bottom. The average gross starting salary for an elementary school teacher in Israel (as of 2014) is $18,498 per year (about NIS 6,000 per month), just below the country’s median salary. The best paid OECD teachers are in Luxembourg, earning $68,121 per year (NIS 22,000 per month – like a software engineer). Turkey comes out well ahead of Israel with an annual salary of $26,964 (about NIS 8,500 per month). The OECD report also analyzes the salary cost per pupil in elementary schools. In Luxembourg the government spends $12,377 on salaries for each pupil each year, while in Israel the government spends $1,912 per pupil per year, well below the OECD average of $2,832. (OECD 22.09)

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10.5 Israel’s Roads Increasingly Congested

On 21 September, the Central Bureau of Statistics released 2015 transportation figures for Israel that indicate that while the use of private vehicles is increasing, the use of public transportation is falling and road congestion is breaking all records. According to the published figures, the number of vehicles on the road has grown 69% since 2000, while the area of the roads is 40% higher, and the length of roads has gone up only 17%. The distance traveled by all vehicles has grown by 50% since 2000, while the average distance covered per vehicle fell 13%. According to the data, the average annual distance covered by private vehicles rose from 16,200 in 2014 to 16,300 in 2015, a 0.9% increase, while the average distance covered by buses fell by 0.4%, and the average distance covered by taxicabs fell 1.3%. (CBS 21.09)

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11: IN DEPTH

11.1 JORDAN: Jordan’s Strategic Decision to Buy Israeli Gas

Simon Henderson wrote in the TWI Policy Alert on 26 September that in addition to meeting the kingdom’s urgent energy needs, the new natural gas deal should facilitate long-delayed efforts to develop Israel’s offshore Leviathan field.

The U.S. firm responsible for developing Israel’s largest offshore gas field has just announced a sales contrast with Jordan’s National Electric Power Company. The notion of Amman buying large quantities of gas from Jerusalem to generate the bulk of its electricity has been commercially logical but politically fraught, since most Jordanians do not particularly want their country to buy Israeli gas. But the deal has become economically necessary, at least in King Abdullah’s view. Egyptian gas is no longer available for import, leaving the kingdom dependent on liquefied natural gas tankers arriving at the Red Sea port of Aqaba — a stopgap measure at best because the floating facility is only leased and supplies are vulnerable to price fluctuations and the good grace of the current provider, Qatar. Proposals for Russian nuclear power stations or gas deals with Iraq have apparently been rejected as infeasible (the former for financial reasons, the latter for political).

Given the timing of today’s announcement — after last week’s voting for a new Jordanian national assembly — Amman likely wanted to keep the deal from becoming an election issue. Indeed, in a 25 September interview with the Financial Times, Deputy Prime Minister for Economic Affairs Jawad Anani stated that the kingdom needed concessions from Israel to “mitigate the backlash” he expected the gas sale would bring.

The deal with Houston-based Noble Energy is for 300 million cubic feet per day (cfd) of gas over a fifteen-year term, with an option to purchase an extra 50 million cfd. This is a typical contract length for natural gas because it requires substantial investment in infrastructure. The arrangement is “take or pay,” meaning Noble and its Israeli partners will be paid whether Jordan uses the gas or not. The price is linked to the widely traded Brent crude oil and total revenues from the contract should be approximately $10 billion.

In Israel, exploitation of the huge Leviathan field, discovered in 2010, has been delayed by domestic political squabbles and the need for more than $6 billion to retrieve the gas from deep beneath the Mediterranean Sea eighty miles off the port of Haifa. Noble Energy is due to take an investment decision on Leviathan in December but needs commitments for purchases of around 1 billion cfd (the planned production platform just off the Israeli coast has a capacity of 1.2 billion cfd.). The Jordanian deal brings the total contracted volumes to 450 million cfd, so more sales need to be secured. Noble officials are pursuing other potential customers, including in Israel and Egypt, and they now seem likely to reach the magic number to justify the cost.

When gas starts flowing in late 2019, Leviathan production will double the amount of gas being produced off Israel’s coast. The Tamar field is already responsible for more than half of Israel’s electricity generation, and later this year a small portion of its supplies will flow to two industrial plants in southern Jordan under a previous contract. Israel has also announced a Dutch-brokered arrangement to supply gas to the power station in Hamas-controlled Gaza, though the Palestinian Authority has suspended a putative deal to supply a new West Bank station.

Some details still need to be worked out for the Jordan deal. The United States and perhaps other donor countries will likely fund a pipeline connecting Israel’s gas network with Jordan. More problematic is Amman’s request to export more goods to Judea and Samaria, which would cut into Israel’s market there. Under the circumstances, though, the impact of that concession would be economically small, so its political significance is questionable.

Simon Henderson is the Baker Fellow and director of the Gulf and Energy Policy Program at The Washington Institute, and author of the German Marshall Fund report “Jordan’s Energy Supply Options: The Prospect of Gas Imports from Israel.” (TWI 26.09)

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11.2 JORDAN: Jordan Chooses Stability

Oded Eran wrote in INSS Insight No. 859 on 27 September that on 20 September 2016, Jordan held elections for its eighteenth parliament. That same day, King Abdullah II delivered his address at the United Nations General Assembly, praising his people for actively participating in the democratic process. Given the blood-soaked civil wars in neighboring Iraq and Syria and the freeze on both the internal process in Lebanon and the Israeli-Palestinian political process, the king has every right to be proud of his nation holding elections. They were transparent for the most part, supervised by more than one hundred European Union and other observers. Although one district required a second round of voting, Jordan emerged from the election as an island of stability in a seething Middle Eastern sea, a nation successfully overcoming internal difficulties that have worsened because of the humanitarian and political chaos plaguing the region.

By absenting himself from Jordan on election day, the king bowed to an international schedule he had no ability to change. Doing so, however, also signaled his confidence that the Jordanian voters would not opt for any major surprises liable to upset the balance of power between the monarchy and the executive and legislative bodies. This balance underwent a minor change in Jordan’s constitution in 2012 as a result of the Arab Spring; accordingly, the king retains his authority and control of the national agenda. While the outgoing parliament was louder and more confrontational on some issues such as Israeli-Jordanian relations than its predecessors, its actual influence on this and other issues was marginal.

The Muslim Brotherhood, or more precisely the Islamic Action Front, the political party representing the Brotherhood in Jordan, commanded much attention. In 2010 and 2013, the party boycotted the entire electoral process, largely because of the advice it received from the Muslim Brotherhood in Egypt. Since then, the movement in Jordan has experienced a change in leadership and an ideological softening, both of which led to a shift in its position on the election. The movement ran candidates in many electoral regions, especially in the capital, where candidates joined forces with others under an umbrella group called the National Coalition for Reform. Thus, candidates ran in the electoral regions of Zarka, Jarash, and the Palestinian refugee camps; returns showed their very partial and limited success. Before the election, one of the Muslim Brotherhood heads in Jordan predicted that the bloc would win 15 – 20 seats in parliament, especially from voters in Amman (i.e., 10-15% of the population). After the results were released, speakers for the movement did in fact boast that they had won 15 seats, but one-third of them were guaranteed by law to women, Christians and the Circassian community, the other coalition partners. Given the outcome, it would be more accurate to say that in Amman, the refugee camps, Zarka, and Irbid, there is support for the Muslim Brotherhood, but if one takes into account the low voting rates and assumes they equally affected all political parties, one can say with a degree of certainty that in Jordan, the Brotherhood is not a decisive political power.

Apparently the Muslim Brotherhood has managed to recover only partially both from the strategic decision it made in 2010 and 2013 to boycott the election, and from the ramifications of its ties to the Egyptian movement toppled after only a year in power and now hounded by the current Egyptian regime. Another reason for the modest success of the Muslim Brotherhood may lie in the loathing and fear of the Islamic State on the part of most of the older Jordanian voters (although hundreds of Jordanians have joined the ranks of the Islamic State), which grew stronger following the January 2015 brutal murder of Jordanian pilot Muath al-Kasasbeh, held captive in the part of Syria controlled by the Islamic State. Furthermore, the internal split in the movement has weakened it. Two movements – the Association of the Muslim Brotherhood, recognized by the Jordanian government, and the Zamzam Initiative – broke off and ran independently in this parliamentary election.

Yet an election is not the only measure of the influence wielded by the Muslim Brotherhood’s ideology or of the popularity of the Islamic State. High unemployment among the young, especially the university educated, creates fertile ground for movements with an Islamic orientation. The Jordanian government, with US encouragement, is trying to control – with only partial success – the influence of pirate, unrecognized, and unapproved mosques. Echoes of the regime’s rising concerns could be heard in the king’s address to the UN General Assembly, dedicated mainly to Islam and the perverse image the Islamic State and similar organizations project for it. In this sense, the changes that the Jordanian Muslim Brotherhood made to its leadership, its relations with the Egyptian mother group, and its attitude toward Jordan’s internal political system, could serve as a bridge toward dialogue with the Jordanian sovereign.

Despite important and positive changes instituted since 2012, the Jordanian parliamentary election system still gives numerical preference to candidates running on slates with a local character compared to those running on national lists. In all, 226 lists were approved by the Independent Election Council. Only a minority ran in more than one population center, a fact indicative of separatism and a focus on local issues. It would seem that the composition of a parliament with a local orientation would make it easier for the government to resist parliamentary pressures and serve the regime, which would not have to confront strong parliamentary blocs with a national agenda. On the one hand, the combination of the constitution and the election law has made it relatively easy for the Hashemite regime to weather the years since the Arab Spring with some measure of peace and quiet. On the other hand, the public discourse about the precise function of the parliament and its role vis-à-vis the executive – beyond the formal definition in the constitution – is quite vibrant. At this stage, the regime has passed the hurdles posed by the social and political awakening of the Arab Spring with success, but it must remain attentive to the public mood reflected in the public discourse.

