Fortnightly February 11, 2015

Fortnightly February 11, 2015

February 11, 2015





1.1  Bank of Israel Moves to Promote Debit Cards


2.1  KKR Provides Growth Equity to ClickTale
2.2  BCMS to Begin Israel Operations
2.3  Chinese Giants Invest in Singulariteam’s $100 Million Fund
2.4  Intel Israel’s 2014 Exports Total $4.25 Billion
2.5  Tel Aviv Offers Incentives for Start-Ups From Abroad


3.1  Australia’s ‘Coffee Club’ Arrives in the UAE
3.2  Abraaj & TPG to Sign Deal for Saudi Fast-Food Chain Kudu
3.3  American University Planned at Tunis Financial Harbor


4.1  10 MW Solar Facility In Dimona To Generate Electricity Day And Night


5.1  Lebanon Largest Recipient of IMF Assistance in Middle East
5.2  Lebanon Environment Minister to Sue Hospitals Over Medical Waste
5.3  Jordan’s Registered Syrian Refugees Number 637,000
5.4  $30 Million USAID Grant to Boost Jordan’s Water Supply Efficiency
5.5  WEF Middle East to be Held in Jordan

♦♦Arabian Gulf

5.6  Qatar Rents Ranked Third Most Expensive in the World
5.7  UAE & Canada Discuss Ways to Boost Trade
5.8  Saudi Arabia Named ‘Most Miserable’ GCC Country
5.9  Saudi King Orders Massive $29.3 Billion Spending

♦♦North Africa

5.10  Egypt’s Annual Inflation Declines to 9.7% in January
5.11  Gulf States to Give Egypt $10 Billion in Deposits Before March
5.12 New Egyptian Limits on US Dollar Deposits to Fight Black Market
5.13  Moscow & Cairo to Build Egypt’s First Nuclear Power Plant
5.14  Morocco Received Over 10 Million Tourists in 2014
5.15  44 Million Cell Subscribers & 9.97 Million Internet Users in Morocco


6.1  Greece Names Hardline Anti-Bailout Finance Minister



7.1  Number of Israel’s Eligible Voters Up by 231,000 Since Last Election


7.2  Call for Female Quota in Oman’s Majlis Al Shura Elections
7.3  New Saudi King Announces Major Government Shake-Up
7.4  Tunisia’s Secular-Islamist Coalition Takes Office
7.5  Turkey’s Population Rises to Over 77 Million


8.1  SCR Cow Monitoring to be Incorporated Into CRV System
8.2  InsuLine Signs Medical Device MOU with J&J
8.3  Evogene New Gene Optimization Program Works with Monsanto
8.4  Micromedic Successful Study for Monitoring Bladder Cancer with CellDetect
8.5  A Phone So Smart, It Sniffs Out Disease
8.6  BioLight Positive Findings for TeaRx for Dry Eye Syndrome
8.7  Evogene to Establish R&D Facility in the United States
8.8  SteadyMed Therapeutics Files for $55 Million Nasdaq IPO
8.9  Results Support CGEN-15049 as Potential Cancer Immunotherapy Target
8.10  Rosetta Genomics Receives First Patent Allowance in Japan


9.1  Checkmarx Introduces CxRASP to Secure Applications During Run-Time
9.2  Frost & Sullivan Names InfinityAR Most Promising AR Startup in Europe
9.3  Siklu Leads Millimeter Wave Backhaul Market for Fourth Consecutive Year
9.4  Camtek First Order for Gryphon – 3D Functional Inkjet Technology System
9.5  Sckipio Makes Go Twice as Far
9.6  Connect One New Broadcom-enabled IoT and M2M Wi-Fi Modules
9.7  Valens & Avago Extend HDBaseT Fiber Transmission to Unprecedented Reach


10.1  Israel 40th in World Bank Doing Business Rankings


11.1  ISRAEL: The Israeli Private Equity Market – Q4/14
11.2  ISRAEL: IVC’s Most Active Venture Capital Funds in Israel – 2014
11.3  JORDAN: The Middle East’s Next Nuclear Power?
11.4   IRAQ: Iraqi Government Spends Millions on Medical Treatment Abroad
11.5  UAE: Abu Dhabi Year in Review 2014
11.6  SAUDI ARABIA: How Will New Saudi King Handle the Economy?
11.7  MOROCCO: IMF Concludes First Review of the Precautionary and Liquidity Line
11.8  TURKEY: Turkey Year in Review 2014
11.9  TURKEY: Turkey’s Arms Procurement Raises Questions
11.10  GREECE: Caa1 Government Bond Rating Review for Moody’s Downgrade



1.1 Bank of Israel Moves to Promote Debit Cards

On 10 February, the Bank of Israel announced a series of measures designed to promote the use of immediate payment debit cards. The central bank believes that expanding debit card use will boost competition in this area, and lead to savings for both business owners and customers, and also to less use of cash. Governor of the Bank of Israel Flug will declare the commission on immediate payment transactions as a price-controlled fee that will have a maximum rate of 0.3% for a year. This compares with a current average commission of 0.7%. The Supervisor of Banks will issue directives concerning the distribution of debit cards to bank customers, and also disclosure rules and rules for immediate financial settlement in transactions using debit cards. (Globes 10.02)

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2.1 KKR Provides Growth Equity to ClickTale

London’s KKR, a leading global investment firm, will lead a $35 million growth equity investment in ClickTale, a Digital Customer Experience (DCX) SaaS company based in Tel Aviv, Israel. KKR will support ClickTale’s global expansion with primary capital and access to its network of tech experts and affiliated companies. Amadeus Capital Partners, a leading UK-headquartered venture capital firm, Viola Credit and other existing investors also participated in this round. ClickTale enables businesses to maximize revenues by optimizing the way visitors interact with their websites – whether from desktop, tablet or smartphone. ClickTale’s software records visitors’ in-page activity and produces highly actionable visual insights, including heatmaps, conversion funnels, and individual session replays, which marketers use to optimize engagement and conversion. ClickTale is a powerful stand-alone solution and also adds a visualization layer to customers’ traditional web-analytics, A/B testing and voice-of-customer tools. ClickTale offers a full enterprise-grade solution with a high near-term ROI. Its global blue-chip customer-base includes many Fortune 1000 companies, such as Adobe, Home Depot, Tele2, Sears, Walmart, and many more.

KKR has a long established track record of supporting technology companies, having invested more than $13 billion of equity in 49+ companies across software, Internet, media and IT-infrastructure since 2000. The ClickTale investment is part of KKR’s growth equity effort, which focuses on selective investments in fast-growing, tech-enabled companies that sell differentiated products with global market potential and which are led by outstanding founders. (KKR 28.01)

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2.2 BCMS to Begin Israel Operations

UK based international merger and acquisitions company BCMS is commencing operations in Israel. The company plans to expose small and medium-sized businesses to hundreds of potential foreign investors. The company’s representatives in Israel are the business consultancy firm Head-On Business and Marketing Navigation. BCMS’ owner has visited Israel a number of times in recent months ahead of the company’s launch in Israel. BCMS’s Israeli representatives say that since the company was founded, it has been involved in mergers for 500 companies worldwide, following the companies’ exposure to hundreds of potential investors, while generating extremely high profits through the deals.

The overseas target companies have annual turnovers of NIS 50-250 million. The volume of activity usually determines which small and medium-sized companies in the US and EU are selected for M&As. In Israel, the annual activity volumes used to select small and medium-sized companies are different: a business with turnover up to NIS 25 million is considered a small business, and a business with a NIS 25-100 million turnover is considered medium-sized. (Globes 28.01)

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2.3 Chinese Giants Invest in Singulariteam’s $100 Million Fund

Chinese internet giants Tencent Holding Group and Renren are leading investment in Israel’s Singulariteam’s $100 million fund. China’s Tencent is behind a number of leading services, including the instant messaging app WeChat. Renren is the company behind the “Chinese Facebook,” and has a market cap of $900 million. The Chinese investments in the fund will make it possible for the companies in the investment fund’s portfolio to enter the Chinese internet and digital markets more easily. The new fund has already invested $20 million in start-ups, and the second fund’s portfolio already includes two companies that are developing mail apps – TL;DR, and Hop, alongside web-building platform Webydo,, Genesort, and

As far as Tel Aviv’s Singulariteam is concerned, this is a significant step up, as the first fund was for only$20 million. Additional investors participated in the first fund, with a co-invest model, and added another $80 million. The start-ups that the company invested in with the first fund raised a total $300 million. (Globes 28.01)

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2.4 Intel Israel’s 2014 Exports Total $4.25 Billion

Intel Israel’s exports rose by 10% in 2014 and it is spending $800 million on upgrading its fabs. Intel Israel’s exports totaled $4.25 billion in 2014 (accounting for about 4% of Israel’s total exports of goods and services), compared with $3.8 billion in 2013. In its 41 years of activity in Israel, Intel Israel has notched up exports totaling $39 billion. One of the largest projects that Intel Israel is currently working on is the upgrade of its fabs in Kiryat Gat. According to Intel Israel’s estimates, construction costs will total $800 million. Intel will construct a 5,000 square meter building bridging between the two fabs in which robots will move silicon wafers between them: the Intel fab (Fab 28) and the fab that Intel bought from Micron. Intel has undertaken to carry out procurement in Israel totaling $1.87 billion annually over ten years as part of the investment program, mainly from small and mid-size Israeli suppliers. Intel Israel is one of Israel’s largest employers, with a headcount of 10,085 at the end of 2014, compared with 9,855 at the end of 2013. (Globes 09.02)

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2.5 Tel Aviv Offers Incentives for Start-Ups From Abroad

The Tel Aviv municipality is seeking to attract foreign start-ups to enrich the local industry. As the Tel Aviv municipality was not satisfied with its 1,515 high tech companies that employ 43,000 workers, Global City, a Tel Aviv municipality subsidiary, launched a pilot under which it is giving incentive packages to entrepreneurs from abroad. This includes complimentary accommodations for a week or two, a free workspace for three months in a start-up complex (such as a library, or Atidim 7 or other municipal-owned building), and professional support and consulting. The companies also receive legal advice, accounting help, and assistance dealing with the Israeli Corporations Authority, and other entities. The municipality claims that the value of the incentive package for entrepreneurs from abroad is NIS 50,000. It does not come from the municipal budget, but rather from resources pooled from the Global City’s global development budget. (Globes 09.02)

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3.1 Australia’s ‘Coffee Club’ Arrives in the UAE

Australia’s largest home grown café restaurant, Coffee Club, has launched in the UAE, with its first outlet at Abu Dhabi’s Yas Mall and a second planned for the upcoming Wasl Vita Mall in Dubai. The café was launched to mark the brand’s 25th anniversary this year, and has been introduced in the region by Liwa Minor Food and Beverages, the joint venture company of local operator Al Nasser Holdings and Thai publicly listed company Minor Food Group, as its first food brand. Since its inception in 1989, The Coffee Club concept has grown to more than 360 cafés throughout nine countries including Thailand, Egypt and China, and serves more than 40 million cups of coffee every year. It employs more than 6,000 staff, and offers a variety of food options including all day breakfast, salads, sandwiches, light meals and pastas. The company has another eight cafes and restaurants are in the pipeline for the UAE while it is expected to reach 25 cafes in the country within the next four years. (Coffee Club 27.01)

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3.2 Abraaj & TPG to Sign Deal for Saudi Fast-Food Chain Kudu

Private equity firms Abraaj and TPG Capital have signed a deal to purchase a majority stake in Saudi Arabian fast-food chain Kudu. The deal is a first in the region for TPG, which manages about $65 billion of capital and highlights a growing level of interest among international private equity players for assets in the Middle East. It also joins a growing list of deals for consumer-focused firms in the Gulf region, which are drawing buyers’ attention because they grant access to a young and increasingly wealthy population. TPG and Abraaj, a major player in Middle Eastern and African private equity markets, have been in exclusive talks with Kudu for months and the acquisition had been expected by Abraaj to have been completed by late-2014. Riyadh-based Kudu, which has more than 200 restaurants across the kingdom, is estimated to be worth around $400 million. (AB 04.02)

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3.3 American University Planned at Tunis Financial Harbor

Bahrain-based financial group GFH and Tunis Financial Harbor (TFH) has recently announced that three leading US universities have agreed to establish a new $103 million American University at the Tunis Financial Harbor. The project will see US-based Clayton State University, Savannah State University and Michigan State University collaborating with local Tunisian university, University Montplaisir for the development of campus spanning 50,000 square meters of land. With expected completion in 2020, the university aims to offer courses in Economics, Engineering, Medicine, Pharmaceuticals and more. The project will be financed by the participating universities as well as a group of local banks and individual investors. (BC 08.02)

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4.1 10 MW Solar Facility In Dimona To Generate Electricity Day And Night

The Tel Aviv-based Brenmiller Energy will be establishing 10 MW solar power station in Dimona, capable of supplying electricity to consumers both day and night. The NIS 300 million solar field, which will employ a storage technology developed by the company over the past three years, will be capable of generating electricity from solar energy for an average of 20 hours a day on a typical summer’s day. Backing up the facility will be a facility that produces electricity through biomass, otherwise known as organic waste. Annually, the solar field is expected to generate four times more hours’ worth of electricity compared to existing solar fields in the country. The average summer day would yield about 20 hours’ worth of electricity from solar energy sources. However on the sunniest summer days, when the sun is shining a good nine to 10 hours, the Brenmiller Energy solar field may be capable of providing an entire 24 hours’ worth of electricity. In the winter particularly, when the sun is not strong enough to fulfill electricity needs, the backup biomass station will be critical.

