1: Israel Government Actions & Statements

1.1 Netanyahu Government Approves Bi-Annual Budget

The government of Prime Minister Netanyahu has approved the two-year budget proposal for 2011/12 and the new fiscal guideline proposed by the Ministry of finance, the Bank of Israel and the National Economic Council. The new fiscal guideline, whereby the growth in government spending will be subject to the debt:GDP ratio and economic growth in the previous decade, was approved unanimously. The vote is a political achievement for Minister of Finance Steinitz. However, there were six abstentions in the vote on the bi-annual budget, five by Labor Party ministers, the fifth abstainer being Likud minister Dan Meridor. Minister Steinitz believes that the bi-annual budget will enable the government to present a long-term plan, will maintain stability in the economy and will contribute to higher growth. In addition, after years in which government spending has not changed, the new fiscal guideline which will facilitate a correct balance between expanding infrastructures and public services, and economic growth. This guideline will ensure the maintenance of clear fiscal discipline and help reduce Israel's national debt.

The finance minister introduced a two-year budget for 2009/10 as part of the government's effort to cope with the effects of the global economic crisis and because the 2009 budget was not passed by the Knesset at the appropriate time. Since then, the first bi-annual budget has won praise from the IMF and the OECD. The government decided that the bi-annual budget would be introduced as a temporary measure, and that the matter would be reviewed in H1/2012. (Globes 04.03)

1.2 Bank of Israel Buys Dollars Again

On 16 March the Bank of Israel again bought $100 million, a day after a similar move. The shekel-dollar rate is currently NIS 3.7226/$. The Bank of Israel, headed by Governor of the Bank of Israel Prof. Stanley Fischer, intervened in the foreign currency market when the exchange rate fell to NIS 3.715/$. On 15 March, the Bank of Israel bought $100 million when the exchange rate hit NIS 3.71/$. This brings the bank's purchases over the past week to $400 million. The bank initially bought less than $50 million, through private brokers, not banks. Buying through brokers generally implies a smaller intervention. (Globes 16.03)

1.3 Brazilian President in Israel to Mark Mercosur FTA

On 15 March, Brazilian President Lula da Silva met with Israeli President Peres in Jerusalem and said that Brazil had given its final approval for a free trade agreement between Israel and the Mercosur bloc (Brazil, Argentina, Uruguay and Paraguay). Israel is the first country outside South America to implement a free trade agreement with the bloc, whose members produce over $3 trillion in GDP annually, and have a combined population of over 270 million. Peres and da Silva opened an economic conference for hundreds of Israeli and Brazilian business leaders. The FTA between Israel and Mercosur was ratified by both chambers of Brazil's Congress last fall as a consequence of President Peres' visit to Brazil. The agreement was given final approval right before Da Silva's current visit to Israel. When it comes into affect in April, the agreement is expected to rapidly increase the level of commerce between the two countries. The agreement takes 30 days to come into effect. Brazil is Israel's largest trade partner in Latin America and with the approval of the agreement trade is expected to increase by the billions of dollars, especially in the sectors of agriculture, education, science, medicine, space and will reinforce the mutual investments by both countries. (Globes 15.03)

2: Israel Market & Business News

2.1 TUV Rheinland and Standards Institution of Israel Sign Agreement on Cooperation

The Standards Institution of Israel (SII) and TUV Rheinland have reached an agreement on strategic cooperation. In this cooperation, the focus will be on testing and certification of electric products and components destined for the Israeli and global marketplace under the CB Scheme of the Worldwide System for Conformity Testing and Certification of Electrotechnical Equipment and Components (IECEE). Both parties hope for major synergies to emerge notably with regard to activities for the Israeli market and international projects, centered, for instance on renewable sources of energy. Established in 1945, SII is representing Israel on the international organizations for standardization such as ISO and IEC. The institution has a staff of more than 900 and generates turnover of about €45 million annually. SII incorporates Standardization, Testing, Certification and Training activities, under one roof and has laboratories in almost all technological areas, providing testing and inspection services to industry and commerce, as well as regulatory services to government. (TUV 09.03)

2.2 Todacell Secures Additional $1 Million Funding From Existing Investor Afterdox

Todacell announced an additional $1 million round of funding from existing investor AfterDox. Monies from this round of funding have been earmarked for sales and marketing, with five new sales offices opening in New York, Los Angeles, Toronto, London and Bombay. Todacell works with a select group of publishers including Fring, MobiLuck, Mocospace and TuneWiki. By limiting the range of publishers that the company works with, they are able to better optimize performance for each publisher. The limited list of publishers also ensures that advertisers know exactly on which publishers their campaigns will appear, bringing complete publisher transparency to the mobile marketing industry. Beyond advertising on traditional mobile phones, Todacell's ad network enables advertisers to reach other non-phone mobile devices, including hand-held gaming consoles by Nintendo, Playstation and Sega, and soon Apple iPad and Amazon Kindle. To date, Todacell has secured $2 million from AfterDox and others, including $350,000 seed funding from the Fore Group.

Ra'anana's Todacell (http://www.todacell.com) is a mobile display ad network for advertisers and publisher which facilitates optimizing publisher ad performance. The company's publisher-centric ad flow management technology analyzes publisher inventory and ad performance, enabling the optimization of their display ad inventory which results in more effective campaign results for the Todacell's advertisers. For advertisers and agencies, the company is a top-10 mobile ad network according to industry rankings which provides complete transparency and ensures that advertisers and agency planners know exactly where all of their advertising will appear. Publishers gain an ad network partner who takes the time to understand their ad inventory and users in order to run better-targeted campaigns which generate more ad revenue. (Todacell 09.03)

2.3 US' Naturalizer Shoes Chooses Papaya As Israeli Franchisee

Leading US conform footwear manufacturer Naturalizer has named Papaya Shoes its Israeli distributor, according to a Papaya press release. Naturalizer, which is owned by the Brown Show group, has an annual return of $2.5 billion. Sold in hundreds of stores across the United States, Naturalizer shoes, which offer fashionable designs in size 35-45 (EUR) shoes, are also sold in 20 other countries worldwide. The Israeli comfort footwear market is estimated at NIS 160 million a year. (Various 10.02)

2.4 H&M Opening In Tel Aviv Draws Big Crowds

Hundreds of shoppers waited in line on 11 March as the first H&M fashion store opened in Tel Aviv's Azrieli mall. People began arriving at 8am even though the store was not scheduled open until 11am. Swedish fashion brand H&M, owned by Hennes & Mauritz AB had promised free shirts to the first 200 people to enter the store and aggressive advertising of this paid off, resulting in the crowds. Israel's franchisee, the Horesh family, had already held an invitation only evening at the store for hundreds of selected shopped who reportedly bought hundreds of thousands of shekels in clothing. H&M's second Israel store will open a week later at the Malcha Mall in Jerusalem. The Jerusalem store was ready to open before the Tel Aviv outlet, but management decided to open the Azrieli Mall store first because of the greater publicity. (Globes 11.03)

3: Regional Private Sector News

3.1 Middle East Mass Transport Security Market Set To Experience Significant Growth

The mass transport security market in the Middle East has gained importance in recent years due to the growth in infrastructure and terrorist threat perception in the region. Metro, high-speed corridors and freight corridors are being built and most of the projects undertaken by the countries in the region are ambitious, significant and first of its kind. Mass transport security, in particular, has considerable growth potential, as most of the projects are planned for completion before 2018. New analysis from Frost & Sullivan (http://www.aerospace.frost.com), Middle East Mass Transport Security Market Assessment, finds that the market earned revenues of $7.6 million in 2009 and estimates this to reach $76.2 million in 2016.

Investment into transportation infrastructures is at present considered a status symbol in Middle East. Rail infrastructures worth $100.00 billion are either planned or being constructed in the Middle East. The initiation of the Gulf common rail project is expected to boost cooperation amongst the Gulf countries. However, the restraints for the Middle East mass transport security market include reluctance to spend on security systems and a lengthy sales cycle. The Middle East mass transport security market participants should provide ‘specific solutions' because of the open and fragmented environment prevailing in design structures of mass transports unlike other forms of transportation. Therefore, open architectures and presence of multiple entry and exit points for passengers are making the security manufacturers design unique solutions for mass transports. (BI-ME 15.03)

3.2 American Designed, Amman's The Galleria Now 35% Complete

The Galleria, a retail-driven, mixed-use project in Amman's pedestrian-oriented Swefiyah District, is now approximately 35% complete and on track for its opening in fall 2011. West Los Angeles-based Nadel Architects designed the $85.8 million project. The first-of-its-kind for the country, the 10-story, mixed-use center includes two large atriums at the center of approximately 560,000 square feet of mid-level retail tenants, including large and small fashion retailers, a supermarket, big-box consumer electronics store, food court, cafes and restaurants; 6,000 square feet of top-floor office tenants; and 430,000 square feet of below-grade parking that will house 1,200 cars and support facilities. Although nearby street-level retail buildings have commercial uses on higher floors, this is the first mixed-use complex of this magnitude in the country. The architects conceived of the “erosion” of the building mass, designing meandering walkways through the atrium as if the naturally fluid pedestrian paths wore down the buildings like water erodes rock. In addition to its purpose as a retail center, The Galleria provides a much-needed pedestrian connection between adjacent Zahran Street and the Swefiyah District. The project's focus on pedestrian access reinforces the character of the district, helps The Galleria act as a good neighbor to existing nearby retail and has the potential to spur the transformation of other districts with modern urban planning initiatives. (Nadel Architects 11.03)

3.3 GCC Fragrance Market Estimated At $3 Billion

The market for fragrances in the GCC is estimated at $3 billion annually, accounting for approximately 20% of the world market according to a recent study. On top of this, the per capita spending in cosmetics and perfumes is said to be one of the highest in the world. The UAE, where tax-free incomes are the norm, is projected to see a surge of 25% in its population from the current 6 million to almost 7.5 million by 2010. Concurrently, the purchase of beauty products in the UAE has been expanding at over 12.5% per year, accounting for a 30% expansion in beauty and perfume retail space in the past three years. (BI-ME 15.03)

3.4 American Eagle Outfitters Opens First Stores Outside North America in the Middle East

Pittsburgh's American Eagle Outfitters announced the opening of its first stores outside of North America. This March American Eagle Outfitters stores opened in Dubai and Kuwait City. This Middle East launch comes in cooperation with M.H. Alshaya Co., the leading retailer in the region, which last year signed a franchise agreement to open a series of American Eagle Outfitters stores in international markets over the next several years. A new 9,400 square-foot American Eagle Outfitters store will open in Dubai on 16 March at a premier new location at Mirdiff City Centre. An 8,500 square-foot store will open in Kuwait City on 25 March at the Avenues Mall. Both stores will feature the casual lifestyle of the brand and provide the same high-quality, on-trend clothing and accessories at affordable prices featured at American Eagle Outfitters stores throughout North America. Also available at the new stores will be the latest collection of aerie, the comfortable loungewear and intimates brand by AEO. M.H. Alshaya Co. is a leading international franchise operator for over 50 of the world's most recognized retail brands, including Express, Starbucks, H&M, The Body Shop, Foot Locker, Mothercare, Debenhams, River Island and Boots. M.H. Alshaya Co. stores can currently be found in 16 markets across the Middle East, North Africa, Turkey, Cyprus, Russia, Poland and Egypt. More recently, the company launched operations in Slovakia, Czech Republic and Hungary. (American Eagle 11.03)

3.5 Qatar Airways Doubles Fleet To 80 Aircraft

On 6 March, Qatar Airways announced its fleet size had grown to 80 aircraft, double the size of five years ago. The airline has inducted its 15th Boeing 777 into the fleet and maintains a delivery schedule of more than one new aircraft a month, retaining its status as one of the world's fastest growing airlines. The newest Boeing 777-300 Extended Range aircraft will serve long haul routes from the airline's operational hub of Doha, capital of the State of Qatar. The aircraft is part of a larger order for more than 220 different aircraft worth over $40 billion placed in recent years. With the fleet set to grow to 120 aircraft by 2013 and current global network of 86 destinations also expected to rise to 120 by 2013, Qatar Airways is continuing its expansion strategy with vigor. (BI-ME 06.03)

3.6 Istithmar Hands Over Prime New York Times Square Property To Danske Bank

Istithmar World, a unit of Dubai World, has handed over a prime New York residential building to Danske Bank after failing to pay its mortgage. Istithmar bought the building, formerly known as the Knickerbocker Hotel, in New York's Times Square for $300 million in June 2006. Danske, Denmark's largest lender, said LEM Mezzanine took control of the Union Square hotel from Istithmar in December for $2 million in a New York foreclosure sale. Last month Dubai World replaced the chief executive of its Istithmar World with the unit's chief investment officer, as the group focuses on managing its investments rather than making new acquisitions. Istithmar is one of the flagship companies of state-owned Dubai World, which has been hit hard by the global financial crisis, and is in the process of restructuring some $22 billion of debt. (BI-ME 04.03)

3.7 Convenience Store Giant Circle K Enters UAE Market

Circle K, the Canadian-based convenience store retailer with more than 3,800 stores worldwide, has signed a deal to bring its brand to the UAE. Elaph Special Acquisition Company (ESAC), the holding company of Twenty Four Seven, announced the signing of a master license and franchise agreement to own and operate Circle K-branded convenience stores in the UAE. Under the agreement, the regional headquarters will be established in Dubai, with the option of expansion into Oman, Bahrain, Qatar, Jordan, Kuwait and Saudi Arabia. Owned by Canadian-based Alimentation Couche-Tard, Circle K is one of the most successful operators of convenience stores and has a presence in North America, China, Japan, Indonesia, Vietnam, Hong Kong, Guam and Mexico. The financial terms of the agreement have not been disclosed. (AB16.03)