During the parliament’s new term, Jordan will continue to face significant existential challenges. Some of them may have legal significance, such as: the war on terrorism; the enlistment by Jordanian citizens in Salafist jihadist organizations; their involvement in terrorism across Jordan’s borders; and the status of the Syrian refugees in Jordan and their civil and economic rights. These questions will arise with greater urgency than before, and could come to rest at the parliament’s doorstep. The test of this parliament will be its ability to answer them with the requisite degree of national responsibility.

Furthermore, the question of the parliament’s involvement in foreign affairs, in particular Jordanian-Israeli relations, can be expected to resurface. Since the peace treaty between Israel and Jordan, the Jordanian parliament has served as a forum for lambasting Israel, opposing processes of normalization, and criticizing the Jordanian government for not severing the bilateral relations. The return to the parliament provides the Muslim Brotherhood with a ready-made platform to attack the government along the lines of an issue shared with many partners in other political parties. At the same time, the political alliance between the Christian and Circassian communities in Jordan and the Muslim Brotherhood, in its new and less rough-edged form, creates interesting possibilities from Israel’s perspective, as Israel has a parallel communities maintaining widespread connections with their brethren in Jordan.

Finally, the previous Jordanian parliament was not a key player in Jordan’s political, economic or social theaters. However, a new parliament will soon take office under new regional circumstances and it may have to take some serious decisions with long term implications. Perhaps the status of the parliament will then change in the eyes of the 60% of the Jordanian electorate that in 2016 stayed at home, indifferent to the election and its consequences. (INSS 27.09)

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11.3 JORDAN: Who Are the Winners and Losers in Jordan’s Latest Elections?

Osama Al Sharif posted on 28 September in Al-Monitor that with limited political party participation in parliament and a legislature that is still dominated by monarchy loyalists, many Jordanians believe that little has changed after the recent elections.

The results of Jordan’s legislative elections for the 18th Lower House of parliament, held 20 September, was a mixed bag of surprises, disappointments and modest breakthroughs. The elections were held under a new law allowing multiple votes for open proportional lists that replaced the decades-old single-vote system, which has been criticized for years by various political players, especially the Muslim Brotherhood. The Muslim Brotherhood had boycotted the last two elections but decided to contest this year’s poll through its political arm, the Islamic Action Front (IAF). In all, 1,252 candidates ran in 226 lists in the elections.

Managed by an independent commission, the elections were hailed by local and international monitors as mainly free and fair with no government interference, despite incidents that marred the elections process and protests that erupted in many parts of the kingdom following the announcement of results.

So who were the winners and losers in Jordan’s recent elections?

The Islamists

The Muslim Brotherhood, which the government does not recognize as a legitimate entity, contested the elections through an alliance that brought together IAF candidates and tribal, nationalist and Christian figures — the National Coalition for Reform (NCR). NCR’s program and rallies departed from traditional Brotherhood slogans, especially the famous slogan “Islam is the solution,” and offered a civic, nonreligious approach to dealing with the country’s economic and social challenges. In all, the NCR fielded 120 candidates through 20 lists in various districts including Amman, Zarka, Irbid and Salt.

When the results were announced, they had won 15 seats of the 130-seat Lower House, of which IAF candidates took 10 and the rest went to their allies. There is no doubt that while this makes the NCR the biggest opposition bloc in parliament, the result is a modest one for the Muslim Brotherhood. They had taken 11.5% of the Lower House seats while pre-election predictions gave them between 15 and 20 seats in total.

Overall the 20 lists had gathered 160,000 votes — the majority of which were in Amman, Zarka and Irbid — or about 11% of total votes cast in the elections. Moreover, five of the seats that the NCR had won were part of the quota system, designated for women, Christians, Circassians and Chechens, which usually receive smaller number of votes. Of these, three seats were taken by women.

It is noteworthy that 50% of the NCR lists failed to win a single seat, and that these lists were mostly competing in southern governorates where tribal influence is dominant. Such results will please the government as they indicate a waning in grass roots support for the Brotherhood while allowing them to be represented in the legislature, ending a decade of boycott.

On the other hand, the newly registered Muslim Brotherhood Society (MBS), which was formed last year, failed to win a single seat. It had contested the elections with one list in Irbid’s second district. This dismal performance will focus attention on the future of the MBS and its political viability. The Zamzam Initiative and the Wassat Party each won three seats, and the question now is whether or not their deputies will form a bloc with the NCR.

Women

The election law was criticized by pundits and women’s associations for designating three out of 15 seats, dedicated to women under the quota system, to the country’s most populace governorates — Amman, Zarka and Irbid — raising further questions over gerrymandering imbalance that favored tribal districts at the expense of the capital, where half of the eligible voters, more than 4 million in total, live. Still, five women were able to compete and win outside the quota system, bringing the number of women in the new legislature to 20. In all, 252 women contested the elections through 218 lists, and they received a total of 266,000 votes, which is considered a new record for women in Jordanian elections. On the other hand, only 32% of eligible female voters cast their vote.

Political parties

The new law was supposed to help political parties do better in legislative elections, but results show that only 22 candidates belonging to seven political parties had made it, out of 215 candidates belonging to 50 political parties. Political parties’ representation in the new Lower House is about 17%, of which almost two-thirds belong to Islamist parties. Not a single nationalist or leftist party is represented and, in fact, independent deputies including businessmen, professionals and tribal figures will make up the bulk of the legislature. At least 50 candidates, who were formerly in the Lower House, were re-elected.

On a brighter side, especially for those who support democratic reforms and an all-encompassing secular state, the Ma’an (Together) list, competing in Amman’s third district, made history by winning two seats. While the victory is symbolic, it underlines a growing debate in Jordan among the political elite on the need to set the foundations for a civic, secular and democratic society to confront both authoritarian and religious driven agendas.

Voter apathy

Perhaps this is the biggest story in this latest election. Of more than 4 million registered voters — 1 million of whom are outside the country and cannot vote — voter turnout was a modest 37%, compared to over 50% in the 2013 elections. Amman was the lowest with only 23% voter turnout, and in its competitive third district turnout was only 18%. Similar low figures were marked for other urban centers like Zarka and Irbid. Pundits believe middle-class voters had opted to stay home for a number of reasons including lack of confidence in the role of the legislature and its limited influence on government policies.

Election results have triggered calls by political parties and figures to review elections law shortcomings in preparation for the next legislative elections in four years’ time. Former Deputy Prime Minister Marwan Muasher, a staunch proponent of civil rights and a secular state, told Al-Monitor, “Voter apathy should prompt the government to reform the law to prepare the ground for parliamentary governments, which will not come about without genuine development of political parties.” He added that the new law has not succeeded in restoring voter confidence in parliament. “We need to reach a stage where elections are held on the basis of voting for party and national lists,” he said.

For now, the government can boast that Jordan’s democracy is thriving and that the elections were a success. But with limited political party participation and a legislature that is still dominated by loyalists, many Jordanians believe that little has changed.

Osama Al Sharif is a veteran journalist and political commentator based in Amman, Jordan, who specializes in Middle East issues. (Al-Monitor 28.09)

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11.4 IRAQ: Fitch Affirms Iraq at ‘B-‘; Outlook Negative

On 13 September, Fitch Ratings affirmed Iraq’s Long-Term Issuer Default Rating (IDR) at ‘B-‘ with a Negative Outlook. The Country Ceiling is affirmed at ‘B-‘ and the Short-Term IDR at ‘B’.

Key Rating Drivers

Political risk and insecurity in Iraq are among the highest faced by any sovereign rated by Fitch. Progress has been made in pushing back the Islamic State (IS), but the military campaign brings in its wake major reconstruction and humanitarian challenges. Sectarian and ethnic tensions continue to undermine political stability, relations with the Kurdish Regional Government are volatile and Iraq scores the worst of all Fitch-rated sovereigns on the composite World Bank governance indicator. This reflects not only insecurity and political instability but also corruption, government ineffectiveness and weak institutions.

The bulk of oil production facilities and export infrastructure are located away from areas of insecurity. After expanding strongly in 2015, oil output in the south has stabilized so far in 2016 at 3.5m b/d on average, given lower budgeted government payments to international oil companies, which has constrained investment. Including output from the north, which incorporates Kurdish fields, total oil production totaled 4.6m b/d in July, according to the Ministry of Oil. Given low oil prices we expect the government to budget a similar amount for oil investment in 2017 and we forecast oil production and exports (at 3.3m b/d) to plateau.

Lower oil prices are driving significant deterioration in Iraq’s financial position. Commodity dependence is among the highest of all Fitch-rated sovereigns. Oil accounts for more than 50% of GDP and over 90% of fiscal and current external receipts. The budget deficit in 2015 ballooned to IQD26.4trn ($22.3b) or 13.9% of GDP. This was financed by a mixture of T-bill issuance to banks refinanced to a large degree by the CBI (indirect monetary financing), accumulation of domestic and external arrears and multilateral financing.

Iraq and the IMF agreed a stand-by arrangement (SBA) in July 2016, which entails $5.34b of funding over three years. The funding is front-loaded, providing $1.9b between July and end-2016. Performance criteria under the SBA seem broadly realistic, but implementing earmarked structural reforms is likely to prove more difficult. Risks attached to the program are high, but the Iraqi government has a strong incentive to adhere to the SBA.

In 2016 the IMF programs for a deficit of IQD26trn ($22b) for Iraq. The majority of financing, $17b, will come from T-bills and bonds, $10.7b of which will be refinanced by the CBI and $4b is from government deposits in the banks. The banking sector itself is not strong enough to be a source of much financing. External financing from the IMF, World Bank, US loans and other bilateral loans will make up most of the remainder.