The 10 MW solar field will be established as part of a pilot facility, after receiving the approval of the National Infrastructures, Energy and Water Ministry. As part of the project, about 150 workers are expected to receive employment in the area. (JP 10.02)

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5.1 Lebanon Largest Recipient of IMF Assistance in Middle East

The International Monetary Fund’s Middle East Technical Assistance Center indicated that Lebanon accounted for 23% of its overall allocation of technical assistance delivery during the fiscal year that ended in June 2014. Lebanon was the biggest recipient of such assistance, ranking ahead of Jordan (20%), Sudan (16%), the Palestinian Authority (8%), Afghanistan and Iraq (6% each), Egypt and Libya (4% each) and Yemen (1%). Lebanon received 40 person weeks (PWs), or 200 days’ worth of assistance in FY 2014, down from 47 PWs in FY 2013 and compared to 31 PWs in FY 2012. Lebanon received 18 PWs, or 90 days in revenue administration support, which accounts for 45.6% of the total assistance it received and for 27.3% of the region’s total for this category. METAC supported authorities’ efforts in developing a fiscal regime for the oil and gas sector in Lebanon. It reviewed the draft policy for the development of the oil and gas sector, assessed the fiscal alternatives that should be considered when dealing with international investors and operating companies, and evaluated the institutional and organizational issues. (TDS 10.02)

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5.2 Lebanon Environment Minister to Sue Hospitals Over Medical Waste

Lebanese Environment Minister Machnouk is prepared to sue all private hospitals who fail to recycle their medical waste. After meeting with Machnouk at the ministry on 10 February, the head of the Association of Private Hospitals said he could not convince the minister to refrain from suing the hospitals. He explained that the Environment Ministry urged 72 hospitals one year ago to make sure their medical waste is treated by a specialized company, but 19 of them have so far failed to do so. The union chief said the reason why some hospitals could not abide by the demand was related to structural problems. (TDS 10.02)

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5.3 Jordan’s Registered Syrian Refugees Number 637,000

The total number of Syrians residing in the Hashemite Kingdom has reached around 1.4 million, of whom 637,000 have been registered as refugees, according to Interior Ministry figures. The monthly increase in the number of Syrian refugees registered with the UNHCR since the beginning of 2014 has reached 2,500. The number of Syrians residing in official camps stands at 100,000, constituting 15% of registered Syrian refugees and 7% of the total number of Syrians in Jordan. The number of Syrians in the Zaatari Refugee Camp at 85,000, while Azraq camp houses 11,000 refugees. Amman, Mafraq and Irbid host the largest number of Syrian refugees living outside camps in Jordan. In December, Interior Minister Majali told a group of MPs that there are over 791,000 Syrians residing in the capital, whose overall population has recently been estimated at 4 million. This means Syrians constitute nearly 20% of Amman’s population. (JT 28.01)

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5.4 $30 Million USAID Grant to Boost Jordan’s Water Supply Efficiency

The Jordan Water Company, Miyahuna, will install new water networks and meters and renovate deteriorating pipes to curb water theft and reduce water loss by 12%. Under an agreement signed on 29 January, the US government granted Jordan $30 million to assist Miyahuna boost water supply efficiency and limit water loss and violations on the network. Water Minister Nasser said the USAID-Miyahuna agreement will target water lost through leakage and theft, as well as revenue lost through inaccurate billing. The agreement, which starts with activities worth $1.3 million, will enable Miyahuna to enhance its leak detection capability and provide mobile workshops to repair leaks more efficiently. It will allow Miyahuna to replace 80,000 water meters, which will increase the precision of its customer billing, reduce administrative losses and increase revenues. Current water loss in Amman stands at 37%. Water loss in the capital is expected to drop to 25% once the networks are renovated and the new gauges are installed. (JT 29.01)

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5.5 WEF Middle East to be Held in Jordan

The World Economic Forum on the Middle East and North Africa will be held at the Dead Sea in Jordan on 21 – 23 May. Convening under the theme “Shaping a New Strategic Context”, more than 800 government, business and civil society leaders from more than 50 countries are expected to participate. The meeting will particularly focus on new developments and institution-building efforts of countries in the Levant and North Africa, which are creating important momentum for regional and cross-regional trade and investment with countries of the Gulf Cooperation Council, as well as with the United States, Europe and Asia. These developments will be addressed in the context of significant geopolitical realignments in response to security and humanitarian challenges in Iraq, Syria and Libya, and also in light of the fundamental transformations in the energy and technology sectors, which are reshaping business models and economies. The World Economic Forum on the Middle East and North Africa was last hosted in Jordan in 2013 in partnership with KAFD. This year will mark the eighth meeting with Jordan as host. (JT 31.01)

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►►Arabian Gulf

5.6 Qatar Rents Ranked Third Most Expensive in the World

Property rents in Qatar are the third most expensive in the world, according to the Numbeo’s Cost of Living Index 2015. The UAE is reported to be the fourth highest for rents, according to the index, while Kuwait and Bahrain are ranked at number 10 and 13, respectively. The most expensive countries/regions on the list are Singapore and Hong Kong. The most expensive country in the GCC, in terms of total cost of living, including rent and consumer goods and services, is Kuwait, which was placed ninth in the survey of 119 countries worldwide, just head of the UK and Ireland. In terms of purchasing power, Saudi Arabia ranked number two in the world, behind Switzerland, with Qatar (6th) and Oman (10th) also in the top ten, with UAE in 13th. (AB 08.02)

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5.7 UAE & Canada Discuss Ways to Boost Trade

Abdullah Al Saleh, UAE Undersecretary of the Ministry of Economy for Foreign Trade, received a Canadian delegation led by Martin Zablocki, CEO of the Canadian Commercial Corporation (CCC), for discussions on best ways to bolster joint economic, trade and investment co-operation. In the presence of a number of resident Canadian diplomats, Al Saleh said UAE-Canada’s ties had contributed towards expanding two-way trade to nearly Dh16.2 billion ($4.4 billion). By the end of 2013, trade exchange reached Dh6.8 billion ($1.85 billion) and trade through free zones stood at Dh3.56 billion ($970 million). Figures show that 51 Canadian trade companies, 23 trade agencies and 788 trade marks were registered with the Ministry of Economy. (WAM 29.01)

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5.8 Saudi Arabia Named ‘Most Miserable’ GCC Country

Saudi Arabia was the most miserable country in the GCC last year, according to a new report by the CATO Institute, a privately funded public policy research organization. The list of 108 countries has been ranked based on a number of factors which include national inflation rates, lending rates, unemployment figures together and year-on-year per capita GDP growth to determine its applicable level of “misery.”

A key driver in Saudi’s ‘misery’ is its current level of unemployment which, according to statistics published by trading, stands at 5.5%. While Saudi Arabia may be ranked the most miserable country in the GCC, its overall position on a list of 108 countries is 47. That is some way behind Venezuela, in first place, where consumer prices in the country are a key factor in the nation’s calculation of relative ‘misery’.

According to the list, the most miserable Middle East country is Iran, at number 5 – well ahead of the troubled Palestinian Authority at number 17. Egypt is ranked 18th most miserable country globally and Jordan sits at 36th. Unemployment is a key factor in driving rankings in those countries. Qatar’s interest rates make it the 82nd most miserable country in the world, while Bahrain (91), Kuwait (92) round out the list. Oman and the UAE don’t feature in the rankings. (AB 01.02)

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5.9 Saudi King Orders Massive $29.3 Billion Spending

King Salman bin Abdulaziz has ordered a massive $29.3 billion spending in a series of decrees that include lavish payments of two months’ bonus salary to all Saudi state employees and a series of subsidies. Former government employees will receive two months bonus pension, while students, people with special needs and people receiving welfare payments will also benefit from a bonus payment equivalent to two months of their annual income. Included in the handouts was $5.3 billion pledged in subsidies for electricity, water and housing. In a commitment to the arts, King Salman pledged $267,000 for each art club in the kingdom. (Al Arabiya 30.01)

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►►North Africa

5.10 Egypt’s Annual Inflation Declines to 9.7% in January

Egypt’s annual inflation slumped to 9.7% in January from 10.13% in December, the Central Agency for Public Mobilization and Statistics (CAPMAS) announced on 10 February. On 15 January, the Central Bank of Egypt (CBE) cut interest rates by 50 basis points, in its first meeting in 2015. The cut was attributed to a decline in the headline consumer price index (CPI) by 1.53% in November and 0.07% in December. The CBE said this was to bring annual inflation rates to 9.09% in November, and then to 10.13% in December. The CBE also said that real GDP jumped in Q1 FY 2014/15 to 6.8%, the highest annual growth rate since Q4 FY 2007/08, thanks to growth in the manufacturing sector. There was also expansion in tourism activities after several quarters of contraction. In July, inflation rates witnessed their highest surge since 2008, affected by the government’s decision to reduce spending on energy subsidies. There was also a raise in the prices of fuel and gas products in an attempt to reduce the 14% GDP budget deficit. (CAPMAS 10.02)

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5.11 Gulf States to Give Egypt $10 Billion in Deposits Before March

Saudi Arabia, Kuwait and the United Arab Emirates will deposit $10 billion in Egypt before the country holds an investment conference in March. Egypt hopes the conference in the resort Sharm El Sheikh will generate ventures worth billions of dollars, helping to boost its economy, which has just started to recover from political turmoil triggered by the 2011 Arab Spring uprising. Saudi Arabia, Kuwait and the United Arab Emirates gave Egypt more than $12 billion in aid, deposits for the central bank and petroleum products since the army toppled Islamist President Morsi in 2013 after mass protests against his rule.

The major oil producers see Morsi and his now-outlawed Muslim Brotherhood movement as a threat to their monarchies and believe Egypt – the biggest Arab state – is a bulwark against the group. President Abdel Fattah Al Sisi has focused on trying to repair Egypt’s economy, enacting reforms to try and win over foreign investors and announcing mega-projects such as a second Suez Canal to create jobs. (AB 04.02)

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5.12 New Egyptian Limits on US Dollar Deposits to Fight Black Market

The Central Bank of Egypt has introduced new restrictions on cash deposits in US dollars, CBE governor Ramez confirmed. Individuals and companies will not be able to deposit over $10,000 in a day and $50,000 a month in Egypt’s banks in the latest move in a fight by the Central Bank to eradicate the country’s foreign currency black market, which has gained ground in the past years as authorities protected the pound following the country’s January 2011 uprising. The new restrictions on cash deposits are expected to effectively eradicate the black market by making it impossible for companies to buy large amounts of foreign currency and then depositing them in banks. The banks will accept large deposits on a case by case basis, Ramez added, citing hotels needing to deposit cash revenues in dollars as an example. Foreign currency reserves in the country’s central bank stood at $15.3 billion at the end of December 2014. (Ahram Online 05.02)

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5.13 Moscow & Cairo to Build Egypt’s First Nuclear Power Plant

Cairo and Moscow have agreed on plans to jointly build Egypt’s first nuclear power plant, President Abdel Fattah al-Sisi announced. An MoU to build the facility was signed by Russian and Egyptian officials during Russian President Putin’s visit to the country. (Ahram 10.02)

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5.14 Morocco Received Over 10 Million Tourists in 2014

Morocco welcomed 10.28 million tourists in 2014, a gain of 2.4% compared to 2013, Tourism Minister Haddad said. Last year, tourist arrivals from France decreased, while the number of holidaymakers from Germany rose, the minister pointed out. Tourism is the second-largest economic sector in Morocco. It accounts for around 8% of GDP, employing some 500,000 people, and the government hopes to see the number of visitors rise to 20 million by 2022. (MWN 06.02)

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5.15 44 Million Cell Subscribers & 9.97 Million Internet Users in Morocco

A new report released by Morocco’s telecommunication regulator reveals that the number of cell phone subscribers has reached 44 million, while the number of internet users reached 9.97 million. This increase in subscribers was accompanied by lower prices for communications by cell phones and internet services. Telecommunication operators are now charging an average of 0.32 Dirham/Min for mobile telephony, down from 0.41 Dirham/Min in 2013, or a decrease of 22%, according to a report released by the National Agency for the Regulation of Telecommunications, known as ANRT.

