Fortnightly, 9 March 2016

Fortnightly, 9 March 2016

March 9, 2016


9 March 2016
29 Adar I 5776
29 Jumada Al-Awwal 1437




1.1  Prime Minister Netanyahu Calls for Free Market Reforms
1.2  Housing Cabinet Approves 5 Foreign Building Companies for Israel Work
1.3  Israel and EU Working on New Cooperation Framework


2.1  Israel’s Natural Gas Potential Triple Initial Calculations
2.2  Cyber-Security Startup Ensilo Passes $21 Million in Funding
2.3  Nano Satellite Company SkyFi Raises $3 Million
2.4  Team8 Builds World’s Strongest Cybersecurity Syndicate
2.5  Oracle to Acquire Ravello Systems
2.6  DBmaestro Raises $3 Million in Series A Funding
2.7  RR Media to Merge with SES Platform Services
2.8  AppCard Raises $20 Million
2.9  Cisco Buys Leaba Semiconductor for $320 Million
2.10  Papa John’s International Opens First Store in Israel
2.11 Deep Optics Raises $4 Million in Funding to Revolutionize Multifocal Market
2.12  PSI Establishes Permanent Operation in Israel


3.1  Arab Middle East IT Spending Forecast to Hit Nearly $213 Billion in 2016
3.2  Jordanian & Chinese Firms to Set Up $1.3 Billion Fertilizer Project
3.3  Karl Lagerfeld Opens Concept Store in Kuwait City
3.4  Dubai & Shenzhen Sign Agreement on Innovation
3.5  Hibernia Networks Extends Service Reach into Middle East
3.6  UL & SASO to Promote Safety Standards and Enhance Market Access
3.7  Grandstream Products Now Available from Baud Telecom in Saudi Arabia
3.8  Calgary Scientific & Limantepe Offer Web & Mobile Diagnosis in Turkey


4.1  Drought of 1998-2012 in Middle East Was the Worst in 900 Years


5.1  Fourth Quarter MENA Review and Outlook
5.2  Lebanon’s Balance of Trade Narrowed During 2015
5.3  Lebanon’s Trade Deficit Stood at $1.31 Billion in January 2016

♦♦Arabian Gulf

5.4  Kuwait Says it is Planning a 25% Cut in State Spending
5.5  Qatar’s Trade Surplus Falls by 58.1% in a Year
5.6  Sheikh Mohammed Approves UAE Infrastructure Projects Worth $1.9 Billion
5.7  Saudi Inflation Jumps to New High on Gasoline Price Hike
5.8  Saudi Arabia’s Labor Force Grows at Slowest Pace Since 1999

♦♦North Africa

5.9  Egypt’s Parliament Approves Defense Loan Agreement with France
5.10  Egyptian Defense Industry Report 2016 – 2020 Issued
5.11  Egyptian Tourism Declines 46% in January As Russians Stay Away
5.12  Egypt & Japan Sign Several Agreements on Projects Worth $17 Billion


6.1  Turkish Inflation Slows to 3-Month Low on Lower Food Prices
6.2  IMF Revises Turkey’s Growth Forecast for 2016
6.3  Hotel Occupancy Rates in Turkey Drop Below 50% Amid Tourist Squeeze



7.1  Israel Holds its First Transgender Beauty Contest


7.2  UAE Decides to Extend Compulsory Military Service to 12 Months
7.3  Moroccan Minister Presents Toughened Draft Law to Fight Sexual Harassment


8.1  Avraham Pharma Raises $4 Million
8.2  Rosetta Genomics Launches Three New Product Offerings
8.3  Medasense Biometrics Raises $8 Million Investment in Series B Financing
8.4  Deep Instinct Patents to Implement Deep Learning in Cybersecurity
8.5  Teva Completes Acquisition of Rimsa
8.6  Insuline Medical Signs Non-Binding MOU to Distribute InsuPad in Brazil


9.1  OriginGPS’ New Module Adds Multi-GNSS to the World’s Smallest Footprint
9.2  Mellanox Partners with Nutanix to Deliver Effortless Enterprise Infrastructure
9.3  HexaTier Launches Solution for Database Security and Compliance in the Cloud
9.4  Israel’s Elencon Teams with Alstom
9.5  SolarEdge Launches Commercial Inverter Solution in Japan
9.6  Mellanox Delivers Next Generation Network Processor to Key Telco Customers
9.7  AudioCodes VoIPerfect Evolves Voice Over WAN Into Quality HD Voice
9.8  RSA Goes Live with Sapiens Reinsurance


10.1  Israel’s Foreign Exchange Reserves Hit New Record
10.2  Average Salaries in Israel Increased During 2015


11.1  LEBANON: S&P’s ‘B-/B’ Ratings Affirmed; Outlook Remains Negative
11.2  LEBANON: Ending the Year in Stagnation
11.3  QATAR: Tarnished by Cheap Oil
11.4  SAUDI ARABIA: Dealing with a Record Fiscal Deficit
11.5  EGYPT: Heading Towards Serious Challenges, Despite Continuous Efforts
11.6  EGYPT: Is Egypt Doing Enough to Counter Widespread Sexual Harassment?
11.7  IRAN: Iran’s Long Road to Reintegrating With the World Financial System
11.8  TURKEY: What Fading Oil Fortunes Means for Turkey’s Businesses


1.1  Prime Minister Netanyahu Calls for Free Market Reforms

On 6 March, at the beginning of the weekly cabinet meeting, Prime Minister Netanyahu took aim at government intervention in the economy.  The Prime Minister blamed overregulation and state interference in the economy for Israel’s failure to attract outside investment and the relatively modest pace of economic growth.  He cited that Israel has excessive regulation, excessive bureaucracy and excessive legislation; the combination of which causes Israel to be less and less competitive, less attractive to foreign investors.  Netanyahu pledged to make deregulation a primary focus of his government in hopes that it will spur economic growth.

Netanyahu’s distinctly market-oriented talk signals a possible return to the neo-liberal economic policies he pursued as Finance Minister from 2003-2005.  The fiscal reforms implemented during his tenure are largely credited with bringing the Israeli economy out of a recession and kicking off more than a decade of growth.  (INN 06.03)

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1.2  Housing Cabinet Approves 5 Foreign Building Companies for Israel Work

The Israeli government decided to allow up to six international construction companies to operate in Israel for 5 years.  Despite sharp opposition by Israeli contractors and developers, the housing cabinet approved on 7 March a decision to allow foreign construction companies to operate in Israel.  The plan was advanced by Minister of Finance Kahlon and will be modeled after an existing agreement with Turkish construction company Yilmazlar.  Under the plan, the foreign firms will not operate independently in Israel, but rather crews will be brought from abroad to work as subcontractors for the domestic companies.

According to the decision, a pool of six foreign firms with experience in the residential construction sector and solid finances will be selected by tender.  The pool will operate over five years, during which the foreign firms will be allowed to bring up to 1,000 employees from abroad for wet works projects.  It further calls for the application of Israeli law on the foreign firms including labor laws for employers of foreign employees in order to assure the rights of the foreign workforce and the quality of the work.  (Globes 08.03)

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1.3  Israel and EU Working on New Cooperation Framework

The EU is discussing a new framework agreement with Israel that will replace the existing 2004 agreement.  The new agreement will redefine the implementation of cooperation between Israel and the EU in a range of areas, such as industry, trade, energy, the environment, agriculture, economic questions, as well as on the political level.  Prime Minister Netanyahu, who is also serving as Minister of Foreign Affairs, will travel to Brussels to meet High Representative of the European Union for Foreign Affairs and Security Policy Mogherini.  The trip is expected to take place by the middle of 2016 and will be the first occasion on which an Israeli foreign minister has visited the EU headquarters since the 1990s.  (Globes 28.02)

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2.1  Israel’s Natural Gas Potential Triple Initial Calculations

The Energy Ministry has tripled its estimate of the volume of still-undiscovered natural gas in Israeli waters.  Energy Minister Yuval Steinitz, presented to international energy companies the new assessment of a potential 2,100 billion cubic meters (BCMs) of natural gas, in contrast to the 680 BCMs that the Tzemach Committee relied on to examine the government’s policy regarding the natural gas market.  The Tamar and Leviathan gas fields have already yielded 750-950 BCM of natural gas.

The ministry based its new assessment on a report prepared by French consulting firm BeicipFranlab.  It found that the seabed has four relevant layers that potentially contain geological structures that could contain gas.  According to the report, the potential amount of petroleum is estimated at 6.6 billion barrels.

BeicipFranlab believes that the territorial waters of Israel have four layers with the potential for finding oil or gas deposits.  It estimates that the deeper layer, where the Tamar and Leviathan fields were found, has the potential for about 480 BCM of natural gas, while shallower layers could contain about 1,640 BCM of gas.  This assessment is based on a re-examination of existing seismic maps and new models.  The numbers are based on an estimate believed to have a likelihood of 50%.  (Various 25.02)

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2.2  Cyber-Security Startup Ensilo Passes $21 Million in Funding

enSilo, a leading provider of a real-time data protection platform focusing on preventing data tampering and exfiltration, closed the second tranche of its Series A financing, raising a total of $19 million for the round and $21 million in total funding.  The second tranche of $9 million was led by Rembrandt Venture Partners with previous investors Carmel Ventures and Lightspeed Venture Partners participating.

enSilo has experienced rapid growth since its founding 18 months ago, with tens of deployments in the US.  The new funding will be used to expand sales and marketing, and improve customer experience in support of the rapidly growing demand for the company’s products and services.  enSilo’s real-time data protection platform is currently in use by a number of Fortune 100 companies along with leading defense contractors and payment solutions worldwide.

enSilo delivers a real-time data protection platform against advanced targeted attacks by preventing threat actors from establishing outbound malicious connections.  With enSilo, organizations can continue running their businesses’ operations securely and without interruption, even during the investigation and remediation of attacks.  (enSilo 25.02)

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2.3  Nano Satellite Company SkyFi Raises $3 Million

Israeli startup SkyFi (formerly known as NSL Comm) has raised $3 million from Jerusalem Venture Partners (JVP) and Liberty Israel Venture Fund, a subsidiary of Liberty Media Corporation.  This is the company’s first fund raising round.  SkyFi has developed a nano satellite with a flexible sub-reflector which it aims to use to provide Internet access from everywhere on the planet.

SkyFi’s innovation revolves around a flexible sub-reflector that compensates for any reflector shape imperfections.  This does away with expensive, poor performing satellites by enabling a nano satellite to be sent into space with a 55cm diameter antenna folded up, greatly reducing launch load and costs.  Once in orbit, the satellite’s antenna expands and the proprietary flexible sub-reflector enhances transmitting precision and power by as much as 500x.  Putting 60 such satellites into space using SkyFi technology would bring internet connectivity to the entire globe and would be less expensive than the current cost of putting one satellite into space.  Members of the SkyFi team have filed over 20 patents combined, and have worked at Israeli Aerospace Industries, RaySat Broadcasting and Gilat Satellite Network, among others.  (Globes 25.02)

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2.4  Team8 Builds World’s Strongest Cybersecurity Syndicate

Team8 announced a $23 million strategic round of funding.  With the completion of the strategic round, Team8 further strengthens its relationship with market leaders and design partners who work closely with Team8 in its company-creation process.  The funding adds AT&T, Accenture, Nokia, Mitsui, and Temasek to Team8’s existing investors Cisco, Alcatel-Lucent, Bessemer Venture Partners, Marker LLC and Eric Schmidt’s Innovation Endeavors to create the world’s strongest cybersecurity syndicate. Quantum Strategic Partners also participated in the round.

Team8 does not invest in cybersecurity companies, they create them.  At Team8’s core is a research group with intimate knowledge of both offensive and defensive aspects of cybersecurity.  By leveraging its research group, access to the best cyber talent, and a global network that gives Team8 companies access to customers, partners and key influencers, Team8 has reinvented the entire company-creation process.  The result: a cyber innovation platform uniquely engineered to create category-leading cybersecurity companies that tackle the biggest problems in cybersecurity and help organizations reclaim the advantage over attackers.  Team8’s strategic investors work closely with its research group throughout the company-creation process.

Since its launch in February 2015, Team8 launched illusive networks and is on pace to launch two more companies in 2016.  illusive networks, a market leader in deception technology, recently announced a $22 million B Round of funding, led by NEA and including participation from Citi Ventures.  illusive networks counts Fortune 100 companies in the financial, insurance, retail, technology and healthcare sectors among its customers.  Over the past year, Team8 has also helped recruit over 120 new hires to its portfolio companies.  Team8 plans to recruit an additional 150 people in 2016.

Tel Aviv’s Team8 is Israel’s most prestigious cybersecurity company-creation platform, focused on developing disruptive technologies and building category-leading companies that challenge the biggest problems in cybersecurity today.  (Team8 25.02)

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2.5  Oracle to Acquire Ravello Systems

On 22 February 2016, Oracle signed an agreement to acquire Ravello Systems for an estimated sum close to $500 million.  All Ravello employees will be joining Oracle as part of Oracle Public Cloud.  Ravello’s team will join Oracle’s new development center in Israel, which will focus on cloud computing.  This development center will also be part of Oracle’s existing Israeli R&D center, which was established after they purchased Demantra in 2006.  Since its founding in 2011, Ravello had raised $54 in total funding from Qualcomm Ventures, Sequoia Capital, SanDisk Ventures, Norwest Venture Partners, Bessemer Venture Partners and Vintage Investment Partners.

Ravello’s unique solution provides new ways for developers to test their applications seamlessly while in the public cloud.  In the past, it was not feasible to test various deployments in the public cloud because it required various modifications to the applications’ code so that they could run correctly within a public cloud infrastructure, which was also a costly process.  With Ravello’s technology, companies can deploy applications in the cloud without changing any code.  Ravello, which is headquartered in Palo Alto, operates an R&D center in Ra’anana and employs more than 60 people.  (Various 28.02)

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2.6  DBmaestro Raises $3 Million in Series A Funding

DBmaestro, the pioneer and leading provider of DevOps for Database solutions, raised $3 million in Series A funding from a number of venture capital firms including StageOne Ventures, lool Ventures and iAngels.  The financing will be used to grow DBmaestro’s global sales and marketing and to seal its place as the leading database automation solution.  The funding round came after a banner year for the company.  In 2015, DBmaestro tripled their subscription revenue and signed many high-profile brands, including Barclays, Bank of the West, Allianz and VISA.  These achievements were driven by the success of their flagship product, TeamWork, which enables agile development, Continuous Integration, and Delivery for the Database.