Government debt is rising sharply on the back of these deficits and we forecast it will average 73% of GDP in 2015-17. However, this includes $41b of debt lent to Iraq by GCC countries during the 1980-1988 Iran-Iraq war, which the authorities do not face any pressure to repay or service. If this debt were restructured on the same terms as Paris Club debt was restructured, government debt/GDP would average 52% in 2015-17, closer to the ‘B’ median of 41%.

International reserves are declining, but remain large and support Iraq’s currency peg. Fitch forecasts an average current account deficit of close to 9% of GDP in 2016-17 because of low oil prices. This will contribute to further declines in international reserves, which we project to slip to $45b this year and $41b at end-2017 from $54b at end-2015. This would still equate to almost eight months of current external payments (CXP) in 2017. We assume the authorities will maintain the dinar’s peg to the US dollar, although this could come under pressure.

The banking sector is under-developed and fundamentally weak. Private sector credit to GDP is one of the lowest of any Fitch-rated sovereign. The two large state-owned banks Al-Rafidain and Al-Rasheed, which have high non-performing loans and exceptionally low capital adequacy, dominate the sector. There has been no progress in restructuring these banks, although the government has appointed auditors as required by the IMF. Fitch assumes that restructuring will require recapitalization by the government.

Rating Sensitivities

The main factors that could, individually or collectively, lead to a downgrade are:

-Evidence of stress in financing fiscal shortfalls.

-Further deterioration in the country’s security, particularly if insecurity spreads to new geographical areas or hinders oil production or exports.

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

-A sustained period of oil prices higher than our current forecasts, particularly if combined with higher oil production and exports and leading to an improvement in Iraq’s public and external finances.

-A fundamental improvement in the country’s security that allows for stronger non-oil economic development.

Key Assumptions

Fitch forecasts Brent crude to average $42/b in 2016, $45/b in 2017 and $55/b in 2018. We assume that Iraqi oil sells at a consistent discount to Brent. Fitch forecasts Iraqi oil exports (excluding exports from the Kurdish region) to average 3.3m b/d in 2016-17.

Fitch does not incorporate into its fiscal numbers an oil-sharing agreement between the central government and the Kurdish Regional Government, given the patchy track record for implementing this agreement. (Fitch 13.09)

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11.5 IRAQ: Decline of Higher Education in Iraq Continues

Adnan Abu Zeed observed in Al-Monitor on 22 September that despite several recent achievements, Iraq’s universities still suffer from poor management, corruption and sectarianism.

The University of Kufa declared on its website on 6 September that it ranked 701st among the world’s best universities, according to QS World University Rankings. This is great news for the reputation of the country’s universities, since most Iraqi universities are not included in any global university rankings. Nevertheless, this achievement does not mean that Iraqi universities have overcome their problems, mainly the demand of students for an improvement in the education system. The student protests in Kufa that took place 10 March subsequently spread to the north and south of the country.

On 25 February, students from the University of Muthanna in Samawah, al-Muthanna province, banned then-Minister of Higher Education Hussein al-Shahristani from entering the campus, as they believed he had failed to improve tertiary education and provide essential academic facilities to Iraqi universities. On 30 August, university students in Sulaimaniyah, Iraqi Kurdistan, boycotted classes because of the lack of financial grants for students.

The education sector in Iraq has been dealt several blows; for instance, the University of Kirkuk has witnessed national and sectarian strife, which caused its Shiite Turkmen dean to resign on 4 May 2015, after the Kurds expressed objections against him.

In this regard, Nader Abdullah, a professor at the University of Babylon, told Al-Monitor that the student protests are the natural results of the ongoing crises in the country. He said, “They reflect the dire conditions of the higher education sector; the high ranking of the University of Kufa was at a scientific research level only. Iraq’s universities lag behind the universities of the world because of low-level management and centralized decisions, which affects the knowledge product and weakens the university’s’ participation in the building of society. This is not to mention the declining academic and scientific level of the graduates.”

Abdullah also stressed the “interference of partisan and sectarian agendas in the policies of the universities, at the expense of professional and scientific standards.”

For his part, Abdul Razzaq al-Issa, the minister of higher education and scientific research, also recognizes this dilemma in Iraq’s educational sector. He told Al-Monitor, “The partisan electoral agendas affect the policies of the universities and I will not be part of it.”

In further evidence of these statements, an academic from the University of Babylon, who spoke on condition of anonymity for fear of jeopardizing his position, told Al-Monitor, “[Universities] are highly partisan, which affects the issuing of diplomas, positions in colleges and institutions, and the students’ admission in prestigious colleges.” He added, “Many of the university theses promote partisan and sectarian agendas and are not even remotely associated with professionalism and scientific standards.”

This alarming trend was already present in the era of the Baath regime (1968 – 2003), when university theses were geared to serving the goals of the political regime and a ticket to securing high-ranking positions.

Khazaal al-Majidi, an academic researcher on the history of civilizations and religions, shares the same opinion on this issue. Speaking to Al-Monitor, he traced back the history of the “deterioration of higher education in Iraq.” He said, “Iraqi universities started to go downhill gradually in the mid-1970s, when the Arabization of engineering and medicine materials took shape in universities, and campuses turned into battlefields of the Baath Party and its opponents. Party members had also managed to fully control some faculties.”

Things have not changed much since the fall of the Baath regime, as students continue to be admitted to colleges and granted diplomas and other distinctions based on their partisan affiliations, away from any professional standards or guidelines.

This is what happened, for instance, at the University of Kirkuk, which awarded students on 2 July five additional points as a result of the difficult conditions experienced by the students and the growing ease of obtaining forged certificates. This led numerous Iraqis — even the elderly — to rush to obtain higher education. They were not seeking education as such, but rather a university degree, even if through twisted and illegal ways, as a means to secure a job, including senior officials who had forged their educational degrees to keep their prestigious office.

This situation has led to a substantial inflation in the number of graduates who obtained a university degree, but remain unemployed. Professor Ahmed Abed who teaches at the University of Al-Qadisiyah, told Al-Monitor, “We must develop mechanisms that promote confidence in university education. The new Higher Education Law consolidates the role of universities in development and reconstruction and the investment of theoretical research in applied fields.”

He said that Iraq’s universities lag behind and do not keep pace with advanced universities in the world, calling for “overcoming this obstacle by participating in foreign conferences, collaborating with advanced universities and giving the students paid scholarships to these universities.”

Mohammed al-Shammari, a member of the Commission of Higher Education and Scientific Research, told Al-Monitor, “Universities are in urgent need of independence in terms of admission policies and preparation of the curriculum, which must be scientific, away from any political, sectarian or nationalist ideology.”

These solutions must be accompanied by the eradication of corruption in higher education. The squandering of funds allocated for the development of universities, whether the 29 governmental universities or the 38 private universities, must be stopped. Updating the administrative system based on an inherited routine promotes the universities’ effective role in the development of society.

Adnan Abu Zeed is an Iraqi author and journalist. He holds a degree in engineering technology from Iraq and a degree in media techniques from the Netherlands. (Al-Monitor 22.09)

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11.6 EGYPT: Egypt Takes New Approach to Tourism

Ahmed Hidji posted in Al-Monitor on 23 September that Egypt’s long-suffering tourism business might finally be getting some good news: The private sector will take a crack at handling one of the country’s ancient sites.

One day after yet another report came out summarizing the wretched state of Egypt’s tourism industry, government officials said they will turn management of the Giza pyramids over to the private sector. The prime minister’s office said 6 September the decision is part of an effort to develop the archaeological area to a level befitting its status as a World Heritage site.

Tourism in Egypt has been suffering severely for the past five years. According to an economic performance report issued on 5 September by the Ministry of Planning, the tourism sector shrank by 34% during the period from January to March, compared with 9.3% during the same period last year.

Moody’s Investors Service issued a report in July stating that Egypt’s tourism sector brought in revenues of $551 million during the period from January to March, which is the smallest amount since the comparable quarter in 1998.

In June, the tourism sector registered its worst monthly drop of this year, with the number of tourists visiting Egypt plummeting 60% compared with June 2015. According to a report issued on 28 July by the Central Agency for Public Mobilization and Statistics (CAPMAS), the number of tourists in Egypt stood at 328,600 in June, compared with 820,000 in the same month last year.

It’s not as if that’s an anomaly, though. The entire first half of 2016 was abysmal, with the number of tourist arrivals falling each month compared with the same month the year before: January, down 46.3%; February, 45.9%; March, 47.2%; April, 54%; and May, 51.7%, according to the CAPMAS report.

On top of that, what first looked like a potential bright spot in a CAPMAS report for July still reflected a major decline. In July, the number of tourists reached 529,200 — the highest figure since a Russian plane exploded in October after taking off from the Sharm el-Sheikh International Airport. Yet, that number still showed a drop of 41.9% from July 2015.

According to Sami Mahmoud, head of the Egyptian Tourism Authority, assigning the management of tourist attractions to private companies shows Egypt’s desire to pull as much profit as possible from the sites. Mahmoud told Al-Monitor that the authority proposed the change three years ago and has been studying the idea with Ministry of Tourism experts. Mahmoud specifically cited the need to turn around the reputation of the Giza pyramids area, which has suffered from what he described as chaos and irresponsible management.

Mahmoud expects the chosen company will apply a sophisticated administrative approach based on a clear plan to be discussed with officials of the Ministries of Tourism and Antiquities. Mahmoud believes private sector companies are best-suited to manage all tourist attractions in Egypt and that this system has been adopted in many countries that rely on tourism as a source of national income. Mahmoud anticipates that revenues of all the tourist attractions will rise if reputable companies are allowed to invest in this field.

Bassem Halaqa, head of Egypt’s Tourist Guides Union, agreed with Mahmoud that the pyramids area has been in chaos for the past five years, which destroyed its reputation. Halaqa attributed this chaos to factors such as the inability of tourist police to protect foreign visitors against what he described as harassment from street vendors. He also blamed the administrative apparatus in Giza along with the Ministry of Environment for failing to keep the area clean.