The report also revealed that customers of internet services have seen a 36% decrease in prices, moving from an average monthly bill of 36 Dirham in 2013 to 23 Dirham by the end of 2014. The average monthly usage of cell phone subscribers continued its growth during the fourth quarter of last year. According to the report, each customer consumed an average of 92 minutes per month by the end of December 2014, which represents an annual increase of 11%. Moroccans spoke 48.2 billion minutes on their mobile phones and sent 19.7 billion text messages in 2014, a 20.4 and 74.2% increase respectively, the governing body of Moroccan telecommunications sector reported. (MWN 10.02)

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6.1 Greece Names Hardline Anti-Bailout Finance Minister

Greece named hardline leftwing economist Yanis Varoufakis as finance minister on 27 January, handing him the pivotal task of renegotiating the debt-stricken nation’s bailout with international creditors after it voted overwhelmingly to reject years of austerity politics. The appointment of Varoufakis to the potentially explosive role is seen as a signal that the new anti-austerity Syriza-led government will take a hard line in haggling over the €240 billion ($269 billion) EU-IMF package. The polyglot Varoufakis, 53, a professor nicknamed “Dr Doom” for his stance on Greece’s economic woes, is a vocal critic of the conditions imposed in return for the 2010 bailout and argues the shattered country can never recover until they are relaxed.

The EU has set the end of February as the deadline for Greece to carry out more reforms in return for a €7 billion tranche of financial aid from the 28-member bloc and the International Monetary Fund. PM Tsipras, who has vowed to reverse many of the severe spending cuts and other measures that Greece’s creditors insist on, must decide whether to prolong the deadline. Syriza claims the stringent conditions attached to the bailout — including wage and pension cuts and widespread privatizations –have caused a “humanitarian catastrophe” in Greece. It wants to release an immediate €1.2 billion package to increase the minimum wage and pensions for the poorest. (AFP 28.01)

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7.1 Number of Israel’s Eligible Voters Up by 231,000 Since Last Election

Some 5.3 million Israelis will be eligible to vote in the upcoming 17 March election, a rise of 231,000 (4.5%) from the 2013 election, according to data released by the Central Bureau of Statistics. The report found that 80%, or 4.24 million, of eligible voters are Jewish, while 15% (795,000) are Arab. The remaining 5% (265,000) are defined as “others” and are mostly recent immigrants to Israel who arrived under the Law of Return, but are not officially classified as Jewish in the population directory. Just over half the eligible voters this year, 50.5%, are women.

Some 848,000, or 16%, of eligible voters are between the ages of 18 and 24, the report found. A further 1.6 million (30%) are between the ages of 25 and 39. About 1.63 million (31%) are aged between 40 and 59, and 1.22 million (23%) are aged 60 or older. If 100% of eligible voters cast a ballot, winning a seat will require 44,166 votes. The report also does not include Israelis of voting age who are living or traveling abroad, estimated to be about 540,000 people. (CBS 10.02)

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7.2 Call for Female Quota in Oman’s Majlis Al Shura Elections

Omani citizens have called for a quota for woman to be introduced for the Majlis Al Shura elections. A total of 1,133 candidates contested for 84 Majlis seats in 2011, of which only 77 were women (up from the 20 who contested the 2007 elections). Of those 77 female candidates, just one won a seat on the Majlis Al Shura and there are now calls for a quota to be introduced in order to address the under-representation. (AB 03.02)

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7.3 New Saudi King Announces Major Government Shake-Up

On 29 January, Saudi Arabia’s new King Salman further cemented his hold on power, with a sweeping shakeup that saw two sons of the late King Abdullah fired and the heads of intelligence and other key agencies replaced alongside a cabinet shuffle. Top officials from the Ports Authority, the National Anti-Corruption Commission and the conservative Islamic kingdom’s religious police were among those let go. The new appointments came a week after Salman acceded to the throne following the death of Abdullah, aged about 90.

General Khalid bin Ali bin Abdullah al-Humaidan became the new intelligence chief, holding cabinet rank. The change comes after authorities in the kingdom last year blamed suspects linked to the Islamic State extremist group for shooting and wounding a Dane, and for gunning down minority Shiites. A separate decree said Prince Bandar bin Sultan, a nephew of Abdullah, was removed from his posts as Secretary General of the National Security Council and adviser to the king. Prince Bandar was the kingdom’s ambassador to the United States for 22 years until 2005 before moving to Saudi Arabia’s Security Council. Two sons of the late monarch were also fired: Prince Mishaal, governor of the Mecca region, and Prince Turki, who governed the capital Riyadh. Another of Abdullah’s sons, Prince Miteb, retained his position as minister in charge of the National Guard, a parallel army of around 200,000 men.

Salman, 79, a half-brother of Abdullah, named a 31-member cabinet whose new faces include the ministers for culture and information, social affairs, civil service, and communications and information technology, among others. (AFP 30.01)

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7.4 Tunisia’s Secular-Islamist Coalition Takes Office

A secular-led coalition government that includes Islamists took office in Tunisia on 6 February, three months after the North African state’s first free parliamentary elections. Prime Minister Essid and his team took the oath of office in front of President Essebsi before an official handover from interim premier Mehdi Jomaa. Essid vowed to fight for greater democracy and greater regional stability, four years after a revolution ousted longtime dictator Zine El Abidine Ben Ali, and against rampant unemployment. Both Essid and Essebsi, who was elected in December, paid tribute to Chokri Belaid, an anti-Islamist politician shot dead by suspected jihadists exactly two years ago, with the premier vowing to track down the assassins. Parliament earlier approved the coalition led by the secular Nidaa Tounes party and including moderate Islamist rivals Ennahda, following landmark elections in the birthplace of the Arab Spring. Nidaa Tounes, which won legislative elections in October, holds six portfolios including the foreign ministry, while the interior, defense and justice portfolios have gone to independents. Ennahda has the labor ministry and three secretary of state posts. (AFP 06.02)

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7.5 Turkey’s Population Rises to Over 77 Million

Turkey’s population rose to 77.7 million people in 2014, an increase of 1.28 million over the course of the year, according to data released by the Turkish Statistical Institute. Some 50.2% (38.98 million) of the population is male, while 49.8% (38.71 million) is female. The proportion of the Turkish population living in cities increased to 91.8% in 2014, from 91.3% in 2013.

The most populated province in the country is Istanbul with 18.5% of Turkish citizens (14.38 million people). Istanbul is followed by Ankara with 6.6% (5.15 million people); Izmir with 5.3% (4.11 million people); Bursa with 3.6% (2.79 million people); and Antalya with 2.9% (2.22 million people). The least populated of Turkey’s 81 provinces is the northeastern province of Bayburt, which has just 80,607 inhabitants. The median age of Turkey’s population increased to 30.7 in 2014, from 30.4% in 2013. The median age for males was 30.1, while for females it was 31.3. (TurkStat 28.01)

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8.1 SCR Cow Monitoring to be Incorporated Into CRV System

SCR Engineers announced that starting from February 2015, SCR Cow Intelligence solutions for Heat and Health monitoring will be available in the CRV Ovalert program. This means that farmers who use Ovalert will be from now able to opt for SCR best seller Heatime Solutions.

SCR, which was recently acquired by Allflex, the global leader in livestock ID, is a leading developer of advanced solutions for dairy farming and is well known for its SCR Heatime Systems for cow monitoring. The addition of SCR technology enhances Ovalert users’ ability to customize indicators regarding the fertility, health and nutrition status of their herd. This includes the ability to measure the rumination activity of their cows, and use this data in their management strategy for health and feeding applications. The addition of SCR technology to CRV’s Ovalert solution is expected to bring many opportunities to farmers, making life easier for them, and allowing them to take their herd’s productivity and yield to a sustained higher level.

Building on over 35 years of meaningful innovation, Netanya’s SCR is the leading pioneer of Cow, Milking and Herd Intelligence. The company’s data-driven solutions are trusted by successful dairy farmers to deliver the insights and analytics needed to optimize the productivity of every cow. Improving efficiency and driving growth, SCR helps to ensure a secure and prosperous future for their farms and families. (SCR 28.01)

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8.2 InsuLine Signs Medical Device MOU with J&J

InsuLine Medical is attracting a great deal of attention after the company signed a memorandum of understanding with US healthcare giant Johnson & Johnson. Under the memorandum of understanding, InsuLine and Johnson & Johnson will cooperate immediately in obtaining regulatory approval for marketing InsuPad, which reduces injected insulin uptake speed in diabetics by near 50%. Johnson & Johnson will also manage registration procedures with the various authorities. Once regulatory approval for marketing is obtained, the parties will negotiate a final binding distribution agreement for each territory, in which Johnson and Johnson will be the sole distributor. In addition to Russia, the agreement will also include Ukraine and other former Soviet Union countries Belarus, Armenia, Azerbaijan, Georgia, Kazakhstan, Kirgizstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. The registration procedure is likely to take a year.

Petah Tikva’s Insuline Medical is a publicly-listed Israeli medical device company that developed and is manufacturing and marketing a device which enables patients on intensive insulin therapy to take control of their disease and reach treatment targets in a more effective way. (Insuline Medical 28.01)

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8.3 Evogene New Gene Optimization Program Works with Monsanto

Evogene announced that its recently developed comprehensive gene optimization program is being incorporated into its multi-year collaboration with Monsanto Company. The addition of these new capabilities, which have been designed to optimize desired trait efficacy and potentially accelerate product development, follows the successful identification and validation by Evogene of more than one thousand genes that have entered Monsanto’s product development pipeline. The collaboration, which was initiated in 2008 and extended in 2013, is focused on transgenic approaches for improved yield and enhanced stress tolerance in corn, soybean, cotton and canola. Genes that have been identified under the collaboration represent an important component of Monsanto’s yield and environmental stress research and development program.

Evogene’s gene optimization platform includes, among other components, advanced computational tools for defining the optimal expression pattern for a candidate gene, for assessing the ability of the gene to perform consistently across different varieties of the target crop, and for identifying novel gene combinations that improve crop performance.

Rehovot’s Evogene is a leading company for the improvement of crop productivity and economics for the food, feed and biofuel industries. The Company has strategic collaborations with world-leading agricultural companies to develop improved seed traits in relation to yield and a-biotic stress (such as tolerance to drought), and biotic stress (such as resistance to disease and nematodes), in key crops as corn, soybean, wheat and rice, and is also focused on the research and development of new products for crop protection (such as weed control). (Evogene 04.02)

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8.4 Micromedic Successful Study for Monitoring Bladder Cancer with CellDetect

Micromedic Technologies announced the results of a blinded, multi-center clinical study using the CellDetect non-invasive technology to detect bladder cancer recurrence in patients with a history of the disease. The CellDetect test successfully identified cancerous cells in urine samples, with reported sensitivity of 84.4% and specificity of 82.7% for the study’s primary endpoint. The blinded clinical study was conducted in nine medical centers, where urine samples from 217 subjects with a history of bladder cancer were tested. The study population included 121 healthy subjects and 96 patients currently suffering from the disease. The results of the CellDetect urine test were compared with results from biopsy or cystoscopy, in cases where biopsies were not performed.

Micromedic’s CellDetect technology allows an accurate diagnosis of cancerous and precancerous cells based on unique combination of color and morphology. The technology may be implemented in screening and monitoring cancer patients. Micromedic has proven the product’s efficacy in diagnosing cervical cancer and bladder cancer in the framework of clinical trials and estimates that the technology underlying the products may be implemented for use in additional cancer indications. The cervical cancer detection screening diagnostic test kit is in the initial commercial stage and Micromedic recently completed a clinical trial to prove its ability to monitor bladder cancer recurrence. Micromedic believes that the underlying technology may be adapted for other types of cancer as well.

Tel Aviv’s Micromedic is engaged in the development and commercialization of unique solutions addressing a real need prevailing in the field of cancer diagnostics including early detection of cancers. (Micromedic 03.02)

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8.5 A Phone So Smart, It Sniffs Out Disease

A research consortium headed by the Technion-Israel Institute of Technology is developing a product that, when coupled with a smartphone, will be able to screen the user’s breath for early detection of life-threatening diseases. Funded by a grant from the European Commission, the SNIFFPHONE project will link breathalyzer screening technology to the smartphone to provide non-invasive, fast and cheap disease detection. It will work by using micro- and nano-sensors that read exhaled breath and then transfer the information through the attached mobile phone to an information-processing system for interpretation. The data is then assessed and disease diagnosis and other details are ascertained.