4: Clean Tech & Enviromental Developments

4.1 Korean Delegation in Israel For Cleantech Collaborations

In early March, a large and high-ranking delegation from South Korea was in Israel for a comprehensive, 10-day tour of leading companies in the field, government ministries and academic research centers. The 37 person Korean delegation includes representatives from 22 companies, led by the Korean Ministry of Foreign Affairs and Trade Ambassador for Energy and Resources. They came to examine the possibilities for economic cooperation between the two countries on renewable energy. The delegation will visit 13 Israeli companies, as well as Tel Aviv University, the Technion - Israel Institute of Technology, and the Ministry of National Infrastructures, the Ministry of Industry Trade and Labor, and the Ministry of Foreign Affairs. On 16 March the delegation visited electric car developer Better Place's visitors' center, where the delegation members drove the cars and were very impressed by the progress achieved. South Korea, the world's fifth-largest car manufacturing country, has tremendous potential to take part in the project. During the visit, the option of collaborating with the Korean industry was raised. Possibilities included automobile manufacturing, producing the batteries, and battery charging and replacement stations. (Globes 11.03)

4.2 Eilat To Have Israel's Largest Wind Farm

Eilat Ashkelon Pipeline Company (EAPC) is initiating the construction of a wind farm for the generation of electricity in the Eilat Mountains. The wind farm will be largest of its kind in Israel, generating 50 MW and will cost €50-60 million to build. The project could be built within 2-3 years, unless there are unexpected bureaucratic delays. The EAPC wants to build the wind farm using Israeli technology and equipment and that it was in negotiations with two companies for this purpose. The Israel Civil Aviation Administration is examining the plan because of the proposed site's proximity to air lanes. If it approves the plan, EAPC will build a wind measurement station at the site and open negotiations with equipment vendors at the same time. EAPC's entry into the wind farm market could face regulatory obstacles, since it is a government company supervised by the Ministry of Finance. EAPC executives do not believe that the ministry will frustrate the project, in view of the importance of developing renewable energy projects. (Globes 16.03)

4.3 Sunday Energy to Collaborate with Schneider Electric

Sunday Energy has signed a cooperation agreement with France's Schneider Electric to build up to 200 MW of mid-sized photovoltaic arrays in Israel. Schneider Electric Israel Ltd. will carry out the projects. The agreement with Schneider is in line with the regulation requiring Israeli companies to work with experienced foreign companies in the field for the installation of mid-sized photovoltaic arrays. The work will be performed by Schneider's local branch, Schneider Electric Israel. Schneider Electric has 100,000 employees worldwide and had over €15 billion revenue in 2009. It was involved in the construction of 200 megawatts of photovoltaic arrays worldwide last year. Ra'anana's Sunday Energy (http://www.sundayisrael.com) is a photovoltaic array integrator and solar energy service provider in Israel. (Globes 16.03)

5: Arab State & Pakistani Developments

5.1 Jordan Registers Second-Highest GDP Growth Among Arab States Since 1960

Jordan ranked second among Arab countries in terms of growth in the gross domestic product (GDP) over the past 50 years, according to a new study by the Arab Fund for Economic and Social Development (AFESD). The report showed that the Kingdom achieved an average annual GDP growth of 6.2% between 1960 and 2008. The research placed Oman first with 9.6% GDP growth, followed by Jordan, the United Arab Emirates with 6%, Libya with 5.8%, Syria with 5.7% and Egypt and Qatar with 5.4% each. Jordan and some other Arab countries, including Tunisia, Morocco, Egypt and Syria - where exports, tourism and capital inflows play a major role in the economy - faced a severe slowdown of economic growth as a consequence of the global financial crisis.

The study attributed the slowdown in Jordan's economy to a slump in international tourism - a sector that provides 420,000 jobs in the Kingdom - and to declining remittances from Jordanian workers abroad, saying that Jordan depends more than any other Arab country on expatriate remittances, which represent about 15% of the GDP. However, the report indicated that the impact of the global crisis on the Arab world was moderate compared to other regions, where growth was negative, jobs were lost by the millions, and savings of households lost most of their value. The AFESD urged Arab countries to create no fewer than 70 million new jobs over the next two decades - many more than it created during the past 20 years. The study stressed that cooperation and consultation at the regional level are essential for genuine economic growth and sustainable financial stability, saying that the global economic crisis showed that no country is rich or independent enough to act alone. (BI-ME14.03)

5.2 Jordan's Exports Increase By 4.6% In January

Jordan's Department of Statistics announced that national exports have increased by 4.6% in January 2010, while imports increased by 3%, official data showed on 15 March. The Kingdom's exports reached JD324.9 million in January compared with JD310.5 million in January 2009. The volume of total exports, including national exports and re-exports dropped by 4.9% to JD388.2 in the same month compared to JD408 million in the same period of last year. Jordan's imports increased by 3% to JD805.8 million in January compared with JD782.6 million in January of 2009. (Petra 15.03)

5.3 Some 25% of Persian Gulf Construction Jobs Delayed or Cancelled

About 48% of the Persian Gulf's construction projects are being executed while another quarter have been delayed or cancelled, according to new figures published on 10 March. Research company Proleads said there were around $500bn worth of building projects in the region. Of these, it said 48% were being executed, 27% were in the pre-execution phase while 20% were on hold and 5% had been cancelled. Its research showed that the construction sectors in Saudi Arabia and Qatar had been least affected by the global downturn, led by government-related investment.

The Saudi government has prioritized job creation. This in turn requires heavy investment in infrastructure such as power, water, utilities, transport and healthcare. In addition, with the oil price comfortably above $70 and forecast to remain there, many infrastructure projects are certain to come to fruition. Therefore, the medium term outlook for Saudi Arabia in particular is positive. Qatar, with massive revenues from gas, has probably the least worries about liquidity in the GCC. Isolated by long term pricing agreements, Qatar remains unaffected by oil commodity fluctuations. Moreover, the Qatari government is working to ensure its infrastructure will rival the best in the region. However, despite the fact that the UAE had been worst hit, it still had the highest levels of construction work. Thanks to Abu Dhabi, 2010 will be a lucrative year for the Emirates. Longer term demand may take a few years to catch up with increasing building supply coming onstream. (Proleads 10.03)

5.4 MENA Utilities Industry in a State Of Growth

The Middle East and North African utilities industry is in a state of growth, global investment has meant that the Middle East is officially on the road to recovery. Investment banks are increasing their spending within the utilities sector. Maintaining the correct balance between supply and demand has meant large scale investment such as the recent $1.8 billion going to the SEC (Saudi Electric Company) and more than $5.4 billion is being spent in Dubai to increase their power capacity from 6000MW to 9800MW by the end of 2011. The MENA region is already one step ahead in harnessing the power of its abundant sun. Global investment is coming in thick and fast entering the multibillion dollar solar market and the returns so far have been incomparable. The World Bank plans to invest more than $5.5 billion in solar energy projects around the MENA region through there Clean Energy Fund (CTF) in a hope to accelerate the global deployment of PV (Photovoltaic's) and concentrated solar power generation facilities. New technology is also key in the growth of the MENA energy markets. The UAE, Oman, Saudi Arabia, Kuwait, Qatar and Bahrain are close to achieving their collective goal of a joint power grid for all six member states. The grids aim is to supply adequate power even in an emergency situation and to reduce the cost of power generation to all six states. (BI-ME 09.03)

5.5 Qatar Professionals Lead in Arab Mideast Salaries

Qatar has eclipsed the UAE for biggest salaries in the Arab world, with more than a third of Qatar's professionals (39%) earning between $3,001 and $8,000 a month. This figure was 37% of professionals in the UAE, said the research conducted by job site Bayt.com, in conjunction with regional research specialists YouGov Siraj. Unsurprisingly, the Gulf region has the highest number of professionals earning top tier salaries: 12% of professionals in Qatar earn more than $8,000 each month, as do 10% of professionals in the UAE, 7% in Bahrain, 6% in Kuwait and 3% in Saudi Arabia and Oman, the study said.

As in the previous study, the lowest paid residents in the region are in the North African countries of Algeria, Egypt and Morocco - although the total number of professionals receiving the lowest salary level has dropped in each country. This year, 50% of residents in Algeria earn under $500 per month compared with 54% last year. In Egypt, 41% of professionals receive up to $500 per month, along with 40% of professionals in Morocco, while 2% of professionals in Morocco earn more than $8,000 per month, as do just 1% of professionals in Egypt. Salary satisfaction has fallen across the Middle East by 2% in terms of professionals highly satisfied with their salaries. Matching the regional average, just 5% of residents in the UAE are highly satisfied with their remuneration, according to the study. The picture around the rest of the Persian Gulf and wider Middle East is similar - with a peak of 7% of professionals highly satisfied with their salaries in Qatar, and a low of just 2% of professionals highly satisfied in Syria. (TradeArabia 07.03)

5.6 The Iraqi Dinar Has All Reasons To Grow Stronger

In early March, Iraqi Prime Minister al-Maliki said week that the process to re-evaluate the Iraqi dinar has to do with economic conditions which have to be strengthened. "The Iraqi dinar has all the reasons to grow stronger thanks to an increase in revenues and development of the economy," Maliki said in response to some questions through the National Information Center. "The government would not rush matters but would rather work on finding all the guarantees to render this measure a success. The Central Bank of Iraq (CBI) is currently entrusted with drawing up a study on the whole issue and would give its decision soon," said the Iraqi premier. The Iraqi dinar's exchange rate is suffering from low value against foreign currencies as a result of decades of wars and economic embargo that brought the local currency's exchange rate to the rock bottom from three dinars per dollar in the late 1970s and 1980s to 3,000 dinars per dollar after the 1990 invasion of Kuwait, followed by a 13-year crippling sanctions regime. The exchange rate fell even more after the 2003 American liberation to reach 1,170 dinars per dollar due to the CBICBI's policy of daily auction, in effect for more than five years now. The policy was lambasted by several economists on the grounds that these auctions do not give the real value of the country's local currency. (BI-ME 05.03)

5.7 Kuwait Retail Report Predicts Sales Will Grow to $59.27 Billion by 2014

Research and Markets(http://www.researchandmarkets.com) "Kuwait Retail Report Q1 2010" predicts that the country's retail sales will grow from $41.59bn in 2009 to $59.27bn by 2014. Key factors behind the forecast growth in Kuwait's retail sales are a favorable long-term economic outlook, a sophisticated consumer base and high levels of disposable income.

Kuwait's nominal GDP was $113.38bn in 2009, with 2009's decline of 2.4% expected to translate into growth of 2.0% in 2010 as the economy slowly begins to recover. Average annual GDP growth of 2.0% is now predicted by BMI between 2009 and 2014. With the population rising from its 3.2mn in 2009 to reach 3.5mn by the end of the forecast period, GDP per capita is predicted to rise by more than 53% by 2014, reaching $53,950. Approximately 80% of the Kuwaiti population are expatriates, while foreign workers crossing the border from Iraq also stimulate the retail market. In 2005, 73.8% of the Kuwaiti population was described by the UN as economically active, with 37.9% in the 20-44 age range, important to retail sales. By 2010, 74.6% of the population is expected to be active, while the proportion of those in the 20-44 age band is forecast to reach 39.4%.

According to Arabianbusiness.com, by 2010 the gross leasable area (GLA) in Kuwait's retail sector is expected to total 1.15mn m2, compared with the 345,000m2 in use in 2006. Property consultant Colliers International expects Kuwait to have the third -largest supply of retail space in the Gulf by 2010. According to BMI data, retail sub-sectors that are predicted to show strong growth over the forecast period include consumer electronics, with sales increasing from $0.68bn in 2009 to $0.95bn by the end of the forecast period, a rise of nearly 39%. Sales of over the counter (OTC) pharmaceutical products are predicted to increase by more than 36%, from $1.40bn in 2009 to $1.90bn by 2014. Automotive sales are forecast to rise by nearly 15%, from $3.31bn in 2009 to $3.80bn by 2014. (R&M 06.03)

5.8 Bahrain Oil Field Production Hits 11.75 Million Barrels

Bahrain Oil Field's total oil production was 11.75 million barrels last year, the National Oil and Gas Authority (Noga) has said. Noga also said it has set up a joint venture between the Bahrain government, US Occidental Company and UAE's Mubadala to develop petroleum production capabilities of Bahrain Oil Field. The company launched operations on December 1. According to data issued by Noga, Abu Sa'afah oilfield production reached 54.76 million barrels last year. Crude oil from Saudi Arabia totaled 81.895 million barrels, compared to 82.894 million in 2008. The slight decline was due to maintenance work at the refinery, it said. Oil supplied via pipeline to the refinery - consisting of Bahrain Oil Field production and oil imported from Saudi Arabia - was 94.224 million barrels last year, compared to 94.815 million barrels in 2008. Bahrain refinery production at 262,000 barrels per day (bpd) surpassed the refinery usual production capacity of 250,000 bpd. Petroleum derivatives production was 81.344 million barrels, compared to 81.594 million barrels in 2008. Gas production totaled 5434 billion cubic feet, compared to 538 billion cubic feet in 2008. (TradeArabia 14.03)

5.9 Qatar CPI Falls 5.7% in January

On 13 March Qatar announced that its deflation hit 5.65% year-on-year in January on a continued decline in rents, extending the series of consumer price falls. The global financial crisis slashed consumer prices across the Arab Gulf region last year from 2008 record peaks, with some oil producing countries such as Qatar and the UAE booking deflation in 2009. Consumer prices in Qatar, the world's largest natural gas exporter, fell 4.9% last year, marking its first full-year of deflation since 1993, after price growth peaked at record 15.2% in 2008. On the month, the consumer price index edged down 0.24%, after a decrease of 0.23% in December, falling for the eight month in a row, the data showed. Consumer prices in the cash-rich state are expected to rise this year helped by food prices, but inflation should stay at low single-digit levels although Qatar's economy should largely outperform the fellow Gulf Arab oil producers. The rents and energy item, which accounts for 32% of the basket, fell 1.4% in January from the previous month, after a 0.5% fall in December, the data showed. Transport prices, the second largest component, rose 0.3% month-on-month, down from a 1.3% increase in December, while food prices remained unchanged. Qatar is expected to show inflation of 3.5% this year. (Various13.03)