He said successive governments in Egypt failed for over 50 years to protect and optimally use Egyptian antiquities. The private company, however, will succeed because of the strict administration standards and competitiveness in the private sector. According to Halaqa, government employees don’t care about tourist attractions; all they care about are their salaries.

Halaqa considers the move to a private company the first step toward achieving real growth in tourism. He said he is confident that the condition of the tourist attractions under private companies will improve significantly.

Magdy Selim, former undersecretary of the Tourism Ministry, believes that assigning the management of tourist attractions to a private company will not only achieve material gains, but will also help save Egypt’s tourism reputation by marketing abroad and providing better service for tourists. Selim asserted that more than 75% of Egypt’s tourist attractions need a miracle to save their reputation and increase revenues.

In early August, President Abdul Fattah al-Sisi restructured a tourism council under his chairmanship. The council will develop policies for promoting tourism and suggest necessary legislation and regulations to improve tourist activities. Despite the stagnation of Egypt’s tourism industry, the council has not met since it was formed.

Selim said the government is long overdue in promoting tourism, which has languished for five years. He said laws that regulate the government’s management of tourist attractions — especially laws related to funding — impede development. Private companies, he said, have more freedom to allocate funds for assets, services and promotional events, both inside and outside Egypt.

Selim is optimistic that contracting out tourism management to the private sector will pave the way for a variety of local and international companies to invest in tourism in Egypt. However, he believes the Egyptian administration should offer tax breaks and other incentives.

Ahmed Hidji is an Egyptian journalist based in Cairo. He started working in journalism with Al-Mesaa newspaper in 2011, then worked for Masrawy.com as a political editor and video journalist. He now works as a news producer at ONTV live and is a freelancer with various outlets. (Al-Monitor 23.09)

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11.7 EGYPT: Despite Large Financing Needs, Conditions Are Gradually Improving

While Egypt continues to face challenges, economic and fiscal reform momentum support its B3 rating and stable outlook, says Moody’s Investors Service in a report entitled “Government of Egypt — B3 stable: Annual Credit Analysis.” The rating agency’s report is an update to the markets and does not constitute a rating action. “Although still below pre-revolution levels, economic growth has started to pick up, and investor sentiment has improved. We also expect that high fiscal deficits and government debt levels will gradually reduce. The domestic market continues to provide a sizable funding base for the government,” says Steffen Dyck, a Senior Credit Officer at Moody’s.

Going forward, in addition to private consumption, Egypt’s economic growth will be predominantly supported by public and private investment. However, negative net export growth contribution will remain a feature of Egypt’s growth profile for the coming years. This is due to the expected increase in investment and connected stronger growth in capital goods imports, as well as weak global demand for Egypt’s exports. Financial support from Arabian Gulf countries has helped stabilize Egypt’s international reserves and balance of payments position. While this has slowed, even under Moody’s baseline scenario of oil prices staying lower for longer, the rating agency would expect support for Egypt from these countries in times of stress.

Egypt’s very large government financing needs of more than 50% of GDP annually form its key credit weakness. Under Moody’s baseline scenario, Egypt’s large fiscal deficits will narrow only gradually, keeping general government debt at elevated levels. Moody’s notes that Egypt’s inflation rose to more than 16% in August 2016 and will decline only gradually, posing macroeconomic risks and keeping government funding costs high. But low levels of foreign currency denominated and externally held general government debt mitigate external vulnerabilities.

High unemployment rates, especially among the youth, are a sign of underlying structural economic challenges. While domestic political stability and policymaking has improved somewhat, security risks remain elevated in certain areas, and pose a heightened event risk for Egypt. (Moody’s 28.09)

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11.8 EGYPT: Egyptians Ponder – How Much Military Control is Too Much?

George Mikhail posted in Al-Monitor on 22 September that the recent decision to appoint Maj. Gen. Mohamed Ali al-Sheikh as Egypt’s supply minister because of his military background has sparked major controversy in political circles.

Some Egyptians fear the military’s involvement in the Supply Ministry will lead to wider military control, while others think it is the solution to corruption.

As Sheikh is the former head of the Armed Forces Logistics Authority, some people are concerned that his appointment will lead to the military controlling ministries and government institutions. But others consider the military institution’s participation strictly a measure to cleanse the ministry, especially after former Minister of Supply Khaled Hanafi resigned on 25 August due to the wheat corruption case.

Amid this controversy, several politicians, parties and public figures launched the campaign titled “The Army is the Solution,” to garner public support for forming armed forces’ committees to eradicate corruption and reform the education, health and supply systems. Campaign leaders are taking advantage of the success of their last campaign — “No to Religious Parties” — according to Mohammad Atiyeh, who launched the new effort and distributed brochures supporting its goals to citizens. Atiyeh told Al-Monitor, “In the coming days youth groups will be formed in all provinces to distribute [information] to citizens, to demand the armed forces supervise the ministries of Supply, Health and Education.”

The initiative wants military-supervised committees to restructure those ministries. Atiyeh added, “The armed forces will capitalize on their values of discipline and strictness to implement a firm system in these important sectors plagued by negligence and chaos. The initiative will be public and will represent all of Egypt’s social groups. Any citizen who respects and trusts the army will participate to express their objection to violations.”

He rejected accusations that the initiative is a step toward militarizing the economy, saying, “The mission of the committees is to train new cadres and reform the service systems within two years as a transitional phase.” He said President Abdel Fattah al-Sisi trusts civilians, but was surprised at the corruption in the ministries of Agriculture and Supply, and felt he had to appoint a new supply minister with a military background.

The initiative wants the ministries to benefit from the military institution without appointing people with a military background to ministerial positions. The armed forces can offer their disciplined and strict supervision over employees in those ministries, because they are the pillars of the system and they can also build real capabilities.

When asked about the initiative’s selection of the ministries of Health, Education and Supply, Atiyeh said, “These fields affect citizens. The armed forces have excelled in these fields. The best hospitals in Egypt are affiliated with the army. The educational experience at the military schools was successful and the committees will include civilians and military men, according to the armed forces’ vision.” He noted, “The consultative councils that the president formed offer a general overview of education and other sectors, but the committees suggested by the initiative will develop the same system.”

The army’s response to this initiative will not distract it from its main mission of protecting the nation, he said, because the military institution already contributes to the service sectors. Atiyeh addressed the charges that the initiative was started by sovereign parties, saying, “The people will respond to these accusations through surveys that will be distributed to citizens and that reflect public desire.”

He added, “The initiative does not call on the army to manage ministries, but to supervise them. This guarantees that the army’s popularity will not be affected due to crises and problems that these sectors have been inheriting for years.” He said parties and public figures have widely responded to the initiative and want to participate because it is important to voice trust in the army, which can “rescue Egypt from corruption, chaos and negligence.”

Parliament member Haitham al-Hariri rejected the initiative in his statements to Al-Monitor for putting too many responsibilities on the army’s shoulders. He said that the military institution is involved already in several fields, such as road projects and construction of hospitals, schools, churches and mosques. This is a burden for the Egyptian army, Hariri said, and could work to the detriment of its main mission, which is to protect the country.

“Egypt is suffering from mismanagement,” Hariri continued. “Things cannot be solved through tasking the military with the management or oversight of certain sectors due to its disciplined nature. This is an escape from the real crisis and an abandonment of building strong state institutions. The military cannot take on the tasks of all state institutions, as this would harm it and the country as well.”

For her part, Basant Fahmy, a member of parliament’s Economic Committee, told Al-Monitor she would like the military to manage — not just oversee — the service ministries to fight corruption. “Armies around the world help solve economic crises in their countries. The Egyptian army has proven its ability to complete all service and economic tasks such as construction projects. As a result, citizens trust the military’s ability to reform any system and implement high-quality service projects in no time,” she said. She added, “The Egyptian army will remain popular, even if it handles the service ministries, because those are a mess and accept criticism from the military.”

George Mikhail is a freelance journalist who specializes in minority and political issues. He graduated from Cairo University in 2009 and has worked for a number of Egyptian newspapers. (Al-Monitor 22.09)

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11.9 ALGERIA: Can Algeria Ditch Austerity?

Idriss Jebari wrote on 28 September in Sada that with sustained low oil prices, Algeria is searching for ways out of its economic crisis that do not rely solely on austerity measures.

Algeria has been working diligently ahead of the 27 September Organization of the Petroleum Exporting Countries (OPEC) meeting to secure an agreement among member states, especially Saudi Arabia and Iran, to freeze oil production levels – which would, in principle, raise oil prices to at least $50 a barrel. Algeria has a vested interest in securing higher prices: the hydrocarbon sector accounts for 95% of its exports, and since prices fell dramatically in 2014 its external revenues have been halved. This has posed a major issue for Algerian leaders, who rely on sizeable oil revenues to keep the country’s generous (and expensive) social welfare program and centralized economic model afloat. Already, observers have warned of a scenario similar to 1988, when the cash-strapped state faced shortages of basic goods, causing consequential social upset.

Despite the important media coverage of the OPEC meeting, the Algerian leadership has not placed all its chips on a sudden and unlikely oil-price recovery to bail them out. In fact, the meeting appears disconnected from the economic recovery strategy Algeria has pursued over the past 24 months. Since the 2014 price decrease, the Algerian leadership has gone through three approaches: they maintained a reassuring “wait-and-see” attitude, expecting international prices to soar back up, followed by a phase of austerity measures in 2015 and, more recently, the announcement of an ambitions economic diversification scheme. Initially, the state opted to wait out the price decreases, and relied on the state’s $179 billion reserve fund (in 2014) to address budget and commercial balance deficits, which amounted to $30 billion a year. Consumption trends did not change and neither did official attitudes, but foreign institutions began to sound the alarm, forcing an initial change.