The technology is supported by a recent €6m ($6.8m) grant to the consortium to expand the “electronic nose” breathalyzer technology that Technion Prof. Haick has been developing since he joined the Technion in 2006. That technology can identify individuals from the general population who have a higher likelihood for contracting a specific disease, and treat them in advance or at an early stage. (ATS 02.02)

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8.6 BioLight Positive Findings for TeaRx for Dry Eye Syndrome

BioLight Life Sciences Investments completed a U.S. clinical study, conducted by Ora, Inc. Andover, MA, designed to compare widely used benchmark tests for dry eye with its TeaRx diagnostic parameters that test components of tear film. Positive statistical correlations were identified between TeaRx diagnostic parameters and widely used benchmark tests for dry eye syndrome. The TeaRx diagnostic tests are developed by DiagnosTear Ltd., one of BioLight’s subsidiaries. In this prospective study consisting of approximately 200 subjects, widely-used benchmark tests for dry eye were compared with the TeaRx diagnostic parameters, including Schirmer’s test, TFBUT (Tear-Film Break-Up Time), staining of corneal and conjunctival epithelial cell damage and patient questionnaires. This approach resulted in positive statistical correlations that showed many of the predicted trends and correlations between the widely used benchmark tests and the TeaRx diagnostic parameters tests which measure tear film components.

Tel Aviv’s BioLight Life Sciences Investments invests in, manages and commercializes biomedical innovations grouped around defined medical conditions – ophthalmology and cancer diagnostics. The ophthalmic technologies include IOPtiMate, a laser-based non-invasive surgical treatment for glaucoma; TeaRx, a point-of-care multi-parameter diagnostic test for dry-eye syndrome; Eye-D, a controlled release drug-delivery insert platform and a new technology a drug-delivery platform for the improvement of ocular molecule transmission. (BioLight 02.02)

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8.7 Evogene to Establish R&D Facility in the United States

Evogene signed a Letter of Intent with plans to establish a research and development facility in the Bio-Research and Development Growth (BRDG) Park, developed by Wexford Science & Technology, a BioMed Realty Company, on the campus of the Donald Danforth Plant Science Center in St. Louis, Missouri. The establishment of the facility is a key component of the Company’s previously disclosed entry into the field of advanced solutions for insect control. Evogene previously projected an expenditure of approximately $10 million in order to broaden its existing predictive discovery and validation capabilities into this substantial field.

The approximately 6,000 square foot facility will feature state-of-the-art laboratories and insect rearing rooms and is projected to be fully operational by the end of 2015. It will support Evogene’s growing insect control activities, initially focusing on the Company’s on-going product programs for corn rootworm and soybean aphids. The planned facility will incorporate both field specific modifications of the Company’s existing gene testing and validation infrastructure and new capabilities for targeting these and other high impact pests. In addition, the facility will help facilitate the Company’s field-based data generation activities in the United States. In support of its selection of St. Louis for its R&D facility, Evogene has been offered a strategic economic incentive package from the Missouri Department of Economic Development.

Rehovot’s Evogene is a world leading developer of improved plant traits, such as yield and drought tolerance, for a wide diversity of key crops through the use of plant genomics. The company focuses on utilizing its proprietary computational genomic technologies to provide a complete solution for plant trait improvement through combining state of the art biotechnology and advanced breeding methods. (Evogene 09.02)

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8.8 SteadyMed Therapeutics Files for $55 Million Nasdaq IPO

Drug delivery system development company SteadyMed Therapeutics has filed with the US SEC to raise $55 million in a Nasdaq IPO. The company was founded in the Zisapel family’s RAD Biomed incubator and although today under US management and headquartered in San Ramon, California, much of the company’s development is carried in its Rehovot offices. The drug development company has filed for an IPO just 10 days after raising $12.2 million in equity financing. The underwriters for the IPO are Wells Fargo, RBC and JP Morgan. Rehovot’s SteadyMed Therapeutics is a specialty pharmaceutical company. SteadyMed leverages its PatchPump platform to develop its own therapeutic portfolio and partners to optimize the delivery of high volume (greater than two mL), high value, small molecule or biologic drugs. Their family of PatchPumps can be customized to deliver liquid drugs, including biologics, with a wide range of volumes and viscosities, in a consistent and controllable manner. (SteadyMed 09.02)

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8.9 Results Support CGEN-15049 as Potential Cancer Immunotherapy Target

New experimental results for CGEN-15049, a novel immune checkpoint protein discovered by the CGEN, works as a target for cancer immunotherapy. The new data presented for CGEN-15049 demonstrate expression of this protein on tumors isolated from ovarian cancer patients, both on the cancer cells and on immune cells within the tumor. Additional new data also demonstrate expression of CGEN-15049 on a similar population of tumor infiltrating immune cells in tumor-bearing mice. The collective data generated to date by Compugen support the ability of CGEN-15049 to affect key components of the immune system known to be involved in anti-tumor immune responses, supporting its potential as a promising target for immuno-oncology antibody therapy. The CGEN-15049 studies examined expression of this protein on cells isolated from primary tumors of ovarian cancer patients. Expression of CGEN-15049 was observed both on cancer cells and on tumor infiltrating myeloid cells, which have been associated with immune suppression. Additional data demonstrate consistent expression of CGEN-15049 on myeloid immune cells within the tumor microenvironment in mouse cancer models.

Tel Aviv’s Compugen is a leading drug discovery company focused on monoclonal antibodies and therapeutic proteins to address important unmet needs in the fields of oncology and immunology. The Company utilizes a broad and continuously growing integrated infrastructure of proprietary scientific understandings and predictive platforms, algorithms, machine learning systems and other computational biology capabilities for the in silico (by computer) prediction and selection of novel drug target candidates, which are then advanced in its Pipeline Program. (CGEN 09.02)

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8.10 Rosetta Genomics Receives First Patent Allowance in Japan

Rosetta Genomics received a Notice of Allowance from the Japan Patent Office (JPO) for Japanese Patent Application No. 2007-512601, which relates to human miR-92b. The composition of matter patent to be issued claims the sequence of miR-92b and its complement, as well as its use as a probe, including in biochips. miR-92b has been shown to be elevated in cancer and is a key element of the Company’s lead oncology diagnostic, the Rosetta Cancer Origin Test™ (COT). The claims allowed cover an isolated nucleic acid having the sequence of human miR-92b and its complement, as well as to variants being at least 90% identical to miR-92b. In addition, the allowed claims encompass a vector and a probe comprising miR-92b, a composition and a biochip comprising probes specific to miR-92b.

Founded in 2000, Rehovot’s 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 and therapeutics. (Rosetta Genomics 10.02)

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9.1 Checkmarx Introduces CxRASP to Secure Applications During Run-Time

Checkmarx launched its Runtime Application Self-Protection (RASP) solution, CxRASP, that utilizes unique two-point instrumentation technology to continuously observe an app’s bidirectional data flow, enabling the detection and defense against real-time attacks. CxRASP is the latest addition to the Checkmarx Application Security Hub which provides a broad range of solutions to ensure application security throughout the software development lifecycle as well as while in production. Existing Web Application Firewalls (WAFs) act as external devices monitoring the input without a clear understanding of the logic behind the app’s data flows and behavior. Checkmarx’ technology “listens” at each interaction junction of the app, covering access points between the application and the user, the database, the network, and the file system, respectively. With complete visibility into the app’s input and output, CxRASP is the first solution that tailors the protection mechanism to the specific flow within the application to achieve unprecedented detection accuracy in real-time. The product flags suspicious activity when it enters the app, and then verifies if it is actually malicious at the output to minimize false positives and false negatives. When an attack is identified, the organization is alerted and instructions are sent on how to fix the vulnerability.

Tel Aviv’s Checkmarx is a leading developer of software solutions used to identify, fix and block security vulnerabilities in web and mobile applications. It provides an easy and effective way for organizations to introduce security into their Software Development Lifecycle (SDLC) which systematically eliminates software risk before applications are released. (Checkmarx 28.01)

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9.2 Frost & Sullivan Names InfinityAR Most Promising AR Startup in Europe

Infinity Augmented Reality (InfinityAR), which developed a software-based augmented reality (AR) engine, has received the 2015 Frost & Sullivan Technology Innovation Award. The research group studied the leading AR companies in Europe. InfinityAR has received the highest scores on both technology attributes and future business value criteria. InfinityAR’s engine overcomes three major challenges in today’s AR environment: cost, processing power and battery life. The company’s engine uses two simple cameras instead of depth sensors, so the cost drops significantly. The use of passive cameras, rather than active infrared sensors (like many other AR companies do) reduces power consumption by 60%. Additionally, the company uses efficient computer vision algorithms that require much less processing power. Additionally, the company’s technology can recognize the user’s gestures for full and natural interaction with the environment.

Petah Tikva’s InfinityAR’s vision is about creating a new digital environment that will allow people to naturally interact with augmented content in their physical surroundings. InfinityAR’s augmented reality development engine enables accurate 3D digital scene representation of one’s current physical environment, using basic, affordable hardware. (InfinityAR 29.01)

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9.3 Siklu Leads Millimeter Wave Backhaul Market for Fourth Consecutive Year

With sales of its EtherHaul system seeing double-digit growth in 2014, Siklu continues to lead the rapidly growing millimeter wave connectivity market. Growth in 2014 was characterized by increased demand for bandwidth in core operator and service provider markets.

The company announced that it sold more than 10,000 EtherHaul units in 2014, representing more than 50% year-over-year growth. The strong growth in 2014 was characterized by increased demand for bandwidth in core operator and service provider markets. Millimeter waves are also seeing greater adoption in new markets that require high capacity connectivity on the street as well as on rooftops. Sales expanded from traditional operator and service provider networks to security networks, smart city networks, and gigabit-to-the-home providers. Siklu has achieved its industry leadership with its groundbreaking all-silicon technology, which lowered costs and prices and enabled mass market millimeter wave adoption. More than 23,000 EtherHaul units are already deployed worldwide, in all climates, making them the most field-proven in the industry.

Petah Tikva’s Siklu delivers gigabit capacity millimeter wave wireless backhaul solutions operating in the 60, 70 and 80 GHz bands. The top choice of tier-1 operators worldwide, thousands of units have been deployed and deliver carrier grade performance. Siklu’s innovative all-silicon design has dramatically reduced prices and effectively opened the market for ultra-high capacity wireless links. Siklu is currently deploying its street level and rooftop connectivity solutions in diverse urban networks requiring high capacity connectivity. (Siklu 03.02)

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9.4 Camtek First Order for Gryphon – 3D Functional Inkjet Technology System

Camtek has received a conditional purchase order from Bay Area Circuits for a Gryphon system. The purchase order will become firm upon successful completion of an evaluation process. This is a milestone event, marking the first customer purchase order for the Gryphon following the successful conclusion of the beta-testing phase of the system. Gryphon provides a one-stop-shop process designed to replace the traditional solder mask and legend deposition process in the manufacture of Printed Circuit Boards (PCB). Gryphon enhances production, while significantly improving the reliability and yield of the process. The Gryphon system has been installed in the customer’s facility in California and is now working in a production environment. Bay Area Circuits is using the Gryphon primarily for the direct deposition of the solder mask following the manufacture of the circuit boards.

Migdal HaEmek’s Camtek. provides automated and technologically advanced solutions dedicated to enhancing production processes, increasing products yield and reliability, enabling and supporting customer’s latest technologies in the Semiconductors, Printed Circuit Boards (PCB) and IC Substrates industries. (Camtek 02.02)

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9.5 Sckipio Makes Go Twice as Far

Sckipio Technologies has successfully demonstrated at speeds greater than 500Mbps for 200 meters – double the official ITU targets for this new broadband standard. In laboratory trials with multiple broadband access service providers globally, Sckipio also achieved more than 200Mbps at 400 meters, again doubling the target distance for the given rate. These important test results will help widen the potential footprint for and help telecommunications companies better address new FCC regulations now being proposed in the U.S.

The U.S. government recently redefined broadband access as 25Mbps or greater – downgrading most xDSL subscribers to non-broadband status. While cable companies have access to technologies such as DOCSIS to achieve greater than 25Mbps performance, telcos have lacked affordable alternatives to fiber to the home (FTTH) and xDSL. That’s why the International Telecommunications Union (ITU-T) created a new standard called, which was approved in December 2014. The Sckipio improvement of performance over distances such as 400 meters will open up more potential uses for in rural environments. It also will help in very dense environments like large cities where as many as 30% of all residences lack alternatives to cable operators.