DBmaestro’s DevOps for Database solution offers a comprehensive approach to the database development life cycle, providing enterprises need to deliver changes faster.  DBmaestro has been at the forefront of Continuous Delivery for the database, with a solution which brings innovative methods for safe database automation and ultimately reduces costs in development and deployment.  Subsequently, it was named to the 2015 SD Times 100 for its Innovation in the Database and was also recognized as a prominent vendor of the DevOps tools market in Technavio’s Global DevOps Tools Market 2015-2019 report published in August 2015.  (DBmaestro 28.02)

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2.7  RR Media to Merge with SES Platform Services

RR Media has agreed to be acquired by Germany’s SES and will merge its activities with SES Platform Services (SES PS) to form a new world-leading provider of media solutions.  SES will acquire a 100% ownership of RR Media, paying $13.291 per share, or a 52% premium to the closing price of the Company’s shares on 25 February 2016. This corresponds to an Enterprise Value of $242 million.  The acquisition of RR Media by SES S.A. has been approved by the Boards of Directors of both companies, and is subject, among others, to regulatory approvals and the approval by the general meeting of shareholders of RR Media, which are expected to be completed in the second or third quarter of 2016.  Once the transaction is completed, RR Media and SES PS will join forces to create a new, stand-alone world-leading media services provider.  The new organization will offer full continuity and enhanced service to SES PS and RR Media’s existing customers.

Airport City’s RR Media works in partnership with the world’s leading media players to transform content into valuable media assets.  RR Media’s complete ecosystem of digital media services maximize the potential of media and entertainment content, covering four main areas: smart global content distribution network with an optimized combination of satellite, fiber and the internet; content management and channel origination; sports, news & live events; and online video services.  RR Media provides scalable, converged digital media services to more than 1,000 broadcasters, content owners, sports leagues and right holders.  (RR Media 26.02)

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2.8  AppCard Raises $20 Million

Appcard, which has developed a marketing and loyalty platform for small and medium sized retailers, has raised $20 million in Series B funding.  PLDT Capital, the investment arm of Philippine Long Distance Telephone Company and Alexander Rittweger, founder of Loyalty Partner, led the round.  Existing investors: Founders Fund (Peter Thiel), Innovation Endeavors (Eric Schmidt) and Jerry Yang also participated.  Headquartered in New York and with its development center in Ramat HaSharon, AppCard empowers thousands of retailers to market directly to their customers in a personalized way.  The technology combines item-level smart data capture with artificial intelligence to automate marketing.  After developing and optimizing the product to cater to specific retail verticals, AppCard released its latest version in the second half of last year and generated explosive growth.  The new funding is intended to fuel that and further develop the technology.  (Globes 26.02)

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2.9  Cisco Buys Leaba Semiconductor for $320 Million

Cisco Systems announced on 2 March that it plans to acquire Israel’s Leaba Semiconductor, a designer of networking chips, for $320 million in cash plus additional incentives to retain employees.  This is Cisco’s 12th acquisition in Israel, the most recent one being that of Ra’anana-based self-optimization network software company Intucell for $475 million in 2013.  Caesarea’s Leaba Semiconductor is a fabless semiconductor company operating in stealth mode to provide innovative solutions for significant infrastructure challenges. Leaba is backed by blue-chip investors and led by seasoned entrepreneurs and prominent technology experts. Leaba is assembling one of the best teams of engineering.  (Various 02.03)

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2.10  Papa John’s International Opens First Store in Israel

Louisville, Kentucky’s Papa John’s Pizza continues its global growth as the third largest pizza delivery company in the world by opening its first store in Israel.  Everyone in Tel Aviv will now be able to experience why better ingredients really do make a better pizza.  Papa John’s opened its first international store 18 years ago, and now has over 4800 restaurants in over 40 countries.  Papa John’s will be opening soon in Spain, and Papa John’s International continues to look for potential franchisees around the globe.  (Papa John’s 01.02)

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2.11  Deep Optics Raises $4 Million in Funding to Revolutionize Multifocal Market

Deep Optics has raised $4 million in a Series A funding round to fuel the development of its electronic lens and glasses system.  The round includes strategic investor Essilor, the world leader in ophthalmic optics, Taiwan-based Atomics 14 Ventures and several private investors, including Saar Wilf, Deep Optics’ Chairman and first investor.  Deep Optics brings a technological breakthrough to the multi-billion dollar multifocal market, aiming to provide alternative progressive glasses and new ophthalmic applications with electronic dynamic focal technologies based on its proprietary and patent-pending liquid crystal lenses.  The Company was named the most promising start-up at the sixth annual Israel Machine Vision Conference and Exhibition (IMVC) in 2015.

Deep Optics is also exploring additional applications for its adaptive electronic lens technology.  Two notable applications are AR (Augmented Reality) and VR (Virtual Reality) systems, which are likely to benefit from the addition of adaptive optics to future models.

Petah Tikva’s Deep Optics is the inventor and pioneer of Omnifocals, dynamic focal eyeglasses based on its proprietary and patent-pending Liquid Crystal lens technology.  The glasses are designed to allow the two billion people requiring multifocal vision correction to see the world naturally and seamlessly.  The founding team has extensive expertise in the design of electro optical systems and integration into consumer electronics products.  (Deep Optics 02.03)

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2.12  PSI Establishes Permanent Operation in Israel

Zug, Switzerland’s PSI CRO, a global full-service contract research organization, announced the establishment of its permanent operation in Israel.  PSI has worked in Israel on behalf of pharmaceutical and biotech sponsors for a number of years already.  They have gained vast experience in the areas of oncology, hematology, hemophilia, infectious diseases, CNS and other therapeutic areas.  The impressive potential of the region to facilitate patient enrollment prompted PSI to think about establishing a permanent operational base in the region.  PSI is a privately-owned, full-service contract research organization (CRO), operating globally.  PSI’s reputation on the market place is that of a no-nonsense CRO, capable of saving pharmaceutical sponsors millions of development dollars by consistently meeting clinical trial timelines.  (PSI CRO 08.03)

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3.1  Arab Middle East IT Spending Forecast to Hit Nearly $213 Billion in 2016

Arab Middle East IT spending is projected to reach $212.9 billion in 2016, a 3.7% increase from 2015, according to the latest forecast by Gartner.  With devices representing close to 19% of total IT spending in the region, tablets and PCs are showing good momentum in the forecast period, the company said.  It added that tables and PC sales are forecast to reach nearly $8 billion in 2016, and surpass $10 billion in 2018.  Mobile phone sales will grow from slightly above $30 billion in 2016 to nearly $37 billion in 2019.  With IT services doubling software expenditures in 2016, business IT services will represent 84% of the total services segment.  The data center segment market is forecast for relatively flat growth in 2016. This segment includes external network equipment, external controller-based storage, servers and unified communications.  (AB 01.03)

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3.2  Jordanian & Chinese Firms to Set Up $1.3 Billion Fertilizer Project

The national Jordanian Phosphate Mines Company and Chinese companies have set up a project to construct a JD1 billion ($1.3 billion) venture on fertilizers in the southern city of Aqaba.  Jordanian Phosphate Mines Company and China’s Chongqing Minmetal and Machinery Import and Export Co. (CMMC) signed an agreement to build the industrial complex, with the first phase of the project to be at the cost of $350 million.  Officials in Amman hope the new project would breathe life into the struggling company and the fertilizers produced by the industrial complex will be exported to several markets across the world.  Thousands of jobs would also be created from the project, helping to absorb numbers of unemployed among the rapidly growing population.  (AMMONNEWS 25.02)

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3.3  Karl Lagerfeld Opens Concept Store in Kuwait City

Fashion designer Karl Lagerfeld has opened its first concept store in Kuwait City as part of the phase 2 expansion of The Avenues Mall.  The Kuwait store is the latest for the fashion brand in the Gulf after Abu Dhabi, Doha, Dubai and Jeddah.  The Karl Lagerfeld Avenues Mall store showcases the brand’s women’s collections including ready-to-wear, footwear, bags, watches, fragrances, eyewear and an exclusive selection of limited-edition novelty items.  The concept shop also doubles as a virtual window to the designer himself as shoppers are invited to use Karl iPads to view the latest collections and news.  Since opening in 2007, The Avenues Mall is considered to be one of the largest malls in the world and is home to more than 800 stores spread throughout its seven districts.  Last year, the German fashion designer launched its first Middle Eastern concept store in Doha, Qatar.  (AB 05.03)

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3.4  Dubai & Shenzhen Sign Agreement on Innovation

The Dubai Museum of the Future Foundation and Shenzhen Foundation for International Exchange and Cooperation have agreed on a strategic partnership to exchange talent and ideas.  The two cities have signed an MoU which will focus on innovations in areas including robotics, the Internet of Things and other services directly related to the economy and people’s lives.  The partnership will focus on the exchange of innovative ideas and prototypes between Shenzhen and Dubai.  This will include a talent exchange, hackathons, investment proposals, and start-up networking.  Shenzhen in Southern China is one of the world’s most creative manufacturing centers.  Over the past ten years, it has become a powerhouse of creativity, innovation and design.  The city is currently home to many of China’s most innovative companies, including DJI Robotics, the maker of bestselling commercial drones; the AI and search giant Baidu; and BGI, the world’s largest genetic research facility.  (Various 23.02)

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3.5  Hibernia Networks Extends Service Reach into Middle East

Dublin, Ireland’s Hibernia Networks, a leading provider of global telecommunications solutions, announces that it has established a Point of Presence (PoP) in Dubai, UAE.  The new PoP enables customers to benefit from Hibernia Networks’ comprehensive suite of data and media services, as well as industry leading low latency connectivity solutions linking Dubai to other major financial and media centers in Europe, North America and Asia.  The new PoP is located in one of Dubai’s major telecom hubs, enabling seamless cross-connects to other networks extending into the Middle East and the rest of the world.  The Ethernet-based connectivity service leverages the unmatched latency performance of the Hibernia Express cable across the Atlantic, which connects Europe and North America.  Hibernia Networks owns and operates a global network connecting North America, Europe and Asia, serving 89 markets and spanning 25 countries.  (Hibernia Networks 01.03)

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3.6  UL & SASO to Promote Safety Standards and Enhance Market Access

UL and the Saudi Arabian Standards Organization (SASO) announced an agreement to promote the use of UL Standards for Safety in the ongoing development of national safety standards in Saudi Arabia via formalized consulting, communication and information exchange protocols.  The agreement provides SASO with full access to all UL standards, and encourages the translation, use, and adoption of UL standards within Saudi Arabia.  In addition, the agreement encourages cooperation and collaboration by UL and SASO on standards development efforts.  UL and SASO had previously signed a standards agreement, but the agreement had lapsed in recent years.  Signing the new agreement allows the efforts outlined in the previous agreement to continue, and encourages increased cooperation between the two bodies.  SASO is accredited as the national standards writing organization in Saudi Arabia, and has begun the process of adopting UL standards for use within the country.  (UL 08.03)

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3.7  Grandstream Products Now Available from Baud Telecom in Saudi Arabia

Boston’s Grandstream Networks, connecting the world since 2002 with award-winning SIP unified communication solutions, and Baud Telecom, Saudi Arabia’s leading provider of integrated solutions, jointly announced a new distribution partnership.  Baud Telecom will now stock and distribute Grandstream’s complete line of IP phones, voice/video conferencing solutions, IP PBXs, VoIP gateways, analog telephone Adapters (ATAs) and IP video surveillance products.  Resellers, installers and integrators throughout the kingdom of Saudi Arabia now have a local source for purchasing Grandstream’s powerful SIP unified communications products.

Baud Telecom has been serving resellers, installers and integrators throughout Saudi Arabia for over 40 years and has the experience, knowledge and expertise to back it up.  They offer the largest data network within Saudi Arabia and have established office and warehouse locations in Jeddah, Riyadh and Khobar to allow them to best serve their customer base.  The partnership between Grandstream and Baud Telecom brings a portfolio of state-of-the-art unified communication solutions to Saudi Arabia to help users of legacy system to experience the benefits, cost-savings and simplicity of IP communications.  (Grandstream 08.03)

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3.8  Calgary Scientific & Limantepe Offer Web & Mobile Diagnosis in Turkey

Alberta’s Calgary Scientific, a company known for creating innovative technology for the medical industry and beyond, announced that they have partnered with Limantepe Technology & Life who will distribute their ResolutionMD enterprise image-viewer in Turkey.  ResolutionMD medical imaging software is now registered with the Turkish Ministry of Health for diagnosis using both web and mobile devices.  This certification enables medical practitioners in Turkey to provide a higher standard of care by gaining quick, secure mobile access to diagnostic images with their web, iOS or Android devices.  Obtaining registration from the Turkish Ministry of Health means that ResolutionMD is the only accredited mobile enterprise image-viewer in Turkey.  The registration follows ResolutionMD’s FDA Class II clearance in the US and CE marking for Europe.  (Calgary Scientific 08.03)

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4.1  Drought of 1998-2012 in Middle East Was the Worst in 900 Years

According to a recent NASA study, a 14-year dry spell in the Middle East between 1998 and 2012 was the worst drought in the past 900 years.  NASA’s researchers examined records of rings of trees in several Mediterranean countries to determine patterns of dry and wet years across a span of 900 years.  They concluded that the years from 1998 to 2012 were drier than any other period and that the drought was likely caused by humans.