In 2015, the Algerian leadership seemed to change course, driven by the realization that $40 a barrel would represent the “new normal.” The World Bank and other outside observers began highlighting the dangers to Algeria’s finances, especially because the Algerian state needs $115 a barrel to break even. The state has faced immense fiscal pressures to stabilize its currency level and avoid a sharp increase in prices. While it continues to rule out foreign borrowing, it has opted for strong austerity measures to save up its foreign currency reserves to pay for its large imports of food and consumption goods, as Algeria has very few non-hydrocarbon exports and a weak agriculture sector. The state’s foreign reserve fund provides a convenient, albeit temporary, cushion to maintain the fiscal balance, the aim of austerity being to extend the reserves’ lifespan.

The most notable measure taken at this point was reducing investment spending by 9% and increasing taxes on fuel products in the 2016 budget, in addition to freezing several infrastructure projects and the recruitment of civil servants across the country. The law faced unprecedented opposition in parliament, including among the ruling coalition, before it was adopted in late November 2015. The 2017 budget law, currently under consideration, is expected to contain higher taxes on imported consumption goods, but also on everyday goods such as fuel and cigarettes.

In January 2016, the government also sought to restrict the flight of Algerian currency by establishing a system of licenses and quotas on car imports in a bid to discourage Algerians from purchasing foreign cars. The measure reduced the commercial balance for automobiles to $768 million, a 68% decrease from 2015, but has been deeply unpopular and carried out with confusion and delays, especially at dealerships. For 2016, the quota has been set at 83,000 vehicles, compared to 265,523 imported in 2015. The ultimate aim was to force Algerians to alter their consumption patterns to “live within their means.”

However, austerity has been a stopgap measure, especially after news emerged that the government had used an initiative to sell sovereign bonds, launched in April, to fund its deficit – after promising this revenue would go toward investments such as the Cherchell industrial port in Hamdania. Furthermore, the Algerian National Office for Statistics announced in August that consumer prices increased 8% from 2015, and the value of the Algerian dinar is at a historical low compared to the dollar and the euro, indicating this austerity approach is unable to prevent the deterioration of the economic situation. So the government has had to reconsider.

In response to mounting criticism, on 4 June, Prime Minister Abdelmalek Sellal spoke at the “tripartite” annual conference between the government, the General Union of Algerian Workers, and employers’ associations, announcing a “new model for economic growth.” His tone was reassuring yet sober, insisting that Algeria could no longer rely on its oil and gas and that “we must seek growth elsewhere in the real economic sphere, where public or private companies are the keystone.” This represents a major turning point, one that experts and economists have long called for. The specific details of the plan have yet to be fully communicated, but the gist of the new approach is economic diversification – including developing the digital and agricultural sectors and encouraging more efficient management of companies – without altering the country’s social model. In time, the government hopes diversification will stimulate other sectors of the economy to share the hydrocarbon export burden and ensure economic stabilization.

Though this plan is in the early stages, the government has been active in trying to attract foreign investment to establish strong industrial units. Following encouraging statements by Sellal and the work of Minister of Industry Abdeslam Bouchouareb and Minister of Trade Bakhti Belaib, several automotive companies have announced their decision to build construction units in the country, which would provide jobs and alleviate the car quota issue by providing Algerian-made cars for the public. These companies include Peugeot (through its local partner, the Condor group) and Volkswagen (through its local partner, Sovac).

This new approach has failed to convince some Algerian economists, who insist the current system needs a wholesale transformation, including tackling the structural obstacles that deter foreign investors or the emergence of a dynamic private sector. Algeria’s cumbersome legal framework continues to put-off foreign investors. Despite discussions over changes to the investment legal framework (including the “51-49%” rule regarding foreign entity ownership), no changes have been implemented. Furthermore, decades of socialist-inspired centralism and a protected domestic market have instilled a legacy of suspicion that globalization means a loss of economic sovereignty. It remains to be seen how this plan could spur the private sector to innovate and whether the government would consider foreign debt as a source of economic investment, especially in new areas such as solar energy.

Despite the fiscal crisis, the sharp decline of oil revenues, and political instability among elites, the Algerian government is tackling the issue and has one or two years left of reserves to use as a cushion. In the meantime, it needs to carry out an extensive amount of reforms, which will require a fundamental shake-up, something the prime minister has ruled out for now. But the government needs to do more to put in place the conditions that would allow economic activity to thrive. In a sense, the initiatives of the past two years ensure that even though OPEC countries are meeting in Algiers, the country’s economic survival will not depend on external geostrategic competition.

Idriss Jebari is a postdoctoral research fellow with the Arab Council for Social Sciences working on social and cultural change in North Africa. (Sada 28.09)

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11.10 MOROCCO: Hollow Rivalry in Morocco’s Upcoming Elections

Riccardo Fabiani observed in Sada on 22 September that Morocco’s two major parties are building superficially conflicting narratives to emphasize their differences to voters despite general consensus on most issues.

In contrast to the 2011 elections that brought the moderate Islamist Justice and Development Party (PJD) to power, this year’s 7 October legislative elections for Morocco’s House of Representatives present an uneventful ballot, at least on the surface. Beyond a tense rivalry between the PJD and their primary opposition, the secular Party of Authenticity and Modernity (PAM), the elections largely indicate a normalization of the post-2011 era. The rivalry, which has consumed public debate, overshadows important yet unaddressed structural social and economic issues that have long plagued the country.

This polarization also obscures the largely non-ideological and clientelistic nature of most Moroccan political parties. For example, ahead of the 7 October elections, the PJD and PAM have each managed to secure the support of one socialist party: the Party of Progress and Socialism (PPS) for the former and the social-democratic Socialist Union of Popular Forces (USFP) for the latter. Most of the other parties are waiting on the final results to negotiate their participation with the winner in a ruling coalition, as Article 47 of the 2011 Constitution mandates that the king choose the prime minister from the biggest party in parliament.

Knowing that their electoral strength is limited, these parties are mainly reactivating their membership and patronage networks by making unlikely electoral promises and hardening their rhetoric while quietly signaling their relative proximity to either the PJD or the PAM, without precluding any options. For example, the centrist National Rally of Independents (RNI) has been in government almost continually since its foundation in 1978 and is likely to join the next government coalition regardless of the winner. Another staunchly pro-monarchy and centrist party, the Constitutional Union (UC), has a more confrontational position vis-à-vis the PJD and is unlikely to join the next government if the Islamists win. A third centrist party, the Popular Movement (MP), has a more cooperative stance toward the PJD and has already agreed in principle to be part of the next cabinet if the Islamists win; that said, they are likely to keep lines of communication open with the PAM if it comes out on top. Finally, the nationalist Istiqlal Party, a former member of the PJD’s first ruling coalition, has already signaled its proximity to and willingness to work with the PJD again, with whom it mended its relationship following a contentious few years in the opposition. At first glance, these positions seem to favor the PJD over the PAM—yet if the latter wins the elections, many of these formally pro-Islamist parties (for example, the MP and Istiqlal) will enter negotiations to join the next government.

Local media have widely spoken of the king’s neutrality in this ballot, but far from being the hallmark of a free and fair election, King Mohamed VI’s distance is a sign that this round hardly matters in Morocco’s institutional division of labor. The king is de facto the exclusive decision maker on a series of long-term and strategic matters, ranging from foreign policy to big infrastructure projects and the status of Western Sahara. On all other (usually short-term) issues such as fiscal policy, transportation, and tourism, parliament and government are free to choose the policies as long as they are compatible with the monarchy’s preferred approach. When these policies cross the monarchy’s red lines, the government has to backtrack. This has been the case when the Islamist government has tried to tackle economic rents or increase transparency and competition in, for example, how licenses for sand mining and transportation are distributed. No mainstream party is ready to challenge this arrangement.

In light of this, it is hardly surprising that there is a large consensus within the political class about key policy issues. With the exception of the campaign to legalize cannabis cultivation, which the PAM supports, the PJD and its challenger agree on the country’s long-term goals. Divergences are largely superficial: for instance, the PJD highlights its commitment to advancing democracy and continuing economic reforms implemented since 2011 (without specifying what measures will support these goals), while the PAM stresses its aim to accelerate the pace of industrialization and economic growth (but has so far failed to explain how this would come about). When it comes to the main economic measures adopted in the past five years by the Islamist government, such as phasing out subsidies and reforming the pension system by raising the retirement age, the PAM tends to disagree on minor details while agreeing on the overall framework.

The main parties’ consensus also means that they agree to leave Morocco’s structural economic issues alone, which are therefore unlikely to be discussed in the next term. The IMF and the World Bank point to three major problems that undermine the long-term economic development of Morocco and explain its persistently low growth rates despite the apparent success of its investment policy. First, the country has extremely low levels of human capital and one of the worst-performing education systems in the MENA region, according to all surveys in this field. Second, there is very little competition in most domestic sectors. From retail to banking and telecommunications, the domestic economy is controlled by companies tied to the monarchy and its inner circle, while the bodies supposed to enforce competition have been rendered useless. This lack of competition negatively affects productivity and innovation in the economy. Finally, Morocco’s economic governance is unable to guarantee a level playing field to businesses, which remain susceptible to political interference. With the partial exception of education (where there is a technocratic consensus that more needs to be done to fix it), the other structural issues are taboos in Moroccan politics, as they touch upon vested interests and the political and economic role of the monarchy.

Instead, the PAM and PJD have been trying desperately to emphasize their differences by developing two superficially opposing narratives. The PAM has been trying to ride the region’s anti-Islamist wave and appeal to center-left voters in a way that resembles Tunisian President Beji Caid Essebsi’s electoral campaign in 2014. As for the PJD, Prime Minister Abdelilah Benkirane often hints that the main resistance he has faced as prime minister has been from other, clientelistic parties and the king’s entourage (the businessmen, journalists, and notables closely linked to the monarchy, as well as Mohamed VI’s influential team of advisors, who act as a parallel cabinet). Often resorting to Moroccan dialect in his speeches, Benkirane tries to mobilize his conservative, middle-class, and urban constituencies by presenting the PJD as an anti-establishment party.

