Fortnightly, 6 April 2016

Fortnightly, 6 April 2016

April 6, 2016


6 April 2016
27 Adar II 5776
28 Jumada Al-Akhir 1437




1.1  Israel & US Sign New Energy Agreement
1.2  Foreign Construction Firms to Be Allowed to Operate in Israel
1.3  Knesset Limits Bankers’ Salaries to 2.5 Million Shekels Annually
1.4  Netanyahu Says Natural Gas Ruling Hurts Israeli Economy
1.5  Israel & China Open Talks on Free-Trade Agreement


2.1  Moody’s Confirms Israel’s A1 Stable Rating
2.2  Intel Israeli Procurements Worth $10 Billion In Past Decade
2.3  Raytheon Commits To Israeli Reciprocal Procurements
2.4  Playbuzz Secures $15 Million in Funding from Saban Ventures & Disney
2.5  Israeli Incubator Teams with Chinese University
2.6  B Communications Completes Private Placement of NIS 148 Million
2.7  Magal S3 Acquires Ontario’s Aimetis Corp – A Global Leader in VMS Software
2.8  IAI Concludes a Successful Participation at India’s DEFEXPO


3.1  Arab Internet Users Forecast to Rise to 226 Million by 2018
3.2  International Dairy Queen Opens First DQ Grill & Chill Restaurant in Jordan
3.3  Cummins and Olayan Announce Middle East Joint Venture
3.4  Dubai Seeks New Investments on Tour of US Cities
3.5  Xactly’s Growth Continues with First Customer in Saudi Arabia
3.6  Turkcell Officially Launches 4.5G in Turkey


4.1  Plastic Bag Law Passes in Israel Banning Free Shopping Bags as of 2017
4.2  Oman to Encourage Household Generation of Solar Power
4.3  Morocco Seeks to Generate 52 % of its Power from Renewable Sources


5.1  Lebanon’s Trade Deficit Widened to $2.46B by February 2016
5.2  Lebanon’s Fiscal Deficit Broadened 28.62% by the End of 2015
5.3  World Bank’s $100 Million to Create Jobs for Jordanians & Syrian Refugees

♦♦Arabian Gulf

5.4  Indian Remittances Fall as Arabian Gulf Reduces Demand for Foreign Workers
5.5  Bahrain’s Real GDP Growth Rises to 2.8% in Fourth Quarter
5.6  Qatar Trade Surplus Shrinks 53.5% as Energy Exports Slump
5.7  Shrinking Saudi Money Supply Points to Slowing Economy
5.8  Foreign Firms in Saudi Arabia Will Have to Hire 75% Locals

♦♦North Africa

5.9  Egypt to Repay $1 Billion Owed to Qatar in July
5.10  Egypt’s Trade Deficit Falls 5% in December
5.11  Egypt’s Tourist Numbers Drop in February for Fourth Month in a Row
5.12  Egypt’s Foreign Currency Reserves Slightly Up In March
5.13  Egypt’s Suez Canal Revenues Decline for 2nd Consecutive Month
5.14  Morocco’s Automotive Industry Aims to Create 90,000 jobs by 2020
5.15  Morocco’s Economic Growth Stands at 4.5% in 2015


6.1  Turkey’s Inflation Eases In March As Food Prices Drop
6.2  Turkey & Pakistan Sign Free Trade Agreement Framework
6.3  Only 30% of Workers in Turkey Are Women
6.4  Most Greeks Willing To Work Abroad As Job Insecurity Mounts



7.1  Israelis’ Penchant for Holiday-Related Names


8.1  Takeda and Teva Establish Teva Takeda Yakuhin in Japan
8.2  First Human Results with V-Wave’s Interatrial Shunt Published in The Lancet
8.3  Teva Announces FDA Approval of CINQAIR (reslizumab) Injection
8.4  Metabomed Completes $18 Million Series A Financing


9.1  Stratoscale $27 Million Series C Funding as it Transforms Cloud Computing
9.2  Mellanox Announces New Line of InfiniBand Router Systems
9.3  Stratasys’ Transformational, Market Disruptive J750 3D Printer
9.4  Magos Systems Wins Challenge for Smart City in Brazil
9.5  Contextors Unveils Breakthrough Language-Learning Capabilities
9.6  justAd eyeMagnet Transforms Static Ads to Animated Ads Automatically
9.7  MUV Interactive Launches Smart Wearable BIRD in Japan


10.1  New Tel Aviv-Jerusalem Fast Rail Line to Open in 2018


11.1  ISRAEL: Natural Gas Judgement Casts Shadow Over Israel’s Energy Plans
11.2  ISRAEL: U.S. Firms Target Investment in Israeli Cannabis R&D
11.3  QATAR: Fitch Affirms Qatar at ‘AA’; Outlook Stable
11.4  EGYPT: Cairo’s Crude Crisis
11.5  EGYPT: Will Egyptian Parliament Cut Into the Military’s Profit Margin?
11.6  EGYPT: Egyptian State Takes on Independent Trade Unions
11.7  TURKEY: Key Trends Impacting the Turkish Elevators and Escalators Market
11.8  GREECE: Privatizations Program Struggles to Make Target of €2 Billion


1.1  Israel & US Sign New Energy Agreement

U.S. Energy Secretary Moniz and his Israeli counterpart, Energy Minister Steinitz signed a new joint energy deal in Jerusalem on 4 April, intended to tighten cooperation between the countries.  The agreement expands areas of cooperation to include fuels and fuel alternatives, natural gas, smart grid technologies, desalination and water treatment, and the physical and cyber-defense of energy and water installations.  The deal stemmed from the understanding that developing advanced technologies in the fields of energy and water, for the purpose of creating secure methods of delivery while protecting the environment and making energy more efficient, was of utmost importance to both countries.  (Various 05.04)

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1.2  Foreign Construction Firms to Be Allowed to Operate in Israel

Finance Minister Kahlon and Construction Minister Gallant invited foreign construction firms to bid on local tenders in an effort to introduce new technologies into Israel’s construction industry and boost its productivity.  In an attempt to appease local contractors, Kahlon and Gallant said that international firms bidding for projects in Israel will do so as part of joint ventures with Israeli firms.  The Housing Ministry will license up to six foreign companies to operate in the field of residential housing, for a period of up to five years.  The firms selected will be able to bring up to 1,000 construction workers to Israel, and will have to adhere to strict guidelines and supervision pertaining to construction objectives and standards.  While operating in Israel, the foreign firms will be subject to Israeli law, including the stipulations of the Sale (Apartments) Law and the orders of the Contractors Registrar.  (Various 26.03)

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1.3  Knesset Limits Bankers’ Salaries to 2.5 Million Shekels Annually

The Knesset has passed a law capping the annual salaries of bank executives at NIS 2.5 million ($658,000), described as among the world’s toughest such restrictions.  The law, approved on 21 March, says no salary in the financial sector can be more than 35 times that of the lowest-paid worker in the same company, with a ceiling of NIS 2.5 million.  The high cost of living is a major concern in Israel and a key issue for Finance Minister Kahlon (Kulanu), who pushed for the legislation, approved by a vote of 56 to zero in the 120-seat Knesset.  Prime Minister Binyamin Netanyahu has taken a pro-business stance, but needs Kahlon’s Kulanu party to maintain his majority.  (AFP 22.03)

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1.4  Netanyahu Says Natural Gas Ruling Hurts Israeli Economy

On 27 March, Israel’s High Court of Justice overturned the government’s framework deal on natural gas, delivering a blow to Prime Minister Netanyahu and a consortium of energy companies.  The ruling gave the Knesset a year to amend the plan or the framework will be canceled.  It cited a clause in the deal that would prevent Israel from making significant regulatory changes for the next 10 years as the main reason for scuttling it, arguing that the clause restricts the Knesset’s powers.

Netanyahu has made the energy deal a centerpiece of his agenda, saying the gas sales from Israel’s large offshore reserves would bring energy self-sufficiency and billions of dollars in tax revenues.  Critics have said the deal gives excessively favorable terms to the government’s corporate partners.

Resource-poor Israel announced the discovery of sizeable offshore natural gas deposits about five years ago.  A partnership of Israeli and U.S. companies, including Texas-based Noble Energy and Israel’s Delek Group, have already begun extracting some reserves.  (IH 28.03)

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1.5  Israel & China Open Talks on Free-Trade Agreement

Prime Minister Netanyahu and Chinese Vice Premier Liu announced on 29 March the start of talks on a free-trade agreement between the two nations.  Netanyahu and Liu met at the launch of the 2016 Israel-China Committee for Cooperation in Innovation summit in Jerusalem.  The talks on the potential agreement will be led by representatives from ten Israeli government ministries and agencies, including the Ministry of Foreign Affairs, Ministry of Agriculture, Ministry of Economy and Industry, the Council for Higher Education, and the Office of the Chief Scientist.  Israeli sources believe an agreement with China has the potential to double the trading volume between the two nations and increase their individual production.  Bilateral trade is currently estimated at $8 billion per year.  (Globes 30.03)

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2.1  Moody’s Confirms Israel’s A1 Stable Rating

On 31 March, Moody’s Investors Service confirmed Israel’s A1 rating with a stable outlook.  Moody’s explained that the rating was supported by economic flexibility and the great effectiveness of the government, which is constantly working to improve Israel’s debt and financing figures.  Moody’s added that were it not for Israel’s geopolitical risks, its credit rating would be higher.

Moody’s describes Israel’s economy as very strong, with growth supported primarily by high-tech exports. Writing about this sector, Moody’s economists say that it rests on a highly educated population and high R&D expenditure.  Israel’s debt is low by international standards, and Israel dealt effectively with the crisis that engulfed the world’s economies.  The weak points listed by Moody’s include political instability and security risks that grow when the situation in Syria becomes even more unstable.  Moody’s also cites threats by Iran, which continues to fuel global terrorism, especially against Israel.  Concerning the plan for natural gas development in Israel, Moody’s says that political disputes on the issue are liable to drive away potential investors in natural resources.  Moody’s forecasts 2.9% economic growth and 0.6% inflation in 2016, compared with 2.5% growth and minus 1% inflation in 2015.  (Moody’s 31.03)

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2.2  Intel Israeli Procurements Worth $10 Billion In Past Decade

Intel reported that it has spent $10 billion on procurement in the Israeli market over the past decade.  Figures show that 80% of its purchases in Israel were from small and medium-sized businesses, and it spends an annual average of $1 billion on procurement from 1,000 different Israeli suppliers.  Half of this $10 billion total has been recognized as part of the reciprocal procurement undertaken by Intel as a condition for the grants and benefits it received over the years from the Ministry of Economy and Trade Investment Promotion Center.

Intel says that its procurement is six times as much as its obligations under its agreements with the state.  The company adds that its procurement personnel helped and trained local suppliers to meet its stringent standards, which enabled them to improve their businesses, thereby creating new jobs in the economy and enabling them to expand to new markets.  According to Intel, these suppliers exported $2 billion in goods and services over the past decade.

Figures provided by Intel show that 80% of its procurement in Israel is used for its processor manufacturing activity, mostly at the company site in Kiryat Gat.  The other 20% is designated for the company’s research and development in Israel and other countries.  Intel has 1,100 employees in Israel and is now completing the construction of its upgraded fab in Kiryat Gat.  The company’s investment in upgrading this plant is projected to reach $7 billion.  When the work is completed, the Kiryat Gat fab will be one of Intel’s most advanced facilities in the world.  (Globes 31.03)

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2.3  Raytheon Commits To Israeli Reciprocal Procurements

In an agreement signed on 30 March, US arms manufacturer Raytheon will make $9.5 million in reciprocal procurement in Israel over the next five years.  The agreement was signed in the US by senior company officials and Ministry of Economy and Industry Division for Foreign Investment and Industrial Cooperation.  The agreement follows cooperation between Raytheon and Rafael Advanced Defense Systems in the development and production of the new David’s Sling defense system against rockets and missiles.  The two companies have equal shares in the venture: Rafael makes the interceptor missile for the system, while Raytheon produces the launchers, chassis, and other accessories for it.