5.10 Overweight Make Up 75% of UAE's Total Population

Approximately 75% of people in the UAE are obese or overweight, and Emirati adults who are overweight or obese make up 34% and 36% of the total population respectively, it was revealed at the first Abu Dhabi Diabetes Congress. Factors contributing to this process include a great reduction in daily activity and an increase in obesity. Also, there is a lack of health education and prevention programs in the country. The UAE's population is approximately 3.4 million and of those, around 425,000 people from the ages of 20 to 79 in the UAE are currently diagnosed as having diabetes. That figure is expected to rise to approximately 501,000 in 2030. In 2010, the percentage of diabetes occurrence stands at 18.7 but that is expected to rise to 21.4% by 2030. In the Middle East and North Africa [MENA] region, 26.6 million people suffer from diabetes in 2010, according to the International Diabetes Foundation (IDF.) That figure is expected to jump to 51.7 million in 2030, which is a 93.9% increase. However, the total expenditure in the MENA region is only $5.6 billion [Dh20.56 billion], or 1.5% of the total global spending on the disease. The UAE spends approximately $1,067 yearly per person with diabetes, and there are 1,080 deaths that can be attributed to diabetes. (BI-ME 14.03)

5.11 Oman Inflation Climbs To Five-Month High

Oman's annual inflation accelerated to a five-month high of 1.7% in January on a rise in transport prices and rents, data from the sultanate showed on 14 March. The global downturn slashed price growth across the world's largest oil exporting region last year from record, double-digit peaks in 2008, with some countries such as the United Arab Emirates and Qatar experiencing deflation. Annual inflation in Oman started picking up in December, when it rebounded to 0.9% from a low of 0.8% in the previous month. It is still well below a record high of 13.7% in June, 2008. The CPI in the sultanate rose by 0.6% month-on-month in January, the fastest rise since August 2009, after a 0.2% increase in the previous month, the economy ministry data showed. Transport prices, which account for 22% of the basket, jumped 2.9% in January compared with the previous month, following a 0.2% rise in December. The rents and energy items, which has a similar weight, rose 0.8% after staying flat in the previous month. Food prices, which account for 30% of the basket, eased 0.3%, after increasing by 0.9% in December. Oman's consumer prices soared in 2008 on imported inflation as a result of the weak US dollar, which the rial currency is pegged to. Analysts have forecast Oman's inflation at 4.0% this year, after 3.4% in 2009. (Reuters 14.03)

5.12 Saudi Pharmaceuticals Expenditure to Hit $3.5 Billion By 2013

Pharmaceutical and healthcare spending in Saudi Arabia is expected to surge to $3.5 billion by 2013, driven by the growing healthcare demand of the country's sizeable population. The kingdom spent $2.65m in 2008 on healthcare, according to a report. Saudi Arabia's pharmaceutical and medical device markets, in particular, are expected to grow at a compound annual growth rate of 12% and 7% respectively until 2012. This growth is influenced in part by aggressive government spending as $16.3 billion has already been allocated for healthcare expenditure, representing a 17% increase from 2009, for various large-scale projects including new primary centers all over the country and 92 new hospitals with a combined capacity of 17,150 beds. This positive growth trend reinforces the Kingdom's reputation as a key stakeholder in the regional healthcare industry as Saudi's drug market already accounts for a dominating 65% of all pharmaceutical sales in the GCC. The local demand for pharmaceutical products as well as medical supplies and related services has picked up on account of the Saudi Government's efforts to strengthen the country's ability to provide world-class healthcare to its citizens and residents. 'The government has even increased healthcare expenditure this year to ensure that upgrade programs are implemented immediately. (TradeArabia 16.03)

5.13 Saudi Arabia's Construction Sector Achieves 3.9% Real Growth In 2009

Real growth in the construction sector of Saudi Arabia reached 3.9% in 2009 with real estate growing by 1.8% according to a report from the Ministry of Finance, as sustained government expenditure and continued private sector investments drive new real estate and construction projects across the country. The positive growth trajectory has in turn generated a diverse range of business opportunities, while fuelling demand for the latest construction technologies, building material and equipment in the country. In addition to a wide range of commercial and residential developments, Saudi Arabia has also embarked on a diverse range of education, transportation, agriculture and other infrastructure development projects, which has further boosted the demand for specialized construction technology and expertise. Large-scale projects being launched in the country include around 1,200 new schools in addition to some 3,112 schools currently under construction, and the rehabilitation of some 2,000 existing school buildings. A total of 6,400 kilometers of road will also be constructed, adding to 35,000 km of roads currently under construction. The government has also appropriated a total of $12.24 billion for various water, agriculture and infrastructure projects, representing an increase of 30% over the previous year. The new budget covers construction of water sources, dams and wells, water and sewage networks, and water desalination plants. (BI-ME 09.03)

5.14 Egypt's Headline Inflation Drops to 12.8% in February 2010

Egypt's government statistics agency CAPMAS announced that the annual change in the Consumer Price Index (CPI) declined to 12.8% in February 2010, from 13.6% in January, as the annual change in food prices declined to 22.7% in February, from 24.2% in January. Egypt's core annual inflation, which strips out subsidized goods and volatile items, fell to 6.9% in February from 7.39% in January. The annual change in utilities and fuel prices declined to 1.5%, from 3.8% over the same period. On a monthly basis, the change in the consumer price index declined to 0.3% in February, form 0.8% in January as the change in food prices declined to 1.0% in February, from 1.1% the month before. The change in utilities and fuel prices declined by 2.2% in February, compared to a 3.2% rise in January, driven by the rise in the price of butane gas canisters in January. (CAMPAS 09.03)

5.15 Egypt & Saudi to Drive Middle East Steel Demand

Egypt and Saudi Arabia will drive growth in steel consumption this year in the Middle East and North Africa region, where booming construction and infrastructure spending will lift demand. But demand in Dubai, once a major powerhouse with its insatiable steel appetite, is unlikely to rise in 2010, with banks still reluctant to lend for new construction projects in the indebted emirate and its warehouses filled with steel.

In 2009, North Africa's steel demand looked almost immune to one of the worst downturns in the $500 billion global steel industry, which forced producers worldwide to nearly halve output as demand evaporated. Egypt's banks, flush with cash despite the credit crunch, and government stimulus spending on infrastructure, helped keep construction projects running, analysts say. Housing shortages in the region also kept demand buoyant.

In North Africa, lending is available and people do not have a major problem accessing the cash. There are major infrastructure projects in Egypt due to housing demand and the government has been spending heavily in these areas. Rising demand will allow steel producers to raise prices this year, as steel consumption is forecast grow by 8 - 10% in the Middle East and North Africa (MENA) region, after 2009's 1% dip. The construction market in Egypt is very tight, the demand is high, as Egypt was among the top five exporters of cement, now we're importing due to high demand.

Saudi Arabia and Iraq are the other high fliers in the region, driven by their booming infrastructure spending. The Saudi market remains vital in the region, driven by demand for commercial, residential and industrial development. The property market will benefit from Saudi Arabia's large and growing indigenous population, coupled with numerous government-funded industrial projects. To match the rising demand, Saudi will expand its domestic steel production capacity by at least 50% within the next three years.

However, the picture in Dubai remains bleak, due to the world economic downturn and exacerbated by debt problems at conglomerate Dubai World, which delayed a possible improvement in lending conditions for several years. Several construction projects linked to Dubai World's subsidiary and developer Nakheel have been cancelled or put on hold, following the conglomerate's announcement of a standstill on debt. (DNE 05.03)

5.16 UAE Deflation Continues

Recent statistics show that while deflation in the UAE eased slightly in January 2010, property rental prices rose and while food prices were broadly stable. Annual inflation fell by 0.3% in January, compared to a decline of 0.4% in December 2009. On a monthly basis, inflation declined by 0.6% in January, compared to a decline of 0.7% in December, despite the increase in rents and fuel items prices' by 0.4% and food prices by 0.05% in January, while transportation prices fell by 0.1%. The UAE's annual inflation rate had fallen to 1.6% in 2009, after peaking at 12.3% in 2008, as costs of housing, food and fuel declined rapidly with the slower global and domestic growth. It is forecast that inflation may reach 3% in 2010 as food and rent costs recover gradually. (Beltone 04.03)

5.17 Oman's Nominal GDP falls by 20.2% in 2009

Despite the increase in oil production, Oman's Nominal GDP fell by 20.2% in 2009, reaching $48 billion, compared to $60 billion registered in 2008, the first decline to be recorded since 2001, due to the sharp fall seen in oil prices in 2009 compared to 2008 levels, according to the Ministry of National Economy. No breakdown was provided by the ministry, but the quarterly data reflect a positive y-o-y growth of 17.4% in the third quarter, compared to drops of 1.3% and 25.8% in the second and first quarters of 2009, respectively. Year on year oil production increased by 9% in Q3/09, while output throughout the year until September grew by nearly 7.1% compared with the same period of 2008. (Various09.03)

5.18 Saudi Arabia's CPI Reaches 4.6% in February 2010

The Saudi Central Department of Statistics and Information announced that inflation increased in February 2010 to 4.6% y-o-y, compared to 4.1% y-o-y in January 2010, after reaching a low in October 2009 at 3.5% y-o-y. The cost of living index registered 126.1 points, up from 125.2 points recorded in January, going up by 0.5%, m-o-m. The increase was mainly attributed to the rents sub-index, which jumped y-o-y by 10.6%. In addition, foodstuffs and beverages prices have gone up by 4%. On the other hand, fabric, clothing, and footwear and transport and telecommunications sub-indices declined by 0.3% and 0.2%, respectively, whilst the rest of indices remained stagnant. (CDS&I 10.03)

5.19 Pakistan Scrambles To Solve Energy Crisis

Islamabad ordered the Pakistani Finance Ministry to release emergency funds to the state energy sector to stave off an oil, gas and electricity crisis in the country. Pakistani Prime Minister Yousuf Raza Gilani called on lawmakers to come up with ways to avoid defaulting on foreign payments against oil supplies as the country grapples with a looming energy crisis. Islamabad was forced to consider international loans to help the energy sector, which is dragging on the embattled national economy. Pakistani Finance Minister Shaukat Tarin stepped down in February because of the economic turmoil. Gilani in an emergency meeting called for the weekend release of emergency funding to help the energy sector pay its debts as several sectors faced imminent cut offs. Raja Pervaiz Ashraf, the Pakistani water and power minister, said utility companies were running short on natural gas. Gilani called on top Cabinet officials to present plans for a gas pipeline from Iran as early as 17 March. Pakistan and Iran signed a 25-year deal for natural gas supplies in 2009 as part of an effort to advance plans for the so-called Peace Pipeline. The project, envisioned in the 1990s, would move natural gas from the giant South Pars gas complex in the Persian Gulf to markets in Pakistan and India. (UPI 15.03)

5.20 Libya Warns US Energy Firms Over Diplomatic Rhetoric

On 4 March, Libya's top oil official summoned the local heads of US energy firms to tell them a diplomatic row with Washington could have a negative impact on US businesses in Libya. Libya's NOC state oil firm said in a statement its chief summoned the local representatives of Exxon Mobil, ConocoPhillips, Occidental and Marathon to complain about remarks by a US State Department official on Libyan leader Muammar Gaddafi. The statement said the executives at the meeting expressed regret over the U.S. spokesman's remarks and said they would inform Washington "that such remarks would hurt oil interests for U.S. companies." Earlier, Libya summoned a US diplomat to warn that ties would suffer if Washington did not apologize for the US official's dismissive comments about Gaddafi's call for 'jihad' against Switzerland. US energy companies have invested heavily in Libya, home to Africa's largest proven oil reserves, since the country emerged from decades of international isolation.

U.S. aircraft bombed Tripoli in 1986 after Washington blamed Libya for a bomb attack on a West Berlin discotheque, one of several low points in relations between Libya and the United States since Gaddafi came to power in 1969. When Libya renounced banned weapons programs, Washington restored diplomatic ties and dropped a trade embargo. Since then business ties have been growing fast. In 2003, the United States exported $200,000 worth of goods to Libya and imported nothing. By 2009, exports to Libya had surged to $666 million and imports to $1.9 billion.