Researchers used records of tree rings in Northern Africa, Greece, Lebanon, Jordan, Syria and Turkey, and combined the data with records from Spain, southern France and Italy to examine patterns of drought across time in the region.  They studied rings of trees, both living and dead, sampled from all over the region.  Rings in the trunks of trees represent years.  Thin rings indicate dry years; thick rings show years when water was abundant.  The research supported other studies indicating human causes of extreme climate events.  (AP 05.03)

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5.1  Fourth Quarter MENA Review and Outlook

Investors’ confidence in the economic outlook of MENA countries did not improve in the last quarter of 2015.  The geo-political risks of the region that kept on aggravating and the worsening oil prices remained the key elements driving the macroeconomic performance of the MENA countries.  Besides their continuous efforts to diversify away from oil, fiscal consolidation was the only getaway of most oil exporting countries to ease the spillovers of the fading oil revenues solution.  While Saudi Arabia revealed a slower economic growth in 2015 coupled to a wider fiscal deficit, Qatar posted in 2015 its first negative fiscal balance since 2000.  In the United Arab Emirates (UAE), the economic slowdown also became more pronounced with the Emirates recording their first fiscal deficit since 2009.  When it comes to oil importers, the intensifying security and political situations of the region ruined any possibility of economic rebound from the slowing oil prices.  While Jordan did its best to cope with local and international pressures, only the trade sector benefited from lower international commodity prices.  As for Lebanon, the release of the abducted Lebanese soldiers and the optimistic political talks about a potential breakthrough in the presidential dilemma did not have any notable impact on the economic performance.  The structural fiscal and external deficits persisted in Q4/15 despite shy improvements in tourism and stock markets.  The negative repercussions of the continuing terrorist attacks on Egypt’s economy became more pronounced between October and December 2015, mainly on fiscal, external and tourism sectors.  (BLOM 04.03)

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5.2  Lebanon’s Balance of Trade Narrowed During 2015

The Lebanese trade deficit has been narrowing during the past two years, resulting from a faster decline in the value of imports than exports.  In 2015, Lebanon recorded a trade deficit of $15.12B, compared to a higher deficit of $17.19B in 2014.  The 12.04% narrowing of deficit was mainly caused by the bearish oil and gold trends and the depreciation of the currencies of Lebanon’s major trading partners against the US Dollar, which benefited the pegged Lebanese Pound.  Trade deficit represented 27.79% of 2015’s GDP, compared to a higher share of 34.35% in 2014.  Exports covered 16.34% of imports in 2015, compared to 16.14% in the previous year.

Looking at total imports, their value plunged 11.83% yearly to $18.08B in 2015, however with a 1.60% growth in volume to 15.70M tons.  The main reason behind the drop in value is the depreciating Euro and Yen, making imports from the European Union and Japan relatively cheaper to the Lebanese residents.  Moreover, many European goods became exempted from custom fees in accordance with the European Mediterranean Association Agreement and European Free Trade Association (EFTA) agreement, effective beginning of March 2015.  In parallel, the decline in crude oil prices also led to the decline in the value of imports.  It is worth mentioning that the increase in volume might be associated with the increase in the number of refugees fleeing their country in wartime and the improvement in real income as Lebanon recorded an average deflation rate of 3.75% during 2015.  (BLOM 02.03)

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5.3  Lebanon’s Trade Deficit Stood at $1.31 Billion in January 2016

Lebanon’s trade deficit for the first month of 2016 stood at $1.31B, widening from the $1.09B registered in the same month last year.  Total imports grew by 11.5% year-on-year (y-o-y) to $1.49B while exports slumped by 25.83% y-o-y to $185.6M.  The top imported goods to Lebanon were mineral products (25%), followed by 10.4% for chemicals and allied industries and 9.64% for machinery and electrical instruments.  The value of imported mineral products increased from $218.15M in January 2015 to $372.73M in January 2016 and their volume rose from 514,554 tons to 788,067 tons over the same period.  Meanwhile, the value of products of the chemical and allied industries and that of machinery and electrical instruments dropped by a yearly 1.8% and 4.1% to reach $155.56M and $144.14M in January, respectively.

In January, the top three import destinations were China, the US and Italy with shares of 12.9%, 6.8% and 6.4%, respectively.  The top exported products from Lebanon were prepared foodstuffs, beverages and tobacco with a share of 18% in the total followed by shares of 14.84% for pearls precious stones and metals and of 12.87% for machinery and electrical instruments.  All top exported items fell in January: The value of prepared foodstuffs, beverages and tobacco, pearls precious stones and metals, and machinery and electrical instruments registered yearly drops of 3%, 44% and 16% to reach $33.52M, $27.55M and $23.88M, respectively.  In January, the top three export destinations were Saudi Arabia, the UAE and South Africa with shares of 11.77%, 1.14% and 9.48%, respectively.  (CAB 04.03)

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►►Arabian Gulf

5.4  Kuwait Says it is Planning a 25% Cut in State Spending

Kuwait’s government has revealed plans to cut state expenditure by 25% in the state budget.  The plans were discussed in a recent meeting between the government and the National Assembly’s financial and economic affairs committee, though the parties did not agree on a final decision.  The head of the committee, MP Faisal Al-Shaye, said the government expects to save up to $4 billion (KD 1.2 billion) by reducing subsidies and raising prices of petrol and electricity.  However, Al-Shaye said lawmakers have proposed excluding Kuwaitis from the price hikes.  As part of the proposal, citizens with driving licenses will be compensated through coupons based on a monthly consumption of 220 liters per citizen.  Kuwait’s government revealed that the squandering in electricity consumption is estimated to be 30%.  It said consumption categories have been proposed to cut wastage.  (AB 01.03)

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5.5  Qatar’s Trade Surplus Falls by 58.1% in a Year

Qatar has reported a 58.1% drop in its foreign trade surplus in the 12 months to January 2016.  Data from the Ministry of Development Planning and Statistics show the trade surplus as of January 2016 was QR7.3 billion ($2 billion).  This represents a decrease of QR10.1 billion ($2.77 billion), or 58.1%, when compared to January 2015.  This represents a decrease of 17.8% when compared to the previous month (December 2015).

The country’s total exports dropped 33.6% year on year to QR17.94 billion ($4.9 billion) – a month-on-month drop of 9.4%.  Of that, total domestic products exports shrank 33.2% year-on-year to QR17.4 billion ($4.7 billion) as of January 2016 – representing a 9.2% drop from the previous month.  Qatar’s crude exports dropped the most at 44.1% to QR1.66 billion, the figures showed, while petroleum gases plummeted by 40.3% to QR11.62 billion ($3.1 billion) and non-crude by 25.1% to QR680 million ($186 million).  Petroleum gases and other hydrocarbons accounted for 66.78% of total exports of domestic products compared to 74.69% the previous year, the figures showed.  (AB 29.02)

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5.6  Sheikh Mohammed Approves UAE Infrastructure Projects Worth $1.9 Billion

Sheikh Mohammed bin Rashid Al Maktoum, the UAE’s Vice President and Prime Minister and Ruler of Dubai, approved projects for the Ministry of Infrastructure Development worth AED7 billion ($1.9 billion).  The projects include approvals for housing aid, the building of new residential complexes, roads, schools, health centers and government buildings across parts of the UAE.  AED5 billion have been allocated until 2021 for citizen accommodation projects that will benefit 42,000 people over the next five years.  Sheikh Mohammed also visited a number of road projects on the East Coast and approved an additional AED1.5 billion for the ministry’s projects.  (AB 29.02)

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5.7  Saudi Inflation Jumps to New High on Gasoline Price Hike

Saudi Arabia’s Central Department of Statistics announced that inflation jumped to 4.3% in January, its highest level since September 2012 following a hike in gasoline prices in December.  The government raised the price of 95 octane gasoline to 0.90 riyal ($0.24) per liter from 0.60 riyal in late December as part of austerity measures in the 2016 state budget.  Prices for utilities were also hiked.  As a result, transport costs surged 12.6% from a year earlier in January.  Prices of housing and utilities climbed 8.3% while food and beverage prices rose 1.3%, according to the figures cited by Reuters.  The jump in inflation rate comes as growth of Saudi Arabia’s non-oil private sector eased in January, continuing the trend seen through much of the latter part of 2015.  (AB 23.02)

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5.8  Saudi Arabia’s Labor Force Grows at Slowest Pace Since 1999

Saudi Arabia’s labor force grew by 46,000 during 2015, its slowest pace since records began in 1999, according to Jadwa Investment’s latest update on the labor market in Saudi Arabia.  It also showed that Saudization rates within the private sector fell for the first time since 2011.  The unemployment rate fell slightly from 11.7% in 2014 to 11.5% in 2015.  During 2015, total net employment in the Gulf kingdom saw a rise of 417,000, compared with 339,000 in 2014, but of these positions, 368,000 (or 88%) went to non-Saudis.

Jadwa said private sector net employment of Saudis fell for the first time since labor market reforms began in 2011, with nearly all sectors within the private economy seeing negative changes to their Saudization rates.  Public sector net employment of Saudis rose by 93,000, compared to a 103,000 rise in 2014, the report said, adding that the Saudi female unemployment rate rose to 33.8% in 2015 despite a fall in their participation rates.  (AB 05.03)

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►►North Africa

5.9  Egypt’s Parliament Approves Defense Loan Agreement with France

Egypt’s new parliament voted overwhelmingly in favor of a defense loan agreement with France, aiming to boost the powers of the former country’s armed forces.  A parliamentary report explained that the agreement is between Egypt’s defense ministry and a number of French banks led by Credit Agricole for Companies and Investment.  The banks will provide a cash loan of €3.376 billion, representing 60% of the value of French military equipment that will be delivered to Egypt.  The total value of this equipment is estimated at €5.626 billion, with Egypt to pay the remaining 40%.  The loan will be guaranteed by Egypt’s finance ministry.  (DNE 02.03)

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5.10  Egyptian Defense Industry Report 2016 – 2020 Issued

Research and Markets announced the addition of the “Future of the Egyptian Defense Industry – Market Attractiveness, Competitive Landscape and Forecasts to 2020” report to their offering.  The Egyptian defense market will be driven by threats from Ethiopia, modernization of the armed forces, maritime security and the ongoing volatile political scenario.  In addition, the capital expenditure allocation is anticipated to average 16.8% of the total defense budget during 2016-2020 and defense equipment procurements are expected to be in the areas of fighters and multi-role aircraft, diesel electrical submarines and corvettes.

During 2011-2015, Egyptian defense expenditure registered a growth rate of 6.11%, increasing from $4.4 billion in 2011 to $5.6 billion in 2015.  Lack of transparency, corruption, political uncertainty and internal instability impose challenges for the Egyptian defense market.  Demand for equipment is mainly expected to revolve around fighters and multi-role aircraft, diesel electric submarines and corvettes during 2016-2020.  (R&M 01.03)

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5.11  Egyptian Tourism Declines 46% in January As Russians Stay Away

Egypt’s tourism sector continued to falter in January, as the number of tourists visiting Egypt dropped by 46.3% year-on-year, according to state statistics agency CAPMAS.  CAPMAS figures show that 363,500 foreign tourists visited Egypt during the month, spending a total of 2.6 million nights in the country – a 62.5% decline from January 2015.  Tourist figures have plunged since the October Russian Metrojet plane crash in Sharm el-Sheikh that killed all 224 passengers on board.  In that month, tourists numbered 909,400 according to the Central Bank – more than a 60% drop in three months.  CAPMAS attributes the decline to the almost complete absence of Russian tourists, citing a 99% decline in the number of nights Russians spent in Egypt.  Flights from Russia to Egypt have been suspended since the crash.  The disaster has also prompted visitors from other regions to stay away – tourist figures from Western Europe declined by 35.2%, while the number of Middle Eastern visitors declined by 28.6%.  (CAPMAS 07.03)

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5.12  Egypt & Japan Sign Several Agreements on Projects Worth $17 Billion

Egypt and Japan have signed several agreements and memorandums of understanding on the sidelines of the tenth meeting of the Egypt-Japan Business Council in Tokyo.  Three bilateral agreements were signed in the fields of generating thermal energy, manufacturing electrical generators in Marsa Matrouh and establishing a thermal energy station west of Marsa Matrouh.  Fifteen memoranda of understanding were signed on the Matrouh thermal energy station, operation and maintenance of electricity generating stations of Egypt’s Electricity Ministry, electricity generation project in Qena province at capacity of 1,300 MW, generating electricity through the thermal electricity station in Sidi Shebeib area at a capacity of 2,000 MW, renting semi-submersible rigs and developing the Suez Canal zone.  The memoranda were also signed in fields of comprehensive strategic partnership between Egypt and the Japan Bank for International Cooperation.  Japanese Prime Minister Abe said that Egyptian projects are worth about $17.7 billion in electricity and other sectors.  (Al-Masry Al-Youm 02.03)

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6.1  Turkish Inflation Slows to 3-Month Low on Lower Food Prices

Turkey’s consumer price index rose 8.78% year-on-year in February, the Turkish Statistics Institute (TurkStat) said on 3 march.  This was the weakest figure since November, when the index hit 8.10%.  In January, annual consumer price inflation had jumped to 9.58%, hitting its highest level since May 2014 on the back of surging food, drinks and tobacco prices.  The data also showed domestic producer prices fell 0.20% on the month, for an annual rise of 4.47%.  The data triggered slight gains in the lira. The lira firmed to 2.9210 against the dollar from 2.9310 before the data was released.  High inflation is a major worry for policy makers in Ankara and Turkey’s central bank left key interest rates unchanged for the 12th month running last month.  (TurkStat 03.03)

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6.2  IMF Revises Turkey’s Growth Forecast for 2016

The International Monetary Fund (IMF) has upgraded its 2016 growth forecast for Turkey by 0.3 points in a report released on 24 February, noting a weakening global recovery, with the world economy “highly vulnerable” to adverse shocks.  In its “Global Prospects and Policy Challenges,” the IMF forecasted Turkey to grow by 3.2% in 2016, up 0.3 points compared to its previous forecast.  Growth in Turkey was also revised down to 3.6% from 3.7% in 2017 in the report.  The global recovery has weakened further amid increasing financial turbulence and falling asset prices, warned the IMF in the report.