Raytheon is committing itself to reciprocal procurement in Israel for the first time.  Under the new agreement, its procurement in Israel will focus on electronics and semiconductor enterprises, many of which are already subcontractors for Rafael in the various ventures in which it is involved.  The Division for Foreign Investment and Industrial Cooperation said that a large proportion of these companies were active in northern Israel. Since 2007, when the program for joint development of David’s Sling began, the US administration has allocated $800 million in special aid for it.  US aid for this program, and for the Arrow 3 defense missile program, is slated to continue in the coming years.  (Globes 31.03)

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2.4  Playbuzz Secures $15 Million in Funding from Saban Ventures & Disney

Tel Aviv’s Playbuzz, the leading platform for online content engagement and social distribution, has raised $15 million in new funding, led by Saban Ventures with participation from The Walt Disney Company.  Existing investors 83North, Carmel Ventures and FirstTime Ventures also participated in the investment round.  Playbuzz will use the investment to further enhance its proprietary content-engagement platform and expand its sponsored content business, which already works with many of the world’s leading brands to create and distribute native advertising campaigns at scale.

The Playbuzz platform is used by tens of thousands of publishers, brands and content creators to create and distribute content in formats that optimize audience engagement and social distribution.  Examples of Playbuzz’s innovative content formats include slideshows, flip cards, galleries, quizzes, lists and video snaps.  The popularity of content created using Playbuzz is skyrocketing, as engagement metrics for such items outpace those of traditional digital formats, such as articles and long-form video.  Playbuzz-powered content generates average item completion rates of up to 94% and social share rates as high as 15%.  (Playbuzz 31.03)

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2.5  Israeli Incubator Teams with Chinese University

On 30 March the Alon MedTech Ventures incubator signed a cooperation agreement with Tsinghua University, considered one of China’s leading universities.  This is the first cooperation agreement of its kind between an Israeli technology incubator and a Chinese entity.  The agreement is Tsinghua University’s second in Israel, after it signed an agreement with Tel Aviv University in 2013 to establish a joint center in China for Israeli and Chinese researchers, called the XIN Research Center.

Under the agreement, the Alon MedTech incubator will scan projects from the XIN Research Center, and select several of them for further development in the incubator.  The products to be developed by these companies will probably be adapted to the Chinese market and be prepared for marketing in China at the accelerator jointly owned by Alon MedTech and the XIN Center, and will opened nearby the latter.  The final model has not yet been settled, and any format signed will require prior approval from the Ministry of Economy and Industry Chief Scientist for sending technologies developed with his support overseas.  At the same time, parties at Tsinghua University will help companies in the Alon MedTech incubator find both investors and marketing channels for their medical device products.  (Globes 30.03)

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2.6  B Communications Completes Private Placement of NIS 148 Million

B Communications completed the private placement of NIS 148 million par value of its Series B Debentures to Israeli institutional investors for an aggregate consideration of approximately NIS 162 million (approximately $42 million).  The Company received the approval of Midroog, an Israeli rating company affiliated with Moody’s, that the issuances will not cause a reduction in the Series B Debentures’ rating; and also received the Tel Aviv Stock Exchange approval for the listing of the additional debentures for trade.  The private placement was carried out as an increase to the outstanding Series B Debentures of B Communications, which were first issued in September 2010 and have identical terms.  Ramat Gan’s B Communications is an Israeli corporation focused on the telecommunications industry.  Its shares are traded on the Nasdaq Global Market and the Tel-Aviv Stock Exchange under the symbol BCOM.  B Communications’ asset is its controlling interest (approximately 26.34%) in Bezeq The Israel Telecommunication Corp, Israel’s incumbent telecommunications group.  (B Communications 31.03)

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2.7  Magal S3 Acquires Ontario’s Aimetis Corp –  A Global Leader in VMS Software

Magal Security Systems announced that Senstar, its fully owned subsidiary based in Canada, acquired Aimetis for an enterprise value of approximately $14 million.  Aimetis, headquartered in Waterloo, Ontario, is a global leader in intelligent IP video management software (VMS), and was recently recognized by Deloitte, a leading consulting and accounting firm, as one of the fastest growing technology companies in North America.  Aimetis’ product portfolio is highly complementary to Senstar’s large portfolio of perimeter intrusion detection systems (PIDS), adding a state of the art video surveillance offering with unmatched solutions for outdoor and critical sites.  The acquisition expands the product portfolio by about 20%, and diversifies their offering into new markets such as education, health care and retail.

Yehud’s Magal S3 is a leading international provider of solutions and products for physical and cyber security, as well as safety and site management.  Over the past 42 years, Magal S3 has delivered tailor-made security solutions and turnkey projects to hundreds of satisfied customers in over 80 countries – under some of the most challenging conditions.  (Magal S3  01.04)

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2.8  IAI Concludes a Successful Participation at India’s DEFEXPO

At the conclusion of India’s defense exhibition ‘Defexpo’ 2016 that took place in Goa, India recently, IAI announced that it has finalized new sales worth hundreds of millions of dollars in the past quarter.  Those sales covered Unmanned Aerial Systems (UAS), air defense and radar systems, among others.  IAI top executives that participated at the event have met many of India’s senior leadership of India’s defense and security organizations.  At the event IAI displayed advanced systems of interest to the Indian customers, many of them operationally proven in India.  Among the new systems introduced here were radar systems providing early warning against mortar attacks and improvised explosive charges (IEDs).

IAI has been operating and selling advanced defense products to the Indian Ministry of Defense and other government organizations for the past 25 years, through a strategic partnership that span many areas.  Through the years IAI established subcontracting, cooperation agreements and joint ventures with numerous Indian companies and expanded its operation and cooperation with military branches, navy and air force, coast guard, border security and other agencies.  This cooperation also spans to joint research and development, for example in the Barak-8 air defense system, in its naval and land-based configurations, various radar systems, unmanned systems and more.

IAI is Israel’s largest aerospace and defense company and a globally recognized technology and innovation leader, specializing in developing and manufacturing advanced, state-of-the-art systems for air, space, sea, land, cyber and homeland security.  Since 1953, the company has provided advanced technology solutions to government and commercial customers worldwide including: satellites, missiles, weapon systems and munitions, unmanned and robotic systems, radars, C4ISR and more.  (IAI 31.03)

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3.1  Arab Internet Users Forecast to Rise to 226 Million by 2018

The number of internet users in the Arab world is expected to rise to about 226 million by 2018, according to the Arab Knowledge Economy report 2015-2016.  The report said the internet penetration rate will jump from about 37.5% in 2014 to over 55% in 2018, or about 7% above the estimated world average of 3.6 billion users.  Developed by Orient Planet Research, the study showed the six GCC states led the Arab region in terms of ICT indicators in 2015.  Bahrain led the way, registering 74.15% in internet user penetration, while Kuwait registered the highest in mobile subscription penetration with 194.62%.  The Arab ICT Use Index examines four major indicators for each of the 18 MENA economies – mobile phone subscribers, fixed-line subscribers, internet users, and installed computers.  (AB 29.03)

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3.2  International Dairy Queen Opens First DQ Grill & Chill Restaurant in Jordan

The Dairy Queen system, part of Berkshire Hathaway, has opened a new DQ Grill & Chill restaurant at Abdoun Circle in Amman, Jordan.  The opening of this location in Jordan represents the latest country outside of the United States with a DQ brand presence.  SKM Franchise Co. has entered into a long-term franchise agreement with American Dairy Queen, Corp. (ADQ) and plans to develop a minimum of 10 locations, including five DQ Grill & Chill restaurants throughout Jordan over the next five years.

The Nafal brothers, who lead SKM Franchise Co. Ltd., have more than 20 years of retail development experience.  In 2005, they opened El Rancho Supermercado, which grew into a chain of 13 supermarkets in Texas.  They own La Bodega, a food distribution company based in the state as well.  (IDQ 30.03)

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3.3  Cummins and Olayan Announce Middle East Joint Venture

Columbus, Indiana’s Cummins Inc. and The Olayan Group announced the formation of Cummins Arabia, a 50:50, three-country distribution joint venture company in the Middle East.  This joint venture consolidates the distribution of Cummins products in the United Arab Emirates (UAE), Saudi Arabia and Kuwait.  Those products are currently distributed by Cummins’ wholly-owned UAE distributor and Olayan-owned independent distributors – General Contracting Company (GCC) in Saudi Arabia and General Transportation and Equipment (GTE) in Kuwait.  These three countries represent some of the largest markets for Cummins in the Middle East.  The partnership allows Cummins to greatly expand access to the Saudi and Kuwaiti markets and operate closer to its customer base. At the same time, it will provide a valuable platform for the training and employment of nationals in each country.

The joint venture entity will be formed and the new operating structure implemented in the second half of 2016.  It will be headquartered in Saudi Arabia. Plans are underway to build dedicated facilities there.

Cummins, a global power leader, is a corporation of complementary business units that design, manufacture, distribute and service diesel and natural gas engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems.  (Cummins 29.03)

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3.4  Dubai Seeks New Investments on Tour of US Cities

Dubai Investment Development Agency (Dubai FDI) and Dubai Exports are touring four cities in the US as part of a mission aimed to attract North American industries and investment into the emirate.  Dubai FDI, an agency of the Department of Economic Development (DED) and Dubai Exports, the export promotion agency of DED, said the trade mission delegation also has representatives from Dubai South, Tecom, Dubai Silicon Oasis (DSO), and Emirates.

The itinerary includes presentations, meetings and site visits in Orlando, Dallas, Denver, and San Francisco to introduce the focal points of Dubai’s economic development strategy and share insights on successful investment projects.  Orlando was the first stop for the Dubai delegation, where exports to the UAE is reported to have supported 17,598 jobs in 2014.  Solar energy will be the focus of discussions in San Francisco, California where the delegation will tour the Solar Technology Acceleration Centre that has the largest test facility for solar technologies in the US.  (AB 26.03)

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3.5  Xactly’s Growth Continues with First Customer in Saudi Arabia

San Jose, California’s Xactly, a leading provider of cloud-based incentive solutions, today announced that Sherbiny Holdings, a fast-growing Saudi industrial trading, manufacturing and servicing group, has chosen Xactly to provide real-time visibility to help motivate employees and retain top performers.  Prior to choosing Xactly, Sherbiny Holdings wasn’t able to provide reps easy access to the important sales data they need to stay connected and help close key opportunities.  As a growing company, selecting a product that would scale with them and help drive sales behavior was of utmost importance.  In addition to purchasing Xactly Incent to manage their sales compensation, Sherbiny selected Xactly Objectives to further motivate employees and help align their individual goals with those of the organization as a whole.  (Xactly 29.03)

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3.6  Turkcell Officially Launches 4.5G in Turkey

Turkcell officially launched 4.5G in Turkey as LTE-A services on its network went live at midnight on 31 March.  With its 4.5G launch, Turkcell will offer the fastest LTE speeds that are supported on commercial terminals globally.  Combining this speed with the geographical scope of its coverage – spreading over 81 city centers in a country with a territory of 783.6 thousand km² (302,5 thousand sq. miles)– makes Turkcell unique among its international peers.

Turkcell is a converged communication and technology services player in Turkey.  Turkcell Group has approximately 68.8 million mobile, fixed and IPTV subscribers as of 31 December 2015.  Turkcell was one of the first among the global operators to have implemented HSPA+.  It has announced two new HSPA+ Technologies on its 3G network to meet rising data usage.  Having successfully integrated 3C-HSDPA and DC-HSUPA Technologies, it became the first mobile operator in the world to enable peak speed of 63.3 Mbps downlink while also enabled an 11.5 Mbps uplink on a 3G network.  Turkcell is the first telecom operator to offer households fiber broadband connection at speeds of up to 1,000 Mbps in Turkey.  (Turkcell 01.04)

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4.1  Plastic Bag Law Passes in Israel Banning Free Shopping Bags as of 2017

The Knesset passed on 22 March a bill intended to reduce Israeli’s use of disposable plastic bags.  The bill, which would ban the free distribution of plastic shopping bags by supermarkets and other stores, was first proposed in 2014.  While it passed the initial vote in late October 2014, it failed to pass the last legislative hurdles before new elections in 2015.  The new bill, which proposes a mandatory 10 agorot (3 cents) charge for every shopping bag used, will go into effect in January of 2017.  The previous bill proposed a 30 agorot (8 cents) charge per plastic bag.  Because Knesset votes do not require a quorum, the bill was passed by a minority of 44 MKs out of 120 total.  There were no votes in opposition to the bill.