But bullishness among Western investors has been tempered by a fierce diplomatic row that began as a quarrel with Switzerland but has since expanded to set Tripoli at odds with several European countries and now the United States. The problem started in July 2008 when police in Geneva arrested Gaddafi's son Hannibal at a luxury lakeside hotel on charges of mistreating two domestic employees. They were later dropped. The row took on a Europe-wide dimension in February when Libya stopped issuing visas to citizens of the Schengen zone, a passport-free travel zone that includes Switzerland and most European Union countries. On 3 March Libya also imposed a trade embargo on Switzerland. (Various 04.03)

5.21 Libya Gets American Apology of Jihad Remarks

On 9 March, the US State Department spokesman apologized for a joking remark he made about Libyan leader Moammar Qaddafi that threatened to turn into a diplomatic incident between the two countries. The spokesman said he regretted any offense called by his offhand remark, which came in response to a reporter's question about Qaddafi's recent call for a Muslim holy war against Switzerland for its ban on building new mosque minarets. Libya had said it might take action against U.S. business interests in Tripoli in the absence of a formal apology. The feud between Libya and Switzerland stems from a brief 2008 arrest in Geneva of Qaddafi's son, Hannibal, and his wife for allegedly beating some hotel workers. Libya retaliated by detaining two Swiss businessmen. The diplomatic crisis escalated when Switzerland hit back by imposing travel restrictions on Qaddafi, his family members and his ministers. Libya retaliated by imposing a trade embargo with Switzerland and barring citizens from 25 European countries from visiting the oil-rich country. (Various 10.03)

5.22 Algeria's Line Telecoms Overview & Forecasts

Research and Markets (http://www.researchandmarkets.com) said in "Algeria - Key Statistics, Regulatory and Fixed-Line Telecoms Overview & Forecasts" that with a fixed-line penetration of around 10% and mobile penetration of over 80%, Algeria has one of the highest tele-densities in Africa. Its relatively well developed infrastructure includes a national fiber backbone and one of Africa's first FttH deployments. The country's oil and gas reserves have made it one of the wealthiest nations in Africa. Competition in the fixed-line sector received a setback at the end of 2008 when the second operator, Lacom, exited the market after three years of operations, citing regulatory barriers that made it impossible to compete with Algerie Telecom (AT). Only months later, the already delayed privatization of AT was called off and the licensing of third generation (3G) mobile spectrum delayed further, which may indicate that the government is trying to boost ATs fixed and fixed-wireless infrastructure in preparation for an eventual privatization, before allowing more competition in the broadband sector from the mobile operators. AT is currently installing around 800 new fixed lines every day, mostly using its CDMA wireless local loop network which supports broadband and full mobility. In parallel with the access networks, the national and international fiber optic backbone is being upgraded to an IP-based next-generation network (NGN). The government has announced investments of 100 million into national fiber infrastructure in 2009. This report contains an overview of Algeria's fixed-line market and the regulatory environment, analysis and key statistics, and two scenario forecasts for fixed-line services to 2010 and 2015. (R&M 05.03)

6: Turkish, Cypriot, Greek & Bulgarian Developments

6.1 February Inflation Puts Turkey On Top of EU CPI List

Latest inflation figures for February in Turkey put the country on the top of a list of European Union countries with highest CPI rates, said a report released by the Okan University Financial Risks Research Center, an Istanbul-based risks research institute. TurkStat said earlier this week consumer prices in Turkey recorded a 1.45% monthly rise in February as the year-on-year increase was 10.13% (2003=100). Year-on-year CPI in January was 8.19%. Pressure caused by a rise of 21.02% in prices of alcoholic beverages and tobacco products, as well as a rise of 8.61% in prices of food and non-alcoholic beverages had adverse effects on February figures, which came above expectations. The report said Turkey's macro-economic outlook seemed negative given recent capacity utilization figures, foreign trade data and jobless rates. The report said the Turkish Central Bank could be expected to wait until figures for the second quarter are announced before making any intervention to policy rates. The year-on-year CPI in January 2010 averaged 1.7% for the EU as a whole, while the UK saw a 3.5% rise, Greece 2.3% and Germany 0.8%, contrary to Turkey's 8.19% rise. (Okan 04.03)

6.2 Turkey Ratifies Nabucco Agreement

On 4 March, Turkey's parliament ratified the Nabucco pipeline agreement signed by five countries aimed at broadening the supply of natural gas to Europe. The assembly in Ankara approved the agreement signed in Ankara in 2009 by 229 votes to 12. Turkey's ratification of the intergovernmental agreement on the Nabucco project puts supporters of the pipeline further ahead in the race to build Europe's next major natural-gas conveyance system. Hungary, Bulgaria and Austria have also all ratified the agreement, which lays out the legal framework for the 3,300-kilometer-long gas pipeline that will cross Turkey, Bulgaria, Romania and Hungary, ending in Austria. In the next step toward completion of the legal framework, the Nabucco consortium, made up of the gas companies from the transit countries as well as Germany's RWE, will sign separate project-support agreements with the five participating countries.

The next task for Nabucco would be to create legally binding deals to secure gas. Another task would be to finalize the transit agreement with Azerbaijan, which is supposed to be the major supplier for the 30 billion-cubic-meter pipeline, and Turkey. The majority of the countries interested in Nabucco have also given their tacit support to the competing South Stream project. While Nabucco is designed to carry Caspian and Middle Eastern resources to Europe to ease its dependence on Russia, the Russian gas giant Gazprom is pushing for South Stream to bypass Ukraine, with which it has faced difficulties in the transit of gas, to maintain its dominance over the European markets. (Hurriyet 05.03)

6.3 Turkish People Spend $27.5 Billion for Cellular Phone Sets in 16 Years

Turkish people have spent $27.5 billion for 135 million mobile phone handsets sold in Turkey since 1994, either registered or unregistered, a study showed. Three mobile phone operators - Turkcell, Vodafone and Avea - had 63.6 million subscribers in Turkey as of December 2009. The study, made by the Mobile Communication Systems Dealers Association, covers the period from 1994, when mobile phone services were first introduced in the country and the beginning of 2010. Turkey legally imported some 105 million mobile handsets in 16 years. Around 19 million illegal phones, which did not have a valid International Mobile Equipment Identity (IMEI) number, have been registered after a law introduced in 2005. The study revealed that there are still 10.5 million illegal sets in use. It also showed that 72 million handsets out of 135 million mobile phone sets are now considered trash. Total amount of trash handsets are worth around $18 billion. (Anatolia 10.03)

6.4 Turkey's Unemployment Rate Up By 13.5%

Turkey's unemployment rate increased 0.4% to 13.5% in December 2009, Turkish Board of Statistics (Turkstat) said on 15 March. The unemployment rate was 13.1% in November 2009. According to the TurkStat's Household Labor Force Survey for December 2009, number of unemployed people increased 29 thousand to 3.3 million. Labor force participation rate was calculated as 47.6%. Unemployment rate was 15.6% in urban areas and 9.2% in rural areas in December 2009. (Turkstat15.03)

6.5 Cyprus' Real GDP Down 1.7% in 2009

The Cyprus economy shrank by 1.7% in 2009, according to the latest full figures on the national accounts, despite government efforts to prop up the economy. The main reason for the fall was household consumption, which fell by 3.1% in 2009, having bounded ahead by 8.5% in 2008. Household consumption is by far the largest expenditure item in the national accounts, accounting for 68% of GDP. Gross fixed capital formation, representing mainly investment in construction and machinery, fell by 1.2% for the whole year, having contracted sharply in the second half. Figures on inventories show that there de-stocking acted as a large drag on growth, bringing GDP down by 8.8%. Exports of goods and services, depressed by a 10.9% drop in tourism arrivals, fell by 11.8%. However, the negative impact of this on growth was more than offset by the 19.8% fall in imports of goods and services. These were depressed by a collapse in demand for cars and a decline in construction. The only expenditure item that grew was government consumption, which rose by 5.8%, although this was slower than the 6.2% recorded in 2008. In the fourth quarter real GDP fell by 3.0% over the corresponding quarter of 2008. Based on seasonally and working day adjusted data, it fell in the same period by 2.8%. (FM 16.03)

6.6 Cyprus' Inflation Rate Increases in February

Cyprus' rate of inflation for February 2010 increased to 2.9% from 2.4% in January 2010 and 0.7% in February 2009. The Consumer Price Index for February 2010 increased by 0.49% compared to January 2010. This is mainly due to increases in the prices of certain fresh vegetables, petroleum products, gas and medical care. Decreases have been recorded in the prices of certain clothing items. For the period January-February 2010, the CPI recorded an increase of 2.7% compared to the corresponding period of 2009. (FM04.03)

6.7 Cyprus Trade Deficit Shrinks in January 2010

On the basis of preliminary estimates for Cyprus' foreign trade in January 2010 total imports/ arrivals reached €441.6 mln, of which €275.2 mln were arrivals from other member states of the EU and €166.4 mln imports from third countries. Total exports/dispatches amounted to €74.0 mln of which €48.4 mln were dispatches to other member states of EU and €25.6 mln exports to third countries. The preliminary trade deficit for January shrank to €367,643 compared with €373,791 in 2009. Meanwhile, the Statistical Service of Cyprus has announced that it has published the monthly report “Intra-Extra EU Trade Statistics” for December 2009.

Cyprus' total imports/arrivals (covering total imports from third countries and arrivals from other member states) in January-December 2009 amounted to €5,654.4 mln compared with €7,366.7 mln in January-December 2008. Total exports/dispatches (covering total exports to third countries and dispatches to other member states) in January-December 2009 were €963.2 mln compared with €1,190.4 mln in January-December 2008. The trade deficit was €4,691.2 mln in January-December 2009 compared with €6,176.3 mln in January-December 2008. During December 2009 total imports/arrivals (covering total imports from third countries and arrivals from other member states) valued at €469.3 mln. Total exports/dispatches (covering total exports to third countries and dispatches to other member states), including stores and provisions, in December 2009 amounted to €78.2 mln. Exports/dispatches of domestically produced goods, including stores and provisions, were €43.0 mln whilst exports/dispatches of foreign goods, including stores and provisions, were €35.2 mln. (FM 16.03)

6.8 Greece's Inflation Increases to 2.8% in February

Greece's consumer price inflation advanced by an annual rate of 2.8% in February, rising from 2.4% in January due to a sharp increase in petrol costs, according to the National Statistics Service (NSS). The NSS said transportation costs in February rose by 11.4% year-on-year due to higher road tolls, car fuel and vehicle parts. Part of the increase was offset by a reduction in the price of cars. The first of two tax hikes on fuel took place in February as the government attempts to boost revenues to help tame its massive budget deficit. The second increase in fuel tax took place earlier this month. Despite food companies lowering prices by 1.7% in February as the downturn weighs heavily on consumer spending, price hikes in Greece are among the highest in the eurozone. Inflation in the 16 countries that use the euro decelerated to 0.90% in February from 1% in January, in a sign that price pressures in the single currency zone remain subdued in the wake of the recession. (Ekathimerini 10.03)

6.9 Greece Fifth Largest Arms Importer

Greece ranks fifth in the world in terms of the volume of its arms imports, according to a report made public on 15 March by the Stockholm International Peace Research Institute (SIPRI), a think tank. China and India top the list of arms imports, according to the report, which notes that the US and Russia were responsible for more than half of all weapons' exports in the period between 2005 and 2009. During the same period, global weapons sales increased by 22%. Greece spends an estimated 4% of its GDP on defense. (Ekathimerini 16.03)

6.10 Bulgaria's GDP Drops By 5% in 2009

Bulgaria's GDP fell by 5% in 2009, ending a three-year growth pattern, the National Statistics Office in Sofia said on 11 March. The slump has been revised upwards from the flash data that the statistics office provided a month ago, according to which the Bulgarian economy in 2009 shrank by 5.1% over 2008. The contraction, which followed robust growth of 6.2% and 6% in 2007 and 2008, reflects the global economic crisis. Despite the upward revision of the data, Q4/09 remains the weakest for the whole year with a 5.9% fall after the economy contracted by 3.5%, 4.7% and 5.4% during the first three quarters respectively. Despite the annual decline, it was less severe than the International Monetary Fund's forecast of a 6.5%. Bulgaria's conservative government has based its 2010 budget on a 2% fall of the gross domestic product, though it revised its expectations upwards by 0.3% in late January. The growth is expected to be due to a recovery of the Bulgarian economy in the second half of the year. (SMN 12.03)

6.11 Recession & Greek Crisis Stumble Bulgaria's Economy

The recession in Bulgaria's main trading partners and the Greek crisis will be among the major obstacles that Bulgaria's economy will face in the short term, a report of the Economist Intelligence Unit (EIU) says. According to the experts for the time being concerns over Bulgaria's competitiveness could hardly trigger the dismantling of the Currency Board that keeps the Bulgarian currency at 1.9558 to the euro. The report points out that the weak demand on the market of the EU member states will limit the exports of Bulgarian goods and services, but considerable changes are not expected in the levels of the current account deficit in 2010 and the year after. According to EIU the current account deficit will stand at an average of 6.8% of GDP by the end of 2011, driven mainly by the trade deficit. The Economist's analytical unit projects inflation at about 2.2% in 2010 and 2.5% in 2011. Bulgaria's economic growth has been set at 0.6%. Prior to the economic crisis Bulgaria was among the countries with the highest inflation in the European Union, but due to the recession, prices in Bulgaria and across Europe started falling. Statistics office data recently showed that the harmonized index of consumer prices rose 1.8% on a yearly basis in January and was up 0.6% on a monthly basis. The experts forecast that the crisis in Greece will probably hurt Bulgaria regarding its trade contacts, investments and the Greek banks. The foreign analysts also warn that the deteriorating debt crisis in Greece and the Greek banks, which hold nearly 30% of the Bulgarian banking sector, may trigger funds outflow from Greek bank subsidiaries in the country to headquarters in Greece. (EIU 09.03)

6.12 Bulgaria Opts For Stake Sale to Combat Crisis

On 15 March, Finance Minister Djankov announced his center-right government will present a program with anti-crisis measures in the next ten days, including the listing of minority shares in state-owned companies on the Bulgarian Stock Exchange. The bourse privatization will be carried out by a state-owned consolidation company. Minority stakes in fifty-five state-owned companies will be listed on the stock exchange, including the three electricity distribution companies, military factory Arsenal and Lomski mills. The government plans to angle for strategic investors for the other majors, such as tobacco monopoly Bulgartabac and a few energy companies, in which the state owns higher than a 50% stake. The moves comes after Bulgaria's government was urged to sell on the stock exchange shares in companies, which are part of the Bulgarian Energy Holding, in a bid to put the local capital market back on track. According to them this will be the most efficient method for privatization, which will bring fresh money into the budget. Earlier in the month Bulgaria scrapped a plan to sell shares in Bulgartransgaz, the state-owned natural gas storage company and some 15% in the National Electricity Transmission Company. Bulgaria is targeting a balanced budget this year. (SMN 16.03)

6.13 Bulgaria to Join Pipeline Project

Bulgaria's Energy & Tourism Ministry announced on 4 March that Bulgaria will join Turkey-Greece-Italy natural gas pipeline, part of the EU's southern energy corridor. Minister Traykov signed a contract in Thessaloniki on 5 March creating the joint venture that will build a link to Greece's section of the pipeline. The Bulgarian Energy Holding will have a 50% stake in the company, while the remaining stake will be held by IGI Poseidon, owned by the Greek and Italian companies. The project is expected to be operational by 2013 and will reduce Bulgaria's dependence on Russian supplies. (Focus 05.03)

7: General News and Interest

*ISRAEL:

7.1 Passover Observance Will Begin on 29 March

On Monday night, 29 March, Israel and world Jewry begin the week long celebration of the Passover (Pesach) holiday. One could say that Pesach is indeed the "Independence Day" or "National Liberation Holiday" of the Jewish People, since it marks the liberation of the Jewish People from slavery in Egypt by the hand of G-d. It is central to Jewish identity and Jewish practice, since the Exodus and life in the wilderness led to the true birth of the Jews as a distinct entity. Jacob and Josef came to Egypt numbering 70 souls and Moses led 600,000 out after the defeat of Pharaoh. Probably the most significant observance related to Pesach involves the removal of chametz (or leaven) from Jewish homes and businesses. This commemorates the fact that the Jews leaving Egypt were in a hurry and did not have time to let their bread rise. Even converts to Judaism relate to the Exodus as their own ancestors as having left Egypt. It is also a symbolic way of removing the "puffiness" (arrogance, pride) from our souls. Instead, special non-leavened bread called matzah is consumed, among a myriad of other special holiday dishes.