“Activity softened towards the end of 2015 and the valuation of risky assets has dropped sharply, especially in advanced economies, increasing the likelihood of a further weakening of the outlook.  Growth in advanced economies is modest already under the baseline, as low demand in some countries and a broad-based weakening of potential growth continue to hold back the recovery,” said the report.  Adding to these headwinds are concerns about the global impact of China’s transition to more balanced growth, along with signs of distress in other large emerging markets, including from falling commodity prices, according to the report.  Finally, shocks related to geopolitical conflicts, terrorism, refugees, and global epidemics loom over some countries and regions, and, if left unchecked, could have significant spillover impacts on global economic activity, warned the IMF.  (IMF 24.02)

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6.3  Hotel Occupancy Rates in Turkey Drop Below 50% Amid Tourist Squeeze

Turkey’s hotel occupancy rates plunged below 50% in the first month of this year, the Turkish Touristic Hotels and Investors Association said.  The drop in Turkey, amid a number of coinciding challenges to the country’s tourism sector, marked the sharpest drop in hotel occupancy rates in Europe.  Hotel occupancy rates decreased by 6.2% to 47.6% in January compared to the same month of 2015.  Hotels in Istanbul were worst hit, with hotel occupancy rates in Turkey’s largest city declining by 11% to 48.7% in January compared to the same month of 2015.  Istanbul was also the city that saw the second biggest plunge in hotel occupancy rates in Europe.

While average daily room prices were €102.4 in January 2015, they were €97.1 in January 2016.  Average revenue per available room also decreased from 15.6% in January to €47.3 compared to the same month of 2015.

The number of foreign arrivals from Russia to Turkey declined significantly in the first month of 2016 amid rising political tension between Ankara and Moscow.  The overall number of foreign arrivals dropped by 6.44% to 1.17 million in January compared to the same month of 2015.  In 2015 as a whole, Turkey’s tourism revenues fell by 8.3%, down to $31.46 billion, amid a large drop in the number of tourists from Russia and Europe.  (HDN 08.03)

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7.1  Israel Holds its First Transgender Beauty Contest

Nearly 30 transgender women strutted down the catwalk in skinny jeans, crop tops and stiletto heels at a Tel Aviv club on 3 March, vying for a chance to enter the first “Miss Trans Israel” beauty pageant.  Tel Aviv has emerged as one of the world’s most gay-friendly travel destinations, standing in sharp contrast to most of the rest of the Middle East, where gays can face persecution.  Among the contestants was Talleen Abu Hanna, a 21-year-old from a Catholic Arab family in the of Nazareth.  She said she came to the audition because she wants to do something with her life.

Israel is generally tolerant toward gays and transgender people.  Gays openly serve in Israel’s military, as does at least one openly transgender soldier.  In 1998, a transgender singer, Dana International, won the popular Eurovision song contest.  Finalists will compete at a pageant in May, and the winner will represent Israel at the Miss Trans Star International pageant to be held in Spain in August.  (AP 04.03)

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7.2  UAE Decides to Extend Compulsory Military Service to 12 Months

Compulsory national military service in the UAE is being extended to a minimum of 12 months from nine months, the National and Reserve Service Authority of the UAE Armed Forces General Command announced.  The period of the service relates to national and reserve service for Emirati male and female 12th grade holders of a high secondary school certificate.  Those who do not have a high school diploma serve for two years.  A law implementing compulsory military service for Emirati men was first issued in June 2014, a move highlighting the Gulf state’s concern over turmoil in the region.  (AB 07.03)

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7.3  Moroccan Minister Presents Toughened Draft Law to Fight Sexual Harassment

On International Women’s Day, Bassima Hakkaoui, Moroccan Minister of Solidarity Women, Family, and Social Development, announced a new second draft for an anti-sexual harassment law.  Hakkaoui presented the draft to the general secretariat of the government on 8 March after the first draft proved to be highly controversial in feminist circles.  During the presentation of the draft, Hakkaoui acknowledged that the previous version of the bill contained “limited measures” to protect women from the “worrying phenomenon” of sexual harassment “sweeping” the public spaces in the kingdom.

According to the text of the bill, day after day more women are becoming victims of sexual harassment in Morocco.  The new bill legally redefines the spaces in which women can claim they have been sexually harassed.  Sexual harassment includes unsolicited acts, statements, or signals of a sexual nature, which are delivered in person, online, or via telephone, the bill says.  The draft includes tougher punishments for perpetrators as well.  A person convicted of committing sexual assault could face a combination of jail time, ranging anywhere from one month to six months, and fines, between MAD 2,000 and MAD 10,000.  Perpetrators of sexual violence could be charged with both punishments if they are found to be a coworker of the victim or are part of the country’s security forces, according to the text of the bill.  (MWN 08.03)

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8.1  Avraham Pharma Raises $4 Million

Avraham Pharmaceuticals has closed a financing round of $4 million.  Investors in the round include Yissum Research Development Company Ltd., the technology transfer arm of the Hebrew University of Jerusalem, Pontifax, Clal Biotechnology Industries, Integra Holdings, Yissum’s biotech holdings company, the Technion Research and Development Foundation Ltd. (TRDF), and others.  Avraham Pharmaceuticals will use the capital to complete the on-going Phase IIb study of its lead product, ladostigil, a novel molecule designed for the treatment of mild cognitive impairment (MCI) and early stages of Alzheimer’s disease, results of which are expected in Q3/16.  The investment will also support activities in preparation for the next Phase 3 study of ladostigil.  These include the establishment of a clinical advisory board which includes key opinion leaders in the fields of MCI and Alzheimer’s disease and a steering committee that will assist the Company in the design of the Phase 3 study.  In addition, the capital will be used for preparations for a future pre-IND meeting with the FDA

Founded in 2010, Yavneh’s Avraham Pharmaceuticals is a privately held, emerging pharmaceutical company developing novel products for treatment and prevention of neurodegenerative disorders.  Their lead product candidate, Ladostigil, was exclusively in-licensed from the Hebrew University and the Technion, and is in Phase 2 clinical studies for MCI. Ladostigil is a multifunctional compound that combines neuroprotective mechanisms: reducing oxidative stress and microglial activation, and inhibiting proinflamtory cytokines.  Ladostigil provides a drug candidate that may have the potential to slow progression to Alzheimer’s Disease in patients diagnosed with MCI.  (Various 25.02)

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8.2  Rosetta Genomics Launches Three New Product Offerings

Rosetta Genomics launched 3 high-value molecular diagnostic offerings in order to better serve current and prospective clients with a broader molecular test menu.  HEME FISH, a portfolio of disease-specific diagnostic, prognostic and predictive test panels for the various hematologic malignancies, BRAF mutation analysis for lung cancer and NRAS mutation analysis for colon cancer are now available through the company’s Lake Forest, CA-based laboratory, which it acquired in 2015.  These tests further expand the Company’s robust solid tumor service offering and provide clients with the ability to order Rosetta’s new molecular testing services for their liquid tumors.

HEME FISH encompasses multiple fluorescence in situ hybridization (FISH) tests for detection of amplifications or rearrangements of DNA in a number of hematologic cancers, such as leukemia, lymphomas and myelomas in order to form a diagnosis and/or to evaluate prognosis or remission of disease.  Rosetta is expanding its portfolio in Hematology by leveraging years of experience and recognized competence in FISH test development.

Rehovot’s Rosetta develops and commercializes a full range of microRNA-based and other molecular diagnostics.  Rosetta’s integrative research platform combining bioinformatics and state-of-the-art laboratory processes has led to the discovery of hundreds of biologically validated novel human microRNAs.  Building on its strong patent position and proprietary platform technologies, Rosetta is working on the application of these technologies in the development and commercialization of a full range of microRNA-based diagnostic tools in clinically meaningful areas.  (Rosetta Genomics 25.02)

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8.3  Medasense Biometrics Raises $8 Million Investment in Series B Financing

Medasense Biometrics announced the closing of an $8 million Series B financing round.  The financing was led by Benslie International and joined by existing investors and a strategic investor – a leading global medical technology corporation.  Medasense will use the new funding to accelerate commercialization of its flagship product PMD-200: An objective pain monitoring system for operating rooms and critical care, where patients under general anesthesia are unable to communicate their pain.  The system consists of a non-invasive finger probe that records multiple pain-related physiological signals, and the PMD-200 monitor, which uses a composite algorithm to determine an individual’s real-time, pain level index – NoL.

Ramat Yishai’s Medasense Biometrics is a medical device company that has developed an innovative, platform technology that can objectively assess and monitor changes in a patient’s pain level by processing multiple physiological parameters affected by pain and by analgesic administration.  Better assessment of pain can optimize pain management, improve patient outcomes, and reduce adverse events and associated costs.  (Medasense Biometrics 02.03)

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8.4  Deep Instinct Patents to Implement Deep Learning in Cybersecurity

Deep Instinct announced that it has filed five patents covering the only technology that applies deep learning to cybersecurity.  The extensive patent applications, which contain, in the aggregate, over 150 independent claims, cover the entire innovative body of knowledge achieved by Deep Instinct in deep learning and cybersecurity: both for currently commercially available products and for future planned products.

Deep learning is a novel branch of artificial intelligence.  It is considered by many researchers in the field of computational intelligence to contain the most suitable family of algorithms for domains that require the ability to analyze vast and complex data, such as the data comprising files in cybersecurity.  Deep Instinct is the first company applying deep learning to detect, in real-time, malware on endpoints, servers and mobile devices, focusing on zero days and APT attacks – areas where traditional cybersecurity practices lack the capacity to protect in real-time.

Tel Aviv’s Deep Instinct is the first company to apply deep learning to cybersecurity. Leveraging deep learning’s predictive capabilities, Deep Instinct’s on-device, proactive solution protects against zero-day threats and APT attacks with unmatched accuracy.  Deep Instinct provides comprehensive defense that is designed to protect against the most evasive unknown malware in real-time, across an organization’s endpoints, servers, and mobile devices.  Deep learning’s capabilities of identifying malware from any data source results in comprehensive protection on any device, any platform, and operating system.  (Deep Instinct 01.03)

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8.5  Teva Completes Acquisition of Rimsa

Teva Pharmaceutical Industries has successfully completed the acquisition of Representaciones e Investigaciones Medicas (Rimsa), a leading pharmaceutical manufacturing and distribution company in Mexico, together with a portfolio of products and companies, intellectual property, assets and pharmaceutical patents in Latin America and Europe in a set of transactions for an aggregate of $2.3 billion.  With the completion of the acquisition, Teva is now one of the leading pharmaceutical companies in Mexico, the second largest market in Latin America and one of the top five emerging markets globally.  Rimsa has had annual growth, year-over-year of 10.6% since 2011.  The company has an extensive portfolio of patent-protected products, including fixed-dose combination products which have fueled its growth.

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 03.03)

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8.6  Insuline Medical Signs Non-Binding MOU to Distribute InsuPad in Brazil

Insuline Medical signed a non-binding Memorandum of Understanding (MOU) with Sterifarma do Brasil, for the distribution of the InsuPad in Brazil.  The InsuPad’s ISTS technology induces increased and consistent local blood perfusion at the injection site, resulting in improved and consistent drug absorption.  Use of the technology allows patients to achieve improved glycemic control with reduced risk of hypoglycemia.

Sterifarma has been engaged in the distribution of medical devices to clinics and hospitals for over 20 years and, according to the MOU, will retain exclusive marketing and sales rights of the InsuPad in Brazil, and will be responsible for obtaining the regulatory and reimbursement approvals necessary in the country, with the assistance of the company pertaining to the professional, medical and marketing aspects, as long as necessary.  Insuline Medical is exploring additional collaboration opportunities with pharma and drug delivery companies in order to apply the ISTS technology to other subcutaneous delivered drugs, including long-acting insulin.

Petah Tikva’s Insuline Medical has developed technology and products to stabilize and improve the effectiveness of “meal time insulin,” given to diabetics by subcutaneous injection.  The company has first and successfully applied the Injection Site Treatment and Stabilization technology (ISTS) to meal time insulin, using the InsuPad device, which has the CE, Canadian CE, Australian TGA and Israeli AMAR. In the US, the company agreed upon the 510K De novo with the FDA, subject to acceptable data about the product’s effect on insulin.  (Insuline Medical 08.03)

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9.1  OriginGPS’ New Module Adds Multi-GNSS to the World’s Smallest Footprint

OriginGPS announced the launch of their new revolutionary Multi Micro Spider, boasting the world’s smallest footprint within a fully integrated and highly sensitive multi-GNSS module.  The Multi Micro Spider is uniquely positioned for applications that require quick movement, minimal power consumption and ultra-small form factors, ranging from wearables to drones.  Like its predecessor, the Multi Micro Hornet (ORG1510-MK), the Multi Micro Spider’s (ORG4033) module utilizes MediaTek’s MT3333 chip and its onboard flash memory to achieve a rapid update rate and positioning speed of up to 10Hz.

Utilizing MediaTek’s MT3333 chip, the Multi Micro Hornet extends the functionality of GPS and GNSS solutions in wearables, drones and Internet of Things devices, providing a highly integrated multi-GNSS solution that delivers the world’s smallest footprint, without sacrificing any of its superior power consumption, signal sensitivity and accuracy.

Airport City’s OriginGPS is a world-leading designer, manufacturer and supplier of miniaturized GNSS modules (Spider family), antenna modules (Hornet family) and antenna solutions.  OriginGPS introduces unparalleled sensitivity and noise immunity by incorporating its proprietary Noise Free Zone technology for faster position fix and navigation stability even under challenging satellite signal conditions.  (OriginGPS 23.02)

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9.2  Mellanox Partners with Nutanix to Deliver Effortless Enterprise Infrastructure

Mellanox Technologies has joined the Nutanix Elevate Technology Alliance Program to provide a simple to use and fully converged solution for compute, storage and networking to enterprise customers.  The Mellanox SX1012 is a unique half rack width, top of rack 10/40 Gb/s Ethernet switch solution that provides network invisibility and has been validated as “Nutanix Ready for Networking” following functional and compatibility testing.