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4.2  Oman to Encourage Household Generation of Solar Power

Oman will encourage households to generate electricity with solar panels and feed it into the national grid, the Authority for Electricity Regulation said on 28 March.  The policy could put Oman in the forefront of Middle East nations promoting widespread use of solar power.  Its finances severely damaged by low oil prices, the Omani government is seeking ways to save money, including a cut in electricity subsidies for commercial and industrial users.  The Authority aims to have a mechanism in place by mid-year for households to generate power using solar roofing panels, and provide the power to the grid in exchange for cuts in their electricity tariffs.  The new program will initially focus on residential units but eventually be extended to commercial entities.  (Reuters 28.03)

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4.3  Morocco Seeks to Generate 52 % of its Power from Renewable Sources

Morocco seeks to generate 52% of its power from renewable sources by 2030, the British magazine Financial Times (FT) said on 22 March.  A previous goal of generating 32% of its power from renewable sources by 2020 – which is likely to be comfortably exceeded – was extended late last year to a target of 52% by 2030.  When production officially began at the world’s biggest concentrated solar power plant at Ouarzazate in southern Morocco in February, the country was widely celebrated for its achievement.  Called Noor 1 after the Arabic word for light, the concentrated solar power (CSP) plant is designed to deliver 160 MW of electricity at peak output.  It is the first of three stages in a project expected to provide 510MW of generating capacity by 2018.  The complex will save 13m tons of carbon emissions over 25 years.

An important spin-off from this drive is the establishment of a local renewables industry, FT underlined, adding that officials say they want to establish Morocco as a hub for renewable energy, develop industrial capacity in the sector and even begin exporting energy in the coming decades.  (MWN 23.03)

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5.1  Lebanon’s Trade Deficit Widened to $2.46B by February 2016

Lebanon’s trade deficit for the first two months of 2016 stood at $2.46B, widening from the $2.17B registered by February 2015.  Total imports grew by 7.93% year-on-year (y-o-y) to $2.87B, while exports slumped by 14.89% y-o-y to $414M.

The three major product categories that were imported to Lebanon by February 2016 were mineral products (24.08% share of total imports’), products of the chemical or allied industries (10.55% share of total imports) and machinery and electrical instruments (9% share of total imports).  The change in imported mineral products, on a cumulative year-on-year basis, displayed an increase of 38.17% from February 2015.  This was mainly caused by the 51% increase in the volume of imported mineral products.  However, the value of the products of the chemical or allied industries and machinery and electrical instruments downturned by an annual 3.57% and 7.42%, respectively.  Notably, the three major countries that Lebanon imported goods from, in the first 2 months of 2016, were China, Italy and Holland with corresponding weights of 11.48%, 7.56% and 7.23%.

Similarly, the major exported products in terms of value by February 2016 were pearls, precious stones, and metals, constituting 16.91% of total exports, which went down by 15.03 % y-o-y.  Furthermore, prepared foodstuffs, beverages, and tobacco (16.3% share of total exports) experienced a yearly detraction of 8.92% by February 2016.  It seems that the drop in the prices of fast moving consumer goods is following the trend of the internationally falling commodity prices.  Machinery and electrical instruments (14.8% share of total exports) undergone a 2.35% increase in the value of exports.  In terms of the major destinations of the Lebanese exports, the UAE, Saudi Arabia and South Africa grasped respective weights of 13.37%, 8.45% and 8.22% by February 2016.

On a monthly basis, total exports dropped by 3.29% from February 2015. However, overall imports inched up by a monthly 4.31%.  In turn, the trade deficit broadened from $1.08B in February 2015 to $1.15B in February 2016.  (CAS 26.03)

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5.2  Lebanon’s Fiscal Deficit Broadened 28.62% by the End of 2015

Following the 27% annual drop in 2014, Lebanon’s fiscal deficit increased by 28.62% year-on-year (y-o-y) to $3.95B by the end of 2015.  This was attributed to the 12% yearly decrease in government revenues outpacing the 3% annual decline in fiscal expenditures.  During the same period, the total primary balance displayed a surplus of $724M by the end of 2015 compared to a higher primary surplus of $1.31B by December 2014.  Total government revenues stood at $9.58B by December 2015, compared to a higher level of $10.88B by December 2014.  Tax revenues, constituting 19.97% of total public revenues, slightly declined by a yearly 0.56% to $6.85B.  In details, VAT revenues (grasping a 30.58% share of tax receipts) dropped 4.34% y-o-y to $2.10B, while custom revenues (19.98% of tax receipts) added 1.07% to $1.37B, over the same period.  As for telecom revenues (12.88% of total government revenues), they went down by 38.67% y-o-y to $1.23B after the Ministry of Telecommunication reduced internet and mobile tariffs in June 2014.  Total government expenditures declined from $13.95B by December 2014 to $13.53B in the same period of 2015.  Regarding transfers to Electricite du Liban, they dropped by 45.81% annually to $1.13B, on the back of the continuous fall in oil prices.  In contrast, interest payments on government’s debt went up 6.45% to $4.46B, due to the 9.98% rise in interest payments on domestic debt to $2.87B, and the0.62% rise in the interest payments on foreign debt to $1.59B.  (CAB 25.04)

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5.3  World Bank’s $100 Million to Create Jobs for Jordanians & Syrian Refugees

Aiming to create 100,000 new jobs for Jordanians and Syrian refugees in the next five years, the World Bank’s Board of Directors has agreed to offer Jordan $100 million in financing  at rates usually reserved for the poorest countries.  The World Bank’s Board extended the highly unusual financing offer because of the extraordinarily difficult situation facing both the refugees and their Jordanian hosts.  A partnership among the Jordanian government, donor countries and development actors will use the financing to develop and strengthen existing special economic zones to attract international and domestic investments.  Additional details of the job-creation plans will be announced in coming months.

The announcement came three days after Kim announced a separate $100 million financing to support education of Lebanese and Syrian refugee children living in Lebanon.  The terms, approved by the World Bank’s Board of Directors, will be similar to those announced for Jordan.  In both cases, the Board broke new ground in giving a middle-income country financing at a rate reserved for the poorest countries.  (WB 27.03)

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►►Arabian Gulf

5.4  Indian Remittances Fall as Arabian Gulf Reduces Demand for Foreign Workers

Remittances to India – a large portion of which comes from the millions of Indians working in the Arabian Gulf region – fell to $15.8 billion last quarter, the lowest since April-June 2011.  Bloomberg reported that the figure represented a 9.4% drop from a year earlier, as the global slowdown and slumping oil prices reduced the demand for foreign workers.

India relies on remittances and earnings from services exports to help bridge a trade shortfall and support its currency and Indians working overseas remitted $72.2 billion in 2015.  It added that workers in the Gulf region accounted for more than half of funds sent home in 2014, while laborers in the UAE sent the single biggest amount of $13 billion.  Indians working abroad send home the most money in the world, helping to pay for imports of fuel and electronics.  India has about 14 million migrants overseas and remittances account for less than 4% of the Indian economy, compared with 10% for the Philippines and almost 30% for Nepal.  (AB 01.04)

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5.5  Bahrain’s Real GDP Growth Rises to 2.8% in Fourth Quarter

Bahrain’s real Q4/15 gross domestic product growth rose to 2.8% in annual terms, according to data from the Central Informatics Organisation.  The growth represented a rise from 2.4% in the third quarter.  GDP in Bahrain expanded 2.9% in 2015 after 4.5% growth in 2014.

In December Fitch Ratings revised Bahrain’s outlook to negative from stable as it forecasts a wider double-digit budget deficit of 12.5% of GDP in the Gulf kingdom in 2015.  The ratings agency, which also affirmed the country’s long-term foreign and local currency issuer default ratings  at ‘BBB-‘and ‘BBB’ respectively, said in a statement that the revision comes as low oil prices continue to impact Bahrain’s economy.  It said fiscal adjustment measures introduced so far have proven “insufficient” to offset lower oil prices, as social and competitiveness constraints hinder the pace of policy response.  (AB 02.04)

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5.6  Qatar Trade Surplus Shrinks 53.5% as Energy Exports Slump

Qatar’s foreign trade surplus shrank 53.5% from a year earlier to QR7.41 billion ($2.04 billion) in February, data from the Ministry of Development Planning and Statistics announced on 28 March.  Exports of petroleum and hydrocarbons fell 41.2% to QR10.35 billion.  Qatar’s exports in February totaled QR17 billion, a 32.5% decline year-on-year and a 4.8% drop compared to January.  Revenue from gas and hydrocarbons exports declined in February to QR10.2 billion. Imports meanwhile were QR9.6 billion, a 10.1% decline compared to January 2016.

Japan was the top destination for Qatari exports, with 17.2% of total exports, followed by South Korea and India.  As for imports, Qatar relied on the US for 12.1% of its needs, ahead of China and the UAE.  Qatar said in December that it has halved its forecasts for economic growth in 2016, the latest sign of the hit taken by the wealthy Gulf state’s economy at a time of low oil prices.  Growth expectations were slashed to 3.7% from the 7.3% forecast in June.  But the government’s biannual outlook said the hydrocarbon-rich nation would record a fiscal surplus this year of 1.7% of GDP, a figure above the 1.4% it projected in June.  (AB 28.03)

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5.7  Shrinking Saudi Money Supply Points to Slowing Economy

Saudi Arabia’s money supply shrank in February for the first time in more than a decade, central bank data showed on 29 March, a fresh sign the economy of the world’s largest oil exporter is slowing sharply because of depressed oil prices.  The broadest measure of money supply published by the central bank, M3, dropped 0.9% from a year earlier last month, its first annual decline since at least 2004.  Narrower money supply measures M1 and M2 also shrank. M1, which includes currency in circulation and demand deposits but excludes less liquid assets such as savings and time deposits, contracted a hefty 5.1%.

Low oil prices pushed the budget into a deficit of nearly $100 billion last year and the government has embarked since late 2015 on spending cuts and tax rises to narrow the gap, hitting consumer spending and companies’ willingness to invest.  More economic pain is expected in coming months due to new austerity measures, where the government ordered ministries in mid-March to cut their spending on contracts by at least 5%.  Because of the austerity measures, inflation has risen sharply, which is expected to deter consumers.  Annual consumer price inflation jumped to 4.3% in January, the highest in over three years, from 2.3% in December after the government cut fuel subsidies and hiked utility fees.  (Reuters 29.03)

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5.8  Foreign Firms in Saudi Arabia Will Have to Hire 75% Locals

Foreign companies active in Saudi Arabia will be required to have 75% of their workforces made up of local nationals.  The Saudi Arabian General Investment Authority (SAGIA), the government body tasked with encouraging greater foreign direct investment into the kingdom, had implemented the new rule.  The regulation came into place last month for all foreign companies applying for a license to operate in Saudi Arabia, while firms already active in the kingdom would be given a two-year grace period to implement the change.  Other new regulations stipulate that foreign firms must have a minimum of 50 employees and minimum capital must be not less than $9.5 million.

Despite extensive government efforts to find more jobs for locals, Saudi Arabia’s labor force grew by 46,000 during 2015, its slowest pace since records began in 1999.  Jadwa Investment’s latest update on the labor market in Saudi Arabia, released earlier this month, also showed that ‘Saudization’ rates within the private sector fell for the first time since 2011.  (AN 29.03)

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►►North Africa

5.9  Egypt to Repay $1 Billion Owed to Qatar in July

Egypt’s Central Bank Governor Tarek Amer has said that devaluing the Egyptian pound had attracted foreign investment worth $500 million in treasury bills and that he had pumped $22 billion into the banking system to clear goods piled at ports.  Amer added that there was no currency crisis, but merely a crisis in managing the foreign exchange market.  Amer said Egypt would pay back a $1 billion debt owed to Qatar in July and also $800 million to Paris Club countries.  He said dollar-denominated “Belady” certificates offered by the three largest state-owned banks in recent weeks to Egyptians abroad in a bid to persuade them to invest their dollar savings in their home country had seen a very low turnout.