On the first night of Pesach (first two nights for Jews outside of Israel), there is a special family meal filled with ritual to remind Jews of the significance of the holiday. This meal is called a seder, from a Hebrew root word meaning "order," because there is a specific set of information that must be discussed in a specific order. The seder is full of symbolism, all pointing to one salient point: that Jews all remember that G-d took us out of slavery in Egypt to freedom to observe his Torah. Pesach lasts for seven days (eight days outside of Israel). The first and last days of the holiday (first two and last two outside of Israel) are days on which no work is permitted. Work is permitted on the intermediate days. These intermediate days on which work is permitted are referred to as Chol Ha-Mo'ed, as are the intermediate days of Sukkot. Though work is permitted, many take vacations and a full work environment returns only after the holiday. Passover ends on 5 April in Israel, 6 April in the Diaspora.

7.2 Gay-Tel-Aviv.com Prime Gay: Tel Aviv's Gay-Friendly Tourism Website

Israel's new Web site: http://www.gay-tel-aviv.com is devoted to gay-friendly tourism to Tel Aviv, Israel. The site was designed due to the Tel Aviv Tourist Association's increased interest in taking a proactive approach in promoting Tel Aviv as a prime gay and lesbian destination. The site features a gay map, information about gay-friendly hotels, gay dance bars and gay-friendly pubs and restaurants, as well as other notes on activities and places to visit. Tel Aviv is home to a vibrant gay and lesbian community, beautiful beaches and warm Mediterranean waters, trendy night life, great cuisine, interesting architecture and spectacular sunny weather. http://www.gay-tel-aviv.com is a joint project of Travel and Events in Israel, which specializes in content for tours and special events in Israel, and Eshet Incoming, one of Israel's leading tour operators. (Gay-Tel-Aviv.com 09.03)

*REGIONAL:

7.3 Tunisian Independence Day Marked on 21 March

Tunisia celebrates its independence day on 21 March. The day marks the 1956 treaty by which France recognized Tunisian independence. Tunisia's independence from France in 1956 ended a protectorate established in 1881. President Bourguiba, who had been the leader of the independence movement, declared Tunisia a republic in 1957, ending the nominal rule of the former Ottoman Beys.

7.4 Libya To Celebrate British Evacuation Day

On 28 March, Libya will mark British Evacuation Day. An annual holiday, in 1970, the British government agreed to leave Tobruk "Al-Adam" base which was established following World War II. The base was renamed Jamal Abdulnasir Base. British Evacuation Day is considered to be one of the most important holidays in Libya but it isn't celebrated with festivities inasmuch as how religious holidays in Libya are celebrated. The employed consider this day as a time off from work.

7.5 Pakistan Day Commemorated on 23 March

Every year on 23 March, the Pakistani people commemorate their National Day in remembrance of “The Pakistan Resolution” passed on 23 March 1940 in the city of Lahore. On this day, the Muslims of the Indian subcontinent pledged to create an independent homeland, where they could live in accordance with their religious and cultural values. From 22 to 24 March, 1940, the All India Muslim League held its annual session at Minto Park, Lahore. The session proved to be historical. On the first day of the session Muhammad Ali Jinnah announced that they would not seek union with their Hindu neighbors in India, but rather seek a separate state. Based on this, a prominent Moslem leader Fazl-ul-Haq presented the historical resolution which is known as Lahore Resolution or Pakistan Resolution. The Lahore Resolution renounced the concept of United India and recommended the creation of an independent Muslim state consisting of Punjab, NWFP, Sindh and Baluchistan in the northwest, and Bengal and Assam in the northeast. The Resolution was passed on 24 March. An independent Pakistan was finally achieved on 14 August 1947.

7.6 Turkey Recalls US Ambassador Following Vote on Armenian Genocide Recognition

On 4 March, a U.S. congressional panel voted to label as "genocide" the World War One-era massacre of Armenians by Turkish forces, prompting Turkey to recall its ambassador from Washington. The House of Representatives Foreign Affairs Committee voted 23-22 to approve the non-binding resolution, which calls on President Obama to ensure U.S. policy formally refers to the killings as genocide. The action cleared the way for the measure to be considered by the full House, but it was unclear whether it would actually come to a vote there. The Obama administration and Turkey had pressed lawmakers to drop the matter. The vote triggered an immediate condemnation from Turkish Prime Minister Erdogan, who recalled Turkey's ambassador to Washington for consultations. Erdogan said he worried the measure would harm Turkish-U.S. ties and efforts by Muslim Turkey and Christian Armenia to end a century of hostility. Turkey and Armenia signed a protocol last year to normalize relations but it has yet to pass through the parliament of either country. Obama called Turkish President Gul to urge quick ratification, the White House said. Turkey accepts that many Armenians were killed by Ottoman forces but denies that up to 1.5 million died and that it amounted to genocide - a term employed by many Western historians and some foreign parliaments. (UPI 04.02)

7.7 Turkey's Gender Inequality ‘Bad Apple' in OECD Bushel

An Organization for Economic Cooperation and Development (OECD) report shows that economic gender equality in Turkey is at very low levels and has a long way to go if Turkey is to call itself a truly developed country. According to the Gender Brief released by the OECD on 9 March, the economic status of women in Turkey is among the worst for OECD countries and is significantly lower than economically similar nations. The female employment rate - the proportion of the female population working - which is 58% on average for OECD members, was a dismally low 23%, or less than half the average. The only nation coming close to Turkey's was Mexico, with 43%. Iceland had the highest employment rate, with more than 80% of its women employed.

Moreover, the report showed that the highest proportion of single-earner families was in Turkey, with more than 65% of families having only one income earner. This was the highest out of all of the OECD nations and one of only three countries, along with Japan and Mexico, where single-income families were more common than dual-earner families. The OECD gender gap in employment rates, or the difference between employment rates for males and females, was the greatest in Turkey with a more than 42% difference. The closest OECD nation was its neighbor Greece, with 26%. (ZAMAN 09.03)

7.8 25 March – Greek Independence Day

Greek Independence Day (Tou Evangelismou) will be celebrated on 25 March. 25 March is both a national (revolution against the Turks) and religious holiday (Annunciation). There is a school flag parade in every town and village and a large military forces parade in Athens. On 25 March 1821 the bishop Germanos of Patras raised the Greek flag at the Monastery of Agia Lavra in Peloponnese and one more revolution started against the Turks. The people of Greece shouted "Freedom or Death" and they fought the War of Independence for 9 years (1821-1829) until a small part of modern Greece was finally liberated and it was declared an independent nation. The struggle for the liberation of all the lands inhabited by Greeks continued. In 1864, the Ionian islands were added to Greece; in 1881 parts of Epirus and Thessaly. Crete, the islands of the Eastern Aegean and Macedonia were added in 1913 and Western Thrace in 1919. After World War II the Dodecanese islands were also returned to Greece. Greek Independence Day is also a national holiday throughout Cyprus. The day is marked by historic exhibitions and cultural displays in many of the larger towns and cities.

8: Israel Life Science News

8.1 Cheetah Medical Closes $20 Million Series B Financing

Cheetah Medical closed a $20 million financing round. The financing was led by Ascension Health Ventures (AHV) and also included Robert Bosch Venture Capital (RBVC), MVM Life Science Partners (MVM) and existing investors. The support will allow Cheetah to further the extraordinary potential of its NICOM platform. NICOM provides a simple to use platform that enables physicians and nurses to quickly obtain accurate advanced hemodynamic parameters at the bedside, thereby aiding in differential diagnosis and selection and titration of the appropriate therapy to individualize patient care. Legacy approaches that rely on invasive, costly catheters have more limited use due to concerns about cost, maintenance requirements, invasiveness and potential complications. NICOM provides accurate hemodynamic information through a safe, cost-effective, user-friendly platform that can be utilized by physicians, nurses and other clinicians. Tel Aviv's Cheetah Medical's (http://www.cheetah-medical.com) NICOM Noninvasive Cardiac Output and Hemodynamic Monitoring System uses the company's proprietary BIOREACTANCE Technology to deliver continuous, accurate, noninvasive cardiac output (CO) and other vital hemodynamic monitoring parameters. The system is US FDA cleared and CE Marked, and since its commercial launch in 2008 has been adopted by a growing number of clinicians worldwide. (Cheetah Medical 15.03)

8.2 Nano Retina Develop Implants For People Blinded By Disease

An Israeli company is taking a hi-tech approach to restoring sight to millions of people who've gone blind from disease. Herzliya, Israel-based Nano Retina's (http://www.nano-retina.info) key project is the Bio-Retina, an implant and a set of glasses that together are designed to replace the function of a retina destroyed by diabetic retinopathy, macular degeneration and other diseases. After two years of study and testing, the company's founders claim to have proven their concept. With the help of a recently grant from the Bi-National R&D Foundation, a U.S.-Israeli industrial-cooperation group, Nano Retina's managers hope to put the product in trials with patients in 2013.

Nano Retina is a joint venture of Rainbow Medical and Zyvex Labs, a Richardson, Texas, developer of nanotechnology. Bio-Retina is certainly that, "around the size of a child's fingernail bed," the company's materials say. In a healthy eye, light passes through to the retina. The photoreceptors within the retina convert the light to electrical signals, and those signals travel via the optic nerve to the brain. The brain creates the image we see. But when the retina - specifically the macula, the part of the retina that lets you read and see details such as people's faces - is damaged, the photoreceptors are damaged or destroyed, and the electrical signals no longer are sent to the brain or are insufficient to allow the brain to process the signals and enable the person to see. It is here that the Bio-Retina steps in, taking the place of the damaged photoreceptors. After applying a local anesthetic, a surgeon makes a small - about a centimeter - incision in the cornea and uses biological glue to attach the Bio-Retina implant on top of the damaged retina. The procedure takes about half an hour. Powering the implant wirelessly is a tiny infrared laser that sits on a pair of eyeglasses that the patient wears. The glasses also carry normal corrective lenses for those who would need them. Nano Retina says that the implant is designed to work with the eye's natural functionality, including pupil dilation and eyeball movement. A patient with the implant "will be able to look from side to side" and see left or right without turning the head, the company says. That natural functionality is one characteristic of the Bio-Retina that distinguishes the system from its competitors. Nano Retina estimates the cost of its system at $60,000. (Nano Retima 12.03)

8.3 Compugen Announces Discovery Platform to Predict Cell Penetrating Peptides for Drug Delivery

Compugen announced the development and validation of its Intracellular Drug Delivery (IDD) discovery platform for identification of cell penetrating peptides. Compugen also announced that as part of the validation process for the new platform, more than twenty novel peptides, predicted and selected in silico, demonstrated the predicted cell penetrating properties in initial experimental validation studies. Compugen's newly developed Intracellular Drug Delivery discovery platform enables the in silico identification of novel peptide sequences that are predicted to have the potential to penetrate the cell membrane. This new platform consists of various components from Compugen's existing computational biology infrastructure and a series of proprietary machine learning algorithms specifically designed for this platform. In a validation run of the platform, a number of peptides having various physico-chemical properties potentially relevant for different specific uses were predicted and experimentally evaluated. Their ability to penetrate into cells was assessed by two independent well-accepted in-vitro assay systems. In these evaluations, more than twenty of these peptides were shown to possess cell penetrating activity both by visual image analysis through confocal microscopy and quantitative measures performed by flow cytometry analysis.

Tel Aviv's Compugen (http://www.cgen.com) is a leading drug and diagnostic product candidate discovery company. Unlike traditional high throughput trial and error experimental based discovery, Compugen's discovery efforts are based on in silico (by computer) prediction and selection utilizing a growing number of field focused proprietary discovery platforms accurately modeling biological processes at the molecular level. (Compugen 16.03)

8.4 Itamar-Medical & Roche Sign Agreement for EndoPAT Devices in Drug Development Study

Itamar Medical signed an agreement with Roche for use of Itamar's EndoPAT device in a clinical phase II study for patients with Peripheral Arterial Disease (PAD) at 80 worldwide medical centers. The assessment of endothelial function by EndoPAT will provide one endpoint of the study that will test the effectiveness of a newly developed drug. The agreement is valued at approximately $2.7m to be paid in installments through the study period that is scheduled to last until Dec. 2012. EndoPAT offers the only non-invasive technology that is FDA-indicated for detecting endothelial dysfunction which is easily applied and totally operator independent. With more than 80 papers to date in peer-reviewed journals and over 100 abstracts at major scientific meetings, EndoPAT is well positioned as a clinically valid procedure. Caesarea's Itamar Medical (http://www.itamar-medical.com) is a publicly-traded medical technology company utilizing PAT (Peripheral Arterial Tone) signal technology and applications. The PAT signal is a non-invasive "window" to both the cardiovascular and autonomic nervous systems. (Itamar Medical 16.03)

9: Israel Product & Technology News

9.1 RED-C Introduces the UltraSpan High Power Amplification Terminal

RED-C Optical Networks announced the launch of the High Power Amplification Terminal. This new solution is part of the UltraSpan product family, a comprehensive portfolio of amplification equipment designed to address the challenges of ultra long repeaterless links and long spans within multi-span links. The 3RU platform, which supports up to six hot-swappable pump laser diodes, is specifically designed for very high power Raman/ ROPA and EDFA applications, and thus complements RED-C's existing 1RU products, which support up to three pumps. The High Power Amplification Terminal is provided as a network managed unit including SNMP v2/v3, GUI, hardware interfaces, and dual hot-swappable power and fan units allowing easy and rapid integration within existing systems. All configurations support RED-C's unique, patented laser safety technology for Class 1M classification, and feature a standard, uniform GUI and operating procedures. Tel Aviv's RED-C Optical Networks (http://www.red-c.com) is a leading provider of state-of-the-art EDFAs, Raman amplifiers and optical monitoring devices for all network segments (long haul, regional, metro and access) and for all network applications (telecom, cable and enterprise). Beside a broad variety of EDFA and Raman modules, RED-C offers innovative and comprehensive solutions for some of the industry's most difficult technological challenges today, such as ultra long repeaterless links, 100Gb/s and 40Gb/s transmission networks. (RED-C 10.03)

9.2 G4S Justice Services Selects PerSay as their Voice Biometrics Vendor

Atlanta, Georgia's G4S Justice Services, a leading international electronic monitoring group, has selected PerSay as its Voice Biometrics technology vendor. G4S Justice Services has deployed PerSay's VocalPassword Voice Biometrics platform in electronic monitoring projects around the world. The selection was announced following a thorough selection process and was based on PerSay's superior technology and distinct field experience. Voice Biometrics technology plays a critical role in enhancing electronic monitoring solutions and services. It can be utilized in-lieu of or in conjunction with traditional ankle bracelet-based solutions for monitoring offenders under home arrest or other court ordered supervision program. Upon a court order, using Voice Biometrics is cost effective and convenient to both the agency as well as to the party being monitored.