Mellanox provides the highest performance and most reliable Ethernet solutions, which deliver data faster to applications to unlock system performance.  Mellanox Ethernet switches are simple to use and deliver predictable, high network performance for any workload.  The Mellanox switches offer flexibility for various configurations of different scale, network speed, and high availability requirements, as well as the ability to scale from 10/25 Gb/s to 40/50/100 Gb/s.  The Mellanox switch solutions include the NEO network orchestration and automation software platform to make the network invisible too.  It makes the entire solution easy to deploy, even for people without a networking background.

The Nutanix Elevate Technology Alliance Program provides partners with technical resources, testing and documentation processes, marketing support, and sales enablement to develop comprehensive customer solutions. Nutanix Elevate Partners deliver validated solutions to market in the areas of Application Development, Applications and Operating Systems, Backup and Disaster Recovery, Desktop and Application Virtualization, Hybrid Cloud, Management and Operations, and Networking and Security.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage.  Mellanox interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance capability.  Mellanox offers a choice of fast interconnect products: adapters, switches, software, cables and silicon that accelerate application runtime and maximize business results for a wide range of markets including high-performance computing, enterprise data centers, Web 2.0, cloud, storage and financial services.  (Mellanox 24.02)

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9.3  HexaTier Launches Solution for Database Security and Compliance in the Cloud

HexaTier launched HexaTier 4.0.  This solution includes new features that focus on enterprise needs for DBaaS adoption, while maintaining organizational policies and addressing the challenges and risks with database security and compliance.  HexaTier’s software-based approach utilizes a patented Database Reverse Proxy technology, overcoming the limitations of competing solutions through its architecture-agnosticism, advanced management, and faster performance for securing cloud-hosted and DBaaS database instances.

Established in 2009, Tel Aviv’s HexaTier (formerly GreenSQL) sets the industry standard for database security and compliance in the cloud with its unified solution that provides database security, dynamic data masking, database activity monitoring (DAM) and discovery of sensitive data.  Utilizing patented Database Reverse Proxy technology, the company protects against both internal and external threats.  Leading investors are: JVP, Magma VC and Rhodium.  HexaTier is the first to provide security for cloud-hosted databases and DBaaS platforms through a streamlined and simple solution.  (HexaTier 24.02)

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9.4  Israel’s Elencon Teams with Alstom

Elencon Systems has signed a memorandum of understanding with French engineering company Alstom SA, a unit of General Electric (GE), with a view to a long-term collaboration agreement.  Elencon, of the Gefen Investments group, has developed technology for managing energy consumption that can reduce the cost of cooling large buildings by 30%.  So far, there have been several successful installations in Israel: at the HaSharon Hospital, the Holon Institute of Technology and the Crowne Plaza Hotel in the Azrieli towers in Tel Aviv.  The average saving is NIS 200,000 ($51,000) annually, or NIS1,000,000 ($255,000) over five years.  (Globes 28.02)

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9.5  SolarEdge Launches Commercial Inverter Solution in Japan

SolarEdge Technologies is launching its commercial inverter solution in Japan.  The SolarEdge commercial solution consist of small and light-weight three-phase commercial inverters, sized 24.75kW and 33.3kW for both low and medium voltage connection, P600 and P700 power optimizers, and a cloud-based, module-level monitoring platform.  By maximizing power harvesting from each module, enabling longer strings, enhanced safety, and lower O&M costs, the SolarEdge DC optimized inverter solution improves the lifetime value of commercial systems.

SolarEdge inverters have a standard 12 year warranty, extendable to 25 years, 25 year warranty for power optimizers, and its module-level monitoring is free for system lifetime.  As part of its commercial solution, SolarEdge offers a wide variety of optional pre and post sales services to support the installation and help ensure lifetime profitability of a SolarEdge commercial system.  The SolarEdge commercial solution also includes optional control & communications gateway (CCG) and environmental sensors.

Hod HaSharon’s SolarEdge provides an intelligent inverter solution that has changed the way power is harvested and managed in solar photovoltaic systems.  The SolarEdge DC optimized inverter system maximizes power generation at the individual PV module-level while lowering the cost of energy produced by the solar PV system.  The SolarEdge system consists of power optimizers, inverters, storage solutions, and a cloud-based monitoring platform and addresses a broad range of solar market segments, from residential solar installations to commercial and small utility-scale solar installations. (SolarEdge 01.03)

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9.6  Mellanox Delivers Next Generation Network Processor to Key Telco Customers

Mellanox Technologies announced that its next generation network processor, the NPS-400, is now sampling and has been shipped to strategic customers.  In addition Mellanox announced that China’s ZTE has selected NPS-400 for its new line cards design for carrier-grade router platforms.  The NPS-400 is the most advanced network processor available today, capable of performing advanced deep packet processing for security and telecommunications applications at over 800Gb/s.

The NPS is architected to address the next generation of smart high-performance carrier and data center networks. It provides outstanding packet processing flexibility through C-based programming, a standard toolset, support of the Linux operating system, large code space, and a run-to-completion or pipeline programming style.  A comprehensive library provides source code for a variety of applications to speed customer’s design cycle.  The NPS features programmable CPU cores that are highly optimized for packet processing and leverage deep packet processing and applications experience, a market-proven traffic manager, hardware accelerators for security and DPI (Deep Packet Inspection) tailored for efficiency and performance, on-chip search engines including TCAM with scaling through algorithmic extension to external low-cost low-power DRAM memory and a multitude of network interfaces providing an aggregated bandwidth of 800-Gigabits per second including 10-, 40- and 100-Gigabit Ethernet, Interlaken and PCI Express interfaces.

Yokneam’s Mellanox Technologies is a leading supplier of end-to-end Ethernet and InfiniBand intelligent interconnect solutions and services for servers, storage, and hyper-converged infrastructure. Mellanox intelligent interconnect solutions increase data center efficiency by providing the highest throughput and lowest latency, delivering data faster to applications and unlocking system performance.  (Mellanox 01.03)

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9.7  AudioCodes VoIPerfect Evolves Voice Over WAN Into Quality HD Voice

AudioCodes introduced its VoIPerfect solution for delivering resilient, quality-assured high-definition (HD) voice services over Wide Area Networks (WAN).  Cloud-based communications are becoming increasingly popular among Unified Communications as a Service (UCaaS) and SIP trunk service providers and customers alike, as they offer significant cost savings and increased productivity.  To meet customer demand for secure, reliable and high quality business communications, many cloud communication providers offer expensive dedicated WAN links that may have limited geographical coverage, take a long time to set up and may compromise the cost-effectiveness of the offered service compared to commodity broadband.  However, reliance on unmanaged and public internet WAN connections leaves cloud-based offerings open to potential security, quality and reliability issues.  By orchestrating AudioCodes access SBC, enterprise SBC, HD IP phones and the AudioCodes One Voice Operations Center management tools, VoIPerfect utilizes advanced voice processing and path optimization techniques to maintain high call quality even under adverse broadband network conditions by reducing the impact of impairments such as packet loss, jitter and delay.  At the same time, VoIPerfect provides encryption and resiliency to ensure privacy and critical business communications continuity.

VoIPerfect employs HD voice efficient codecs, such as Opus and SILK, that reduce costly bandwidth of private connections between branches, headquarters and hosted UC datacenters, and multi-path load balancing (including the use of 3G and LTE connections) to ensure resilient connections for critical business communications.

Lod’s AudioCodes designs, develops and sells advanced Voice-over-IP and converged VoIP and Data networking products and applications to Service Providers and Enterprises.  AudioCodes is a VoIP technology market leader, focused on converged VoIP and data communications, and its products are deployed globally in Broadband, Mobile, Enterprise networks and Cable.  The Company provides a range of innovative, cost-effective products including Media Gateways, Multi-Service Business Routers, Session Border Controllers (SBC), Residential Gateways, IP Phones, Media Servers, Value Added Applications and Professional Services.  (AudioCodes 02.03)

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9.8  RSA Goes Live with Sapiens Reinsurance

Sapiens International Corporation announced the successful go-live of Sapiens Reinsurance at Royal and Sun Alliance (RSA) – one of the world’s leading multi-national general insurance groups, serving customers in around 140 countries.  Sapiens Reinsurance, a comprehensive reinsurance business management and accounting solution, is now managing a large part of RSA’s reinsurance arrangements.  RSA has replaced several of its Legacy IT systems to improve management and control of its external and internal reinsurance, and provide comprehensive accounting management.  With the enhanced functionality provided by Sapiens Reinsurance, RSA now benefits from a single repository for all information, with support for operational reporting, accounts management, risk and financial exposure.  Sapiens and RSA are continuing to work together to develop management information to support business analytics, statutory reporting and compliance.  Sapiens Reinsurance is also providing support for business process management via automated workflow activities and user-defined business rules with full audit trail for all transactions.

Holon’s Sapiens International Corporation is a leading global provider of software solutions for the insurance industry, with a growing presence in the financial services sector. Sapiens offers core, end-to-end solutions to the global general insurance, property and casualty, life, pension and annuities, reinsurance and retirement markets, as well as business decision management software. The company has a track record of over 30 years in delivering superior software solutions to more than 190 financial services organizations.  (Sapiens 02.03)

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10.1  Israel’s Foreign Exchange Reserves Hit New Record

Israel’s foreign exchange reserves at the end of February 2016 reached a record $90.618 billion, up $131 million from the end of January, and exceeding the previous record of $90.575 billion at the end of December 2015, the Bank of Israel announced.  The increase came despite the fact that the Bank of Israel made no foreign currency purchases in February.  The increase was the result of government transfers from abroad of about $283 million and an increase of about $8 million derived from private sector transactions.  These were partly offset by a revaluation that decreased the reserves by about $160 million.  (Globes 07.03)

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10.2  Average Salaries in Israel Increased During 2015

Israel’s average salary continued to rise in 2015 but at a slower pace than previously, the Central Bureau of Statistics announced on 7 March.  The average salary rose 1.1% on an annualized basis in Q4/15, after rising 2.3% in Q3.  At the end of 2015, the average salary in Israel was NIS 9,591, up 2.3% from the end of 2014.  In fixed price terms, salaries rose even more in 2015, by 3%.

Among the highest salaries earners in 2015 were the 102,000 employees of banks and financial companies with an average salary of NIS 17,225.  The 151,000 employees of government companies earned an average salary of NIS 17,225.  The average salary of hospital employees including doctors and nurses was NIS 15,611 and the average salary of 2 million private sector employees was NIS 10,041.  The average salary of government employees was NIS 13,245, while the average salary of local authority employees was NIS 8,236.  The average salary in the NPO sector was NIS 8,282.  (Globes 07.03)

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11.1  LEBANON: S&P’s ‘B-/B’ Ratings Affirmed; Outlook Remains Negative

On 4 March, Standard & Poor’s Ratings Services affirmed its ‘B-/B’ long-and short-term foreign and local currency sovereign credit ratings on the Republic of Lebanon. The outlook remains negative.


The affirmation incorporates our assumption that Lebanese bank deposits will grow by at least 4% in 2016, or about 12% of GDP.  Approximately two-thirds of Lebanese bank deposits are in foreign currency and nearly one-fourth is externally sourced.  These flows of funds are critical sources of funding for the government’s 2016 gross borrowing requirement of about 26% of GDP and for the country’s 2016 gross external financing requirement of 88% of GDP (or 147%of current account receipts [CARs]).

In our analysis, the Lebanese government’s debt servicing capacity depends on the domestic financial sector’s willingness and ability to add to its holdings of government debt, which in turn relies on bank deposit inflows.  Domestic banks support the government debt market in two ways.  First, they buy Lebanese government debt directly.  Banking system claims on the public sector account for about 20% of total banking system assets.  This means bank creditors hold about one-half of total government debt.  Second, Lebanese banks buy certificates of deposit issued by the Banque du Liban (BdL, the central bank), which in turn buys government debt.  As of year-end 2015, BdL held 37% of the government’s outstanding treasury bills, which amounted to 23% of total government debt.  Although we view the concentration of government financing from these sources as a structural weakness, at the current rating level these flows are an essential support.

Similarly, the financial system is key in meeting the country’s external financing requirement.  Bank deposit inflows are largely sourced by remittances from the Lebanese diaspora.  The banks induce the inflows by paying on average about 6% on Lebanese pound deposits and 3% on U.S. dollar deposits.  Last year, the inflows covered net government debt issuance two times.  We note as a consequence that banks’ external positions have deteriorated.  We expect banks’ net external debtor positions will almost double in 2016 to $13 billion (41% of CARs), compared with $7 billion in 2013 and a net creditor position in 2010.  Nonresident retail deposits constitute the bulk of banks’ external liabilities (about 83% as of year-end 2015), the rest being cross-border interbank deposits.  To meet the 2016 gross external financing requirement, we expect banks and corporations will add to their external borrowings, and the government will return to the eurobond market.  We also note that drawdowns on the BdL’s external reserves (nearly $32 billion at end-February, net of our estimate of bank reserve requirements on foreign currency deposits) could finance part of Lebanon’s 2016 $46 billion gross external financing requirement.

That said, there are risks to these inflows.  Bank deposit growth slowed to about 5.2% annually at year-end 2015 from 11.5% at year-end 2010 since the start of Syria’s civil war and, to a lesser extent, with the economic slowdown in the Gulf Cooperation Council (GCC; Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates).

Inflows are sensitive to swings in confidence.  In February 2016, the government of Saudi Arabia announced its curtailment of its $4 billion grants for military procurement for Lebanon and the GCC states placed restrictions on their citizens’ travel to Lebanon.  Still, these measures will likely have a softer impact on depositor confidence than the 2005 assassination of Prime Minister Rafik Hariri (prompting nearly $2 billion in withdrawals from the banking system) or the 2006 war with Israel (triggering about $3 billion in withdrawals).  The withdrawals from these earlier, more perilous periods lasted a few weeks at most, were in the low-single-digit percentages of total bank deposits, and were more than compensated for by returning inflows.