Egypt, which relies heavily on imports, has been facing a dollar shortage since a popular uprising in 2011 drove away tourists and foreign investors, both major sources of hard currency.  The central bank had been keeping the pound artificially strong through regular auctions three times a week. Its reserves more than halved to $16.5 billion in February from around $36 billion in 2011.  (Reuters 27.03)

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5.10  Egypt’s Trade Deficit Falls 5% in December

A drop in the imports of raw steel materials in December 2015 largely contributed to the fall in Egypt’s trade deficit by 4.8% compared to the same month a year earlier, the official statistics agency CAPMAS announced.  Egypt’s trade deficit fell to EGP 31.25 billion in December 2015, down from EGP 32.82 billion in the same month in 2014.  During this period, imports fell 6% to EGP 46.7 billion, down from EGP 49.7 billion, driven mainly by a sharp decline in the import of raw materials for steel by 40.5%.  Other imports including plastics, petrochemicals and meat have also decreased in this period, while imports of pharmaceuticals, passenger cars, petroleum products and wheat have risen in December 2015 compared to the same month the prior year.  The fall in the value of petroleum products on the other hand has contributed to the slight drop in exports by 8.3% to EGP 15.4 billion, down from EGP 16.8 billion.

In October 2015, lower exports and imports contributed to a decline in the country’s trade deficit by 11.8% year-on-year to EGP 34.16 billion, down from EGP 38.34 billion.  (CAPMAS 24.03)

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5.11  Egypt’s Tourist Numbers Drop in February for Fourth Month in a Row

The number of tourists visiting Egypt declined in February for the fourth consecutive month, as a deadly air crash last year continues to have an impact on the country’s tourism industry.  Egypt saw 346,500 tourists in February, down 46% compared to the same month last year, CAPMAS announced on 4 April.  West Europeans led the visitor list, making up 35.6% of the total arriving tourists in February, followed by Middle Easterners with 26.7% and East Europeans with 14.1%.  The countries sending the most tourists in each region are Germany, Saudi Arabia, and Ukraine.  In February this year, tourists spent a total of 1.8 million nights in the country, versus 5.6 million in February 2015.

In a recent televised interview, newly appointed Tourism Minister Yehia Rashed said that he would meet with 12 low-cost airliners by next week to put in place a plan to attract tourists from different markets worldwide, especially those which are not served by Egypt’s national carrier EgyptAir.  Rashed said that his ministry is targeting high-spending tourists such as Arab Gulf nationals in an attempt to “immediately” increase industry revenues.

Egypt accrued $6.1 billion in tourism revenue in 2015, down 15% from the year before, as the total number of tourists dropped in 2015 by 6% to 9.3 million and the total number of nights spent in the country declined by 14%.  (CAPMAS 04.04)

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5.12  Egypt’s Foreign Currency Reserves Slightly Up In March

Egypt’s foreign currency reserves inched up in March to reach $16.561 billion from $16.53 billion the previous month, the Central Bank of Egypt announced.  Egypt’s reserves stood at $36 billion in 2010 before the 2011 uprising drove away tourists and investors, the country’s main sources of the hard currency.  The central bank will repay $800 million to the Paris Club and the remaining $1 billion it owes to Qatar next July, CBE governor Tarek Amer.  (Ahram Online 04.04)

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5.13  Egypt’s Suez Canal Revenues Decline for 2nd Consecutive Month

Egypt’s Suez Canal revenues fell for the second consecutive month to record $401.4 million in February, official data from the canal’s authority showed.  The revenues slowed from $411.8 million in January and $429 million in December last year amid claims that vessels are changing route to the Cape of Good Hope at the southern tip of Africa instead of the Suez Canal due to the drop in world oil prices.  On an annual basis, the revenues saw an increase of 5.1% from February 2015 ($381.9 million).

The country’s vital waterway saw 1,300 vessels pass through last February, a year-on-year rise of 6.6%, said the authority.  The canal is the fastest shipping route between Europe and Asia and is one of the country’s main sources of foreign currency.  (SCA 22.03)

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5.14  Morocco’s Automotive Industry Aims to Create 90,000 jobs by 2020

Morocco’s automotive sector is aiming to create 90,000 jobs by 2020 in addition to the 100,000 that already exist, the British magazine Financial Times (FT) said.  With total automotive exports reaching €4.8bn in value last year, the sector is seen as one of Morocco’s “big success stories,” the paper pointed out in a special edition on Morocco, citing the success of Renault’s factory in northern Morocco, which is the largest car factory in Africa.  The plant produced 229,000 cars in 2015, up from export 174,000 the year before, FT pointed out, adding that the bulk of its output is destined for Spain, France and Germany.

The Renault plant, along with a range of tax and other incentives offered in Morocco’s free trade zones, has also attracted foreign makers of car parts, FT added, noting that some 150 automotive-related manufacturers are based in Morocco.  (MWN 24.03)

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5.15  Morocco’s Economic Growth Stands at 4.5% in 2015

Morocco’s economic growth stood at 4.5% in 2015, a rise of 0.2 points compared to forecasts by the High Planning Commission (HCP) which is 4.3%.  This progress is due to the good economic activity in Q4/15, with a growth of 5.2% instead of 2.2% a year earlier, said HCP in an information note on the situation of national economy at Q4/15.  The GDP growth was 7.1%, thus generating an increase in its implicit price of 1.9% instead of 1.1%.  The national economic growth in the fourth quarter of 2015 was driven by agriculture value added and an amelioration in non-agricultural activities.  The agriculture value added, in terms of volume, increased by 13.5% instead of a drop of 1.3%, after an average growth of 14.3% was posted during the previous three quarters.  Non-agricultural activities increased by 3% instead of 0.8%, after an average of 1.7% registered in the past three quarters.  (MWN 01.04)

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6.1  Turkey’s Inflation Eases In March As Food Prices Drop

Annual inflation in Turkey fell unexpectedly in March, mainly due to a sharp decline in food prices, according to official data released on 4 April.  The Turkish Statistics Institute (TUIK) said the annual consumer price index fell to 7.46% in March. February’s rate stood at 8.78%.  While the biggest decline in monthly prices was seen in food and non-alcoholic beverages, the highest rise in the annual index was seen in tobacco and alcoholic drink prices.  The health sector saw the highest monthly increase for March, with a 1.84% rise.  According to the TUIK data, the highest price decline in the food groups was seen in fresh fruits and vegetables.

After Russia began to impose sanctions against Turkish products following the outbreak of the jet crisis between the two countries, Turkey’s fresh fruit and vegetable producers have focused on seeking alternative markets and diverted most of their products into the domestic market.  The Central Bank said on 24 March that limited improvement in core inflation indicators still required a tight liquidity stance.  (TUIK 04.04)

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6.2  Turkey & Pakistan Sign Free Trade Agreement Framework

Turkey and Pakistan have paved the way for a new free trade deal, which has the potential to reduce barriers in bilateral trade and investment.  On 22 March, Turkish Economy Minister Elitaş and Pakistani Commerce Minister Dastgir Khan signed the free trade agreement framework in the Pakistani capital of Islamabad.  The free trade agreement between the two countries was expected to be signed before the end of 2016.

Negotiations over the deal were launched by Turkish Prime Minister Ahmet Davutoğlu and Pakistani Prime Minister Nawaz Sharif during the latter’s visit to Turkey in October 2015.  Last year, bilateral trade was around $600 million, including $289 million in imports from Turkey.  Turkey mainly exports telecommunication equipment, televisions, textiles and machinery, while imports from Pakistan include textile yarn, cotton fabrics, plastics and organic chemicals.  (Anadolu Agency 23.03)

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6.3  Only 30% of Workers in Turkey Are Women

Some 30% of working people in Turkey are women, according to data from an annual income and life conditions survey released by the Turkish Statistics Institute (TÜİK).  Some 53.9% of working women were employed on salaries or wages, the TÜİK data for 2014 showed, while another 29.2% were working in their families without any wages.  Nearly 10% of women worked for themselves, while 6% of women were employed in casual jobs.  Only 1.1% of them were employers.  Working women in Turkey earned TL 1,654, roughly €513, per month on average.  The highest wages were in the service sector with an average of TL 1,723, while wages in the agricultural sector were at the bottom of the list with TL 1,297.  In the industrial sector women earned TL 1,404 on average.  The data also showed education level had a direct impact on earnings, as women without higher education earned less than TL 1,000 per month, while university graduates earned some TL 2,419 per month.  (AA 22.03)

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6.4  Most Greeks Willing To Work Abroad As Job Insecurity Mounts

More than half of Greek employees would be interested in working abroad or willing to move for the “right” job, a recent study by HR services firm Randstad Hellas has found, adding that job security is also a mounting concern.  According to the Workmonitor survey, 58% of Greek employees expressed an interest in working abroad, jumping to 74% in the 18-24 age bracket, and 57% said they would be willing to move abroad for the “right” job.  Women appeared more eager at 61% than men (55%) and the 18-24 age group particularly so at 67%, followed by the 25-34 age group at 61%.

On the question of job security, 42% of respondents said it is “highly likely” that they may lose their job or that their contract will not be extended within the next six months, showing a 3% rise from the fourth quarter of 2015.  Women appeared more concerned about losing their jobs at 46% than men (39%) and the 55-67 age bracket had the greatest sense of job insecurity at 50%, followed by the 18-24 age group at 49%.  (Ekathimerini 05.04)

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7.1  Israelis’ Penchant for Holiday-Related Names

To mark the holiday of Purim, Israel’s Population and Immigration Authority released on 20 March data regarding irregular first names in Israel.  Relating to the holiday, are 91 Israelis named Purim, one woman named Vashti and one man whose name is Haman.  There are 49,907 women in Israel named Esther and 22,797 men named Mordechai.  Other holidays are represented, as well: 477 people are named Pesach, 123 people are named Chanukah, 43 are named Hashanah or Rosh Hashanah, seven are named Shvat or Tu B’Shvat and four are named Sukkot.  The Names Law, approved by the Knesset in 1956, lays out how first and last names are given in the State of Israel.  The parents communicate their decision to the Interior Ministry via the hospital shortly after birth or later on directly.  Article 2 of the law states that every person in the Civil Registry must have a given and a family name.

According to the law, the minister of the interior is authorized to reject a name if he deems to likely “to mislead or harm the public or its feelings.”  However, sources in the Population and Immigration Authority say that this rarely happens.  (PIPA 20.03)

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8.1  Takeda and Teva Establish Teva Takeda Yakuhin in Japan

Teva Pharmaceutical Industries and Japan’s Takeda Pharmaceutical Company announced the establishment of Teva Takeda Yakuhin.  As a result of this strategic move, Takeda, an R&D driven pharmaceutical company which has a long history as a leading company in Japan, and Teva, among the top ten pharmaceutical companies in the world and the global leader in generics, will meet the wide-ranging needs of patients and growing importance of generics in Japan through the provision of off-patent drugs (products whose patents have expired).

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 1,000 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 01.04)

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8.2  First Human Results with V-Wave’s Interatrial Shunt Published in The Lancet

V-Wave announced the results of its first human implants were published in The Lancet.  The study was performed at the Quebec Heart and Lung Institute, Laval University, Quebec.  The first 10 consecutive patients had Class III symptoms despite being treated with maximally tolerated HF medications and had poor left ventricular function.  All were successfully implanted with the shunt during a minimally invasive procedure that took generally less than one hour, and were discharged home the next morning.  There were no device-related adverse effects. After three months, patients had significant improvements in symptoms, exercise capacity and quality-of-life assessments.  Catheter measurements showed lowering of left atrial pressure without deterioration of right heart function.  These findings are consistent with the shunt diverting just the right amount of blood from the left-side to the right-side of the heart.

Caesarea’s V-Wave is a privately-held medical device company with offices in Israel and the U.S.  Venture investors include BRM Group, Pontifax, TriVentures, Pura Vida Investments, BioStar Ventures and strategic investors Edwards Lifesciences and Johnson & Johnson Innovation – JJDC Inc.  (V-Wave 28.03)

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8.3  Teva Announces FDA Approval of CINQAIR (reslizumab) Injection

Teva Pharmaceutical Industries announced that the U.S. FDA has approved CINQAIR (reslizumab) Injection, an interleukin 5 antagonist monoclonal antibody (IgG4 kappa) indicated for add-on maintenance treatment of patients with severe asthma aged 18 years and older, and with an eosinophilic phenotype.  The FDA approval of CINQAIR was based on review of efficacy and safety data from Teva’s global development program in asthma.  Upon commercial availability of CINQAIR, Teva will launch Teva Support Solutions, a comprehensive program that will provide personalized support, training and education to healthcare providers and patients who have been prescribed CINQAIR.  This is the first approval of CINQAIR (reslizumab) anywhere in the world.  Reslizumab has been submitted to and is currently under review by European Medicines Agency (EMA) and Health Canada.