Ramat Gan’s Sckipio is the leader in modems and is dedicated to delivering ultra-broadband using next-generation Fiber-to-the-distribution point (FTTdp) architectures. Sckipio offers a complete solution – chipsets bundled with software – for a variety of access and mobile backhaul applications based on the ITU G.9700 and G.9701 standards, to which Sckipio is a leading contributor. (Sckipio 04.04)

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9.6 Connect One New Broadcom-enabled IoT and M2M Wi-Fi Modules

Connect One announced a collaboration with Broadcom Corporation, a global innovation leader in semiconductor solutions for wired and wireless communications, to enable Connect One’s G2 Wi-Fi modules for the M2M and Internet of Things (IoT) market. The combination of Broadcom’s WICED Wi-Fi system-on-chip, together with Connect One’s iChip Internet Controller, offers vast functionality and ease-of-integration to many applications in areas such as home automation, medical, security, industrial control, smart grid, asset management, and point of sale. Building on its internet protocols, security, management and simple API, Connect One’s G2 product line enables product manufacturers to connect, secure, and manage IoT products over the Internet in just a couple of hours. The G2 modules feature Broadcom’s BCM43362 Wi-Fi system-on-chip (SoC), 802.11b/g/n MAC and baseband functionality, offering excellent system performance for IoT connectivity.

Established in 1996, Kfar Saba’s Connect One is widely regarded as the device networking authority, with many innovative firsts to its credit. The company manufactures semiconductors, modules, and device servers that facilitate secure, reliable, and robust Internet protocol-based communication for everyday devices. (Connect One 09.02)

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9.7 Valens & Avago Extend HDBaseT Fiber Transmission to Unprecedented Reach

Valens and Avago Technologies, a leading supplier of analog interface components for wireless, wireline, storage, and industrial applications, announced a collaboration on an HDBaseT fiber transmission solution that delivers HDBaseT video over 800 meters of multimode fiber (MMF) cable. Based on Valens’ Colligo chipsets and Avago’s extended reach AFBR-709HDZ transceivers, the solution enables a new generation of HD video distribution for applications such as hospitality video system, video surveillance and digital signage. Hod HaSharon’s Valens provides semiconductor products for the distribution of uncompressed ultra-high-definition (HD) multimedia content. The company’s HDBaseT technology enables long-reach connectivity of devices over a single cable and is a global standard for advanced digital media distribution. (Avago 09.02)

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10.1 Israel 40th in World Bank Doing Business Rankings

Figures published by the World Bank rank Israel 40th on the list of the best countries for doing business, two spots lower than Israel’s 38th place rating last year. Israel’s largest downgrade was in setting up a business, in which its rating went down eight places to 53rd place. Israel continues to have one of the world’s worst ratings for real estate – 121st place for obtaining building permits (118th place last year) and 135th place in registering land rights (130th place last year). Israel also continues to have poor ratings in contract enforcement (111th place), electricity hookups (109th place) and taxation (97th place).

In a positive vein, Israel has good ratings in protection of minority shareholders (11th place), transportation of goods at border crossings (12th place), protection against bankruptcy (24th place) and obtaining credit (36th place) – although the rating for credit is significantly lower than last year’s 30th place. The World Bank’s rating, designed to provide a comparative look at the ease of doing business in countries, is being published for the 12th straight year. The list is topped by Singapore and New Zealand. China, on the other hand, the world’s second largest economy, is rated only in 90th place, a slight improvement on its 93rd place rating from two years ago. At the bottom of the list are Chad, South Sudan, the Central African Republic and Eritrea. (WB 28.01)

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11.1 ISRAEL: The Israeli Private Equity Market – Q4/14

Key facts:

• Private equity fund involvement in high-tech deals up 90%in 2014

• Israeli PE deals attracted 19% more capital in Q4/14 than in the year-earlier period

• In Q4/14, Israeli private equity funds invested 67% of total transaction value

On 4 February, the IVC Research Center announced that in 2014, Israeli private equity performance increased 10% from the last year. Forty-five Israeli and foreign private equity investors were involved in 69 transactions, investing $2.18 billion in total. The amount invested was up 10% from the $1.98 billion invested in 71 deals in 2013.

In Q4/14, $317 million was invested by Israeli and foreign private equity investors in 16 deals, up from $266 million invested in 13 deals in the year-earlier period, but well below $1.26 billion (the second highest quarterly amount since 2011) invested in 12 deals in Q3/14. The number of deals in 2014’s final quarter equaled the four-year quarterly average.

Two buyouts by foreign PE funds accounted for 52% of total investments in 2014: Apax Partners’ $650 million buyout of Answers Corp., owner of Q&A website and Oaktree Capital’s $475 million buyout of utilities company Veolia Israel.

In 2014, Israeli PE funds invested $658 million (30% of total transaction value) slightly above the $636 million (32% of total) invested in 2013, but far below the $1.38 billion (40%) invested in 2012.

In Q4/14, Israeli private equity funds invested $213 million, which accounted for 67% of all Israeli PE transactions, compared to $91 million (34% of total) in Q4/13 and $114 million (9%) in Q3/14. Yesodot Private Equity, an Israeli PE fund, acquired Shikun & Binui’s Solar Facilities for $105 million – the largest deal in the quarter – which accounted for 33% of quarterly transaction value.

Private equity fund involvement in Israeli technology companies widened in 2014 as investments reached $1.13 billion (52% of the total), compared with $596 million (30%) in 2013, a noticeable jump of 90%.

Rick Mann, Partner and Head of M&A at GKH, noted: “The growing role of technology-driven transactions in the private equity space in Israel is the key lesson of 2014. Israel continues to be the focus of funds looking for innovative technology, and this market is no longer limited to traditional venture capital players. While there are several interesting opportunities for private equity funds in other business areas, such as the insurance and finance and oil and gas industries, transactions in those industries require more patience and a willingness to endure regulatory approval processes that many perceive as burdensome. We fully expect technology to lead in 2015 as well.”

In 2014, 13 buyout deals accounted for $1.68 billion or 77% of total deal value, up 18% from $1.42 billion (72% of total) invested via 13 buyouts in 2013. Straight equity deals captured $445 million or 21% of total PE investments, compared to $475 million (24%) in 2013. Interestingly, in the last two years, the number of straight equity deals had jumped to an average of 51, while in the two previous years, the average was 23.

In Q4/14, PE fund investments were almost equally divided between straight equity and buyout deals, with $166 million (52%) and $151 million (48%) invested, respectively. This contrasts with Q4/2013, when straight equity deals dominated with $197 million (74% of total), and Q3/14, when buyouts accounted for $1.2 billion or 97% of total investments.

Israeli Private Equity Investors

Marianna Shapira, Research Manager at IVC Research Center, said, “According to our latest data, 12 Israeli PE funds raised a total of $1.24 billion in 2014, and an additional 12 are in the process of raising capital. Looking at capital availability in the local private equity sector and at funds projected to be raised during 2015, we believe 2015 will see growth continuing in private equity investments in the cleantech, communications, internet and software industries. With PE funds and VC growth funds focusing on the high-tech sector, the expected competition could drive valuations higher than they were in 2014. Moreover, we expect to see a return to prominence of the real estate and infrastructure sectors as an increasing number of funds are being raised for such investments.”

The IVC-Online Database maintains data on 33 active Israeli private equity management companies with a total of $7.23 billion under management. In 2014, the 12 PE funds that raised capital of $1.24 million compared with a 10-year average of five funds that raised an average of $700 million annually. Currently, 12 additional funds are in the process of raising capital, and $1.1 billion is forecast to be raised during 2015.

IVC Research Center is the leading online provider of data and analyses on Israel’s high-tech, venture capital and private equity industries. Its information is used by all key decision-makers, strategic and financial investors, government agencies and academic and research institutions in Israel. (IVC 04.02)

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11.2 ISRAEL: IVC’s Most Active Venture Capital Funds in Israel – 2014

• First investments by Israeli VCs are up 3%, while those by foreign funds are down 4%

• Software overtook the Internet as the most popular first investment sector

• 2014’s most active micro VC fund made just 7 first investments, versus 11 made by the most active micro VC in 2013

IVC Research Center today released a report analyzing first investments in Israel by venture capital funds in the five years through 2014, and ranking the most active venture capital funds that invested in Israel in 2014.

In 2014, JVP, a large veteran Israeli fund, topped all investors by making 10 first investments, compared to 11 first investments made in 2013 by last year’s top-ranked fund, foreign micro fund SG VC. JVP, with $1.1 million under management, invested via two new funds raised in 2014 – JVP VII and JVP VII Cyber, a fund dedicated to cyber security investments.

Placing a close second, with nine first investments each, were large Israeli funds Pitango and Magma. Pitango, with $1.6 billion under management, invested from its fifth fund and Magma, with $450 million under management, from its third fund. Both were raised in 2012. Two US-based funds, Blumberg Capital and Flint Capital, shared third place with eight investments each.

The leading investor among micro VC funds was Wadi Ventures with seven first investments from its 2012 $10 million fund. Following Wadi were Israel’s First Time fund and Hong Kong-based iVentures Asia with six investments each.

The report, which analyzes trends relating to first investments by foreign and Israeli VC funds in Israel, shows that foreign funds continued to lead in terms of both the number of investors and deals. Yet there was a decrease in first investments among foreign funds, while the number of first investments among the Israeli funds slightly increased. (Chart 1)

The five-year average for VC first investments at 249 deals and 122 investors is skewed slightly downward by a relatively low number of first investments in 2010. In 2014, there was a slight dip in the number of first investments to 283 from 287 in 2013. The number of funds making first investments also slipped, dropping to 132 from 140 in 2013. These figures reflect a decrease of one% in the number of deals and a decrease of six% in the number of investors. (Chart 2)

Koby Simana, CEO of IVC Research Center: “In light of record capital raising by Israeli high-tech companies, as we reported a few weeks ago, it is important to understand that the slight decrease in first investments in 2014 is not indicative of a general decline in investments, but rather reflects a change in the ratio between first and follow-on investments. More follow-on investments were made in 2014 than in the previous year. This is mainly reflected in foreign fund activity, which was responsible for the larger part of first investments in 2014.” Foreign funds made 155 investments (55%) last year, compared to 169 investments (59%) in 2013. Israeli VC funds made 128 investments (45%), compared to 118 in 2013 (42%). “Unlike in the previous year, Israeli fund activity expanded in contrast to the foreign fund down trend,” explained Simana. “The slight increase in Israeli fund activity reflected their having raised more capital in 2014 than in any of the previous six years, and they therefore had more available capital for first investments. We expect this trend to continue in 2015 as well, along with the mounting pace of fund capital raising,” he concluded.

Another change observed in 2014 was in the most popular sector for first investments, with software attracting the largest number of investments following four years in which the Internet sector dominated. Funds made 97 investments in the software sector, which accounted for 34% of the total number of first investments made in 2014. In comparison, software accounted for a 25% share of first investments in 2013 and only 16% in 2010. (Chart 3)

Rotem Inbar, who conducted the research at IVC, explained that “Increased interest in the software sector does not come at the expense of the internet sector, which continued to attract first investments due to its more modest capital requirements for the purpose of R&D and revenue generation. The increase in the software sector mostly reflected growing interest in two high interest fields – cyber and fintech – which are becoming increasingly important in today’s digital world. JVP, for example, established a fund specifically dedicated to cyber investments in 2014 and made six investments in this sector.”

The Internet sector attracted 92 investments or 32% of all first investments in 2014. The number of first investments increased from those of 2013, and the sector has continued to retain its 30% five-year average share of investments. Two sectors that suffered a decrease in percentage of first investments were cleantech and life sciences, sectors that typically require relatively large investments and take longer to produce exits.

IVC data for 2014 also indicate a slackening in growth of first investment activity by micro venture capital funds in parallel with the decrease in fund raising by micro VCs in the previous year. In 2014, 20 micro VCs made 57 first investments, compared to 30 micro VCs that made 75 first investments in 2013. These figures also help explain the apparent contradiction between increasing first investments by Israeli funds and the slight decline in the number of funds investing – 39 funds compared to 41 in 2013. The larger funds have more investment capital at their disposal compared to micro VCs.

IVC Research Center ranked Israeli and foreign venture capital and venture lending funds according to the number of first investments made in Israeli high-tech companies in 2014, excluding incubated companies, foreign companies or non-technology companies. The data are based on information received directly from the VC funds and from the IVC-Online Database ( Rankings reflect the number of deals only, not capital invested and are divided into two tables, according to managed capital: VC funds with $50 million or more under management and micro-VC funds.

Most Active Venture Capital Funds in Israel – 2014

Ranked by Number of First Investments

Rank VC Fund Total First Investments Total Capital Managed ($m) Portfolio Company Name
1 JVP 10 1062 Valooto, Teridion, Noobaa, RepnUp, CyActive, CyberCanary, GreenSQL, Morphisec, SecBI, Smart-X
2 Pitango 9 1610 AppsFlyer, Artsetters, imVision, Neura, Sckipio, Timeful, Leaba, myInPact, TravelersBox
Magma 9 450 Applitools, Argus, E8 Storage, Guesty, Indegy, Teridion, WebyClip, Oliver solutions, Avanan
3 Blumberg Capital 8 N/R Fortscale, Yotpo, Zooz, Namogoo, SQream, Zeek, FairFly, Biocatch
Flint Capital 8 N/R Deeplink, SubPLY, Umoove, youAPPi, Any.DO, MentAd, BrightInfo, Appsee
4 Disrupt-ive 7 50 Artsetters, Docady, Roomer, 7 Elements, Anodot, Captain Up, Askem
Marker 7 N/R Dynamic Yield, Glide, Beamr, Screenz, Wochit, Athena Wisdom, Datorama
5 83North 6 564 Hylinx, Smore, Via, Anodot, Take&Make, Guardicore
Singulariteam 6 200 Effective Space Solutions, Webydo, GeneSort, IntelAgent, TLDR, Yo

Notes: • Ranking includes Israeli and foreign VC funds that manage $50 million or more.
• Amount of capital managed by foreign VC funds is not relevant (N/R) for this ranking.