We also see longer term constraints on Lebanon’s deposit and economic growth, largely stemming from the tough political landscape.  We consider that policymaking in Lebanon is hampered by a divisive political environment organized along confessional lines.  The presidency has been vacant since President Michel Sleiman’s term ended in May 2014.  On 2 March 2016, the Lebanese parliament failed for the 36th consecutive time to elect a president.

The parliament itself is led by a national unity government comprising both the March 14 and March 8 political alliances.  These alliances back opposing sides in the Syrian civil war.  Absent a president, the parliament, whose term was due to end in June 2013, voted to extend its term for a second time in November 2014.  The split political environment can thwart policymaking even on small matters, such as garbage collection.  We note, though, that parliament passed some key laws at the end of 2015, such as legislation permitting the government to borrow in foreign currency in 2016.

We believe that Lebanese economic growth will remain weak as long as the domestic political standstill persists and the Syrian civil war does not conclude.  The Syrian crisis is about to enter into its sixth year (without a resolution in sight) and we expect that Lebanon’s political, security and economic trajectories will remain entwined with its larger neighbor.  We therefore anticipate that Lebanon’s traditional growth drivers -tourism, real estate and construction – will remain subdued, despite the current oil price decline.  We project economic growth over 2015-2018 at 1.6% on average, down from the 2.6% estimated previously.  We estimate per-capita GDP at $10,000 in 2016.

We expect that the current account will remain large but narrow to average about 18% of GDP in 2016-2019, due to a smaller import bill stemming from lower oil prices and weaker domestic economic activity.  The strengthening U.S. dollar will also reduce the cost of imports from the eurozone, which accounts for about one-third of Lebanon’s imports.  On the other hand, exports, tourism and net remittances will remain constrained because of the Syrian crisis.  However, we note that sizable positive net errors and omissions suggest that the current account deficit could be overstated by as much as a factor of two.

We estimate Lebanon’s public and financial sector external assets will exceed the country’s external debt by an average 54% of CARs between 2016 and 2019, albeit on a declining trend.  We estimate that gross external financing needs will average 117% of CARs plus usable reserves over the same period.

We expect general government deficit will widen to about 8.7% of GDP in 2016, compared with 6% in 2014.  We note that government revenues in 2014 benefited from a onetime receipt of about 2% of GDP due to exceptionally higher telecom transfers.  The deficit includes transfers to the electricity company Electricité du Liban (EdL), estimated at about 2% of GDP in 2015 compared with 4% of GDP in 2014, with EdL requiring less government support due to lower oil prices.  The Syrian civil war and the flow of refugees to Lebanon continue to impose a heavy burden on Lebanon’s infrastructure.  Registered refugees reached 1.1 million according to the UN High Commissioner for Refugees, but estimates range up to about 2 million, compared with an estimated population living in Lebanon of about 5.9 million according to the government.

In our view, public finances and fiscal flexibility will remain constrained by structural expenditure pressures, including transfers to EdL, as well as by high interest payments, which account for more than two-fifths of general government revenues.  Still, without a fully functioning government, current expenditures were contained at about 23% of GDP in 2015, while capital expenditures were cut to 1% of GDP in the same year, notwithstanding Lebanon’s significant infrastructure needs.  We expect that the already very high net general government debt will increase in the coming years, to 129% of GDP by 2019.

Lastly, in our view, there are substantial shortcomings and material gaps in the dissemination of macroeconomic data and reporting delays.  Official national accounts data for 2013 are the latest available, and were published in December 2014. The availability and quality of official external data are also limited, in our opinion.


The negative outlook reflects our view that the protracted political deadlock and increasing regional tensions could further impair the functioning of the Lebanese government and result in a further slowdown in banking sector deposit growth over the next 12 months.

We could lower our ratings on Lebanon if, over the next 12 months, deposit inflows significantly slowed or foreign-exchange reserves declined much further than we currently expect. If the domestic political gridlock escalated to something more destabilizing, we could also lower the ratings.

We could revise the outlook to stable if Lebanon’s policymaking framework became more predictable, supporting foreign capital inflows and the sustainability of the public finances.  (S&P04.03)

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11.2  LEBANON: Ending the Year in Stagnation

Lebanon ended 2015 with disparate developments on the security and political fronts.  Two suicide bombings alarmed the security situation in November.  However, 2015 was wrapped with positive expectations after the release of the Lebanese soldiers taken hostage by Al Nusra Front and the positive political talks regarding a potential breakthrough in the 19-month presidential vacuum.

BLOMInvest added in their review of Lebanon in 2015 that the repercussions of the deteriorating regional and domestic conditions drove GDP growth down to a slight rate of 0.5% during 2015.  Similarly, the BLOM Purchasing Managers’ Index remained below the 50 mark, at an average of 47.3 points in Q4 lower than the average 48.4 points recorded in Q3/15.

Falling oil prices and the depreciating European currency against the US dollar continued to pressure the Lebanese Consumer Price Index (CPI), which declined by 3.40% y-o-y to 95.92 in December 2015.  Transportation prices and “water, electricity, gas and other fuels” sub-index dropped 7.66% and 17.57%, respectively, compared to December 2014.

Looking at the real-estate sector, total transactions (local and foreign) decreased 5.4 % annually to 82,790 worth $8.41B in 2015, of which 16.29% represent foreign demand.  Specifically, 41,006 land transactions worth $2.55B were executed in 2015 compared with 48,115 deals worth $3.08B in 2014.  On the other hand, 35,410 transactions on built units, worth $5.01B, were registered by the end of 2015, down from the 39,117 transactions, worth $5.53B carried out in 2014.  Average value of land transactions decreased from $64,013 in 2014 to $62,186 in 2015, while that of built unit transactions went down from $141,485 to $136,258 in 2015.

Likewise, construction continued its plunge, with the number of permits falling 9.43% y-o-y to 15,092 by December 2015.  Noting that permits are usually issued at least 6 months after applications are filed, the drop in construction activity was due to the ongoing slowdown in the whole economy.

As for tourism, the number of incomers reached a 4-year high, as the Lebanese security scene preserved its stability.  According to the Ministry of Tourism, the number of tourist arrivals surged by a yearly 12.05% to 1.52 million in 2015.  Global Blue’s Tourist Spending Report revealed that tourist spending in Lebanon grew 2% y-o-y in 2015.  Accordingly, hotel occupancy progressed, with the average rate adding 5% to 56% by November.  Average room rate and average room yield added 2% and 11.5% to $175 and $99, respectively.

Lebanon’s Balance of Payments (BoP) deficit widened from $1.41B in 2014 to $3.35B in 2015.  The decline in capital inflows and Foreign Direct Investment (FDIs), as a result of the ongoing domestic developments and the regional upheavals, in addition to the substantial trade deficit are the main reasons behind the deficit in BoP.  However, the trade deficit tightened by 12.04% y-o-y, to record $15.12B in 2015, mainly due to the bearish Euro and oil trends.  Total imports dropped 11.83% slower than the 10.75% decline in total exports.

Fiscal deficit broadened 17.38% yearly to $2.61B in the first three quarters of 2015.  Therefore primary surplus dropped to $672M compared to a higher primary surplus of $867B, during the same period of 2014.  This was mainly driven by the 8.60% decline in total revenues exceeding the 2.86% drop in total expenditures.  The drop in revenues resulted from the 1.43% decrease in revenues coming from taxes on income, profit, capital gains, and property, and a 6.15% plunge in VAT revenues.  The plummet in VAT revenues was due to the decrease in the value of imports, as the Euro and Yen depreciated and fuel prices declined.  The major decrease in expenditures was due to the 40.44% plummet in EdL transfers.  The deficit led Gross Public Debt (GPD) to widen by 5.63% y-o-y to reach $70.30B end of December 2015.

On the monetary front, BDL’s total assets dropped slightly, by 0.79%, due to the 4.10% and 4.96% declines in foreign assets and gold reserves to $37.09B and $9.85B, respectively, by end of 2015.  The drop in gold reserves resulted from the bearish gold trend.  However, total assets at commercial banks grew by 5.86% yearly to $185.99B by December.

Positive political talks concerning filling the presidential vacuum spread positive vibes to investors.  The Beirut Stock Exchange showed a small improvement in the last quarter of 215, where the BLOM Stock Index (BSI) gained a marginal 1.93% q-o-q, to end the year at 1,169.52 points.  Trade volume decreased from 263,922 shares worth $2.61M, the previous quarter, to 231,158 shares worth $2.12M, in Q4/15.  As for market capitalization, it broadened from $9.53B to $9.72B at the end of 2015, where 2.5M shares of Bank of Beirut preferred shares class “E” were delisted end of December 2015.  (BLOM 04.03)

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11.3  QATAR: Tarnished by Cheap Oil

BLOMInvest reported that Qatar’s real GDP growth for Q3.15 stood at 3.8% year-on-year (y-o-y), led by the non-hydrocarbon sector.  The Real Gross Value Added (GVA) of the non-mining and quarrying sector, with a 50.14% share of GDP, grew by 7.8%.  This was mainly due to the increases seen in construction, social services and financial sectors.  A new $1B sewage treatment plant has been built processing up to 245,000 cubic meters of sewage per day.  This plant, which began running in December 2015, produces high-quality reclaimed water for reuse in irrigation purposes.  Meanwhile, real GVA of the mining and quarrying sector, with a 49.86% share of GDP, showed a 0.1% yearly rise.  Worth mentioning that the Qatari state oil company, Qatar Petroleum has reached a deal with Chevron to acquire 30% of its stake in offshore drilling areas in Morocco.

Inflation reached 2.7%, pushed up by the 3.4% and 3.1% price surges in “Housing, Water, Electricity & Gas” (21.89% weight) and “Transport” (14.59%).  Moreover, “Recreation & Culture” sub-index added 1.6%.

On the suppliers’ side, the Producer Price Index (PPI), measuring the average selling prices domestic producers receive for their output, plummeted by 36.2% y-o-y in October, primarily due to the sharp decline in prices of crude oil and natural gas during 2015.  The price of the Qatari Land Crude Oil (QLCO) and that of the Qatari Marine Crude Oil (QMCO) shed 44.4% and 46.9% y-o-y to $42.4/barrel and $39.5/barrel end of November 2015.  Therefore, the “Mining” group, which represents 72.67% of the PPI plunged by 38.7%.  The PPI “Manufacturing” subcomponent also showed yearly decline of 30.8%, while “Electricity and water” sub-index went down by 7.2%.

As for Qatar’s trade balance, it tightened by 52.72% y-o-y to a surplus of $39.72B by end October 2015, as a result of decreasing exports and increasing imports.  Declining oil prices drove down the largest component of total exports, hydrocarbons, by 41.04%, inflicting a 38.82% y-o-y plunge in exports to $66.47B by October 2015.  On the other hand, imports augmented by 8.62% y-o-y to $26.75B, where motor cars and other passenger vehicles were the top imported commodities, going up by a yearly 16.83%.

On the fiscal front, 2016 is expected to be marked by the first budget deficit in 15 years.  After harmonizing the fiscal year with the calendar year starting January 2016, the ministry of finance projected the budget deficit to stand at $12.77B in 2016 compared with a surplus of $2B in 2015, mainly due to a decline in revenues.  Revenues are expected to decline by 30.88% y-o-y to $42.86B, resulting from a 26.15% expected drop in the price of oil to $48 a barrel.  Expenditures are also forecasted to decrease by 7.28% to $55.63B.  The budget demonstrates the government’s keenness to continue the implementation of its sustainable development program which mainly targets projects in health, education, and infrastructure, in addition to projects related to the hosting of the World Cup in 2022.  Worth noting that the government of Qatar will take a $5.5B loan, arranged by Bank of Tokyo-Mitsubishi UFJ, Mizuho, SMBC, Deutsche Bank, Barclays and Qatar National Bank.

Looking at the monetary sector, total assets at commercial banks grew by 9.26% since end of 2014 to $301.60B, by November 2015.  Private sector credit broadened by 18.60% to $115B, while that of the public sector inched up 0.88% to $64.73B by November.  Total deposits posted a 5.47% growth to $174.16B, due to the 7.46% and 33.45% increases in resident and non-resident private sector deposits that offset the 3.27% drop in public sector deposits.  The governor of Qatar’s Central Bank stated that if necessary, authorities will use fiscal and money market operations to avert low oil and gas prices from causing a liquidity crunch in the banking sector.  The oil and gas revenues plummet over the year and the borrowing of the Qatari government to fund an emerging budget deficit have caused money market rates to rise sharply.  The 3-month Qatari interbank rate went up from 0.94% in November 2014 to 1.71% in November 2015.  Thus the central bank stated that it will continue to actively manage liquidity to ensure a stable interest rate environment.

The Doha Stock Market Index (DSMI) slid by 9.03% q/q to 10,429.36 points end of 2015, pushed down by the plunge in oil prices.  Trade during the last quarter of 2015 occurred at a lower volume of 326.02M shares worth $4.93B, compared to 358.05M shares worth $4.25B during Q3, 2015.  It should be noted that Qatar is in talks with banks about a sovereign sukuk issue, first time since 2012, as the country returns to international debt markets to shore up state finances pressured by low energy prices.

As part of a defense agreement signed in 2014, Turkey will establish a military base in Qatar.  Some 3,000 ground troops would be stationed at the base, as well as air and naval units, military instructors and special operations forces.  The two countries have provided support for the Muslim Brotherhood in Egypt, backed rebels fighting to overthrow Syrian President Bashar al-Assad and raised the alarm about creeping Iranian influence in the region.  (BLOM 04.03)

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11.4  SAUDI ARABIA: Dealing with a Record Fiscal Deficit

Saudi Arabia continued to be involved in the issues of its neighboring Middle Eastern countries, according to BLOMInvest.  In December, the Kingdom decided on an $8 billion investment in Egypt, while Egypt is set on renewing a deal to import oil products from the Saudi Kingdom under favorable conditions for a period of five years.