Teva Respiratory develops and delivers high-quality treatment options for respiratory conditions, including asthma, COPD and allergic rhinitis.  The Teva Respiratory portfolio is centered on optimizing respiratory treatment for patients and healthcare providers through the development of novel delivery systems and therapies that help address unmet needs.  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 1,000 molecules to produce a wide range of generic products in nearly every therapeutic area.  (Teva 28.03)

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8.4  Metabomed Completes $18 Million Series A Financing

Metabomed has completed an extension of its Series A round from current and new investors, bringing the total of its raise to $ 18 million.  Existing investors include MS Ventures, Boehringer Ingelheim Venture Fund (BIVF), Pontifax Fund and the Technion Research and Development Foundation.  New investors Pfizer and Arkin Holdings also joined the round.  The final transaction is subject to the successful completion of the approval process by the Israel Antitrust Authority.

Metabomed is focusing on the discovery and development of potential small molecule drugs directed against novel targets in the field of cancer metabolism.  Based on its proprietary interdisciplinary target identification platform, Metabomed utilizes a unique approach to discovery, which allows the company to potentially identify new targets that form a synthetic lethal gene pair with metabolic genes inactivated in cancer cells.  By inhibiting these targets, Metabomed intends to develop more selective anti-cancer drugs that may potentially be highly targeted, and therefore sparing of normal cells.

The MS Ventures Israel BioIncubator is a strategic initiative designed to stimulate innovation by bridging the gap between academic research and the biotechnology industry in Israel.  Launched in 2011 to invest in biomedical innovation in Israel, the BioIncubator offers both seed financing and access to dedicated laboratory facilities within the R&D center of the biophama business of Merck in Yavne, Israel.  Through the incubator initiative, MS Ventures has committed to invest up to €10 million in early stage opportunities.

MS Ventures is the strategic venture capital fund of the healthcare business of Merck. The fund was established in March 2009 and focuses primarily on early stage investments.

Metabomed is a drug discovery company in the field of cancer metabolism with a proprietary target identification platform based on computational biology and metabolomics.  Metabomed focuses on the discovery of drugs that inhibit targets that form a synthetic lethal gene pair with metabolic genes inactivated in cancer cells.  Metabomed operates out of MS Ventures Bioincubator in Yavne, Israel.  (Metabomed 04.04)

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9.1  Stratoscale $27 Million Series C Funding as it Transforms Cloud Computing

Stratoscale has secured $27 million in Series C financing.  Qualcomm Incorporated, through its venture investment group, Qualcomm Ventures, joined the Series C financing round with participation from all existing investors.  Transforming cloud computing capabilities within the data center by enabling businesses to embrace new technologies at a faster pace, Stratoscale has raised over $70 million in funding over the past three years that is dedicated to support global expansion of the company.

To help customers keep up with business agility mandates that include rapid development and new age applications, Stratoscale provides a hardware-agnostic Software Defined Data Center (SDDC) solution that offers a holistic data center experience.  Stratoscale’s solution enables IT to scale and respond to real-time needs with greater ease and assured control.

Since its $32 million Series B investment in 2014, Stratoscale has experienced significant growth and continued product innovation.  The company also began expansion throughout North America and Europe with PartnerFirst, its 360 degree partner program.  Through this program, Stratoscale is building an ecosystem of technology and distribution partners, expanding coverage and customer service to meet market demand for next generation data centers.

Herzliya’s Stratoscale is revolutionizing the data center with a zero-to-cloud-in-minutes solution.  With Stratoscale’s hardware-agnostic, software-only hyper-converged platform to store everything, run anything and scale everywhere, IT is empowered to take control of their data centers.  (Stratoscale 23.03)

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9.2  Mellanox Announces New Line of InfiniBand Router Systems

Mellanox Technologies announced a new line of InfiniBand router systems.  The new EDR 100Gb/s InfiniBand Routers enable a new level of scalability critical for the next generation of mega data-center deployments as well as expanded capabilities for data center isolations between different users and applications.  The network router delivers a consistent, high-performance and low latency router solution that is mission critical for high performance computing (HPC), cloud, Web 2.0, machine learning and enterprise applications.

Mellanox’s SB7780 InfiniBand Router family is based on the Switch-IB switch ASIC and offers fully flexible 36 EDR 100Gb/s ports, which can be split among six different subnets.  The SB7780 InfiniBand Router can connect between different types of topologies.  Therefore, it enables each subnet topology to best fit and maximize each applications’ performance.  For example, the storage subnets may use a Fat-Tree topology while the compute subnets may use 3D-torus, DragonFly+, Fat-Tree or other topologies that best fit the local application.  The SB7780 can also help split the cluster in order to segregate between applications that run best on localized resources and between applications that require a full fabric.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage.  Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability.  (Mellanox 04.04)

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9.3  Stratasys’ Transformational, Market Disruptive J750 3D Printer

Stratasys introduced another industry first with its market-disruptive 3D printer, the J750.  The new solution breaks restrictive technology barriers, enabling customers for the first time to mix-and-match full color gradients alongside an unprecedented range of materials to achieve one-stop realism without post-processing.  This, together with the system’s superior versatility, makes the J750 the ultimate 3D printing solution for product designers, engineers and manufacturers, as well as service bureaus.

The Stratasys J750, the premier addition to the Objet Connex multi-color, multi-material series of 3D Printers, allows customers to choose from more than 360,000 different color shades plus multiple material properties – ranging from rigid to flexible and opaque to transparent.  Prototypes can include a vast array of colors, materials and material properties in the same part, speeding production of realistic models, prototypes and parts for virtually any application need – as well as delivering incomparable 3D printing versatility to produce tooling, molds, jigs and fixtures and more.

For more than 25 years, Stratasys has been a defining force and dominant player in 3D printing and additive manufacturing – shaping the way things are made. Headquartered in Minneapolis, Minnesota and Rehovot, Israel, the company empowers customers across a broad range of vertical markets by enabling new paradigms for design and manufacturing.  The company’s solutions provide customers with unmatched design freedom and manufacturing flexibility – reducing time-to-market and lowering development costs, while improving designs and communications.  (Stratasys 04.04)

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9.4  Magos Systems Wins Challenge for Smart City in Brazil

Magos Systems won the 3C Smart City challenge for the smart city of Croata being built in Brazil.  Magos Radar will be deployed in the Smart city project both at the construction phase of the project and the safe keeping of the city later on.  The company beat twelve Israeli tech firms participated in the final stage of the Challenge held in Tel Aviv with cooperation from the Brazilian government, Italian group Planet Idea, the Tel Aviv University and Tyco Innovation.

Magos offers highly advanced, solid state radars for perimeter security applications at a low cost with minimum installation and maintenance requirements, and has a worldwide footprint including cooperation with FLIR Systems, Tyco Security, Panasonic and other large scale security firms and integrators.

Magos’ affordable radars are suitable for a wide variety of security applications and are already installed in facilities ranging from Oil\Gas production sites through US Utility Substations and in small sites such as car lots and protected neighborhoods.  Magos Radars have detection ranges of up to 400m for Person and 600m for vehicle or boat and can even detect a drone at up to 100m, it has low power consumption(<3.5W), high range resolution(40 centimeters) which increases detection performance in highly cluttered environments and with 120-360 degree coverage depending on the model.

Rehovot’s Magos was established in 2008 with the vision of bringing state-of-the-art radar technologies to civilian markets, and after years of development for military graded applications and companies has made available its commercial products in 2015.  (Magos 04.04)

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9.5  Contextors Unveils Breakthrough Language-Learning Capabilities

Contextors has been selected as one of only three companies to showcase technology for the “Classroom of the Future” at TESOL’s International Convention and English Language Expo in Baltimore.  Contextors will unveil “Contextors Literate,” an advanced language-learning product that breaks new ground in helping English Language Learners (ELLs) master English by combining extensive reading with in-line intensive learning support.  By providing e-book readers with context-specific definitions, explanations of grammatical rules, and adaptive challenges for a highly effective language learning experience, Contextors Literate meets the demands of a booming global market thirsty for new ways to master English.

Based in Tel Aviv, Contextors is pioneering groundbreaking linguistic technology by reinventing parsing, the analysis of sentences into relevant parts, in order to describe each part’s syntactic role.  Contextors extracts complete, deep linguistic information from content, including each word’s grammatical functions, interword relationships and overall structural semantics.  (Contextors 05.04)

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9.6  justAd eyeMagnet Transforms Static Ads to Animated Ads Automatically

justAd announced its newest product, eyeMagnet, which offers an automated, fully scalable solution to transform existing banner ads into engaging ad units, on the fly.  By automating all the steps in the way of rich media creation, justAd enables the creation of rich media campaigns easily, without requiring developers, graphic designers or operations professional.  Targeted to companies that require thousands of ads to get a single user click, and to branding agencies requiring a simply, streamlined way to animate video and display ads, eyeMagnet provides dynamic, eye-catching effects that attract users to respond.

Tel Aviv’s justAd is a powerhouse for mobile rich media solutions. We serve, in high scale, global leaders in ad tech.  Starting from the large media and creative agencies to technical driven DSPs and Networks and dominated sale-driven publishers.  Each segment is offered a part of our ensemble of technologies all focused on the creative aspect.  (justAd 05.04)

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9.7  MUV Interactive Launches Smart Wearable BIRD in Japan

MUV Interactive, in partnership with Silicon Technology, a leader in electronics distribution in Japan, announced the launch of the wearable BIRD, an intuitive device worn on the tip of the finger.  BIRD transforms any surface into a multi-touch interface with 3D interactive capabilities.  BIRD communicates with the user’s computing devices, enabling rich interaction with anything from displayed content and smart home appliances to IOT devices and drones.  BIRD will be sold through Silicon Technology with partners including, SoftBank Service & Commerce, Synnex Infotec, Ricoh Japan, CSE, Eizo-system, Gakuei System, and Dospara later this year.

BIRD is the first device to integrate the entire spectrum of interactive methods – including touch, remote touch, gesture control, mouse functionality and hover – into a single tiny wearable.  This gives users the flexibility to interact with each type of digital content in the most intuitive way.

Founded in 2011, Herzliya’s MUV Interactive is a developer of innovative technologies for wearable interfaces.  The company’s first product, BIRD, is a wearable device that transforms any surface into a multi-touch interface with 3D interactive capabilities.  (MUV 05.04)

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10.1  New Tel Aviv-Jerusalem Fast Rail Line to Open in 2018

The high-speed rail line between Tel Aviv and Jerusalem currently being built will open for service in 2018, Israel Railways said on 28 March.  Travel time between Tel Aviv’s Haganah station and Jerusalem’s International Convention Center station will be half an hour.  Service frequency will be four trains per hour in each direction.  Trains will make an intermediary stop at Ben-Gurion International Airport.  The maximum speed on the new line will be 160 kilometers (99 miles) per hour.  The total cost of the project will reach NIS 7 billion ($1.82 billion).  The project has required the construction of six tunnels and eight bridges along the course of the line.

It currently takes around an hour and 15 minutes to travel between Tel Aviv and Jerusalem by train on the old line built during the Ottoman era in the 1890’s.  The current station in Jerusalem is inconveniently located in the Malha neighborhood, on the southwestern outskirts of Jerusalem.  (IH 28.03)

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11.1  ISRAEL:  Natural Gas Judgement Casts Shadow Over Israel’s Energy Plans

Simon Henderson posted in The Washington Institute on 28 March that a new court decision could stunt exploitation of offshore gas reserves, open the possibility of a heavy punitive arbitration award, and hamper foreign investment in Israel.