Most Active Micro-Venture Capital Funds in Israel – 2014

Ranked by Number of First Investments

Rank Micro VC Fund Total First Investments Total Capital Managed ($m) Portfolio Company Name


Wadi Ventures 7 10 53n53, i4drive, Invisu, IsItYou, Shoptagr, Zikk, Rompr
2 First Time 6 40 YuGo, eMaze, PlayBuzz, Talkspace, Wannabiz, AppMyDay
iVentures Asia 6 N/R Fulcrum SP Materials, Geneformics, imVision, MobileOCT, Saguna, Silentium
3 Jumpspeed 5 5 Curiyo, EverMinder, RoadShows, Breezometer, TaskCurrent
Janvest 5 N/R Cronus, Dove, Lingacom, SeatID, Unomy

Notes: • Ranking includes Israeli and foreign micro VC funds (managing under $50 million in capital).
• Amount of capital managed by foreign micro VC funds is not relevant (N/R) for this ranking. (IVC 10.02)

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11.3 JORDAN: The Middle East’s Next Nuclear Power?

David Schenker wrote for the Washington Institute on 28 January that in the face of stiff opposition and ongoing economic and security challenges, Jordan may delay its decision on building nuclear reactors for now, but energy shortages could force its hand in the longer term.

The Kingdom of Jordan has for more than a decade watched near-continuous turmoil swirl around its borders — an American invasion of Iraq on one side, an Israeli war in Lebanon on another and a Syrian civil war to the north that has seen ISIL flourish. For much of that decade, while Jordan absorbed refugees and was targeted by terror, it largely escaped the first-hand effects of war itself. The killing of one of its pilots by IS and the Jordanian response represents a new chapter in Jordan’s perpetual struggle against the militants on its borders. Over all of these regional challenges has hung another dark cloud — the fear, uncertainty, and tension that’s sprung from Iran’s secret nascent nuclear program.

Even as Western attention has focused all around Jordan — and especially on the nuclear negotiations with Iran — in a little-noticed series of moves, the Kingdom’s been edging closer to going nuclear itself. In fact, the Kingdom of Jordan, Washington’s most reliable Arab partner, is the latest Middle Eastern state considering nuclear energy that is refusing to relinquish its right to enrich.

That “right to enrich” uranium has proved to be one of the key sticking points in the Iran nuclear talks and was at the top of the list of why Washington and Tehran missed and subsequently extended their late November deadline to reach an agreement regulating the theocracy’s nuclear program.

To prevent proliferation, the US has long held that Middle Eastern states seeking nuclear energy must forego the right to enrich nuclear material. The principle of no-enrichment has underpinned the so-called “gold standard” of US-bilateral nuclear agreements. While this standard does not uniformly apply outside the region — Washington’s 2014 Agreement on Peaceful Nuclear Cooperation with Hanoi included no such stipulation — in its December 2009 agreement with the US, the United Arab Emirates acquiesced to forego enrichment and reprocessing of spent nuclear fuel.

Jordan and Washington have been discussing nuclear cooperation for some time, but the conversation gained urgency following the 2011 Egyptian revolution — and the subsequent and repeated destruction of the Sinai natural gas pipeline — when the Kingdom lost its most consistent source of energy. In 2013, these disruptions resulted in a $2 billion, or nearly 20%, budget deficit.

Over the past four years, the Kingdom has increasingly focused on nuclear energy, in particular the construction of two 1000-megawatt power plants, to fill this gap. By 2030, Jordanian officials estimate nuclear power will provide 30% of the state’s electricity.

Amman’s proposed nuclear facilities have met with opposition both at home and abroad. Washington’s stated opposition to the program revolves around enrichment. Jordan’s resolve to maintain this right has stymied efforts to reach a “123 agreement” governing US international nuclear cooperation. The Kingdom, which has no oil, has significant deposits of uranium ore – reportedly 35,000 tons or enough to last Jordan 100 years – and is hoping to commercially exploit the resource.

Israel, too, has taken issue with Jordan’s nuclear ambitions, primarily due to concerns about safety. One of Jordan’s proposed nuclear plants, at least initially, was slated to be built in the Jordan River Valley, a major earthquake fault line. According to a US diplomatic cable disclosed by WikiLeaks, Israel highlighted these apprehensions during a meeting with Jordanian officials in 2009 – two years before the Fukushima Daiichi catastrophe – only to have the Jordanians respond by citing Japan as an earthquake-prone country that builds safe nuclear reactors.

The biggest opposition to Jordan’s nuclear project, however, is domestic. It’s not difficult to see why. To start, one of the proposed plants is slated to be built in the heartland of the Bani Sakr, Jordan’s largest tribe. A charismatic young parliamentarian named Hind al Fayez, who hails from the tribe and happens to be married to a prominent local environmental activist, has adopted the no nukes agenda as her cause célèbre. In May 2012, she spearheaded a successful vote in parliament to suspend the program.

Among other concerns, Al Fayez questions how a state with such little water will be able to cool a reactor situated more than 200 miles from the shoreline and whether Jordan has sufficient human capital (i.e., enough nuclear physicists) to safely operate the facilities. She has also expressed dismay with the $10 billion price tag, a sum roughly equivalent to Jordan’s total 2013 annual budget.

Refuting the critics is Jordan’s Atomic Energy Commission Chair Khaled Toukan, who holds a Ph.D in Nuclear Engineering from Massachusetts Institute of Technology. Toukan is an impressive government advocate for the project.

No access to water, Toukan says, no problem. Like the three nuclear power plants in Palo Verde, Arizona, Jordan will use wastewater from the nearby Khirbat al Samra sewage treatment plant to cool the blistering reactors. The second reactor, closer to the port of Aqaba, will utilize water pumped from the Red Sea — easing Jordan’s water crisis through desalinization.

A dearth of local nuclear technicians? Not for long, says Toukan. The Kingdom is building a research and training reactor, recently established an undergraduate nuclear engineering program, and has sixty-one nationals currently enrolled in graduate programs in nuclear engineering and related fields abroad. As for the financing challenge, according to Toukan, Russia — which is presently slated to build the reactors — will fund and own 49.9%, leaving the Government of Jordan to finance the remaining and controlling share.

While Toukan’s answers are authoritative, they have not yet succeeded in convincing Jordanian skeptics. Perhaps that’s because serious safety problems emerged at Palo Verde in 2013. Or maybe Toukan’s unsubstantiated 2014 claims before parliament – that radiation leaks from the Israeli nuclear reactor at Dimona were resulting in increased incidences of cancer in the Kingdom – have further soured Jordanians on nuclear energy. It’s also possible that heightened fears of terrorism fueled by the recent territorial gains by IS are dampening enthusiasm for the project.

Last year, Hind Al Fayez said “They’ll build that plant over my dead body.” A year on, her hostility toward the program has not noticeably diminished.

To be sure, Jordan needs energy. Indeed, the requirement is so acute that months ago the palace ignored significant domestic disapproval and signed up to a 15-year $15 billion deal to procure natural gas from Israel (Amman has temporarily frozen negotiations as Israel deals with anti-trust concerns in its offshore gas sector). While important, however, the agreement is insufficient to meet the Kingdom’s requirements in the decades to come.

In the face of continued foreign and domestic opposition, it isn’t clear that Jordan will actually proceed with the nuclear option. Today the Atomic Energy Commission is calling nuclear power “a strategic choice,” but with nearly a million Syrian refugees in the Kingdom, a stumbling economy, a rising threat of terrorism on the home front and the IS, King Abdullah could punt, delaying a decision — and avoiding confrontation with Washington — for the indefinite future. Given the ongoing challenges, for the time being at least, no nukes should be a no-brainer for the Kingdom.

David Schenker is the Aufzien Fellow and director of the Program on Arab Politics at The Washington Institute. (TWI 28.01)

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11.4 IRAQ: Iraqi Government Spends Millions on Medical Treatment Abroad

Adnan Abu Zeed posted on Al Monitor on 5 February that the coordinator of a consulting firm specializing in providing medical treatment in India announced on 15 November on his Facebook page that he was coming to Iraq and provided his phone number so people could contact him and make arrangements for medical treatment. Al-Monitor tried calling on numerous occasions, but no one answered.

In the midst of a medical crisis forcing Iraqis to travel to various countries, most frequently India, to receive treatment, Iraqis have lost faith in the country’s medical services, which they see as lacking adequate technologies and thus proper care. They are therefore seeking treatment abroad in neighboring countries, including Jordan, Iran and Turkey. Indian hospitals, however, are the big winners in the competition to woo patients, due to their lower cost, followed by facilities in eastern European countries.

Although Iraqis have valid reasons for seeking treatment abroad, the sector providing it is full of corruption, most notably favoritism. An administrator at Hilla General Teaching Hospital who requested anonymity told Al-Monitor, “Doctors have received financial compensation in exchange for granting patients reports indicating their need for treatment abroad, despite the fact that their medical condition did not require it.” According to the administrator, “Private offices calling themselves treatment-abroad consulting firms have established extensive networks with specialists and private and state hospitals to amass profits at the expense of the truth.”

Young Mou’mil al-Khafaji from Babylon published a picture of himself on Facebook and asked his friends to “pray for his recovery from ‘kidney failure,’” which Iraqi doctors diagnosed him as having. His father, Makki al-Khafaji, told Al-Monitor in a phone interview, “It was not my intention to travel to India for medical treatment, but social pressures drove me to seek confirmation of [my son’s] condition and forced me to pursue treatment abroad. The process was easy. Dozens of people traveled there before me and supplied me with the names of consulting firms and translators. [They] find patients for foreign hospitals, which they actively promote.”

Saeed Moheisen from Karbala is one of many Iraqis planning to travel abroad for treatment in India. He told Al-Monitor, “After comparing the costs of a knee replacement, I chose Apollo Hospital in the Indian capital, New Delhi, as it charged half the $10,000 price of a Jordanian hospital.”

Given the hundreds of advertisements and posters that dot Iraq’s cityscapes and social networking sites offering services for medical treatment abroad, one can infer that the medical tourism phenomenon has mutated into a commercial endeavor reeking of illegal or questionable profiteering. Yet, the state is encouraging these practices by allocating funds to finance the treatment abroad of cases lacking adequate local avenues for care. After medical consultations to determine whether a case is particularly difficult, a committee decides whether the afflicted person should receive state funding for treatment elsewhere.

Baghdad International Airport employee Abbas al-Sultani told Al-Monitor, “Flights to India in particular are in great demand by people seeking treatment there. There is one flight that departs Baghdad daily to India and most passengers on that flight are seeking medical treatment.” Abbas said that his assertion was based on “passenger statistics and daily observation at the airport.”

Kazem Shaker, a doctor from Babil, attributes Iraqis’ rush to seek treatment abroad to “their lack of confidence in the Iraqi medical sector.” In an interview with Al-Monitor, he said, “Even if the medical diagnosis were correct, and the available treatments adequate, people would remain unconvinced as a result of popular propaganda in favor of traveling abroad.”

Shaker further said that bolstering this feeling was the “collapse experienced by the Iraqi medical sector since the 1990s as a result of successive wars and the decline in the numbers of Iraqi specialists since sectarian violence erupted in 2003.” He believes, “Above all else, the state must fight the [medical tourism] phenomenon instead of encouraging it by espousing the slogan of ‘treatment at home is best’ and preparing the infrastructure for that.” Shaker cited “kidney failure, organ transplant, cancer, open heart surgeries, tumors, coronary artery transplant surgery and spinal deviations” as among the diseases considered difficult to treat” in Iraq.

Halim Hassan, from Najaf, told Al-Monitor, “Bribery plays an important role in obtaining financing for treatment abroad.” He claimed, “An intermediary demanded $500 to arrange for [my] trip abroad.”

As news spread about the rampant corruption in obtaining approval for treatment abroad, the Ministry of Health felt compelled to defend its “Treatment for Iraqis in India” program and deny any issues. The ministry spends millions of dollars a year on treatments abroad. Given this, Hassan said, “It would have been better to spend these exorbitant amounts on building hospitals and medical facilities.”