The drop in oil prices had ramifications across the board for the Saudi economy.  Real GDP growth slowed from 3.64% in 2014 to 3.35% in 2015.  In nominal terms, the GDP dropped by a yearly 13.35% to $653.22 billion.  With lower oil prices, some large projects were scaled down or even cancelled which translated into a decline in the value of fixed capital formation from $214.94 billion in 2014 to $213.31 billion in 2015.

The private sector also mirrored the impact of the oil price slump.  The Emirates NBD Saudi Arabia PMI announced a lower average in the fourth quarter.  The average PMI reading for Q4 recorded 55.5, two points lower than the 57.6 registered in the third quarter.  This decline in PMI readings is reflecting the slow market conditions which have resulted in a weak expansion of new businesses in the country.

According to the Central Department of Statistics and Information in Saudi Arabia, the average annual inflation in 2015 registered 2.10%.  In Q4 alone, the inflation recorded 2.44% in October and 2.28% in each of November and December.  The most important components in the Consumer Price Index “Food and Beverages” and “Housing, water, electricity and gas” registered yearly increases of 1.6% and 3.5%, respectively.  Rental inflation, reflecting the shortage of housing in the kingdom, also registered a yearly increase of 4.8% by the end of 2015.  After being discussed for a long time, the Kingdom’s Council of Ministers finally approved a “white land” tax according to which an annual tax of 2.5% is to be paid on undeveloped land.  The levied taxes are to be used to remedy the housing shortage in the Kingdom and to free-up unexploited lands which are currently used for speculation or as store of value.

As for the external front, weaker trade activity was registered in 2015.  The imports and exports of goods and services declined by a yearly 8% and 39% to $234.55 billion and $217.73 billion respectively.  Imports of petroleum products (including refined products and natural gas) recorded a double digit yearly slump of 44% to $157.96 billion in light of the fall in the price of Brent Crude from $57.33/barrel at the end of 2014 to $37.28/barrel at the end of 2015.  Non-oil exports were also on the down with a 17.99% yearly decline to $47.48 billion in 2015.

In 2015, Saudi Arabia recorded a fiscal deficit of $98 billion.  Revenues dropped by an annual 42% to $162 billion and expenditures exceeded the initial budget allocation by 13% to reach $229 billion.  Oil revenues dropped by an annual 23% to $118.5 billion while non-oil revenues grew by a yearly 29% to $43.6 billion.  Expenditures were pushed upwards by military spending and by the salaries increase for public sector employees once King Salman took over the throne.  The war in Yemen is estimated to have cost the Kingdom $5.3 billion in 2015.

To finance the fiscal deficit Saudi Arabia tapped into its government deposits and issued $26 billion worth of bonds.  Public debt therefore rose to around $38 billion or 5.8% of GDP, according to Deutsche Bank.  The Kingdom also sought to slash expenses by cutting fuel subsidies from 0.6 SAR ($0.16) per liter to 0.9 SAR ($0.24) per liter, which in turn inflated fuel prices by 50%.  The expected budget deficit for 2016 is expected to be lower at $87 billion as lower oil prices pull revenues down by 15% to $137 billion.  Budget Spending is expected to drop to $224 billion after some projects were postponed, cancelled or reduced in size.

On the monetary front, the Central Bank has reduced its investments in foreign currencies as the financing of the fiscal deficit and the preservation of the riyal’s peg to the dollar are pressing issues at the moment.  Foreign reserves at the Kingdom’s Central Bank remained ample in 2015 but registered a yearly drop of 16% to reach $616.42 billion in 2015.  The Saudi Interbank Offer Rate declined from 0.9358 in 2014 to 0.8797 in 2015 as the market remains amply liquid.  Moreover, loans to both the public and private sectors increased from $26.39 billion and $334.99 billion in 2014 to $33.33 billion and $334.99 billion in 2015.  (BLOMInvest 03.03)

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11.5  EGYPT:  Heading Towards Serious Challenges, Despite Continuous Efforts

BLOMInvest reported that it was a busy last quarter in 2015 for Egypt on all levels.  The country completed parliamentary elections between October and December 2015, concluding the 3rd and final step of its political roadmap.  Despite a low 28% turn-out, Egypt succeeded for the first time since 2012 in electing a new parliament, comprising 568 members.  The security situation failed to improve in Q4/15 as terrorist attacks continued, mainly in Rafah, Giza and el Arish.  Sinai witnessed by the end of October the quarter’s worst terrorist attack as the Islamic State claimed responsibility for the Russian plane crash (Metrojet Flight 9268), where all the 224 crew members and passengers died.  In order to fight terrorism, Egypt continued its plan to create a buffer zone in the Sinai Peninsula.  However this has raised global outrage in September as the process involved mass home demolitions forcing the eviction of nearly 3,200 families.

Despite the poor security conditions of the country, Egypt accomplished several achievements in Q4/15, including the selection of firms that will complete the impact studies related to the $3.37 billion Ethiopian Grand Renaissance Dam project with Ethiopia and Sudan.  Another agricultural project was announced consisting of the expansion of Egypt’s farmland by 20% through the reclamation of 630,000 hectares in the Western Desert bordering Libya, sending the total space of available farmland to 3.99 million hectares.

On the economic front, the latest data showed yearly improvement in Egypt’s economic performance during the Fiscal Year (FY) 2014/15.  In fact, real GDP stood at 4.2% in FY 2014/15 compared to a lower 2.2% in FY 2013/14.  This was mainly attributed to the improvement of several sectors such as the manufacturing, tourism, construction and real estate activities, despite the continuous deterioration of the extractions sector.  Similarly, the country’s non-oil manufacturing sector mimicked the expansion as the Purchasing Managers’ Index (PMI), rose from an average of 48.1 in FY 2013/14 to 50.1 in FY 2014/15.  Accordingly, the increase of the index, above the 50 neutral-mark, signaled that Egypt’s business conditions showed progress in FY 2014/15 compared to the economic contraction in the previous year.

As imported inflation remained contained, inflation averaged 6.98% between October and December 2015 compared to 7.99% over the same period in 2014.  This was mainly the result of the global weakening of commodity prices, the ongoing depreciation of the euro and the bearish trend of oil prices since mid-June 2014.

On another front, the government and the ECB reached a macroeconomic framework on 17 December that included 4 main pillars: implementing structural economic reforms to improve the challenging investment environment, narrowing the fiscal deficit to sustainable levels, containing inflation over the medium term and reducing trade deficit by empowering local production.

Externally, the bearish trend of oil prices failed to trigger down Egypt’s trade deficit and sequentially the current account, due to worsening services, receipts and payments during Q1 of FY 2015/16.  This was heavily reflected on Egypt’s Balance of Payments (BoP) that turned negative in the first quarter of FY 2015/16 at $3.66b compared to the $410m surplus recorded during the same period a year earlier.  The current account deficit more than doubled as it reached $3.98b in Q1 FY2014/15, up from $1.6b in FY2014/15.  As for trade deficit, it stagnated at $10b following respective 26.4% and 10.4% y-o-y drops in total exports and imports.

Tourism in Egypt saw negative performance during 2015 mostly due to the worsening security situation, following several terrorist attacks on tourist locations.  As a result, total travel receipts showed a 17.5% annual fall in Q1 2015/16 to $1.73b.  The Russian airplane crash prompted Moscow and London to halt flights to Egypt, which heavily impacted the total number of incomers as European tourists constitute more than 70% of total tourists.  In fact, the number of travelers stood at 8.89m in the first eleven months of 2015, recording a 2.3% yearly drop from the same period a year earlier.  The improving number of tourists from all continents failed to offset the 6.4% yearly decrease in the number of European tourists by November 2015.  Egypt’s official records also revealed a 9% yearly drop in the number of nights during the same period to 81,728.

However, the occupancy rates in Cairo 4 and 5-star hotels averaged 49% in 2015, compared to 37% in 2014.  This is mainly due to the improving performance of tourism during the first half of the year which more than offset the deterioration in the second half of 2015.  Similarly, the average room rate and the rooms’ yield posted respective increases of 19.6% and 57.6% y-o-y to $112 and $55.

As expected, the Central Bank of Egypt (CBE) renewed its boosting packages to support the sector’s performance, given its importance as major source of foreign exchange reserves, through the extension of the maturities of retail facilities for an additional 6 months without implying any late payment interests.

Egypt’s public finances deteriorated during the FY 2014/15 as reflected by the widening fiscal deficit and Gross Domestic Debt (GDD).  The country’s fiscal deficit increased by a yearly 24.5% to settle at $40.26b by the end of June 2015 on rising fiscal revenues that were outpaced by bolstering expenditures.  In reality, the Egyptian public inflows saw a 14.5% increase in FY 2014/15 to $68b, while the public expenses surged by 18.0% to $106.11b.  As for the GDD, it edged up by 16.5% to reach $270.31b.  Worth mentioning is that Egypt is expected to receive $3b from the World Bank over the coming 3 years to help the government in decreasing its budget deficit and maintaining its economic reforms’ program, of which $1b will be allocated by the end of 2015.

On the monetary front, the net international reserves at the CBE registered $16.45b by the end of December 2015 after dropping to $16.34b in September 2015.  Despite the 7.3% yearly increase from December 2014’s level, the deterioration of Egypt’s net international reserves between September and December followed the repayment of $1.5B maturing US Dollar notes issued in 2005 (including the final coupon).  As a result, the foreign reserves almost covered 3 months of imports in September, which pushed the ECB to devaluate in October the Egyptian pound for the 3rd time in 2015.  In fact, the exchange rate reached EGP 7.83/USD by the end of December 2015 after hitting EGP8.02/USD by the end of October 2015, compared to a previous quote of EGP7.15/USD by the end of 2014.  In October, CBE Governor Ramez submitted his resignation following waves of criticism related to an overvalued Egyptian pound negatively weighing on the country’s trade position.  Egypt’s president appointed Tarek Amer as the new governor for the CBE, with his tenure to start in November 27, 2015.

In addition, the Monetary Policy Committee (MPC) raised in December the overnight deposit rate, overnight lending rate, and the rate of the CBE’s main operation by 50 bps to 9.25%, 10.25%, and 9.75%, respectively.  Also, the CBE launched a stimulus program for Small and Medium Enterprises (SME) which consisted of encouraging banks to increase their lending to reach 20% of their portfolio in the next 4 years.  As a matter of fact, credit facilities at the Egyptian commercial banks rose by 26.9% y-o-y in November to reach $100.04b, noting that 73% were disbursed in local currency.  Total deposits also went up from $194.18b in November 2014 to $239.75b by the end of November 2015.  Over the same period, local currency deposits, constituting 80.6% of the commercial banks’ total deposits, increased by 22.6% y-o-y to $193.28b compared to a faster 27.4% progress in Foreign Currency deposits to $46.47b.  (BLOM 02.03)

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11.6  EGYPT:  Is Egypt Doing Enough to Counter Widespread Sexual Harassment?

An Egyptian TV talk show host who slammed a sexual assault survivor, blaming her for provoking the attack by “dressing immodestly,” has been sentenced to one year in prison.

Shahira Amin posted in Al-Monitor on 7 March that although a number of recent developments offer hope to Egyptian women that efforts to combat sexual harassment are working, change is slow.

Reham Saeed’s conviction is a milestone ruling in a country where sexual harassment and assault is so commonplace that it has been described by rights groups as “endemic” and where, for decades, survivors have been stigmatized and blamed for provoking the assaults.  Rights activists believe the recent court decision is the result of social media pressure after thousands of activists launched a relentless online campaign using Arabic hashtags that translate to #dieReham and #prosecuteRehamSaeed.

The outcry also prompted an advertising boycott and the subsequent suspension of the show by the management of the privately owned al-Nahar network.

The outpouring of anger came after Somaya Tarek had appeared on Saeed’s show to complain about an alleged sexual assault incident that had taken place in a Cairo mall in October and the police’s failure to arrest the attacker.  Rather than condemn the incident and call for the attacker to be held accountable, Saeed instead suggested that the woman herself was to blame, asking her, “Do you think you were dressed appropriately?”

Much to the shock and dismay of viewers, Saeed also showed photos of the woman (allegedly stolen from Tarek’s cellphone by Saeed’s production team), including one of her in a bikini in an attempt to convince the public that the woman had brought trouble on herself because she had been wearing a sleeveless T-shirt.

Tarek’s decision to speak up about her ordeal marks a clear shift in women’s attitudes since the 2011 uprising — a far cry from the pre-revolution days when, for decades, women had accepted harassment as part of their daily lives.  Since the uprising five years ago, more women have broken their silence, coming forward to report harassment and sexual assault incidents and to demand justice from the perpetrators of such attacks.  According to a 2013 UN survey, 99.3% of Egyptian women had reported being sexually harassed.

“We are not sure whether there has actually been a surge in sexual assault incidents since the 2011 uprising or whether the rise is attributed to the fact that more women are reporting such incidents.  It is probably a combination of both,” said Mona Eltahawy, a feminist author and journalist who has written a book titled “Headscarves and Hymens: Why the Middle East Needs a Sexual Revolution.”  Eltahawy was assaulted by security forces during a protest in downtown Cairo’s Mohamed Mahmoud Street in November 2011 and was left with a broken arm and a dislocated wrist.

While sexual harassment has been rampant in Egypt for decades, there has been a surge in mob sexual assaults as well as a marked increase in the level of violence practiced against women since the 2011 uprising.  Women’s rights groups have said they documented more than 250 cases of mass rapes and mob sexual assaults in the country between November 2012 and January 2014, the majority of them during protest rallies in Cairo’s iconic Tahrir Square.  The shocking revelation came in a joint statement released by 29 women’s rights groups after a June 2014 rally to celebrate the inauguration of then newly elected President Abdel Fattah al-Sisi.  More than 27 complaints of mass rapes and mob sexual assaults were filed with the police in a single day of violence.  In their statement, the rights groups also criticized the government for not doing enough to curb such attacks.  The assaults took place despite a heavy presence of volunteer rescue squads from nongovernmental organizations, such as Operation Anti-Sexual Harassment and Tahrir Bodyguard, that were patrolling the square.