Tel Aviv's PerSay Ltd. (http://www.persay.com) is a leading provider of advanced biometric speaker verification products. PerSay's technology relies on the biometric power of voice to verify a speaker's identity. PerSay's products have been deployed by leading financial services, telecom operators, healthcare providers, enterprises and law enforcement agencies worldwide. VocalPassword is a biometric speaker verification system that verifies a speaker during an interaction with a voice application. VocalPassword supports text-dependent, text-independent and text-prompted technology. Totally language and accent independent, VocalPassword provides a secure, efficient and extremely convenient method to verify a speaker's identity. (G4S 10.03)

9.3 Voltaire's Breakthrough Solution Accelerates Distributed Applications by Orders of Magnitude

Continuing on the path of innovation for scale-out data center fabrics, Voltaire announced a ground-breaking new software and hardware solution that accelerates distributed application group communications in scale-out fabrics. Group communications challenges are common in cloud computing and high performance computing and addressing them is key to scaling out the data center. The first edition of Voltaire FCA accelerates high performance computing applications such as reservoir modeling, fluid dynamics, crash analysis and others by up to a factor of ten. Voltaire's patent pending Fabric Collective Accelerator (FCA) accelerates MPI collective operations by using Voltaire switches and their on-board processors to offload significant parts of group communication onto the switching fabric while Voltaire Unified Fabric Manager (UFM) orchestrates an efficient, topology-based collective flow. Working in concert, these products ensure that all bottlenecks are removed, at both the server and interconnect levels. The computational acceleration is achieved transparently without requiring changes to the application.

Ra'anana's Voltaire (http://www.voltaire.com) is a leading provider of scale-out computing fabrics for data centers, high performance computing and cloud environments. Voltaire's family of server and storage fabric switches and advanced management software improve performance of mission-critical applications, increase efficiency and reduce costs through infrastructure consolidation and lower power consumption. Used by more than 30% of the Fortune 100 and other premier organizations across many industries, including many of the TOP500 supercomputers, Voltaire products are included in server and blade offerings from Bull, HP, IBM, NEC, SGI and Sun. (Voltaire 10.03)

9.4 BluePhoenix Wins a $2 Million Contract with International Transportation Company

BluePhoenix Solutions has been awarded a contract valued approximately at $2m to modernize critical business systems for an international transportation company based in the US. The customer selected BluePhoenix to modernize mainframe hosted control, financial and fleet management applications and databases to the Windows platform. The main drivers for the modernization were reduction of costs associated with legacy technologies, application enhancement, improving the agility and building a modern and productive end user interface environment. Herzliya's BluePhoenix Solutions (http://www.bphx.com) is the leading provider of value-driven legacy IT modernization solutions. The BluePhoenix portfolio includes a comprehensive suite of tools and services from global IT asset assessment and impact analysis to automated database and application migration, rehosting and renewal. Leveraging over 20 years of best-practice domain expertise, BluePhoenix works closely with its customers to ascertain which assets should be migrated, redeveloped, or wrapped for reuse as services or business processes, to protect and increase the value of their business applications and legacy systems with minimized risk and downtime. (BluePhoenix 15.03)

9.5 Significant Breakthrough for Elbit Systems in Australia

Elbit Systems was awarded a contract from the Department of Defense of the Commonwealth of Australia in the amount of approximately $298 million for the supply, integration, installation and support of a Battle Group and Below Command, Control and Communications (BGC3) system for the Australian Army's Land 75/125 program. The BGC3 comprises a Battle Management System (BMS) for soldiers, Vehicle Mounted Commanders and Headquarters/Command Post Staff. This project, to be performed over the next three years, will enable the Australian Army to achieve a major portion of its defense network centric warfare milestone of a networked brigade with cutting edge technology in battle management and communications systems. The capability will increase the commander's battlespace awareness, automate combat messaging and assist in the execution of operations. Importantly, this capability will significantly reduce the risk of casualties resulting from friendly fire. This high priority acquisition will assure improved protection and coordination for Australian Defense Forces personnel, allowing missions to be carried out more efficiently, safely and effectively. Elbit Systems, a leading supplier of tactical Battle Management Systems, has been selected by the Australian Department of Defense following a world-wide competitive open tender.

Haifa's Elbit Systems (http://www.elbitsystems.com) is an international defense electronics company engaged in a wide range of programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned aircraft systems (UAS), advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. (Elbit Systems 15.03)

9.6 Ness Provides Maintenance Management System at Mekorot, Israel's National Water Company

Ness Technologies has recently been awarded a contract from Mekorot, Israel's national water company, to provide Mekorot's maintenance management system. The contract includes implementation and deployment for an 18-month period, as well as an option for system maintenance following implementation. The project is valued at multi-millions of dollars. Based on the SAP maintenance module, the system will manage preventive, corrective and planned maintenance activities of the water supply system. The maintenance of the water supply system will be managed according to Mekorot's annual work plan, budget and pre-planned, frequency-based schedule. The system will also enable resource management, maintenance activity analysis, and connection with technicians using mobile devices. This will be achieved by interfacing the maintenance system to Mekorot's existing information systems. Mekorot's water supply system comprises more than 800 pumping stations, over 1,200 wells, about 2,400 pumps, over 10,500 kilometers of large-diameter pipes, 750 concrete and steel reservoirs, 90 large earth reservoirs and related equipment. Mekorot supplies 80% of Israel's drinking water and 70% of its entire water supply.

Tel Aviv's Ness Technologies (http://www.ness.com) is a global provider of IT and business services and solutions with specialized expertise in software product engineering; system integration, application development and consulting; and software distribution. Ness delivers its portfolio of solutions and services using a global delivery model combining offshore, near-shore and local teams. (Ness Technologies16.03)

9.7 Wavion, American Explorer & COGEL Partner to Provide Video Surveillance & Internet in Brazil

Wavion, American Explorer, a large system integrator in Brazil, and COGEL, Companhia Governania Electronica do Salvador, announced the deployment of Wavion's Wi-Fi base stations for a city-wide video surveillance and internet access network in the city of Salvador, Brazil. The network had been deployed as part of the city preparation for the popular annual Carnaval, know as the largest popular party of the world. The network infrastructure was based on Wavion's WBS-5800 and WBS-2400 base stations, working in the 5.8 GHz and 2.4 GHz, respectively, which were installed on poles along the streets. The 5.8 GHz network served video cameras and "kiosks" located along the routes of the Carnaval. The video cameras were used for monitoring the public safety and allowing remote web viewing. The "kiosks" were used to allow the municipality people, such as health and police forces, to access their secure corporative network. The 2.4 GHz network provided free internet access and enabled the general public and the press to share their experience and pictures all over the world. The backhaul was provided by an optical ring via the National Research Network. Wavion's unique and powerful WBS-2400 and WBS-5800 spatially adaptive beamforming base stations provide extended range, higher throughput, and much better NLOS coverage. As a result, unlike more conventional equipment, it does not require costly high towers and can be easily installed on poles and still provide very good coverage and penetration. Moreover, their flexible architecture and ruggedized and weather-proof enclosure add significantly to their unique value offering to Telecom Operators.

Yokneam's Wavion (http://www.wavionnetworks.com) is transforming the metro Wi-Fi and rural markets with a new category of spatially adaptive base stations. The company's digital beamforming and SDMA technologies are the first and only to resolve the significant performance, penetration and profitability challenges facing large scale metro and rural deployments. (Wavion 16.03)

9.8 Navajo Systems Offers VPS for the IBM Cloud

Navajo Systems has partnered with IBM to support the commercial launch of Smart Business Development and Test on the IBM Cloud. Navajo Systems' unique technology addresses the data security and regulatory concerns of using the cloud. Navajo Systems' Virtual Private SaaS (VPS) is a revolutionary concept in SaaS application data security which comprehensively addresses these limitations and concerns of using cloud applications with sensitive corporate data. Implemented as an appliance on the enterprise LAN/WAN or as a cloud service, VPS transparently encrypts all SaaS application data deemed sensitive by the enterprise before it is transmitted from the enterprise to the SaaS provider. While end users remain completely unaware of this process, their data is completely unreadable when stored on the SaaS provider's servers. Database theft and identity theft becomes harmless, and regulatory compliance is ensured, as all sensitive data remains undecipherable when in transmission and at rest outside the enterprise firewall. Developers of cloud applications do not need to implement any special code in their applications for VPS to provide them with this level of security and regulatory compliance. In fact, the same codebase could support cloud software implementations used with or without VPS.

Jerusalem's Navajo Systems' (http://www.navajosystems.com) vision is to dramatically expand the use of cloud computing by eliminating the barriers related to data security and regulatory concerns. Founded by experts in the fields of information security, infrastructure security and Web application security, Navajo Systems has introduced a patent-pending technology which promises to revolutionize SaaS application data security. (Navajo Systems 16.03)

10: Israel Economic Statistics

10.1 Israel's CPI Drops By 0.3% in February

The Central Bureau of Statistics announced on 15 March that Israel's Consumer Prices Index (CPI) fell by 0.3% during February. This is the second successive month that the CPI has fallen, after a surprise 0.7% drop in January. Even so, inflation over the past 12 months stands at 3.6%, above the top range of 3% for the government's annual inflation target. The CPI was led down in February by clothing which fell 7.2% due to end of season sales. Electricity tariffs were down 0.5% in February and apartment prices (including services for apartment owners) were down 0.3%. This was the third successive month that apartment prices fell, having dropped 1% in January and 0.2% in December 2009. Fresh fruit bucked the negative CPI trend in February with prices rising 3.3%, while bread products rose 1% in price last month. (CBS15.03)

10.2 Israel's GDP Growth Revised Upward

The Central Bureau of Statistics announced on 10 March that Israel's GDP, in fixed prices, rose by 0.7% in 2009, after rising 4% in 2008 and 5.2% in 2007. The figure is unexpectedly high and exceeds the preliminary estimate of 0.5% growth made last month. The difference may be due to the annualized 4.9% GDP growth achieved in the fourth quarter, which was higher than an earlier Central Bureau of Statistics estimate of 4.4%. GDP rose by an annualized 3.6% in the third quarter and 1.3% in the second quarter, after falling by 2.7% in the first quarter. Although GDP rose in 2009, GDP per capita fell, due to Israel's 1.7% population growth rate. GDP per capita fell by 1.1% in fixed prices in 2009, after rising 2.2% in 2008 and 3.4% in 2007. Although the growth rate was a positive surprise, the recession can still be seen in other macroeconomic figures. Investment in fixed assets fell 6% in 2009 and exports of goods and services fell 12.5%. Business product (excluding public services and housing services) fell 0.2%, after rising 4.5% in 2008 and 5.6% in 2007. Manufacturing product fell 6% in 2009 and financial services product fell 3.9%. On the other hand private consumption rose 1.5% and public consumption rose 2.1%. (Globes 10.03)

10.3 Bank Leumi Says Israel's GDP Per Capita Growth Better Than Most in OECD

Bank Leumi said that, save for Australia, Israel had the highest GPD per capita than any OECD member states (or rather the smallest decline). Israel's GDP per capita fell by 1.1% in 2009, while the OECD average was negative 4%. The Central Bureau of Statistics yesterday announced that Israel's GDP rose by an annualized 4.9% in Q4/09 and that growth for the year was 0.7%. Given Israel's population growth rate of 1.7%, this translates into GPD per capita decline of about 1%. The Bank of Israel's Composite State of the Economy Index indicates that the growth rate slowed in early 2010. Looking ahead, Bank Leumi nevertheless believes that, in the absence of extraordinary developments, Israel can achieve 3.5% GDP growth in real terms this year. It cautions that one of the main risks to this forecast is a renewed slowdown in global economic activity, especially in developed countries, which could affect Israeli exports. (BLL 11.03)

10.4 Israel's Trade deficit Stands at $700 Million in February

The Central Bureau of Statistics announced that Israel's trade deficit in February was $699.8 million, as imports reached $ 4.21 billion, and exports were $3.51 billion. On a seasonally adjusted basis, the trade deficit was $553.3 million, as imports were $3.82 billion, and exports were $3.27 billion. One year ago, in February 2009, the seasonally adjusted trade deficit was $498.4 million, with imports of $3.3.1 billion and exports of $2.81 billion. (CBS 11.03)

10.5 Job Availability in Israel Grows Over 8% in February

On 15 March, Israel's Central Bureau of Statistics announced that the number of available business sector jobs rose 8.2% to 40,600 in February 2010 from 40,300 in January. The number of available jobs in manufacturing rose by 1,200 in February. Demand growth was heaviest for sales staff (including sales reps, sales advisors, and store salespersons), which rose 25% to 5,360 in February from 4,270 available jobs a month earlier. The number of available jobs for waiters and bartenders rose 45% to 2,260 in February from 1,560 in January, and the number of available jobs for electricians and electrical equipment installers rose 120% to 1,100. However, the number of available jobs for computer engineers, technicians, and programmers fell 30% to 1,380 in February from 1,990 in January. (CBS15.03)

11: In Depth

11.1 ISRAEL: Only $229 Million Raised by Israeli VC Funds in 2009

On 8 March, IVC Research announced that only $229 Million was raised by Israeli VC Funds during 2009.