On 27 March, the Israeli High Court passed a judgement condemning a key aspect of the government’s planned “framework” deal with energy companies hoping to tap the country’s largest offshore natural gas field.  The companies in question – Houston-based Noble Energy and its Israeli partner Delek – had pressed for a ten-year regulatory and pricing stability clause to facilitate the investment of around $6 billion needed to develop the giant Leviathan field, which lies eighty miles west of Haifa deep below the Mediterranean Sea.  The court rejected that clause, ruling that the deal should be suspended for another year and requiring the government to amend the terms and obtain approval from parliament.

Prime Minister Binyamin Netanyahu described the judgment as “bizarre,” arguing via Twitter that it “severely threatens the development of Israel’s gas reserves.”  He continued: “Israel is seen as a country with exaggerated legal interference that makes doing business hard.  We will seek alternative ways to overcome the serious harms inflicted on Israel’s economy by this hard to understand resolution.”  Similarly, energy minister Yuval Steinitz called the judgement “miserable,” while Noble chief David Stover stated, “The court’s ruling…is disappointing and represents another risk to Leviathan timing.  Development of a project of this magnitude, where large investments are to be made over multiple years, requires Israel to provide a stable investment climate…It is now up to the government of Israel to deliver a solution which at least meets the terms of the Framework, and to do so quickly.”  If the issue cannot be resolved, Noble could resort to international arbitration against Israel, with a potential punitive award of up to $12 billion.

The ruling’s immediate consequence is to once again delay development of the Leviathan field, where the companies stopped working in December 2014 after the Israeli oil and gas regulator abruptly decided to reverse tentative approval of a compromise that would have spared the venture from being labeled a monopoly.  The issue has since become a political football, with opposition parties and activist groups claiming that the likely price for Leviathan gas will be unreasonably expensive and the profits for Delek and its Israeli partners too high.  Netanyahu’s government, which survives with a single-seat majority in parliament, has countered by emphasizing the resultant boost to government revenues and Israel’s need to attract foreign investment.  The government had intended to issue new tenders this summer for more exploration, but enticing foreign gas companies with the necessary skills and financial reserves to drill in water 6,000 feet deep – where even an empty hole costs $100 million – could be challenging.

At present, Israel depends on gas from the offshore Tamar field, drilled by Noble in 2009 and in production since 2013.  Less than half the size of Leviathan, it fuels nearly 60% of Israel’s electricity production.  The government’s plans, now delayed if not derailed, are to increase the number of gas-fired power stations for domestic and industrial use while exporting surplus gas.  Neighboring Jordan will receive a small amount of Tamar gas beginning next year, though plans for the multiyear sale of large volumes of Leviathan gas are on hold.

Meanwhile, gas development continues in other parts of the eastern Mediterranean after years of quiet encouragement by the United States.  In Cyprus, Noble discovered the Aphrodite field, which lies mainly in the island’s exclusive economic zone and stretches partly into Israel’s EEZ as well.  Cypriot officials are currently trying to attract more companies to drill there.  Last year the Italian conglomerate Eni found the Zohr field in Egypt’s EEZ; even bigger than Leviathan, it lies only three miles from Egypt’s maritime border with Cyprus.  Various actors have drawn up elaborate schemes for Israel, Cyprus, Egypt and Greece to cooperate in using and exporting this gas.  Even Turkey, currently reliant on expensive Russian, Iranian and Azerbaijani gas, had contemplated buying Israeli supplies, a commercial decision that would require political rapprochement with both Jerusalem and Cyprus, and which may be further complicated by the latest court judgement.

In short, hopes of Israel becoming a mini-energy giant in the eastern Mediterranean have seemingly evaporated in little more than a year.  This court decision flies in the face of commercial realities inherent to twenty-year, high-cost energy projects.  Theoretically, the parliament could pass a law allowing for the ten-year stability clause, but Netanyahu would likely be opposed by coalition partners eager to force new elections.  Noble might also be able to obtain a different set of assurances that are acceptable to all parties. Without such a breakthrough, resolving the impasse would require broader societal awareness of the benefits of natural gas wealth and domestic political compromise, yet the prospects for either, never mind both, seem slim.

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

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11.2  ISRAEL:  U.S. Firms Target Investment in Israeli Cannabis R&D

Already a pioneer in high-tech and cutting-edge agriculture, Israel is starting to attract American companies looking to bring medical marijuana know-how to a booming market back home.

Since 2014, U.S. firms have invested about $50 million in licensing Israeli medical marijuana patents, cannabis agro-tech startups and firms developing delivery devices such as inhalers, said Saul Kaye, CEO of iCAN, a private cannabis research hub.

“I expect it to grow to $100 million in the coming year,” Kaye said at iCAN’s CannaTech conference in Tel Aviv this month, one of the largest gatherings of medical marijuana experts.

Scientists say strict rules, some set by the Drug Enforcement Administration, limit cannabis studies in the United States, where the legal marijuana market is valued at $5.7 billion and expected to grow to $23 billion by 2020.

“In the United States it’s easier to study heroin than marijuana,” said U.S. psychiatrist Suzanne Sisley, who has researched the effects of cannabis as a treatment for American military veterans suffering from Post Traumatic Stress Disorder.

“With marijuana you have to go through added layers of government red tape. It highlights the way marijuana research is being shackled by politics,” said Sisley, Director of Medicinal Plant Research at Heliospectra.

While scientific exploration may be restricted, 23 U.S. states now permit medical cannabis, and recreational use is allowed in four states and Washington D.C. This is despite the fact that at the federal level, marijuana is still classified as a dangerous narcotic with no medicinal value.

In Israel, marijuana is an illegal drug and only 23,000 people have Health Ministry permits to purchase medical cannabis from nine licensed suppliers, creating a market of $15 million to $20 million at most.

But Israeli authorities are liberal when it comes to research. Growers work with scientific institutions in clinical trials and development of strains that treat a variety of illnesses and disorders.

Israeli Health Minister Yakov Litzman, an ultra-Orthodox Jew, supports medical cannabis usage and has introduced steps to ease its prescription and sale.

Israel is far from alone in the market, however. Britain’s GW Pharmaceuticals is licensed to grow cannabis for medicine and in 2013 opted for a dual listing on Nasdaq, where it raised nearly $500 million from U.S. investors.

This month, GW announced its cannabis-based medicine Epidiolex had successfully treated children with a rare form of epilepsy. Its share price doubled as a result.

Medical cannabis is developing fast. Patients can smoke marijuana cigarettes, use inhalers, ingest oil extracts or even consume cookies containing marijuana extracts. GW has a multiple sclerosis treatment which is sprayed under the tongue.

Pain Relief

In a clinic in Tel Aviv, 65-year-old Noa lights a joint. She suffers from fibromyalgia, a chronic pain disorder, and explains how six months of smoking medical cannabis has transformed her life.

“I can function again. Most importantly, I’m a grandma, I can roll around on the floor with the kids,” she said as she discussed with a nurse what strain would best alleviate her symptoms.

The clinic belongs to Tikun Olam, Israel’s largest medical marijuana supplier, which partnered this year with a private U.S. investment group to grow medical marijuana in four U.S. states.

Tikun Olam is taking part in clinical trials on epilepsy, Crohn’s disease, spasticity and tinnitus, said Zvi Bentowich, its chief scientist.

Professor Raphael Mechoulam of the Hebrew University in Jerusalem, whose landmark studies in the 1960s paved the way for cannabis research by isolating and synthesizing THC, the main psychoactive ingredient of marijuana, praised the Israeli government’s open approach to the research.

“Cannabinoid research was and still is viewed positively by government committees,” he said, adding that law enforcement was not involved in study approval.

Jeffrey Friedland, CEO of private U.S. investment firm Friedland Global Capital, has invested in two agro-tech companies and a pharmaceutical firm in Israel.

“Israel is a leader in agriculture, take that and couple it with research – you have the two sides, plant science and pharmaceutical development,” Friedland said.

“If you’re in California or Colorado, you’re getting medical marijuana in a lot of cases from someone who did not graduate high-school – there’s no science.”

It was only in October that California drafted its first comprehensive regulations on medical marijuana, two decades after legalization fueled a grey market in cultivation.

Seth Yakatan, CEO of California-based Kalytera Therapeutics, said the level of capital efficiency in Israel was high.

“What you would spend half a million dollars on in the U.S. you could easily get for 125 or 150 thousand dollars in Israel and it’s going to be done efficiently and on time. The quality of research is world-class and the arbitrage of value is good.”

A Hebrew University and Tel Aviv University study, findings of which were published in May 2015 in the Journal of Bone and Mineral Research, showed cannabis constituent Cannabidiol, or CBD, helped heal bone fractures in rats.

Based on that study and others, Kalytera has licensed two compounds from the Hebrew University’s Technology and Transfer company Yissum. They are synthetic cannabis derivatives that the firm eventually hopes to use in treating osteoporosis, bone fractures and other diseases.  (Reuters 29.03)

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11.3  QATAR:  Fitch Affirms Qatar at ‘AA’; Outlook Stable

On 31 March, Fitch Ratings affirmed Qatar’s Long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘AA’ with a Stable Outlook.  The Country Ceiling is affirmed at ‘AA+’ and the Short-term foreign-currency IDR at ‘F1+’.

Key Rating Drivers

The ‘AA’ ratings reflect Qatar’s large sovereign assets, the government’s fiscal adjustment efforts, a large hydrocarbon endowment and one of the world’s highest GDP per capita.  Qatar’s hydrocarbon dependence is a key rating weakness, with oil and gas extraction averaging more than 50% of GDP over the past five years and hydrocarbon-backed government spending accounting for a further 30% of GDP.  Qatar’s credit strengths are also balanced by government debt and deficits that are set to rise above those of rated peers, and by mediocre scores on the World Bank’s measures of governance and the business environment (both below the 70th percentile).

We expect the general government to post deficits of around 10.4% of GDP (QAR61b) in 2016 and 2.7% of GDP (QAR18b) in 2017, as lower oil and gas prices hit revenues while the overall impact of expenditure reduction measures remains small.  The government intends to tap debt markets instead of drawing on the assets of the Qatar Investment Authority (QIA).  In total, new issuance will push Qatar’s government debt ratio up to 44% of GDP in 2016 from 32% in 2015.  Capital income will allow QIA assets to rise to a forecast $330b by end-2017, from an estimated $300b at end-2015.  As with other oil producers, large swings in nominal GDP will shift the ratio of QIA assets-to-GDP to nearly 200% in 2016 and back to 180% in 2017, from 190% in 2015.

Under our baseline oil price assumptions ($13/bbl lower than the government’s), we expect total government revenue to fall 38% to a trough of QAR141b in 2016 before recovering to QAR179b in 2017.  We expect expenditure to fall 7% to around QAR203b in 2016 and a further 3% to QAR197b in 2017, underpinned by reductions in current expenditure other than salaries and wages.  Measures to reduce current expenditure have included reductions to fuel and electricity subsidies, as well as travel and office expenses for government employees.  The activities of state-owned organizations such as Al Jazeera and Qatar Museums have been scaled back.  The number of government ministries has been reduced to 15 from 18. Nevertheless, the exact composition of the planned headline expenditure adjustment is unclear.

The adjustments to budgetary items have been accompanied by reforms to the fiscal framework, many of which were initiated in early 2015.  Project proposals and budget requests are being more closely scrutinized, even as departments have more flexibility to shift spending between different items.  Non-core functions are being outsourced.  The government intends to pass a new law on public-private partnerships (PPPs) by end-2016 and to use PPPs to finance the construction of 40 schools, 10 medical centers and other infrastructure projects by the private sector.

The government is also taking steps to increase non-oil revenues, focusing on indirect taxes and levies.  It has increased stamp duty and plans to levy additional taxes on alcohol, tobacco and energy drinks starting in 2017.  It plans to start applying VAT at a rate of 5% in 2018 on all goods and services, excluding selected food and medical items, potentially adding QAR12b-15b per year to the government’s coffers.

We expect non-hydrocarbon growth to slow to 6% in 2016 from an estimated 8% in 2015.  Average non-hydrocarbon growth has been 10% over the past five years.  The slowdown will be a result of a less benign fiscal environment, where a contraction in current spending and a focus on fiscal efficiency leads to a slowdown of both private and public consumption growth.  Some of the contraction will, however, be compensated by lower imports.  With the government’s capital spending expected to remain at QAR94b per year through to 2021, its commitment to key infrastructure projects will support economic activity.  After this, the non-oil growth outlook is highly uncertain.