These narratives reflect a real sociological opposition. The PJD is almost exclusively an urban party: it is extremely popular in places like Fes, Casablanca, Rabat, Tangiers and Agadir. Thanks to the low turnout rates in these cities and its highly mobilized voters, the PJD has given voice to the conservative and middle-class constituencies that are loath to undermine the monarchy but demand more transparency and better services. This explains the appeal of Benkirane’s anti-establishment rhetoric: many PJD voters see themselves as part of a rising social class (for example, small- and medium-sized business owners) that is suffocated by the traditional elites’ grip on politics and the economy.

In contrast, the PAM is a largely rural party that tends to perform best outside of Morocco’s big cities. In this environment, characterized by the weak ideological mobilization of voters, patronage networks play a decisive role in determining the electoral outcome. Traditionally, landowners and rural notables have favored the parties that are perceived to have the closest ties to the monarchy and can guarantee political and social stability. The PAM’s pro-monarchy and pro-stability narrative, its close ties to the king’s entourage, and the growing presence of notables in its ranks appeal to the rural elites—who have been hit by the PJD’s tax reforms in the agricultural sector since 2013—and the country’s establishment, which mobilizes its large clientele to influence the ballot.

Outside of these two parties, the other political and social formations play a marginal role. The always fractious left will field one list, the Democratic Left Federation (FDG), while other groups like Annahj Addimocrati will continue to boycott the legislative elections to protest the conditions in which they take place. The left seems unable to broaden its appeal beyond a minority of educated, city-based Moroccans. As for the main Islamist movements, al-Adl wal-Ihsan, Morocco’s biggest religious organization, continues to be critical of the monarchy; though its rhetoric has been softening lately, it is still not allowed to present a list. In contrast, Salafi preachers have become quite fashionable. The PJD tried to field a controversial Salafi preacher in Marrakech, but his candidacy was struck down by the local governor. Meanwhile, other parties, including Istiqlal and the Democratic and Social Movement (MDS), have also offered candidacies to Salafis. As Salafis remain on the margins of Moroccan politics, the main parties are competing to secure their votes by offering them token candidacies.

This election will solidify this facade of normality, which fits with the monarchy’s goals of political stability, greater foreign investment, and long-term economic development. The likely low voter turnout rate is not a source of concern, as the monarchy can present the polarization of the political party system—and the successful inclusion of an Islamist party—as a sign of the ongoing process of democratization following the adoption of the 2011 constitutional amendments. Nevertheless, deeper social and economic issues remain outside of this electoral contest, despite their relevance to Morocco’s political and economic life. The king continues to exert a degree of power and influence that stifles the country’s democratic evolution, and multilateral lenders continue to point out the limits of Morocco’s economic model, but no political actor is willing to tackle these problems.

Riccardo Fabiani is a North Africa analyst at Eurasia Group. (Sada 22.09)

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11.11 TURKEY: Moody’s Downgrades Turkey’s Issuer & Bond Ratings to Ba1 with a Stable Outlook

On 23 September 2016, Moody’s Investors Service downgraded the Government of Turkey’s long-term issuer and senior unsecured bond ratings to Ba1 from Baa3 and assigned a stable outlook. This concludes the review for downgrade that was initiated on 18 July. The drivers of the downgrade are as follows:

The increase in the risks related to the country’s sizeable external funding requirements.

The weakening in previously supportive credit fundamentals, particularly growth and institutional strength.

The stable outlook balances downside risks arising from the erosion in Turkey’s economic resilience and increasing balance of payments pressures against credit-positive considerations arising from its large and flexible economy which continues to register positive growth and the government’s strong fiscal track record.

Concurrently, Moody’s has downgraded to Ba1 from Baa3 the senior unsecured bond rating of Hazine Mustesarligi Varlik Kiralama A.S., a special purpose vehicle wholly owned by the Republic of Turkey; and assigned a stable outlook.

In conjunction with these rating actions, Moody’s has also lowered Turkey’s long-term foreign-currency bond ceiling to Baa2 from Baa1, and its long-term foreign-currency deposit ceiling to Ba2 from Baa3. Turkey’s short-term foreign-currency deposit ceiling has been lowered to NP from P-3, and the country’s short-term foreign-currency bond ceiling to P-3 from P-2. Furthermore, Turkey’s local currency bond and deposit ceilings have been lowered to Baa1 from A3.

Ratings Rationale

In recent years, Turkey’s credit profile has presented a marked contrast between significant external imbalances which heighten its exposure to external shocks and/or loss of confidence, and a strong government balance sheet, supported by a robust fast-growing economy.

The upgrade to Baa3 in May 2013 reflected two things. First, increasing assurance that credit strengths such as economic growth and fiscal performance were likely to be sustained at levels compatible with a Baa3 rating. Second, an assumption that political stability would enable planned structural reform implementation to address external imbalances, such as promoting domestic savings and reducing the economy’s reliance on imports (across a range of sectors including energy) and imported capital.

However, since the upgrade in 2013, the risk of a shock arising as a result of the country’s weak external position has become more pronounced, given the combination of persistently high political risks and volatile investor sentiment. Moreover, credit fundamentals that had previously supported a Baa3 rating (e.g., high levels of institutional strength and a healthy economic outlook) have deteriorated. In particular, Moody’s expects growth will slow over the coming years, as constraints on the externally-funded, consumption-fueled economy emerge, the reform agenda slows further and the investment climate remains weak.

Moody’s believes that this slow deterioration in Turkey’s credit profile will continue over the next 2-3 years and the balance of risks are better captured at a Ba1 rating level. The stable outlook on the Ba1 rating reflects the strengths in the credit profile, namely the government’s robust balance sheet, which would allow for the absorption of shocks and flexible responses.

First Driver: Elevated Risks Related To the Country’s Sizeable External Funding Requirements

Moody’s notes that Turkey continues to operate in a fragile financial and geopolitical environment and that its external vulnerability has risen, both over the past two years and more recently as a result of unpredictable political developments and volatile investor perception. This has credit implications for Turkey given its dependence on foreign capital. The risk of a sudden, disruptive reversal in foreign capital flows, a more rapid fall in reserves and, in a worst-case scenario, a balance of payments crisis has increased.

Turkey’s current account deficit remains elevated (4.3% and 4% forecast in 2016 and 2017 respectively) and exceeds those of other similarly rated sovereigns despite a recent improvement tied to low oil prices. In particular, the upsurge in security-related incidents, specifically in Ankara and Istanbul, and the sanctions that were imposed by Russia last year have had an adverse impact on the tourism sector in Turkey, which accounts for 4.4% of GDP and around 15% of total current receipts (2015). In the first half of this year, tourist arrivals and revenues were down 27.9% and 28.2% (compared to the same period last year) respectively. While the removal of Russian sanctions is likely to provide some support to the sector, full normalization will be delayed as long as political and security risks remain elevated.

Additionally, the country’s external indebtedness has risen. According to our estimates, Turkish corporate, banking and government sectors need to repay approximately $155.8 billion in external liabilities this year. Together with the current account deficit, this amounts to an estimated 26% of GDP in 2016 and in 2017. This large external funding need exposes the country to sudden shifts in investor confidence, which has been weak and volatile over the past 18 months, as reflected in the volatility of the Turkish lira (vis-à-vis the US dollar) and substantial volatility in portfolio flows.

Although debt rollover rates have shown resilience over that period, including recently following the coup attempt, with only a modest re-pricing of new facilities, Moody’s believes that the combination of elevated external financing needs, the rise of domestic political risk, and the persistence of geopolitical threats in combination with volatile financing environment raises the risk of a balance of payments crisis in Turkey beyond that which prevailed at the time of the upgrade.

Furthermore, external buffers to withstand external shocks remain low. Looking across the economy in aggregate, Moody’s External Vulnerability Indicator (which reflects the coverage of maturing external financing, including non-resident deposits and short-term external liabilities, by foreign-exchange reserves excluding gold) positions Turkey unfavorably vis-a-vis its peers. Moody’s estimates that this indicator stood at 187.3% in 2016, more than 20% above the level in 2013, and that the indicator will remain at an elevated level for the foreseeable future.

That said, a mitigating factor is that the Turkish banking sector has foreign-currency reserves at the central bank amounting to around 11% of GDP (end 2015). In the event of systemic stress, these buffers along with liquid assets on the banks’ balance sheet would be sufficient to cover banking sector liabilities due over the next 12 months. In contrast, the government is in a weaker position to support the economy as a whole: net foreign exchange reserves (excluding foreign exchange reserves held by the banking system at the central bank) account for around 30% of total gross foreign exchange reserves (as of end 2015), limiting the central bank’s ability to intervene in the currency markets.

Second Driver – Weakening of Previously Supportive Credit Fundamentals

In Moody’s view, the erosion of Turkey’s institutional strength, which was evident prior to the failed coup attempt but which the event may exacerbate, has negative implications both for the level of growth in the coming years and for the implementation of the structural changes the government has identified are needed to deliver balanced, sustainable growth and relieve external pressures.

Turkey’s institutional strength has eroded since the rating agency assigned a negative outlook to the rating in April 2014. Qualitative surveys on Turkey’s institutions began to erode two years ago particularly reflected in the Worldwide Governance Indicators for control for corruption and more recently reflected in the World Economic Forum’s Competitiveness Indicator where the assessment of institutions experienced the most severe drop, falling 11 places to 75 (out of 140).