In 2009, following the global capital market downturn, Israeli venture capital funds found capital raising to be exceedingly difficult. Only $229 million was raised, a sharp 72% drop from the $803 million raised in 2008, and the third lowest annual amount raised in the past decade. Only three Israeli venture capital funds completed their fund raising efforts in 2009. Sequoia Capital Israel, an Israel-dedicated US fund, announced final closing of Sequoia IV, a $200 million vintage 2009 fund. Other 2009 vintage funds were TriVentures II, a $25 million medical device fund (with American medical technology company Medtronic Inc. as its main investor), and Startvest 09, the Targetech Innovation Center's new fund, which raised $3.7 million.

Koby Simana, IVC CEO, said that “foreign institutional investors - who before the crisis had been the lead source of capital invested in Israeli funds - have suffered serious losses due to the credit crunch. These losses have reduced capital available for investments. The decrease in capital raised by Israeli venture capital funds reflects a global trend. In 2009 for example, US venture capital funds suffered a 48% decrease in their fund raising efforts, compared with capital raised in 2008.”

Within eighteen years between 1992 and 2009 Israeli venture capital funds raised approximately $13.3 billion that was exclusively allocated to investments in Israeli start-up and high-tech companies. Of this amount, $9.4 billion (70%) was raised between 2000 and 2009.

According to IVC estimates, at the beginning of 2010 capital available for first and follow-on investments by Israeli venture capital funds is approximately $1.2 billion (net of management fees and operational expenses). Of this amount, IVC estimates that $400 million is earmarked for first investments, with the remainder reserved for follow-on investments. It is projected that $500 million will be raised in 2010 by Israeli VC funds for investment in Israeli start-up and high-tech companies.

IVC Research Center is Israel's leading research center providing business leaders with an unmatched wealth of data on Israeli high-tech, venture capital and private equity industries. IVC owns and operates the IVC Online Database (http://www.ivc-online.com), containing over 8,000 Israeli high-tech companies, venture capital funds, investment companies, angels and technology incubators, as well as news updates and lots more. Among IVC products and publications are the IVC Quarterly Survey, which examines capital raising trends by Israeli high-tech companies, and the most comprehensive guide to Israeli high technology and venture capital – the IVC 2010 Yearbook, due to be published in April. (IVC08.03)

11.2 BAHRAIN: Food and Drink Report for Q2/2010 Report Forecasts Growth

Research and Markets' (http://www.researchandmarkets.com) "Bahrain Food and Drink Report Q2 2010" cites that while the economic downturn has certainly impacted the Bahraini food and drink sector, a recovery is apparently being reflected by the industry, with investments and forecasts both picking up. As we move into the new decade, we hold to the authors view of a global economic recovery, with improved growth, fiscal and balance-of-payments positions for Bahrain in comparison with 2009.

In line with the authors projection of a global macroeconomic recovery, the authors see Bahrain's economy growing positively again in 2010, but remaining sluggish for the remainder of the forecast period, until 2014, when a large increase in oil production output will cause a similar spike in real growth. However, the private sector has been damaged by the financial crisis and growth will remain below par till 2014, averaging 1.8% annually between 2010 and 2013. This may not look particularly impressive at first glance, but the slowdown is in the export sector, masking a broad-based recovery in consumption and investment. The growth will also allow per capita GDP to increase steadily from $20,560 in 2008 to $29,882 in 2014.

This growth will result in a boost in the local food and drink industry and a number of investments have recently been made into the sector. Most recently, in late December, Global Banking Corporation, a domestic firm, established a new limited liability company called Diyafa Holdings Company, in order to benefit from growth opportunities in the food and drink, hospitality and retail and business service sectors. Ahmed Al Khan, chairman of the new entity, noted that while the current economic downturn has created stagnation in the market for start-up organizations, it also offers a first mover advantage in certain key commercial sectors. The new company plans on targeting some of the leading international food and hospitality brands, while also creating and developing its own brands in specific market segments. Also in December, the Auntie Anne's chain announced that it will continue to expand in Bahrain following the recent opening of its first location at Seef Mall. The company, which will be managed through a sub-franchise license by DaRosa Food Company, plans to open at least five stores over the next five years, and may eventually develop customized products to fit local taste profiles. Meanwhile, India-based Britannia and Oman-based Al Sallan Food Industries recently re-launched the popular biscuit brand Baker's Pride in the Bahraini market. The strategy for the re-launch includes an improved recipe and new packaging, designed to give the brand a new look and feel, while the sales price will remain the same. Such investments reflect returning investor confidence in the country's food and drink industry, and with good reason. BMI is currently forecasting growth of 34% in food consumption in Bahrain between 2009 and 2014. This forecast rate of growth is higher than most countries in the Gulf region, due to the less developed state of Bahrain's food industry, indicating that good growth opportunities remain on the back of the recovery. (R&M 15.03)

11.3 UAE: Fitch Affirms Ras Al Khaimah at 'A'; Outlook Stable Ratings

On 16 March Fitch Ratings (http://www.fitchratings.com) affirmed the Emirate of Ras Al Khaimah's (RAK) Long-term foreign and local currency Issuer Default Ratings (IDRs) at 'A' with Stable Outlooks. The Short-term foreign currency IDR of 'F1' is also affirmed. As a member of the United Arab Emirates (UAE), RAK shares its Country Ceiling of 'AA+'.

"RAK weathered the challenges of 2009 quite well, with growth intact and public finance ratios overall remaining better than 'A' category peers, despite the impact of recession in neighboring Dubai and the regional and global slowdown," says Richard Fox, Head of Middle East and Africa Sovereign Ratings at Fitch. "However, with the budget deficit and debt ratios having risen sharply since 2006, albeit to finance important infrastructure development, RAK now needs to demonstrate that the projected improvement in public finances will start to materialize this year."

Dubai is an important market for RAK, especially for state-owned quarrying companies. However, they have successfully redirected their relatively small output to stronger and faster-growing markets. Hence the main hit to public sector revenues last year was from reduced payments by developers for land purchases, which fell by a sharp 10% of GDP. However, with reclamation for the flagship Al Marjan Island project largely completed in 2008, spending also fell sharply, with the overall public sector deficit virtually unchanged, albeit at a still high 10.5% of GDP.

The deficit had been expected to narrow, with no new borrowing envisaged in the 2009 financing plan. However, the government pressed ahead with capital spending plans and financed the resulting deficit with its first foreign currency sukuk for $400m, issued in July. This raised the debt burden to 31.4% of GDP at end-2009, compared with 22% a year earlier, though remaining below the 'A' peer group median of 34%. Government deposits rose to 5.6% of GDP, well above 2010-2011 debt service of 2.1% of GDP.

Compilation of accounts on a public sector-wide basis has served RAK well, with the authorities able to provide detailed data on the performance of public sector agencies and enterprises and exerting a high degree of oversight and control. This minimizes the risk of a Dubai-style crisis emerging in RAK. Fitch understands the authorities intend to increase the frequency and quality of its reporting.

With capital spending now falling and revenues projected to recover with the global and regional upturn, the outlook remains one of shrinking deficits and a stabilizing debt burden. However, the volatility of revenues last year and the uncertain strength of the upturn argue for a cautious approach. Although the government enjoys considerable fiscal flexibility by virtue of the large current budget surplus (7% of GDP in 2009), large deposits and ample borrowing headroom, a worse case scenario could see the debt burden rise again and begin to stretch comparisons with rating peers.

Public finances are the main influence on RAK's ratings. External finances are not a constraint as RAK benefits from the external strengths of the UAE, buttressed in turn by Abu Dhabi's ('AA'/Stable) oil wealth. RAK also benefits from the UAE's monetary arrangements, including access to central bank reserves, and business environment, as well as substantial federal government spending on social services and local infrastructure.

RAK's development strategy is complementary to its larger neighbors, exploiting comparative advantages in quarrying and the manufacture of construction inputs, as well as more high value-added manufacturing such as glass, ceramics and pharmaceuticals. Activity in RAK's various industrial zones increased significantly last year and tourist arrivals rose. There are risks associated with RAK's development model but Fitch believes the authorities are managing them well. Successful execution of the strategy, which raises RAK's relatively low per capita GDP, will be an important determinant of future rating progress. (Fitch 16.03)

11.4 OMAN: Unionized Politics

The Economist Intelligence Unit (http://www.eiu.com) reports that Oman has become the second Gulf Arab state, after Bahrain, to have a general federation of trade unions. In both cases one of the impulses towards this recognition of organized labor has been that it is part of the qualifying criteria for concluding a free-trade agreement with the US. The move, nevertheless, does bring real changes in the relationship between workers and employers in a country that is focusing on manufacturing as one of the keys to diversification.

The long-awaited founding congress of the General Federation of Oman Trade Unions (GFOTU) was held in the capital, Muscat, in mid-February. One hundred delegates, representing 50 unions, elected a chairman, Saud bin Ali al-Jabri, and an eleven-member committee, which includes two women. The congress had been postponed several times. It was due to be held in the third quarter of 2008 following previous delays. Whether these delays were a deliberate attempt to slow down the pace of labor reform by the authorities, or just the slow pace of bureaucratic change is not clear. In 2008, International Trade Union Confederation (ITUC) general secretary, Guy Ryder, expressed serious concerns about the earlier delays and possible interference by the government in the proceedings and outcome of the congress.

Free trade, free association

Trade unions have only been permitted in Oman since 2006 when the sultan passed a royal decree allowing their formation. The decree was published just three weeks before a close vote (221 to 205) by the US House of Representatives approving the US-Oman Free-Trade Agreement (FTA). Democratic congressmen, prompted by US unions, had expressed concern at existing Omani labor law, which had only allowed the formation of workers' committees and forbade strikes and collective bargaining.

The 2006 royal decree and ministerial decisions in 2006 and 2007 allow workers to form trade unions in companies with a minimum of 25 employees. However, union membership remains forbidden amongst domestic household workers, government and security personnel and the armed forces. Furthermore the manpower ministry may refuse to register a union if all legal requirements have not been met. The decree also established workers' rights to collective bargaining and prevented employers from objecting to representatives, or taking unilateral decisions on any matter under negotiation. Peaceful strike action was made legal, providing it is supported by a majority of the workforce, and the employer is given three weeks' notice in writing. Despite the restrictions, 70 unions have been established in Oman according to the ITUC. Of these, the 50 that have already completed their own elections were represented at the congress.

Employers' reaction

Employers have responded in different ways to the growth of the labor union movement in Oman since 2006. Some have actively helped employees form unions so that they can benefit from improved communication with their workforce. Others are waiting to see what impact the unions will have before promoting their formation. There has been almost no coverage of any such impact in the media, with the exception of a strike by workers at the Oman National Electric Company in March 2008.

Oman has been a member of the International Labor Organization (ILO) since 1994 but has only ratified half of the organization's eight core labor standards. Those conventions not ratified concern equal remuneration, discrimination, freedom of association and collective bargaining. The ILO, the ITUC, and the US State Department (with its annual reports into human trafficking) are together bringing pressure on Oman to improve its record on working conditions, particularly for the strong expatriate labor force. However, the exploitation of cheap Asian labor is so fundamental to the workings of the Omani economy that change will be a long slow process. Indeed there are signs, of which the holding of the congress is one, that the situation is improving, albeit very slowly.

For foreign consumption

In late January Oman's National Commission for Human Rights held its first meeting, over a year after it was established by royal decree in November 2008. Mohammed bin Abdullah al-Riyami is the chairman of the commission. It is perhaps no coincidence that both this meeting and the trade union congress were held in the same fortnight as a US government delegation visited Muscat to follow up Oman's progress improving labor laws, in connection with the US-Oman FTA. The delegation, which included assistant US trade representative Christopher Wilson, was briefed on programs which have been implemented by the manpower ministry in labor inspections, welfare, safety and occupational health. (EIU16.03)

11.5 OMAN: India Ties

The Oxford Business Group (http://www.oxfordbusinessgroup.com) observed that the past decade has seen India become a significant trading partner for Oman, with bilateral trade rising from $200m at the start of the decade to almost $2.5bn last year. The year 2010 will see those trade relations become more important, as Oman becomes the first foreign country to establish a joint fund to invest in India.

The India Oman Joint Investment Fund (IOJIF) was initially established by the signing of a memorandum of understanding (MoU) in 2008 between Oman's sovereign wealth fund, the State General Reserve Fund (SGRF), and the State Bank of India, India's largest commercial bank. Following round-table talks between the two countries in February however, it was revealed that Oman's minister of national economy, Ahmed bin Abdulnabi Macki, will shortly travel to India to sign a final agreement between the two countries concerning the fund.

The IOJIF is anticipated to have initial seed capital of $100m, although this figure is expected to rise quickly to $1.5bn, as the fund's articles enable it to take on this amount of additional debt and capital through partnerships. The fund is unlikely to find itself short of investment opportunities: India hopes to double levels of bilateral trade with the Arab world over the next four years from its current level of $114bn. The Indian government in particular is seeking Arab investment in sectors such as shipbuilding, infrastructure, pharmaceuticals, IT and energy. In total, the government anticipates India will require $500bn of infrastructure investment over the next three years.

The joint fund is likely to build on existing partnerships between Indian and Omani business. Such previous ventures include the Oman India Fertilizer Company, whose operating capital is shared between the Oman Oil Company and two Indian companies. The Oman Oil Company is also investing in a 6m tonne oil refinery in Madhya Pradesh, India, through its subsidiary, Bharat Oman Refineries. Meanwhile, several Indian companies have expressed an interest in investing in Oman, including Infoline in services, Taj and Oberoi Groups in hospitality, and metals giant Tata, which has floated a subsidiary, Reemal Mining Company, on a 70:30 basis with Al Bahja Group to mine limestone and gypsum in Oman.