Latif Hassan, a sociologist from Najaf looking into the growing phenomenon of local residents seeking treatment in India, told Al-Monitor, “Promoting treatment abroad is a deliberate campaign to undermine and belittle national health services at the hands of companies and offices making huge profits from their investments in the sector.” (Al Monitor 05.02)

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11.5 UAE: Abu Dhabi Year in Review 2014

The Oxford Business Group observed that despite a sharp downturn in oil prices in the latter part of the year, Abu Dhabi’s economy maintained its solid pace of growth in 2014. Strong fiscal reserves, a low breakeven price of oil and an increasingly diversified economy should ensure expansion is maintained in 2015, though possibly at a slower rate than in past years.

In December, the Abu Dhabi Department of Economic Development projected an average rate of growth of 5.5% for 2014 – 18. A month later, Standard Chartered Bank put its figure for 2014 growth at 4.5% and projected a slowdown this year to 3.8%, citing the expected contraction in the oil sector.

The uncertainty over oil will weigh on Abu Dhabi’s economy, though strong state reserves will ease pressure on the government, which has committed to maintain spending levels and to continue with its program of infrastructure and industrial investment in 2015. With an estimated budgetary breakeven price below $60 per barrel, Abu Dhabi is less vulnerable to pricing fluctuations in comparison to other oil producing nations thanks to its accumulated extensive fiscal buffers, according to ratings agency Fitch.

Solid Bank Performance

Abu Dhabi’s financial services sector performed strongly in 2014, with a number of the emirate’s leading banks posting double-digit profit growth for the year. The National Bank of Abu Dhabi (NBAD), the second-largest bank in the UAE, reported an 18% rise in net profit to $1.52b in 2014, year-on-year (y-o-y), with a 28% jump in fourth-quarter profit. Abu Dhabi Commercial Bank, the third largest lender in the local market, posted net profit of $1.1b, up 20% on its 2013 results. Abu Dhabi Islamic Bank (ADIB) Group, the emirate’s largest sharia-compliant bank, reported a 20.7% rise in net profit to $476m y-o-y.

Strong liquidity is expected to sustain Abu Dhabi’s banks in 2015, with each of the ‘big five’ lenders posting a net profit in the first six months of the year. However investors will be waiting to see the effect of plummeting oil prices on first quarter results this year. A recent report by the IMF noted that banks in the region might struggle to diversify their credit portfolios due to the structure of the economies with non-oil sectors significantly linked to oil.

Despite high volatility in December across the region, the Abu Dhabi Securities Exchange (ADX) still finished 2014 in positive territory, rising about 5.5% during the year to reach 4,528.93 points, having shed about 11% in the last month of the year.

The ADX is looking at ways to diversify its range of investors this year by pursuing interest from foreign institutional investors whose numbers jumped from 380 in 2013 to 1,106 in 2014, thanks to the UAE gaining emerging market status in June. The exchange is also investigating ways to lure the country’s London-listed stocks back to Abu Dhabi through dual-listings.

Real Estate Growth Slows

After being muted for much of 2014, inflation began trending up towards the end of the year, finishing at 4.1%, according to the latest data by the Statistics Centre Abu Dhabi (SCAD). This increase in the cost of living is forecast to continue into the first quarter, with SCAD predicting inflation to reach 4.3% y-o-y by the end of March, with rises in utilities costs set to impact the consumer price index.

The real estate market remained active throughout the year, though growth tailed off in the latter part of 2014 in response to uncertainty over energy prices. House prices were flat quarter-on-quarter during the final three months of 2014, according to two property reports. Real estate consultancy JLL reported that apartment prices increased by 18% in 2014 while villa prices in the capital rose by 25%, most of which was achieved during the first half of 2014.

Rents in some top-end residential developments also climbed sharply during the year as the removal of the state-imposed cap on increases at the end of 2013 allowed owners to set rates in line with the market.

However, caps on mortgages which have raised the limits for minimum deposits – a measure taken by the UAE Central Bank to restrict market fluctuations – as well as higher transaction fees, may have helped cool investor enthusiasm and curbed price rises. It will be some time before the impact of lower oil prices and a possible deceleration in growth rates in the real estate sector become clear. (OBG 02.02)

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11.6 SAUDI ARABIA: How Will New Saudi King Handle the Economy?

Omar al-Mahboub posted on 29 January in Al Monitor that economists clarified that the custodian of the two holy mosques, King Salman bin Abdul-Aziz, has many economic and industrial files to handle. They underlined the big role he played in supporting the Saudi economy during King Abdullah bin Abdulaziz’s rule. Moreover, they indicated that while he governed the Riyadh emirate and was crown prince, he also led the development process in industrial and commercial sectors. He managed to achieve major accomplishments and build industrial cities that raised the industrial sector’s contribution to the national income.

Salman al-Jishi, the former chairman of the Industrial Committee in the Chamber of Commerce in Saudi Arabia’s Eastern Province, told Al-Hayat that one of the main economic issues that King Salman has to address is the diversification of income sources, instead of relying mainly on oil revenues, as is currently the case. Jishi pointed out that the second source of income must be the industrial sector, which is facing several obstacles, despite its quick development. This sector needs swift and decisive decisions.

Jishi also noted that there are many industrial cities in the kingdom, most notably the Jubail Industrial City, which has investments worth billions of dollars. Several areas in the kingdom can be turned into similar spots. One of the most crucial decisions that can be taken during Salman’s rule is uniting and reviewing industrial procedures in order to strengthen this vital sector and attract many foreign investments.

Jishi stated that the files suggested to Salman include starting a higher commission for small and medium enterprises. Many rules and regulations have been issued in this regard, but they haven’t become applicable yet. The middle-sized and small enterprises need a higher commission that deals with their affairs and increases their effectiveness and contribution to the national economy. Jishi noted that such a commission would carry out several tasks; notably facilitating the work of these facilities, providing subsidies, funding and training, and supporting emerging businesses. It’s noteworthy that these facilities account for about 93% of the total establishments in Saudi Arabia.

He added that these facilities suffer constraints and funding and organizational problems and noted that they must be supported, not to mention that their work must be organized. After all, they are quite weighty in global economies, especially since the kingdom only has new incubators created by small and middle-sized enterprises in some chambers of commerce. However, they are not up to the level that would provide comprehensive care to the owners of small and middle-sized enterprises.

Jishi pointed out that many small businesses begin their operations without preparing economic feasibility studies for their project. About 60% of them start without those studies, while 80% lack the basics of planning and suffer from problems in marketing and finance. What’s more, they conclude contracts and deals without consulting legal experts.

Jishi said: “82% of the small and medium enterprises have a due debt accumulation and most of them are pricing their products based on the prevailing market price. Nearly half of them suffer from a stock accumulation, and more than one third have an excess of liquidity that is not being employed. Some do not take bank loans to fund their activities and many have disputes.”

He noted that one of the most important issues that are being raised is technical education and training, and its partnership with the private sector, in terms of enhancing technical education methods. He added that there are promising job opportunities in the industrial sector, and a qualified technical staff needs to be graduated, to work in the large factories in the kingdom instead of relying on foreign labor in technical professions.

Faisal al-Quraishi, head of the Industrial Commission in the Eastern Chamber of Commerce and Industry, said one of the most prominent files in the industrial sector is “the industrial strategy,” which needs the right foundations in order for the industrial sector to be developed and to be a main source of income in the Kingdom.

He noted that a panel of experts in the cabinet is still examining the strategy that was submitted by the Consultative Assembly a long time ago, and stressed that if approved, there will be a quantum leap in the kingdom’s industrial sector, which will attract huge investments, create thousands of jobs, and thus largely reduce youth unemployment and create a new culture toward the industrial sector, whose promotion needs sharp decisions and significant capital. He added that Salman realizes the importance of this sector, and that at present the kingdom needs to diversify its sources of income, particularly since oil prices have declined.

Mohammad Jaafar, an economics professor, said that many economic files need to be tackled, and it is illogical to prioritize them according to specific order, because we are dealing with a diversified economy of a developing country. He added that a set of files needs to be worked on at the same time, including funding bodies, and the manufacturing industries associated with the most pressing national files, such as the housing file, including its impact on the reduction of the house’s final price.

He added that there are studies at the Ministry of Economy and Planning on the most pressing manufacturing industries, and they can be relied upon in the beginning in the establishment of factories that produce the products that are imported in large quantities and at high prices, before the domestic product becomes a priority thanks to its quality and competitive price. (Al-Monitor 29.01)

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11.7 MOROCCO: IMF Concludes First Review of the Precautionary and Liquidity Line

On 6 February, the Executive Board of the International Monetary Fund (IMF) concluded the first review of Morocco’s economic performance under a program supported by a 24-month Precautionary Liquidity Line (PLL) arrangement.

The PLL was approved in July 2014 in an amount equivalent to SDR 3.23 billion (about $5 billion or 550% of Morocco’s quota at the IMF). The access under the arrangement in the first year will be equivalent to SDR 2.9 billion (about $4.5 billion), rising in the second year to a cumulative $5 billion. Morocco’s first 2-year PLL arrangement was approved in August 2012.

The Moroccan authorities have stated that they intend to treat the arrangement as precautionary, as they have done with the 2012 PLL, and do not intend to draw under the arrangement unless Morocco experiences actual balance of payments needs from a significant deterioration of external conditions.

The PLL was introduced in 2011 to meet more flexibly the liquidity needs of member countries with sound economic fundamentals and strong records of policy implementation but with some remaining vulnerabilities.

Following the Executive Board discussion on Morocco, Mr. Naoyuki Shinohara, IMF Deputy Managing Director and Acting Chair of the Board, made the following statement:

“Despite headwinds from external environment, decisive policy action by the authorities has helped in rebalancing Morocco’s economy and in reducing fiscal and external vulnerabilities. Nonetheless, significant external risks remain and sustained implementation of reforms is essential to consolidate gains in macroeconomic stability and foster higher and more inclusive growth. The arrangement under the Fund’s Precautionary and Liquidity Line (PLL), which the authorities treat as precautionary, has supported the authorities’ efforts by providing an insurance against those risks.

“The fiscal deficit declined in 2014 and reached the authorities’ objective of 4.9% of GDP. Commendable progress was made in subsidy reform with the removal of subsidies on all liquid petroleum products, while support to the most vulnerable was expanded. The new organic budget law is expected to strengthen the budgetary framework once comments from the constitutional council have been addressed. The parametric reform of the public pension system is urgent to ensure the viability of the system. Continued tax reform is also important to bolster the contribution of the fiscal sector to growth.

“The current account deficit contracted significantly in 2014 while the reserve position strengthened, benefiting mainly from the rise in newly developed export sectors and a positive terms-of-trade shock following the fall in international oil prices. To sustain these gains, structural reforms to enhance competitiveness continue to be a priority. A transition to a more flexible exchange rate regime would also help. The business environment has improved but much remains to be done to enhance transparency and governance. The new banking law is welcome to support the continued soundness of the banking sector. The labor market needs further reform to help reduce unemployment.” (IMF 06.02)

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11.8 TURKEY: Turkey Year in Review 2014

The Oxford Business Group noted that for a regular star-performer among emerging markets, the Turkish economy had a modest year in 2014, with the rate of growth easing and the lira tumbling, though exporters managed to post record earnings despite weaker demand from some key markets.

Plunging oil prices may help Turkey’s economy this year, by further reducing the $76b trade deficit recorded in the first 11 months of 2014 and lowering production costs. At the same time, an anticipated US interest rate hike could lead to a renewed capital outflow at a time when many of Turkey’s key export markets in Europe are again teetering close to recession.

Growth Slips

Economic growth progressively slowed over the course of 2014, from a year-on-year high of 4.7% in the first quarter to a 1.7% expansion in the third quarter, missing expectations and reaching its lowest rate since 2012. A decline in agriculture production and cooling of household spending, which registered only a 0.2% increase at constant prices in the July to September term, were some of the contributing factors to the deceleration.

According to the Centre for Economics and Business Research (CEBR), Turkey will fall two rungs on the ladder of global economies to 19th place in 2014, mainly due to the depreciation of the lira, the report said. GDP is set to decline to $767b in 2014 from $827b in 2013, with this setting back the country from its goal of being one of the 10 biggest economies by 2023.

The easing in household spending paralleled a dip in consumer confidence in the latter part of 2014. In its December consumer sentiment survey, state statistics bureau Turkstat found the confidence index had fallen to 67.7 points, its lowest level since the beginning of 2010. This cooling of consumer sentiment (any figure below 100 indicates a pessimistic outlook) could impact the retail, real estate and manufacturing sectors in the coming year.

Another factor that could impact the economy will be the general election scheduled for June. While the period leading up to the poll may see increased state spending, which will flow into the economy and bolster growth, it could also result in uncertainty hitting the markets in the second quarter, at least until the outcome of the ballot is announced.