More recently, the government’s response to the unsuccessful coup attempt raises further concerns regarding the predictability and effectiveness of government policy and the rule of law going forward. This has consequences for both institutional and economic strength. As one example, the large-scale suspensions in the civil service raise doubts over the capacity of Turkey’s policy making institutions to make meaningful further progress in both legislating and implementing the reform program. As another, the government’s actions in the private sector towards institutions that have ties to the Gulen movement are likely to affect the country’s growth trajectory negatively, by raising concerns regarding the protection of private investment and the investment climate in general.

As a consequence, the rating agency now expects real GDP will grow at an average of 2.7% over the 2016-19 period, which is significantly lower than the average growth of 5.5% over 2010-14 and also lower than its forecasts when it upgraded Turkey to Baa3 in May 2013.

Moreover, although the government has made some progress on its reform agenda earlier in the year and passed an important savings-oriented reform policy after the failed coup attempt, Moody’s believes that that the prospect of sustained reform implementation that decisively moves the economy from consumption- and external capital-driven growth to a more balanced growth model is low. Weakened institutions will likely face the distraction of constitutional change at the same time as struggling to balance the tensions inherent in the need to simultaneously boost near-term growth, deal with heightened security risks and consolidate power in a post- coup environment. As a result, external risks are unlikely to diminish in the coming years, and may rise.

Rationale for A Stable Outlook

Moody’s decision to assign a stable outlook reflects the balance of risks at the Ba1 rating level. Turkey’s headline fiscal metrics are still favorable, notwithstanding the fact that the country has only just completed an almost two-year electoral cycle. Since the beginning of 2009, Turkey’s debt burden has fallen by more than 13%age points to 32.9% of GDP in 2015. Under the baseline, Moody’s expects the debt ratio to remain broadly stable at 32.2% of GDP in 2016.

Moreover, Turkey’s ability to finance its outstanding stock of debt is supported by the relatively low share of central government foreign-currency-denominated debt (35.1% 2015, down from 46.3% in 2003) and the favorable maturity profile of the central government’s debt stock: a significant portion of the central government debt stock is contracted under fixed rates and the average maturity of the central government debt stock is now 6.3 years (and the maturity of its external debt stock is now almost 10 years). This favorable structure mitigates somewhat the impact of a further depreciation of the Turkish lira against the US dollar, and from a rise in global interest rates on the government’s balance sheet. In fact, the central government’s external debt payments due next year are modest at only $11.3 billion (1.5% of forecast 2017 GDP). Looking ahead, Turkey’s policy direction and its ability to maintain fiscal stability in an environment of prolonged lower growth (than previously seen) will be an important driver of sovereign creditworthiness.

What Could Move the Rating Up/Down

Upward movement in Turkey’s sovereign rating will be constrained by balance-of-payments factors as long as external imbalances remain large. However, upward rating pressure could materialize in the event of structural reductions in these vulnerabilities or material improvements in Turkey’s institutional environment or competitiveness. Reductions in political risk emanating either from the geopolitical or in the domestic political environment, while credit positive, would not result in upward rating action in the absence of other credit improvements.

Downward pressures on Turkey’s sovereign rating could emerge if one or a combination of the following occur: (1) trends in the public finances were to be materially reversed; (2) a sudden and sustained reversal in foreign capital flows; (3) a more than anticipated erosion of institutional strength or an increase in political risks greater than what has been anticipated.

GDP per capita (PPP basis, $): 20,438 (2015 Actual) (also known as Per Capita Income)

Real GDP growth (% change): 4% (2015 Actual) (also known as GDP Growth)

Inflation Rate (CPI, % change Dec/Dec): 8.8% (2015 Actual)

Gen. Gov. Financial Balance/GDP: -0.6% (2015 Actual) (also known as Fiscal Balance)

Current Account Balance/GDP: -4.5% (2015 Actual) (also known as External Balance)

External debt/GDP: 55.4% (2015 Actual)

Level of economic development: Moderate level of economic resilience

Default history: At least one default event (on bonds and/or loans) has been recorded since 1983. (Moody’s 23.09)

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11.12 TURKEY: The Changing Face of Turkey’s Pleasure Industry

Pinar Tremblay posted in Al-Monitor on 28 September that prostitution and escort services — often one and the same — are flourishing through aggressive promotions using hookup apps, social media and online marketplaces right under the nose of Islamists.

What is the best way to write about the sex industry in Turkey? I posed this question to a well-known Ottoman historian. He smiled at me on a warm Istanbul evening and said, “Did you ever visit Zurafa [Street]?”

Zurafa Street is in one of Istanbul’s oldest and most notorious brothel areas, dating back to Ottoman times. However, over the years, the number of brothels has dwindled. Indeed, the brothels and the official tallies of the women working in them reveal only a small part of Turkey’s sex industry.

Under Turkish law, government-supervised brothels are legal, but otherwise, prostitution is not. The Turkish penal code assumes prostitutes are exclusively female and that if they agree to work in a brothel, then they are legitimate. So the brothels are registered in a location the municipality approves, pay taxes and agree to the city’s health code for sex workers. Indeed, for years in the early 1990s, Matild Manukyan, a businesswoman who owned 32 brothels, was the top taxpayer in the country.

The brothels are a double-edged sword for their workers. They provide a relative safety net compared with independent sex workers. But once workers are registered as brothel employees, their chances of finding other employment are rather slim. The stigma is official and permanent. The workers have to pay a hefty portion of their income to the brothel management, as well.

From talking to the women in these brothels, I learned the following:

-Turkish law does not make brothel work legal for foreign women or for members of the lesbian, gay, bisexual, transgender and intersexual (LGBTI) community. So anyone belonging to any of these groups must work outside legal brothels and inevitably becomes part of a criminal operation.

-While the Turkish economy is deteriorating, sex workers say the demand for them is on the rise, given the young population. However, the demand is selective. Ece, a registered sex worker at an Istanbul brothel for two decades, told Al-Monitor, “In this profession, unlike others, seniority is a disadvantage. Your income decreases as you age. Then, of course, the market is bustling with young boys and girls from Syria and still others from Eastern Europe. Now brothels have to compete against the internet. Most upper-class customers do not come to brothels anymore. Several houses have shut down on Zurafa Street.”

Indeed, the face of Turkey’s sex industry is changing fast. On several main city streets, particularly in Ankara, in broad daylight, you can see young men handing out colorful business cards to passers-by, including children and even police officers. The cards, complete with phone numbers and nude photos of them, say, “Ms. X is waiting for you at her home. Call her.”

Similarly, a simple search online will yield hundreds of webpages providing escort services in different cities, with names such as Escort Istanbul, Escort Izmir, etc. Unlike other countries, escort services are not legal or regulated in Turkey, yet they explicitly offer sexual services. Some escorts provide a detailed list of sexual services they are willing and unwilling to provide, explaining the details of pricing and providing a manual about the kind of hotels they are willing to spend the night at and the product brands they prefer — in case a client would like to buy gifts. None of these webpages have an age requirement to visit.

Similarly, escort services that provide male and transgender escorts to both men and women have bloomed as well. Al-Monitor spoke with a male escort in his early 30s with the nickname Baris: “I started escorting during my college years,” Baris said. “One of my mom’s friends was divorced and asked me if I would join her at an art event. It was not for money or anything. I thought, why not? I hooked up with my first job there. Mainly, this has become my life now. I provide massage and workout sessions for my customers. I go out exclusively with women.”

There are also rules. Baris said, “I do not ever engage in unprotected sex. I think that is the most important issue in our sector. If someone agrees to going without a condom, the customer should move on.” Baris said he charges anywhere from $1,000 for a night to $3,000, depending on the event. Most women who seek these services are happy to be seen in public with their handsome escorts.

Barbaros Sansal, a famous fashion designer and a gay activist who is outspoken on controversial issues, gave a detailed interview to Al-Monitor about the changing face of the sex industry in Turkey. Since the ban against adultery was lifted in the late 1990s, the market for prostitutes and escorts has skyrocketed, he said. “Escort services used to be more discreet. Now they are promoted shamelessly,” Sansal said. “In Turkey today, there are more brothels than domestic violence shelters for women.”

Sansal explained that some hookup apps such as Grindr, Romeo and Hornet that are used to establish gay friendships are also used for prostitution. He added, “Grindr is a forbidden site in Turkey, but you can access it with VPN [virtual private network] services, such as TunnelBear. Police also use these sites to harass the gay community or to blackmail them. Still, they are popular all over the world, letting people make connections on their own time and budget.”

It has become easier for escorts to work independently, with the help of everything from houses that can be rented for a day without the requirement of an ID card (unlike most hotels) to services such as Instagram, Snapchat, Twitter and Facebook and scheduling webpages such as Kolaygece (“easy night”). The internet provides tools for online marketing, advertising, screening of customers and arranging a private location to meet. “I think alcohol is regulated more diligently in Turkey than sex,” female escort Hande told Al-Monitor.

Sporadically, the police decide there is an overabundance of escort services and crack down on them. Usually, it is the sex worker who gets caught and penalized in such instances, and the webpages are shut down. “We have two [main] issues. One is that our webpages are arbitrarily shut down by the government, so every other month we change our portal address before they terminate it. We announce the changes on social media. The other issue is sexually transmitted diseases. It is an unspoken problem,” one escort service manager told Al-Monitor.

It is quite interesting that an Islamist government — one that prides itself on raising a pious generation with a high moral code — has worked to minimize the number of brothels while at the same time turning a blind eye to a flourishing sex industry that uses all sorts of online tools. It is most likely because a sizable portion of the ruling Justice and Development Party (AKP) supporters tacitly approve of this arrangement where prostitution is largely kept out of public view. Even some AKP members are not immune to the wiles of the sex industry. “That is one of the few joys of life left,” one such customer told Hande during our interview. (Al-Monitor 28.09)

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11.13 GREECE: Staff Concluding Statement of the 2016 Article IV Mission

On 23 September, the IMF issued a Concluding Statement describing the preliminary findings of IMF staff at the end of an official staff visit to Greece. Missions are undertaken as part of regular (usually annual) consultations under Article IV of the IMF’s Articles of Agreement, in the context of a request to use IMF resources (borrow from the IMF), as part of discussions of staff monitored programs, or as part of other staff monitoring of economic developments.