In our forecast, hydrocarbon growth will pick up to 2.2% in 2016, after contractions of 3.2% in 2015 and 1.5% in 2014.  This will raise overall growth to 4.1% in 2016 from 2.2% in 2015, despite the slowdown in non-hydrocarbon growth.  The Barzan gas development should come on stream in 2016 and will add 1.4 billion scft/d of production of sales gas when it reaches full capacity, on top of additional production of LPG and condensates.  The Ras Laffan II condensate refinery should be completed by 3Q16 and will add 146,000 bbl/d of capacity for petroleum products, offsetting the impact of declining crude oil production on overall hydrocarbon production.  Oil field redevelopments could positively affect hydrocarbon production after 2020.

A widely expected glut in global LNG capacity poses a risk to Qatar’s fiscal and external revenues, on top of the risk stemming from low oil prices.  Qatar’s market share in LNG exports, which stood at 31% in 2014, will likely shrink, although this should be partly mitigated by a focus on long-term customer relationships through flexible sales arrangements.

Banking sector liquidity has deteriorated as the public sector has drawn down on some of its deposits even as bank lending continued to grow.  The banking system’s loan-deposit ratio rose to 120% in December 2015, from 105% in December 2014, and interbank rates rose sharply in 4Q15.  However, banks have been able to find funding abroad, and we believe that the Qatar Central Bank (QCB) has at its disposal the tools to support liquidity, with the QCB’s repo rate and required reserve ratio both above 4%.  Concentration of bank exposures to large business groups is a risk, as is their exposure to the real estate sector.

Rating Sensitivities

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

– Sustained weakness in hydrocarbon revenues and a failure to scale back expenditure, eroding fiscal and external buffers.

– A materialization of large contingent liabilities, such as from government-related enterprises or the banking sector, resulting in a rapid draw-down of sovereign assets or build-up of debt.

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

– Improvement in structural factors such as reduction in oil dependence, and a strengthening in governance, the business environment and the economic policy framework.

Key Assumptions

Fitch assumes that Brent crude will average $35/b in 2016 and $45/b in 2017 and rise to a long-term average of $65/b.

Fitch assumes natural gas prices will evolve broadly in line with oil prices.

Fitch assumes that regional geopolitical conflicts will not impact directly on Qatar or on its ability to trade and that the domestic political scene will remain stable.  (Fitch 31.03)

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11.4  EGYPT:  Cairo’s Crude Crisis

Yasser El-Shimy wrote in Sada that cheap oil is hurting Egypt’s economy in the short term and could have wider political consequences.

Low oil prices are heaping added pressure on Egypt’s currency crisis.  While common wisdom holds that the finances of fuel-importing nations, such as Egypt, stand to benefit from declining energy prices, the net impact for Cairo’s economy is surprisingly negative.  At least in the short term, this trend is exacerbating what was already a full-fledged foreign currency crisis as a result of significant falls in tourism and industrial exports revenues.

In the long run, Egypt should benefit from cheaper oil by spending less on importing and subsidizing gasoline and gas.  Indeed, spending on petroleum and natural gas subsidies has decreased from EGP 73 billion ($8.2 billion) in 2014–2015 to EGP 55 billion ($6.2 billion) in 2015–2016.  This is at least partially due to plummeting oil prices, which may eventually have a positive impact on inflation and allow Egypt to overcome four years of energy shortages.  All in all, this may actually be conducive to future economic growth.

Yet there are a number of reasons why depressed oil prices are hurting the Egyptian economy in the shorter term.  First, as Egypt’s single biggest export, petrochemicals constitute one of its main sources of U.S. dollars.  For a country as dependent on imports as Egypt, access to foreign currency (particularly dollars) is crucial.  Egypt is earning fewer dollars from its energy exports, partly due to lower energy prices.  Inability to pay energy firms their dues in dollars is also contributing to a declining domestic energy production and, therefore, energy-related dollar revenues.  Amid low energy prices, these companies are also curtailing their exploration activities, limiting Egypt’s future production and withholding precious dollars from the local market.  According to statistics from the Ministry of Trade and Industry, Egypt’s exports of crude oil and petrochemicals declined 33% from $4.5 billion in between January 2014 and September 2014 to $3 billion in the same period of 2015.  While more recent figures have not been released, it is likely that this revenue decline has accelerated due to the continued weakening of energy prices.  Meanwhile, the country is paying more dollars for energy imports.  Egypt’s imports of crude oil and petrochemicals rose in that same time period of January to September 2014 from $6.3 billion to $8.8 billion in 2015, partly because of declining energy grants, credits and aid from the Arabian Gulf.

Second, low oil and gas prices are substantially limiting aid from the Arabian Gulf countries, Egypt’s main economic lifeline since the July 2013 military coup.  Although it is probable that there are also geopolitical reasons behind declining Saudi and Emirati aid and investments in Egypt, such as Cairo’s pro-Russian stance in Syria and reluctance to send combat troops to Yemen, both Gulf countries continue to support the military regime in an effort to curb growing Iranian influence in the Middle East.

Their commitment is more constrained by diminishing oil and gas revenues and the sharp costs of war in Syria and Yemen.  Saudi Arabia’s budget deficit expanded from 2% of its GDP in 2014 to 15% one year later, and foreign reserves plummeted from $737 billion in to $640 billion.  As such, assistance to Egypt has sharply declined.  While Gulf aid and permissive loans for the Egyptian fiscal budget for July 2013–June 2014 are estimated to be at least $16.7 billion, such assistance plummeted to single digits in the period thereafter, and recent pledges are meager in comparison and lack a strict timeframe.

In February, Saudi Arabia rejected the Egyptian government’s project proposals that would have brought in $8 billion in Saudi investment.  Likewise, Emirati contractors limited their participation in Abdel Fattah el-Sisi’s signature projects to build affordable housing and a new administrative capital.  The financial pressure these countries feel as a result of oil that sells for approximately $30 per barrel will lead them to reject former blank-check forms of assistance and potentially opt instead for opportunistic investments, such as in the lucrative real estate sector.  To be sure, Riyadh has recently hinted at further aid to Egypt, particularly in the energy sector, but this aid is far less generous than in previous years.  Osama Kamal, Egypt’s former Minister of Petroleum, recently warned that Saudi Arabia cannot afford to invest in Egypt at the current oil prices.

Third, as oil-producing Gulf countries face their own economic challenges, remittances sent home by Egyptians working in these countries are plummeting.  While Cairo’s banks received $22 billion in transfers in 2014, that figure declined to $18 billion in 2015.  This is attributed to the Gulf economies’ stagnation and limited austerity measures, as well as the large discrepancy between the Egyptian official exchange rate and that of the black market.

Finally, cheap energy prices are limiting Egypt’s access to foreign currency via the Suez Canal.  According to a report by SeaIntel, cheaper oil and cheaper fuel has already pushed many maritime cargo ships to take the longer route around the Cape of Good Hope instead to avoid the now uneconomical canal tariffs.  Between October 2015 and the new year, 115 ships have already taken the longer, but now cheaper, route.  More ominously, the commodity sector’s global decline has thus far been due to oversupply.  If demand also declines due to a slowdown in the Chinese economy or emerging market credit problems, Egypt stands to lose even more dollars from the contraction in international maritime trade, on top of diminishing oil and LNG cargo revenues.

This foreign currency crisis (exacerbated by low energy prices) has broad social, economic, political and geostrategic implications for Egypt.  On the socioeconomic front, Egypt faces a growing need to borrow from the IMF, which will give it little choice other than to embark on a painful array of structural reforms, austerity measures, and currency devaluation.  These will pass tremendous costs to Egypt’s already strained consumers.  The current inflation level of approximately 10% is likely to increase while the economy slows and jobs become scarcer.  Additionally, cutting public spending by taking on the country’s bloated bureaucracy has proven no easy task, as the government confronts a powerful lobby of public employees numbering, according to divergent Egyptian government estimates, between 5 and 7 million.  For instance, in January parliament reviewed hundreds of laws that President Sisi had passed in 2015, but the only one they struck down was the civil service law, which would have substantially curtailed hiring in the public sector and effectively frozen wages.

The current currency crisis will hit Egyptians across the board.  Unusual shortages and price hikes in staples such as rice, cooking oil and medicine are spreading.  Some companies, including General Motors, LG, Air France, British Airways and Italcementi, have either suspended operations temporarily or considered exiting the market entirely, due to their inability to repatriate earnings or access dollars needed for imports.  The government’s recent decision to increase tariffs on a host of imported products to limit the pressure on the Egyptian pound highlights the impact of the dollar problem on manufacturers, importers, workers, and customers alike.

On the political front, President Sisi faces the seemingly contradictory challenge of managing the country’s finances while simultaneously forestalling and suppressing manifestations of public unrest.  Given the rapid decline in Egyptians’ living standards and welfare benefits, outbursts of public anger may begin from professional syndicates, labor unions and even government employees.  Should these groups openly defy the regime’s security forces, they may quickly be joined by a host of other groups and ordinary citizens.  This is already happening with the Egyptian Medical Syndicate, Alexandria bus drivers, Cairo taxi drivers and labor unions in Alexandria and the Nile Delta.  Public criticism of the president and the government, a taboo since Sisi came to power, is becoming common on media channels considered close to state institutions.  In short, given the economic outlook, Egypt is likely to suffer from disruptive sociopolitical turmoil that will dampen hopes for political stability and further impede the government’s ability to turn the economy around.

Yasser El-Shimy is a senior teaching fellow at Boston University and the former Egypt analyst for the International Crisis Group.  (Sada 30.03)

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11.5  EGYPT:  Will Egyptian Parliament Cut Into the Military’s Profit Margin?

Rania Rabeaa Elabd posted on 1 April in Al-Monitor that the Egyptian army’s strength may hinder any attempt at limiting its economic activities.

Egypt’s politicians are preparing to do battle against its army.  A number of lawmakers in the country’s recently elected parliament are working on laws designed to provide answers to questions about the army’s money and its place in the national budget.

“Armies are the basis of the administration and the administration is everything,” Maj. Gen. Mahmoud Nasr said at a conference four years ago on the role of the Egyptian Armed Forces (EAF) in supporting the economy through the institution’s many projects.  At the same conference, held in Cairo and organized by the Supreme Council of the Armed Forces, he stressed that the so-called “army economy” is not derived from state funds, but rather from returns on Ministry of Defense projects.

The Defense Ministry’s projects and finances have long lacked transparency and many critics have questioned whether its funds constitute a black-market budget.  Some estimate the size of the army’s economy at 35 – 45% of the Egyptian economy.  President Abdel Fattah al-Sisi denied both assertions during his election campaign.  In a May 2014 interview with Reuters, Sisi said the correct number was no more than 2%.

The army’s wealth comes through what is owned by the EAF’s ministries, military production and subsidiary bodies or economic institutions.  The Armed Forces Land Projects, a government agency affiliated with the Ministry of Defense, is tasked with creating investment projects (housing, commercial centers, administrative units, parking areas) on EAF-owned land to serve the civilian sector.  But the agency isn’t required to reveal the lands it owns or how it came to own them.

Among the most prominent of the army’s economic bodies is the Arab Organization for Industrialization, launched in 1975 as a partnership with Saudi Arabia, Qatar and the United Arab Emirates to establish an Arab common defense industry.  But after Egypt signed a peace treaty with Israel in 1979, the Arab states withdrew their shares and the Egyptian government became the organization’s only owner.

Also in 1979, the army created the National Service Projects Organization to become self-sufficient and avoid relying on the private sector for its needs.  The agency lists the companies it owns on its website.  The companies operate in numerous sectors such as construction, cleaning, agriculture and food products, and they sell their surpluses in the domestic Egyptian market.

The army’s economic empire extends to public lands that are not declared in any document or official statement.  They come to light when projects are planned on vital land.  After investors become deeply involved in projects, they sometimes discover that the lands in question belong to the army or are disputed between the army and the police, which are represented by the Ministries of the Armed Forces and the Interior, respectively, according to parliament member Moataz Mahmoud, who spoke with Al-Monitor in a recent interview.