FDI, Exports Up

More positive news came from the flow of foreign direct investment, which was up 4.7% year-on-year during the 10 months of 2014 to $9.79b, according to the latest data issued by the Economy Ministry in December.

While foreigners invested heavily in property, spending well over $3b on real estate, there was also a solid increase in FDI for Turkey’s manufacturing sector, which attracted $2.3b, more than $1b up on the same period in 2013. However, total FDI is likely to come in short of expectations, after investment tailed off in the latter months of the year following $5.1b in the first four months of 2014.

Foreign trade was another bright spot, with exports hitting a record high of $157.6b, up 4% on the 2013 figure, according to a report released by the Turkish Exporters’ Assembly at the beginning of January. The automotive sector was the single largest contributor to overseas sales, generating $22.3b, a 4.5% increase on the previous year.

The export performance could have been even better but for a fall in trade with conflict-ridden Iraq and a 15% drop in exports to Russia due to an economic crisis triggered by European and US sanctions over events in Ukraine, as well as weakening demand in Europe.

Growth in foreign trade in 2015 will be in part dependent on a recovery in some of Turkey’s main markets. However the expected stronger performance of the US economy, which will have a knock-on effect on its trading partners, could help prompt a rise in demand for Turkish goods and services.

Currency Woes

The Turkish lira was shaky in 2014, having plunged to record lows in the opening and closing months of 2014. The currency closed out the year having lost around 15% against the dollar, two-and-a-half times the rate of devaluation from the preceding year.

The currency suffered from a loss of faith in Turkish markets at the beginning of 2014 by accusations targeting senior government ministers over alleged corruption.

Concerns over political instability pushed the lira to around 2.4 to the dollar in December as the US currency enjoyed a surge in value and emerging markets experienced an outflow of capital amid fears of a spillover from the collapse of the Russian ruble. With forecasts that the dollar will continue to gain value as the US economy regains momentum, it is likely the lira will lose further ground in 2015.

In response to the drop in the lira early in the year, the Central Bank more than doubled its key overnight rate from 4.5% to 10% in January, a move aimed at reversing a tide of capital outflows. Despite Central Bank efforts, inflation remained persistently high over the course of 2014. However, indications at the end of the year show that inflation could be easing back, a result of falling oil costs, with the December figure down month-on-month. More importantly, as oil prices continue to plunge, inflation could cool further in 2015. (OBG 29.01)

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11.9 TURKEY: Turkey’s Arms Procurement Raises Questions

Metin Gurcan posted in Al Monitor on 27 January that the Executive Committee (EC) of the Defense Industry, the highest decision-making body on arms procurement in Turkey, held its first meeting of 2015 last week under the chairmanship of Prime Minister Ahmet Davutoglu. Ambitious and costly projects approved were trumpeted as further steps toward “new Turkey.”

In the old days, news of EC meetings did not really interest the man in the street. But in recent years the Justice and Development Party (AKP) government’s frequent references to defense industry projects in its political discourse and boasting of grand successes achieved worthy of a global power in the making have made them newsworthy. Inauguration ceremonies for new projects that are public relations spectacles that the Turkish people enjoy are now a reality of that “new Turkey.”

This also explains why Davutoglu reserved most of his 13 January parliamentary speech to the EC meeting. This is how he explained the EC decisions: “The defense industry is henceforth national and will remain national. It will be the basis of our national destiny. In old times, never mind Turkey even dreaming of making its own tanks and its own planes; we used plead for donations to buy the weapons other countries discarded. For tank modernization we needed Israel. Now we have a Turkey that won’t bow to others with its own national defense industry. This is the new Turkey.”

What was decided by the EC?

The first details of Turkish Fighter Experimental Project (TFX) were revealed after the EC meeting. The committee decided to proceed with the FX-1 model that was initiated by Turkey’s TUSAS and TAI companies for which Swedish company Saab provided the design at a cost of $20 million. FX-1 will replace Turkish air force’s aging F-16s and will be deployed with the F-35 fighters Turkey is thinking of purchasing. The meeting stressed that the FX prototype that was planned to fly on the 100th anniversary of Turkey’s independence in 2023 will be more expensive than similar planes, but was preferred because it will be made locally.

In Ankara corridors, it is said that President Recep Tayyip Erdogan sees this project as “Turkey’s prestige project.” But it has to be noted that the project is causing concerns in Turkey’s defense bureaucracy because of potential problems that it will face in its exports because of its high cost. There are serious questions whether this is an appropriate, profitable project for the country. Some sources say although the public is told that is a “100% national project” it is practically impossible move ahead with the project without the support of foreign defense industries during prototype development.

Another decision of the EC was to order four more of the controversial new generation F-35 Joint Strike Fighter in addition to two already ordered. The F-35 is produced by a consortium Turkey has joined.

The decision to mass produce the national infantry rifle (MPT-76) came about because 500,000 G-3 infantry rifles in the Turkish Armed Forces inventory have completed their useful life. The EC decided to replace the G-3 in phases with a $300 million project. In the first phase, state-owned Machinery and Chemicals Industry (MKE) will produce 35,000 7.62 mm MPT-76 rifles. It must, however, be noted that the MPT-76 rifle project that has been dragging on for three years is not actually a local design but a copy of the German HK 416 rifle. Also the decision of the National Defense Ministry to ignore Turkey’s private weapons manufacturing sector and award the tender directly to MKE was a subject of polemics.

Procurement of five more CH-47F Chinook helicopters

The EC took some important decisions on the project begun in 2006 to meet the heavy helicopter needs of the Land Forces Command and Special Forces Command. Accordingly, Turkey will order five CH-47F Chinook helicopters from Boeing to increase its order of heavy helicopters to 11. Of the six helicopters procured with the first package, five are to be allotted to the army and one to special forces. The first order is going to cost Turkey $400 million. With the new order, the total cost will be close to $1 billion.

Also attracting attention was the decision to configure specifications of one of the additional five helicopters for VIP transport. This Boeing Chinook, labeled “Flying Fortress” by the news media, is expected to be allotted to the Presidential Palace. But since 2003 Turkey has already purchased three S-92 VIP helicopters for senior state officials. In addition to the helicopters, the VIP airplane fleet was also expanded with four Airbus and Gulfstream planes with an expenditure of $540 million.

The EC meeting was expected to come out with a final decision on the Ballistic Anti-Missile Defense System (T-Loramids) that was first awarded to China Precision Machinery Import-Export Corp. but which was later said not to be the final choice. Turkey announced it was still negotiating with Eurosam, a French-Italian partnership that was the runner-up to the Chinese company for this $4 billion project. NATO had reacted angrily to Turkey’s selection of China as the contractor.

After the EC meeting, Davutoglu said, “We decided to continue talks with China as well as with other companies for another six months, or let’s say, until any of the companies comes up with an offer that will increase Turkey’s production share in the missile systems to a maximum level, as well being favorable on matters related to costs and the timing of their delivery.”

Of course, Davutoglu’s words can be interpreted as a stalling move to spare any harsh criticism of the AKP government over this critical project in the lead-up to the general elections.

As a whole, ambitious defense projects decided at EC meeting appear to have pleased the Turkish military and Erdogan. But according to journalist Lale Kemal, who follows Turkey’s defense sector closely, given the recent 14% decline in value of the Turkish lira against the US dollar, these decisions also mean monumental financial burdens for Turkey. Kemal thinks that all these projects are overly ambitious under current conditions.

The real issue underlying the execution of these projects, which will cost about $10 billion, is the deficiency of transparency and lack of competition in the awarding the contracts, and generally keeping the public in the dark by hiding behind the pretext of need for secrecy. Amazingly, there is almost no debate whatever in civilian society about the suitability of the choices made and the cost-effectiveness of projects approved. As such, these ambitious projects help to expand the ambiguous aura about them. (Al-Monitor 28.01)

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11.10 GREECE: Caa1 Government Bond Rating Review for Moody’s Downgrade

On 06 February, Moody’s Investors Service placed Greece’s Caa1 government bond rating on review for downgrade. The short-term rating remains unaffected at Not Prime (NP).

The key driver for the review for downgrade is the high level of uncertainty over the outcome of the negotiations between Greece and its official creditors over the terms of Greece’s support programmer. The outcome could potentially have negative implications for Greece’s ability to meet its funding and liquidity needs and for the probability of default on marketable securities. Moody’s government bond rating applies to marketable securities only.

Rationale for Review for Downgrade

Moody’s review for downgrade will assess the likely outcome of the negotiations recently initiated between the newly-elected Greek government and the Euro area authorities, as represented by the European Commission (EC) and European Central Bank (ECB). In particular, it will assess the Greek government’s ability to secure its medium term financing capability through an extension or amendment to its current support programmer with the EC, which would likely also allow Greek banks to maintain access to ECB financing facilities.

Greece’s new government has made clear its desire to materially change the terms of the existing support programmer with its official creditors. In Moody’s view, there is considerable uncertainty regarding the outcome of the ensuing negotiations, and the ability of the two sides to reach an agreement which secures Greece’s financing position.

The Greek government has been vocal about its political mandate to roll back austerity measures, reduce primary budget surplus targets and negotiate a debt reduction agreement with its official creditors. However, other Euro area governments are likely to resist such demands given their policy stance in recent years and because further debt relief could undermine debt consolidation efforts elsewhere in the Euro area.

If the Greek government is unable to secure an agreement with official creditors in the next few weeks, the probability of default on debt issued to the private sector would rise sharply. Without the assurance of an official-creditor programmer, Greece will find it very difficult to meet its near-term financing needs against the background of very low liquidity buffers.

Delays to official-sector disbursements of around €7.2 billion that were originally due last year have exacerbated Greece’s liquidity and funding challenges. In 2015, Greece has to repay around €16 billion in long-term debt, roll over outstanding T-bills of €14.6 billion and make around €4 billion in interest payments to private and official creditors. The first large repayment of €3.5 billion is due on 20 July, followed by another repayment for €3.2 billion on 20 August, both for marketable securities held by the ECB.

The first half of the year also requires the Greek government to roll over around €11.6 billion of T-bills, and Moody’s sees ECB support for the Greek banking sector as a key determinant of its ability to achieve the rollover. The ability of Greece’s domestic banks to continue to play the role of principal buyers of T-bills will rest on continued access to ECB facilities. The decision of the ECB on 4 February to lift the waiver of minimum credit rating requirements for marketable instruments issued or guaranteed by the Government of Greece is noteworthy. Although the ECB renewed access to the Emergency Liquidity Assistance (ELA), Moody’s believes that future access is likely to be contingent on i) Greece remaining within a formal programmer; and ii) the ECB concluding that the Greek banks remain solvent and thus retaining access to ELA provided through the Bank of Greece.

While the recent Asset Quality review by the ECB concluded that the Greek banks were in fact solvent, the prospect of an increase in risk of a default by the Greek government could cause the ECB to revise that view. Were it to do so, Greek banks could lose access to refinancing facilities, which will impair the government’s ability to roll over maturing T-bills.

In addition, Greece will need to depend on additional net T-bill issuance to meet its budgetary needs, but Greece’s agreement with its official creditors limits T-bill issuance to a maximum outstanding amount of €15 billion, which it is very close to reaching already. Moody’s notes that raising this cap will also require official creditor approval.

Even if an agreement is reached between Greece and the official creditors, Moody’s will assess the likely impact of the current stand-off, and any consequent changes to the Greek government’s fiscal and economic policy, on the country’s growth prospects and public sector debt trajectory in the coming years. Even though Greece’s general government debt-to-GDP ratio is the second-highest in Moody’s rated universe, 80% of the debt is held by official creditors (including the ECB) and therefore benefits from low interest rates and long maturities. Consequently, the debt affordability ratio – interest to revenues – has reduced to 9.2% in 2014 from 16.6% in 2011 and the average maturity of the debt is long, at around 20 years.

However, the country’s very weak recovery, estimated by Moody’s at 0.6% real economic growth in 2014 after a six-year contraction, and its inability to attract private investment, remain key credit weaknesses. Greece’s economic outlook faces risks to the downside in the event of continued uncertainty with respect to funding and liquidity, combined with the heightened political risks and the uncertain relationship with official creditors.

What Could Move the Rating Up/Down

Moody’s would consider downgrading Greece’s Caa1 government bond ratings were it to conclude, as a result of the review, that (1) an agreement with official creditors is not likely to be reached in time to enable the government to repay its creditors who hold debt on commercial terms; and (2) that the likelihood of a significant deceleration or even reversal in the implementation of the adjustment programmer would further hinder Greece’s growth prospects.

Although not likely in the near term, Moody’s could consider upgrading Greece’s government bond rating in the event of (1) an increase in the pace of fiscal consolidation and structural reforms; (2) continued economic growth and sustained large primary surpluses, both of which would support a continued decline in debt levels; and (3) more certainty and visibility on future external financial support and the political environment. (Moodys’ 06.02)

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