Greece has made significant progress in unwinding its macroeconomic imbalances, but growth has remained elusive and risks are high. Greece has managed to reduce its fiscal primary and current account deficits from double digits to around zero over the last six years. This is an impressive adjustment for a country belonging to a currency union, where policy levers are limited. The initial fiscal adjustment was based on important reforms. However, it has become increasingly reliant on one-off and ad-hoc adjustments that could not be sustained, denting policy credibility. Recurrent political crises and confidence shocks associated with the inability to sustain the reform effort resulted in a high cost for society, with output having declined by 25% and still stagnating, and unemployment and poverty rates remaining much higher than before the crisis. Looking forward, growth prospects remain weak and subject to high downside risks, and unemployment is expected to stay in the double digits until the middle of the century.

Greece needs to pursue deep reforms in key areas to increase the economy’s resilience and prosper within the currency union without long-term support from its European partners. In the context of its new adjustment program, the authorities have laid the foundations for new reforms to shore up the public finances and support growth. But a significant deepening and acceleration of the pace of implementation of reforms is still necessary to address the four key structural problems that are hindering the recovery and pose considerable risk to long-term growth: (i) a vulnerable structure of the public finances resulting from unaffordable pension spending financed by high tax rates on narrow bases and a deteriorating payment culture; (ii) impaired bank and private sector balance sheets; (iii) pervasive structural obstacles to investment and growth; and (iv) a public debt burden that remains unsustainable despite large debt relief already received. Addressing these challenges decisively will be essential to achieve a better and more secure standard of living.

As to fiscal policy, the structure of the budget should be improved through a rebalancing of the policy mix toward more growth-friendly policies. In light of the impressive fiscal consolidation to date—not least the most recent fiscal package legislated in 2015-16—Greece does not require further adjustment to reach and maintain unprecedented primary surpluses, which would not only be detrimental to growth, but are also difficult to sustain in view of likely pressures given persistently high unemployment. However, the composition of the adjustment, which has relied on tax increases on narrow bases, adds significant risks to the budget and deters investment and employment. Spending remains exceedingly focused on unaffordable pensions provided to current retirees, which crowds out other needed social spending to protect vulnerable groups, including the unemployed. Essential public services have been cut to the bone, as evidenced by hospitals lacking syringes and public busses immobilized by lacking parts. A fiscally-neutral rebalancing of policies over the medium term toward lower pensions and a fairer distribution of the tax burden are thus essential for the public sector to able to provide adequate services and social assistance to vulnerable groups, while creating the conditions for investment and growth. Ongoing complementary reforms to modernize the public administration and public financial management should continue to be pursued with vigor. Looking forward, efforts should focus on two key areas:

Social spending: Recent pension reforms aim to lower spending by about 1% of GDP in the medium-run. This is a welcome and undoubtedly politically difficult step in the current circumstances. However, it is well short of what is needed, considering that the deficit of the pension system remains highly unsustainable, at 11% of GDP (compared to an average of 2½% in the euro-area). The scale of the problem is such that the current policy of largely sheltering current pensioners while relying on much higher tax rates and lower expected pensions for current wage-earners is not consistent with sustainable growth and would become increasingly unsustainable on grounds of inter-generational equity. To create space for needed social spending to protect vulnerable groups and provide essential public services, a further reduction in current pensions is thus necessary and can be implemented by unfreezing current pensions and applying the new benefit formula. Relying instead on further across-the-board discretionary spending cuts, automatic or otherwise, should be avoided, as it is neither growth enhancing nor sustainable.

Tax policies: A new income tax reform has helped to harmonize tax rates and generate additional fiscal savings, while a VAT reform has simplified the system. Nonetheless, the reforms largely rely on increasing tax rates, creating disincentives to work in the formal economy. Moreover, the income tax reform has not tackled Greece’s very generous tax credit, which allows more than half of wage earners to be exempt from income taxes (compared to 8% in the euro-zone). Such exceptionally generous exemptions for the middle-class are difficult to justify with social-fairness arguments, as they forego the revenues needed to protect the most vulnerable through welfare and unemployment benefits that are common elsewhere in Europe. In this context, the authorities should reduce tax (and social security contribution) rates, while lowering the generous income tax credit and eliminating remaining exemptions that benefit the rich. Such a policy can also ultimately result in a more equitable distribution of the tax burden.

To support their fiscal rebalancing strategy, the authorities should send a strong signal that Greece can no longer tolerate evasion. The policy of repeatedly hiking already high tax rates has prompted a proliferation of installment and deferral schemes (more than 60 social security schemes have been put in place since 2001). Their frequency and the inability to enforce them suggest that they are inevitably seen as de facto tax forgiveness. This is evidenced by the rapidly accumulating tax and social security debt (70% of GDP, the highest in the euro-zone, which is owed by half of taxpayers). It is also borne out by the deterioration in tax-collection rates (the percentage of the annual assessment that is collected), which have fallen from an already low level of some 75% in 2010 to less than 50% now despite unprecedented international technical assistance. Tax evasion by the rich and the self-employed and an ineffective and politicized tax administration have contributed to the problem, putting undue pressure on the budget and leading to an unequal distribution of the tax burden. It is thus critical that the authorities refrain from adopting further installment schemes. Instead, they should put in place tailored and durable restructuring solutions for viable debtors in line with their capacity to pay, concentrate audits on large taxpayers and high net-wealth individuals, and continue to strengthen the use of enforcement tools against those who can but do not pay. Implementing the recently legislated independent revenue agency fully insulated from political interference will be critical in this effort.

Non-performing loans (NPLs) must be reduced rapidly to create the conditions for a resumption of credit to the economy. NPLs have reached close to 50% of total loans, the second highest level in the euro-area. This reflects not only the effects of the economic downturn on individuals’ and businesses’ capacity to pay, but also a weak payment culture. Assuming that banks can grow out of the NPL problem is not credible, as growth ultimately depends on lending to dynamic enterprises, which is constrained if banks instead keep alive unproductive and indebted ones. Putting in place policies that support a rapid clean-up of bank balance sheets is thus critical to achieving a successful recovery. This requires building on recent efforts to further strengthen and fully implement the legal tools for debt restructuring to restore the payment culture and provide incentives for borrowers and creditors to resolve NPLs. The supervisory authorities should continue to strengthen incentives for banks to set ambitious NPL-reduction targets and implement strategies prioritizing sustainable restructuring measures and NPL sales. Ensuring adequate bank capital is key to allow a rapid reduction in NPLs, even if costly.

At the same time, payment conditions should be normalized and bank governance strengthened. Payment restrictions and capital controls persist, hindering confidence and the return of much needed liquidity to the economy. The authorities should relax the controls rapidly and predictably—on the basis of a milestone-based roadmap—while preserving financial stability. Moreover, lingering governance concerns, related to a legacy of close relations between banks, the state, and powerful vested interests, foster an inefficient allocation of resources toward well-connected but unproductive entities. The authorities should follow up on recent legislative steps to strengthen governance by severing the links between the banks and the political system in both systemic and non-systemic banks and improving bank-management standards by taking advantage of international expertise. Relying on public development banks to engineer growth risks leading to an inefficient allocation of resources and ultimately higher taxpayer costs.

Structural reforms must be accelerated to boost competitiveness and growth. Despite successive attempts to address its weak institutions, Greece has not managed to regain competitiveness, with productivity growth among the lowest in the euro-area, investment down by more than 60%, and export growth lagging peers. The 2011 labor market reforms to collective bargaining and the minimum wage were major steps forward, as evidenced by the subsequent and notable improvement in labor costs. However, in the absence of product-market reform implementation, the burden of the adjustment has been borne largely by wage earners. The resistance to labor market reforms is thus understandable. But it would be wrong to conclude that labor market reforms should be reversed, as this would risk the potential gains for investment and job creation. Instead, the reforms should be complemented with more ambitious efforts to implement ongoing reforms to fully open up remaining closed professions, foster competition, and facilitate investment licensing and privatizations, as well as with measures to bring Greece’s collective-dismissals and industrial-action frameworks in line with international best practices.

Even with full implementation of this demanding policy agenda, Greece requires substantial debt relief calibrated on credible fiscal and growth targets. Despite very generous debt relief from private and official creditors, debt has continued to rise, reaching unsustainable levels. This reflects significant shortfalls between economic outcomes and Greece’s ambitious targets under its past adjustment programs. The authorities’ current targets remain unrealistic, in that they still assume that Greece will attain and sustain primary surpluses of 3.5% of GDP for many decades—despite double-digit unemployment rates until the middle of the century—and at the same time achieve high growth rates. In this context, it cannot be assumed that Greece can simply grow out of its debt problem. Further debt relief will be required to restore sustainability, going well beyond what is currently under consideration, and it should be calibrated on realistic assumptions about Greece’s ability to generate sustained surpluses and long-term growth.

Greece is at a crossroads, and bolder efforts are needed to address its remaining key challenges. Without a doubt, Greece has made enormous sacrifices to get to where it is now. But the significant achievements in balancing the budget, closing the current account deficit and improving the flexibility of the labor market have taken a heavy toll on the society and tested its endurance. The recent humanitarian challenge caused by the flow of refugees into Europe has added to the burden on the Greek people. This calls for the full support of Greece by its European partners. While Europe has already demonstrated its support by providing Greece with the time needed to adjust, further debt relief remains essential. Greece, for its part, should seize the opportunity to make steady but resolute progress toward addressing its remaining challenges. (IMF 23.09)

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

Fortnightly, 5 October 2016

Fortnightly, 5 October 2016

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