Anti-harassment groups have mushroomed since the 2011 uprising because of the unparalleled scale of sexual assaults in the country.  Those groups have stepped in to fill the vacuum left by the police, as the latter had often turned a blind eye to such crimes and have at times even been accused of harassing the sexual assault survivors who had gone to report the incidents.

Azza Kamel, the founder of “I Saw Harassment,” an Egyptian nonprofit organization fighting sexual harassment, believes the Tahrir assaults were “deliberate, systematic and organized and were meant to keep women out of the public space.”  “We have seen such crimes repeated a number of times at protest rallies in the square during and after the 2011 uprising.  Those were not isolated incidents, but were part of a continuing trend.  Often, high-profile journalists and activists were targeted in those attacks,” she noted.

It was not until a graphic video of a young woman being sexually assaulted in the square during the June 2014 rally had gone viral on social media that the government was compelled to finally take action.  Seven men were arrested in connection with the brutal assault.  The uproar over the video also prompted Sisi to decree long-awaited legislation criminalizing sexual harassment.  Those convicted under the law face up to five years in prison in addition to fines reaching up to 5,000 Egyptian pounds ($638).

The decree signaled there was political will to tackle the problem head on.  However, a May 2015 report released by the International Federation for Human Rights shattered much of the optimism of rights advocates, dashing their hopes for quick progress.  According to the report, security forces were themselves routinely using sexual harassment and abuse against political prisoners and detainees.  While the report does not identify victims by name, it nonetheless paints a grim picture of widespread, systemic sexual violence against prisoners in the country.

“We fought long and hard to have legislation criminalizing sexual harassment and assault,” said Fatemah Khafagy, a gender expert and former ombudsman at the National Council for Women.  “While the law has deterred many potential harassers, legislation is not enough. What Egypt really needs is a change in people’s attitudes, and that can only come through education and awareness campaigns.”

But change is happening, albeit slowly.  The women are no longer tolerating such crimes and are speaking out.  Youths are also raising public awareness through their engagement in dozens of grass-roots initiatives fighting sexual harassment.  What remains is for men to realize the extent of the damage and pain they inflict on women they harass and assault.  But first and foremost, the state has to come to terms with the magnitude and gravity of the problem, admitting that these are not isolated cases but a cancer that has spread from police stations and prison camps to university campuses and public transport.  (Al Monitor 07.03)

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11.7  IRAN:  Iran’s Long Road to Reintegrating With the World Financial System

Katherine Bauer wrote in the The Washington Institute Policy Watch 2575 on 29 February that the recent warning by the Financial Action Task Force to banks about dealings with Iran shows that the end of nuclear sanctions was only the start of a long process.

In its first public statement on Iran since sanctions relief went into effect following implementation of the nuclear deal last month, the Financial Action Task Force (FATF), whose thirty-seven members include Russia and China, in mid-February urged member states to warn their banks about the risks of doing business with Iran.  Coming only a month after Iran received nuclear-related sanctions relief from the United Nations, United States and European Union, the statement underscores the risks for European and Asian banks in renewing financial ties with Iran.


Established in 1989 by the G-7 (Canada, France, Germany, Italy, Japan, Britain and the United States), the FATF is the international standard-setting body for anti-money laundering and countering the financing of terrorism (AML/CFT).  Members submit to peer reviews or “mutual evaluations” of their implementation of FATF standards, and jurisdictions that fail to address strategic AML/CFT deficiencies – whether FATF members or not – are publicly identified by the FATF in statements released following the group’s plenary meetings in February, June and October of each year.  Iran has been the subject of such statements since 2008, when the FATF revised its processes for dealing with “high-risk and non-cooperative jurisdictions.”  However, despite the January lifting of U.S. and EU nuclear-related sanctions on Iran, the consensus-driven intergovernmental organization did not revise the statement it has issued three times a year since calling for member states to impose countermeasures on Iran in February 2009.  The statement again urged Iran to “immediately and effectively address its AML/CFT deficiencies,” noting that if Iran failed to do so, the FATF would consider calling on member states to strengthen countermeasures at its June 2016 meeting.

Implications for Banks

For foreign financial institutions considering renewed ties with Iranian banks, the FATF’s continuing designation of Iran as a high-risk jurisdiction and repeated call for countermeasures have real implications in terms of both illicit finance and regulatory risk.  Relevant FATF standards, now being followed by member states in their fourth round of mutual evaluations, call on regulators to require banks to engage in enhanced due diligence when dealing with high-risk jurisdictions.  These are time- and resource-intensive measures against which banks can be examined for compliance.  Such measures can include obtaining additional information on the customer, beneficial owner, nature of the business relationship, and source or use of funds.  Although designed to mitigate the risk to financial institutions of unwittingly processing illicit transactions, even such measures may not be sufficient for financial institutions when it comes to Iranian banks, which, according to the U.S. Department of Treasury, “willingly engage in deceptive practices to disguise illicit conduct.”

FATF standards also provide a range of risk-mitigating countermeasures regulators can pursue beyond enhanced due diligence, such as imposing additional reporting requirements for banks working with high-risk jurisdictions, prohibiting financial institutions from relying on third parties located in the concerned country to conduct elements of customer due diligence, and even limiting business relationships or financial transactions with an identified country.

In fact, the FATF call for countermeasures on Iran is referenced in the “findings” of Section 104 of the Comprehensive Iran Sanctions, Accountability, and Divestment Act (CISADA) – the statutory basis for U.S. secondary sanctions on Iran.  Although more than four hundred Iranian actors received relief from secondary sanctions as part of the nuclear deal through removal from U.S. sanctions lists, more than two hundred, including significant Iranian economic entities such as the Islamic Revolutionary Guard Corps (IRGC), remain listed and subject to secondary sanctions.  The legislation, which first called for foreign financial institutions engaging in significant transactions with designated Iranian actors to be cut off from the U.S. financial system, cites the February 2010 meeting, at which the FATF urged member states to apply countermeasures to “protect the international financial system from the ongoing and substantial money laundering and terrorist financing risks emanating from Iran.”  That language remains in the current FATF statement, even after implementation of the Iran deal.

The new FATF statement, which continued to press member states to “protect against correspondent relationships being used to bypass or evade counter-measures and risk-mitigation practices,” came only days after the Society for Worldwide Interbank Financial Telecommunication (SWIFT) confirmed Iranian banks had been reconnected to the secure financial-messaging platform after having been cut off by EU sanctions in March 2012.  Even with messaging services restored, however, the FATF’s identification of Iran as a high-risk jurisdiction subject to FATF countermeasures will continue to complicate efforts by Iranian banks to reestablish ties upon which the majority of SWIFT messaging is predicated – those with correspondents.  Although Iran has been given access to roughly $100 billion of its previously restricted funds held overseas, in order to use these funds to make purchases and otherwise engage in international trade, Iranian banks will have to reestablish correspondent relationships with banks in countries that are key trading partners.  Banks’ foreign correspondents hold deposits in foreign currencies and act as a nonresident bank’s agent confirming letters of credit and completing other financial transactions on the correspondent’s behalf.  Beyond the enhanced due diligence discussed above, the FATF recommendation related to correspondent banking calls on regulators to require banks, at the least, to gather sufficient information to assess the quality of the correspondent institution’s AML/CFT controls and the quality of its supervision, an area where Iranian banks remain deficient.

Next Steps

In its December 2015 Article IV report, part of a running assessment of a country’s economic and financial policies and developments, the International Monetary Fund recommended to Iran that “bolstering the AML/CFT framework would facilitate re-integration of the domestic financial system into the global economy, lower transaction costs, and reduce the size of the informal sector.”  Iranian officials, including Central Bank administrators and the country’s executive director at the IMF, have acknowledged weaknesses in the Iranian banking system that could inhibit renewed foreign engagement and investment, saying that Iranian banks are “outdated” and face a legacy of “weak risk management and inadequate supervision.”  Iranian regulators have taken limited steps over the past decade to improve their AML/CFT controls.  In the FATF’s October 2008 statement, it credited Iran for adopting an Anti-Money Laundering Law, which was approved by the Majlis in January 2008, but noted the “lack of corresponding effort on CFT.”  A 2012 draft CFT law that was approved by the parliament but remained pending with the Iranian judiciary did not meet international standards, according to the IMF.  The IMF’s December report specifically urged Iranian authorities to adopt a law that properly criminalized terrorist financing and contained mechanisms for implementation of UN terrorism sanctions.

Recent Iranian official statements have committed to bolstering the AML/CFT regime, including by joining the Eurasian Group, an effective FATF sub-entity based in Moscow, and requesting an IMF assessment of its AML/CFT regime against FATF standards.  These are the correct first steps for Iran in working with the FATF to improve its AML/CFT status.  But it will be a long process, and there is little indication real work has begun.  Despite confirmation by the FATF’s executive secretary to Agence France-Presse following the February plenary that Iran has “shown a willingness” to start cooperating, the recent statement did not acknowledge Iranian efforts to engage with the group as it has done in the past (February 2010).

What this all means is that sanctions relief and SWIFT readmission notwithstanding, significant impediments remain for those banks looking to reestablish financial ties with Iran.  At a minimum, banks will continue to face illicit-finance and regulatory risks, both conditions of Iran’s own making.

Katherine Bauer is a senior fellow at The Washington Institute and a former official at the U.S. Treasury Department.  (TWI 29.02)

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11.8  TURKEY:  What Fading Oil Fortunes Means for Turkey’s Businesses

Are the resplendent days of the Gulf emirates coming to an end?  According to international credit rating agencies and investment banks, the answer is yes.  Standard & Poor’s has lowered Saudi Arabia’s credit rating twice in the last five months, and credit ratings for Bahrain and Oman are not any better.  In November, Christine Lagarde, managing director of the International Monetary Fund, estimated that Gulf Cooperation Council (GCC) states’ export revenues for 2015 would be $275 billion less than for the preceding year due to low oil prices.

Ufuk Sanli posted on 24 February in Al-Monitor that Turkish businesspeople are losing sleep over oil-producing states’ deferrals of payments to international contractors and the possible loss of mega projects.

The Gulf emirates, which spent lavishly to appease their populations after the start of the Arab Spring, have been badly shaken by the decline in oil prices from $110 a barrel to $30 a barrel in the last year and a half.  Gulf leaders first dipped into their central bank reserves to cover budget deficits resulting from their extravagant social assistance expenditures.  When that wasn’t enough, they began selling off assets held by their national asset funds.  According to the Kuwait Financial Center, the Gulf states ended 2015 with a deficit of $160 billion.  This year’s deficit is forecast to be $159 billion.

Conventional wisdom holds that if oil prices continue their downward trend, in five years Gulf countries won’t be able to cover their budget deficits. In other words, they would all be on the edge of a financial cliff.

These daunting developments have compelled the Gulf emirates to begin acting more prudently, that is, to restrict public spending and raise taxes.  They also began deferring payments to contractors involved in ongoing mega projects.

Turkish contractors working in the Gulf have been affected more than Western companies by the current crisis.  The Gulf had come to be seen as a safe harbor for Turkish companies that lost billions of dollars because of tensions between Ankara and Moscow.  This is why major economic troubles in the Gulf are causing Turkish businesspeople to lose as much sleep as people in the Gulf.

According to the Statistical Agency of Turkey, last year Turkish exports totaled $144 billion.  The six GCC states – Saudi Arabia, the United Arab Emirates, Kuwait, Bahrain, Qatar and Oman – spent $6 billion on Turkish goods, about 6.6% of all Turkish exports.  A careful look at these figures reveals that in 2015, while Turkish exports shrank by 8.6% overall, exports to Gulf countries grew by 5.5%.  In short, petrodollar-rich Arab countries contributed significantly to reducing Turkey’s economic losses under Justice and Development Party (AKP) rule.

Initial signs in 2016 suggest the continued loss of blood.  According to figures released by the Turkish Exporters Assembly, an organization of Turkish businesses, in January 2016 overall exports declined 14.4% compared with the same period in 2015.  While there were sharp falls in Turkey’s exports to the UAE, Kuwait, Qatar and Bahrain, exports to Saudi Arabia and Oman increased.

According to Finans Yatirim, a leading investment bank in Turkey, Turkish exports will fall to $137 billion by the end of this year.  Further reductions in Turkish exports to Gulf countries could bring about an even higher decline in overall exports.

Turkish contractors, which are annually awarded some $25 billion in projects, not only contribute significantly to Turkey’s foreign exchange earnings, but also to employment.  Contractors won tenders totaling $27 billion in 2014, but saw that amount fall to $19.4 billion in 2015.  One of the major winners was Limak Holding, which won the tender for a new terminal at Kuwait international Airport that will cost $4.3 billion.  It is the biggest single project a Turkish company has won alone.  If Limak had not obtained the contract, the sector’s performance last year would have been its worst of the decade.

Mithat Yenigun, president of the Turkish Contractors Union, told Al-Monitor, “Developments in Russia, which leads the list of countries where we have projects, worry us.”  Yenigun further said that in terms of companies operating in Russia, “Our Ministry of Economy and Russian employers are saying that the projects in progress will continue, but some projects awaiting approval will be suspended, and there is no likelihood of new projects in the near term.”

Yenigun expanded on his sector’s worries, stating, “The trend of low oil prices in oil-exporting countries like Algeria and Saudi Arabia also delay investments and cause difficulties in timely payments for projects.”  Yenigun noted that there have been some delays in payments by oil-exporting countries and that some projects have been suspended.

Libya and Iraq are the main countries from which Turkish companies are experiencing problems receiving compensation, and there were fears that the situation would spill over to the Gulf countries.  Sani Sener, CEO of TAV Holding, which last month won a $1.1 billion tender for an Omani airport, said their fears were justified. “This is the first time we have faced delays in payments for work done. That naturally affects us adversely,” he said.

Most relevant quarters feel that the burden of President Erdogan’s foreign policy is increasingly weighing on Turkish business by the day.  Tensions with Russia and Iraq have significantly affected exports and tourism.  Gulf countries once seen as an alternative market no longer look promising.  Turkish businesspeople who closely follow developments in the Gulf economies can do little more than gloomily ponder.  (Al-Monitor 24.02)

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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.