Mahmoud supports legislation known as Dominion of the Land (Wilayat al-Ard), which mainly aims to limit how much land the Egyptian army and the Ministry of Interior can own and to codify it as much possible.  According to Mahmoud, existing laws are onerous for Egyptian and foreign investors.  He would like to pass a series of new laws, such as Dominion of the Land, that clearly define state land ownership and protect property rights.

In addition to ruffling the military’s feathers, this legislation is expected to trigger a confrontation among parliament members.  A number of international and domestic media outlets have reported that Egypt’s military intelligence pushed certain people to run in the elections, seeking to boost the army’s political influence even more.

In this context, a parliamentarian who spoke on condition of anonymity pointed out that the army’s economic assets keep expanding year after year but that “the national interest makes it imperative for parliament in general to not open this case.”  He stressed that the army does not interfere with the economy or work against anyone, and that it “fills an economic void to provide goods that the state could not provide.”  He did concede, however, that the army uses conscripts as laborers in its production operations, making its companies more competitive than the private sector.

From 2012 to 2014, the Engineering Authority implemented 473 strategic and service projects.  A military source in EAF’s Engineering Authority told Al-Monitor that projects of the EAF and its affiliates are not subject to any kind of oversight, not even by parliament.

The source said that the expected clash between the army’s economic arm and the parliament members who support the legislation could prevent its passage, or at least prevent its application to the EAF, which is a sovereign body with economic and legal influence surpassing that of parliament members.  Parliament is not allowed to examine the army’s budget, which is the responsibility of the Defense and National Security Committee alone in cases of extreme necessity.

The source said projects assigned to the army’s economic agency are always done directly through the Council of Ministers or the relevant ministries.  In an attempt to create confidence between the agency and businesspeople, the agency sometimes enters into partnerships, such as the partnership with Osman Ahmed Osman and his company, Arab Contractors.

Rania Rabeaa Elabd is an Egyptian journalist focused on issues concerning the parliament and political parties.  (Al-Monitor 01.04)

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11.6  EGYPT:  Egyptian State Takes on Independent Trade Unions

Khalid Hassan posted on 24 March in Al-Monitor that after Egypt recently declared independent trade unions invalid, many groups said they will fight the decision on the grounds that it violates the constitution.

In what many critics see as an effort to eliminate union organization in Egypt and undermine all constitutional articles guaranteeing the right to establish trade unions, the state on 1 March declared that the stamps of independent trade unions will no longer be valid on official documents.  The decision prohibits dealing with independent trade unions and considers them illegitimate entities.

The decision came following a more than five-year struggle between independent trade unions and the state, represented by the Ministry of Manpower, which is in charge of following up on the establishment and activity of trade unions.  After the January 25 Revolution of 2011, dozens of independent trade unions started forming to express workers’ demands.

With time, the independent trade unions’ influence increased, as members elected their leaders and saw them as rights advocates.  Workers abandoned the pro-government Egyptian Trade Union Federation (ETUF), which failed to unite them under its umbrella.

The Interior Ministry said the Ministry of Manpower had asked for the unions to be invalidated because they are not subject to the provisions of Law No. 35 of 1976 on trade unions, which prohibits union pluralism.  Article 13 of that law states that workers in the same occupational groups or industries, or in industries correlated to each other or jointly working for the same production, can only form one trade union across the republic and no other.

Hani Afifi, vice president of the Egyptian Democratic Labor Congress (EDLC), which is an independent alliance of unions, told Al-Monitor, “This law is faulty and has no value, as it contradicts constitutional Article 76, which allows trade union pluralism and guarantees workers’ right to establish trade unions upon notifying the concerned authority.  Constitutional provisions are the important thing for us, and the government needs to adjust its situation according to the constitution and refrain from implementing a law that contradicts the constitution.”

Constitution Article 76 states that the establishment of federations and trade unions on a democratic basis is a right guaranteed by the law.  The article says unions shall have legal personality, operate freely, contribute to higher competencies among its members, advocate for their rights and protect their interests.  The article also says the state shall guarantee the independence of trade unions and federations, and their boards of directors shall not be dissolved without a court order.

“We have in the [EDLC] congress of 125 independent trade unions and more than 800,000 workers, all of whom left the ETUF and decided to join us.  The federation did not offer them anything and workers did not even elect their representatives, so how could ETUF be representative of workers in the state?” Afifi said.

“Why does the state refuse to implement the provisions of the constitution and continue to procrastinate on issuing the laws on freedom of association, which the ministry had announced two years ago?  Why is the state trying to suppress workers with an outdated law from 40 years ago, which was canceled in the [2014] constitution?  We will not be affected by these measures and we will continue to fight for our usurped rights and exercise the freedoms of association to the fullest, as per the constitution,” he added.

In January, the Permanent Conference of Alexandria Workers launched a campaign dubbed “Together for Freedom of Association” calling on the government to yield to workers’ demands and implement the constitution’s provisions regarding the freedom to establish trade unions unconditionally.  The campaign has said it will take clear steps to pressure the government, including organizing seminars and meetings with workers from across the country’s different governorates, and collecting their signatures on a petition rejecting the decision.  The campaign also plans to file lawsuits against the Ministry of Manpower for violating the constitution.

In press statements on 16 March, Khaled Tosoun, vice chairman of the Permanent Conference of Alexandria Workers, called upon the state to reject its thinking, which he said is negatively affecting its economic situation; to implement the international labor agreement it had signed; and to openly declare its support for the working class and workers’ right to establish independent unions.

Egypt is a signee of the International Labor Convention No. 87 for 1948, which states in its second and third articles that workers have the right to establish unions and organizations of their choice unconditionally, to set their bylaws and regulations and organize their administrative affairs and activities in full freedom.  The convention’s Article 8 stipulates that the country’s laws shall not prejudice the provisions of the agreement.

Article 93 of the constitution says the state shall be bound to the international agreements, covenants and conventions on human rights ratified by Egypt, which shall enter into force after publication in accordance with the established procedure.

Abdel Monem al-Gamal, the ETUF deputy chairman, made scathing comments to Al-Monitor against the independent unions, calling upon them to respect the law and rejoin the federation, which is the only union legally recognized by the state.  “Law No. 35 of 1976 is the only law governing the establishment of independent trade unions and federations.  The government has yet to amend it in accordance with the constitution.  So until the government passes the new law, the independent unions are void and invalid,” he said.

Concerning the accusations against that ETUF has not offered workers any benefits for the past 60 years, Gamal said, “If the ETUF has done nothing for workers, could anyone tell me what the independent unions have offered workers over the past five years since their establishment?  “Unfortunately, some workers have exploited the chaos that followed the January revolution to create fake entities, obtaining funds from abroad without any control.  Today, we have to correct the path by operating under the umbrella of the official federation exclusively.”  (AL Monitor 24.03)

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11.7  TURKEY:  Key Trends Impacting the Turkish Elevators and Escalators Market

 Technavio’s latest elevators and escalators market in Turkey report highlights three key emerging trends predicted to impact market growth through 2019.  Technavio defines an emerging trend as something that has potential for significant impact on the market and contributes to its growth or decline.

“Major international players such as ThyssenKrupp, Otis, Schindler, and Hyundai, dominate the elevators and escalators market in Turkey.  Apart from these major international vendors, the key domestic players include Tromp and Edoux.  The construction market in the country has been experiencing steady growth since 2013, and as a result, multiple construction projects are underway in the country, especially in the transport and healthcare infrastructure sectors.  Technavio researchers predict the elevators and escalators market in Turkey will reach close to $972 million in revenue by 2019,” said Soumya Mutsuddi, one of Technavio’s lead industry analysts for construction research.

Technavio’s market research study identifies the following three emerging trends expected to propel the growth of the elevators and escalators market in Turkey:

  1. Increase in export of elevator and escalator equipment
  2. Increase in electric elevator installations
  3. Increased focus on safety in elevators and escalators

Increase in export of elevator and escalator equipment

The elevator and escalator market in Turkey is characterized by the presence of a number of domestic manufacturers.  The country is in close proximity to Europe as well as the Middle East.  The construction industry in the Middle East, especially UAE and Qatar, is experiencing unprecedented growth in the construction of high-rise buildings, resulting in an increased demand for elevator and escalator equipment.

Similarly, with the growth of the construction industry in Russia and Iraq, especially in the high-rise construction sector, the demand for elevator and escalator equipment in these countries is expected to increase over the next four years.  Because of this rising demand, the export of elevator and escalator equipment to Iraq and Russia is also anticipated to increase.  As of 2014, Turkey exported more than $6.5 million worth of elevator and escalator equipment to Iraq and around $5 million worth of elevator and escalator equipment to Russia.  Apart from these countries, Turkish manufacturers mainly export elevator and escalator components and equipment to Bulgaria and Iran.

Increase in electric elevator installations

Electric elevators have become a preferred choice among construction companies.  Electric elevators dominated the market with a market share of 89% in 2014.  The demand for energy-efficient elevators has significantly increased over the past few years.  Energy efficiency is achieved when motors installed in electric elevators are used to overcome friction through a lifting action performed by counterweights.

It has become evident to users that energy-efficient elevators are more economical in the long run.  Hence, in terms of carriage, electrical lifts can carry much more weights when compared to hydraulic elevators.  Most of the energy consumed in these elevators mainly originates from heating, cooling, ventilation and lighting systems.

In hydraulic elevators, the energy that is used to perform the lifting action goes completely unutilized, as elevators use a pump system that helps lift the cabin.  It pushes a cylinder of fluid on a piston while lifting the cab.

Increased focus on safety in elevators and escalators

The elevator and escalator market in Turkey witnessed a number of fatal elevator and escalator accidents during the 2012 – 2014 period.  To overcome risks involved in the installation of faulty equipment, the government of Turkey has therefore increased its focus on safety standards.  Inspectors all across the country are actively engaged in rigorous inspection of installed elevator and escalator equipment, especially in public buildings.

Equipment that does not comply with safety standards are given a red label and are sealed by inspectors.  In 2014, the inspectors of Erzurum, a city in Eastern Turkey identified more than 1,500 elevators that pose potential safety hazards and sealed them off.

Technavio is a leading global technology research and advisory company. The company develops over 2000 pieces of research every year, covering more than 500 technologies across 80 countries.  Technavio has about 300 analysts globally who specialize in customized consulting and business research assignments across the latest leading edge technologies.  (Technavio 25.03)

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11.8  GREECE:  Privatizations Program Struggles to Make Target of €2 Billion

Greece’s privatizations program is again facing delays, this time due to new obstacles raised either by political developments or the stalling tactics of certain government officials who are ideologically against the sell-offs.  Hopes of reaching the target for privatization revenues of €2 billion this year are rapidly diminishing, as key projects that would have contributed significantly are being put off.  The original target for €3.5 billion is now but a pipe dream.

So far, the only certain sum is the €1.5 billion from the contracts of the state sell-off fund (TAIPED) with Fraport for the regional airports (€1.23 billion) and with Cosco for Piraeus Port Authority (€280 million).  All other projects that could fetch significant revenues are under dispute.

For instance, the development of the old Athens airport at Elliniko is unlikely to bring in any takings this year, despite the optimism recently expressed by Finance Minister Euclid Tsakalotos in Parliament.  The government has not yet reached the deal it desires with the preferred bidder.

The only projects that could help the budget within 2016 are Athens International Airport (AIA) and OTE telecom.  However, the former is opposed by the Infrastructure Ministry and the latter is seen as bearing too heavy a political cost for this government.

Of course as the bailout review proceeds, the government will come under increasing pressure from its creditors to complete some key privatizations.  In this context, the AIA negotiations are expected to start soon, with TAIPED and the Canadian stakeholders eager to reach a deal, which would be possible in the next four months.  Should there be an agreement, the revenues are likely to top €200 million.

The government is also examining the case of its 10% stake in OTE, which could be used as a stopgap solution in case the privatizations program looks like missing its target.  The state revenues from the sale of that stake would amount to €300 million, with another €200 million going to the Social Security Foundation (IKA).

Other sell-off projects, such as rail companies Trainose and Rosco, Egnatia Odos, Thessaloniki Port Authority and so on, are unlikely to fetch any revenues within this year.  (Ekathimerini 05.04)

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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.