While Oman remains the primary regional state to have enhanced its ties with the subcontinent, other Gulf Cooperation Council (GCC) nations are also pressing their claims. Saudi Arabia, for example, has announced plans to establish a joint fund with India that will have capital of around $750m. The announcement coincided with a recent visit by India's Prime Minister Manmohan Singh to the Kingdom, the first by an Indian prime minister since 1982. Meanwhile, Qatar is also reportedly planning to establish a $2bn joint fund for investing in India.

Bilateral ties with the subcontinent have become increasingly important across the GCC throughout the past decade, thanks in large part to sustained economic growth in the region that has led to an increase in the size of the middle class, and a resulting increase in demand for oil. With Western economies remaining sluggish, India is also proving a more dynamic investment environment for the excess liquidity once more being garnered by GCC nations as oil continues its recovery.

This is not the only story however: merchandise trade has also exhibited strong growth throughout this period. India now represents Oman's second-largest non-oil export market behind the UAE, with exports hitting almost $650m in 2008, while India is Oman's fifth-largest import market - the Sultanate imported over $1bn in goods from India the same year. Indeed, trade growth remained bullish in spite of the global downturn, registering 12% growth year-on-year for the first two months of 2009.

With strong ties across the board and a brighter trading outlook globally for 2010, Oman and India look set to see continued bilateral growth, with the Sultanate well placed among its GCC neighbors to take advantage of the best investment opportunities on offer in the subcontinent. (OBG08.03)

11.6 LIBYA: The Energy Player Not to Be Dismissed

Philip H. de Leon writes for The OSINT Group (http://www.TheOSINTGroup.com) that on 1 September 2009, Libya lavishly celebrated the 40 years in power of its leader Colonel Muammar Gaddafi. Once qualified as the mad dog of the Middle East by President Ronald Reagan, Gaddafi has demonstrated a sheer ability to make of his once pariah country of 6 million people, one of the most assiduously courted both by countries and companies. Libya is the perfect example of Realpolitik at work where pragmatism prevails to promote commercial and national interests. The September 2009 Staff Report from International Monetary Fund summarizes the situation well: “the ongoing normalization of diplomatic relations with the U.S. and the European Union since 2007 continues to contribute to foreign investor's interest, particularly in the hydrocarbon, banking, and infrastructure sectors.”

Back in the Concert of Nations

After recognizing in 2003 its responsibility in the bombing of the PanAm flight over Lockerbie and offering $2.7 billion in compensation to the victims' families, the United Nations Security Council lifted sanctions against Libya. Shortly thereafter Libya renounced to its weapons of mass destruction program. In 2006 the United States restored full diplomatic ties with Libya. These events opened the floodgates for foreign companies to explore business opportunities in Libya without the fear of incurring severe penalties.

In January 2008, Libya became for two years a non-permanent member of the United Nations' Security Council and in February 2009 Gaddafi was elected Chairman of the 53 members African Union. On September 23, 2009 Gaddafi addressed for the first time in his 40 years as ruler of Libya the General Assembly of the United Nations.

What is at Stake?

Many countries are tripping over each other to get a piece of the Libyan energy cake, oftentimes putting their leaders at odd with their public opinion. The stakes are high, notably for European countries that are eager to secure a southern route for their energy supply as the Eastern route has proven to be unreliable.

According to the US Energy Information Agency Libya holds the largest proven oil reserves in Africa, followed by Nigeria and Algeria. As of 1 January 2009, total proven oil reserves stood at 43.7 billion barrels - up from 41.5bn barrels in 2008 - and proven natural gas reserves are estimated at 54.4 trillion cubic feet. Dr. Shukri Ghanem, President of the National Oil Corporation (NOP), recalls that Libya use to produce 3.7 million barrels per day in 1970 and states that it was planned to raise the production to 3 million barrels per day by 2012 “but this now will take longer for a number of reasons taking into consideration the international economic situation” and 2015 or 2016 seem to be more realistic targets.

Occidental Petroleum, ExxonMobil, Marathon, ConocoPhillips, Hess, Royal Dutch Shell, Petrobras, Verenex, Nippon Oil, Gazprom and Repsol are among the many companies positioning themselves in oil & gas exploration, production and transportation, field development and improvement, refinery upgrades, etc. in order to assist Libya meet its ambitious objectives.

Libya also enjoys vast quantities of gas: its proven natural gas reserves as of 1 January 2009 were estimated to be over 1.54 trillion cubic meters and the fourth largest in Africa. No less than 11 billion cubic meters/year of natural gas transit from Libya's gas field to Italy via the underwater Greenstream Pipeline. This said, the intense activity in the oil & gas sector should not be a distraction from paying attention to other developments, notably in the banking sector, which has shown a noteworthy transformation.

To be or not to be in unpredictable Libya?

Undoubtedly Gaddafi's bravado, shocking statements and unpredictable actions are an aggravation for the West. They are also a distraction from the mutual benefits to be gained from greater trade exchanges. His recent call in February 2010 for holy war against Switzerland and his statement that “any Muslim in any part of the world who works with Switzerland is an apostate, is against Muhammad, God and the Koran” are concerning. One should note the analogy with what happened to Denmark in 2005 and the calls to boycott Danish products after the controversial depiction of prophet Mohammad in the Danish press. The use of religion as a federating tool to go after Western countries is unsettling, though Libya's calls to unite for certain causes are often dismissed by the Muslim world.

Gaddafi's closing of Nestle's and ABB's offices and the freezing of all visas for citizens of the Schengen Area, which affects 25 countries, is highly disruptive to business as many foreign businessmen and managers are unable to get back to Libya. These events serve as a dire reminder that nothing is set in stone and that decisions can be adopted against foreign interests irrespective of their damaging impact on Libya's economy and image. Gaddafi's wrath originated with the arrest of his son Hannibal by the Swiss police in July 2008 for allegedly assaulting his servants, which escalated with the arrest of two Swiss citizens for overstaying their visas followed by Switzerland banning 188 Libyans from entering its territory, Gaddafi included.

Once again Gaddafi masterfully toys with Western nations, knowing very well that their appetite for Libyan natural resources will tame their calls for greater freedom, democracy and openness. Sanctioning 24 countries for the actions of Switzerland is also a very smart dividing strategy as it is doubtful that countries that have high stakes in Libya such as Italy will stand by Switzerland side. Also, the hope that Gaddafi will one day leave power leads many countries to keep a low profile and not shake the tree too hard in order to be in the starting blocks once the power transition happens. This is all wishful thinking: if we look at Cuba, everyone has been waiting for the departure of Fidel Castro who is very well alive… and so is his brother. Gaddafi is only 69 years old and his father is said to have been well over 90 years old when he died in 1985. Similarly, some see one of Gaddafi's sons as a potential heir and read in his statements the possibility of a new era. Similar hopes were fostered when Bashar al-Assad took over at the death of his father in Syria in 2000 but change has not been overwhelming ever since.

Ultimately, the decision to be active or not in Libya is a judgment call and many countries have decided that the potential of the country far outweighs the risks, even more so as the negative attention of the Western public opinion is never sustained long enough to be a source of concern. Oil revenues and public expenditures will remain the two main GDP growth factors in Libya and real GDP growth is estimated by The World Bank's 2009 MENA Economic Developments and Prospects Report to reach 2.9% in 2009 and 4.8% in 2010. (OSINT Group 06.03)

11.7 MOROCCO: Using the Elements

With wind, sun and space to spare, the Oxford business Group (http://www.oxfordbusinessgroup.com) says Morocco is better endowed than most countries in terms of renewable energy potential. The impetus to go green has also never been stronger, as the energy-importing nation has seen its domestic demand steadily rise. In order to preempt an energy squeeze, the Moroccan government has moved to dramatically increase its national solar capacity through a €6.6bn program, and boost the potential for future energy exports.

Five solar power stations are to be constructed by 2020, with the tender for the first slated to begin at the end of February. "We will start first with the tender for Ourzazate power station and the tenders for the others will follow successively," the energy minister, Amina Benkhadra, told international press. When all five plants are on-line, they are expected to meet 20% of Morocco's energy needs.

Spanish firm Abengoa is the forerunner for Morocco's solar contracts (it is almost finished building a 470-MW solar-gas hybrid station in the southern city of Ain Bni Matha), but several international companies, including Siemens, are also said to be interested. "Morocco is open to all forms of partnership as long as the foreign firms have the capabilities to bring expertise, technology and know-how. We are looking for public-private as well as national-and-foreign partnerships," Benkhadra said.

The minister's call was clearly heard, with the Japanese government signing a €5.4m deal in January 2010 to help build what will be Africa's largest photovoltaic plant in Assa-Zag, Morocco.

Lacking the hydrocarbons reserves of its neighbors, Morocco currently imports 97% of its energy. Demand, which has grown 5-7% per year on average over the past decade, is projected to increase from 24 GWh in 2008 to 95 GWh by 2030. As a result, the government has turned to developing its renewable energy capacity – under the current national energy strategy up to 10% of Morocco's energy will come from renewable sources by 2012.

In recent years, most efforts have gone into the development of wind energy, which currently accounts for 150 MW of installed capacity and is expected to reach 1554 MW by 2012. The Tangier wind farm, which will be Morocco's largest, entered construction in 2009 and is expected to go on-line this year. The country's wind potential has been estimated at around 6000 MW a year, but its realization would require billions of euros in investment.

With 3,000 hours of sunshine per year, solar power is another option for Morocco that has hitherto been confined predominantly to villages. In the past 10 years, the Program for Rural Electrification (Programme d'Electrification Rurale) has brought power to 150,000 homes by the use of photovoltaic kits. With capacity totaling 2000 MW, the five planned solar plants will dramatically increase the role of solar energy within the national strategy.

Morocco's suitable climate, as well as the vast expanses of space in the Sahara, have not gone unnoticed by the world at large, which is also struggling to wean itself off an oil dependency. Companies from Morocco, Tunisia, Spain, France and Italy have attached themselves to the Desertec syndicate, which aims to power Europe with solar energy generated in the Sahara using curved mirror technology.

According to the German Aerospace Center Industrial Initiative, it would take less that 0.3% of the North African desert to produce all the electricity and desalinated water needed domestically by Europe. Priced at €293.7bn, the Desertec project should account for 15% of Europe's power consumption by 2050. "We want to be among the leading countries in this project," Said Mouline, the managing director of Morocco's Renewable Energy Development Centre, told international press in the summer of 2009. His wish looks to have been granted: in February 2010, consortium founder Desertec Industrial Initiative announced that talks with the Moroccan government had been successful and their pilot project would be on Moroccan soil. It is a tall order, but the urgency to secure long-term sustainable energy supplies is building internationally and Morocco is in the right place for the development of solar and wind energy. Though lacking any significant oil resources, the country may yet have a role to play in future energy politics. (OBG 12.03)

11.8 TURKEY: Politics - General unease

The Economist Intelligence Unit reported that the recent arrest of dozens of senior military officers has sharpened tensions between Turkey's Justice and Development Party (AKP) government and the high command of the armed forces. This has sparked fears of growing political instability, and has affected Turkey's financial markets. Speculation about the risk of a coup seems to be overblown, but the affair is likely to have a pernicious impact on the management of Turkey's economy.

Turkish share prices shed 9% in four days and the lira hit a ten-month low against the US dollar, as 49 high-ranking military officers were detained and questioned about their role in an alleged coup plot dating back to 2003. The fear is that escalating political tensions could prompt populist policy-making, an early general election and unstable and unpredictable government for the foreseeable future.

The detained officers, active and retired, included former army and navy commanders. Their treatment has further soured relations between the secular and politically vocal armed forces and the ruling AKP, a party of Islamist roots which nevertheless portrays itself as politically and economically liberal. President, Abdullah Gul, brought together the prime minister, Recep Tayyip Erdogan, and the Chief of the General Staff, Ilker Basbug - but the meeting failed to dispel the palpable tension in Ankara (although the stock market and the lira stabilized).

Plots thicken

Revelations and charges related to alleged coup plots have come thick and fast over the past two years. Islamists and liberals regard them as a sign of increasing democracy in a country where the military has staged three coups, engineered the downfall of an Islamist-led government in 1997 and openly opposed the candidacy of Mr. Gul for president in 2007.

However, investigations have also led to the arrests - and in some cases lengthy pre-trial incarceration - of respectable journalists, academics and other public figures. Secularists, including the left-of-centre Republican People's Party (CHP), which leads the opposition, say that the accusations have been manufactured to serve an AKP goal of dominating state and society in conjunction with wider Islamic networks.

A pitched battle is also being fought over and within the judiciary. Earlier in February, the Supreme Council of Judges and Prosecutors (HSYK) sacked a prosecutor for arresting another prosecutor, who had been investigating allegations against an Islamist grouping. The Constitutional Court has crossed the AKP on several occasions. In 2007, it overruled Parliament's election of Gul, effectively delaying his rise to the presidency pending an early general election, in which the AKP won a landslide victory. In 2009, the Court fined the AKP for becoming a focus of Islamist subversion, although it stopped short of closing the party down. In January, the Court threw out legislation adopted last year which broadened the powers of civilian courts over military personnel.

Moving the constitutional goalposts

The government is now mulling constitutional changes which would revoke constitutional provisions on military courts and alter the powers and manner of election of the HSYK, the Constitutional Court and other high judicial bodies. These are to be included in a package of constitutional reforms which may have to be put to a referendum.

Critically, a general election falls due in July 2011, and public support for the AKP has waned. The party claimed 39% of the popular vote in local government polls last March, compared to 47% in the 2007 election. Some polls now put its popular standing below the 34% likely to be needed to retain an overall parliamentary majority under Turkey's inequitable election system.

The AKP rose meteorically to power following the financial crisis and recession of 2001, sparkled during the years of rapid global and local growth which followed, but has been spluttering since the onset of the international financial crisis. Turkey's GDP is estimated to have contracted by almost 6% in 2009, resulting in higher unemployment and falling incomes. 2010 will see only a partial recovery.

Erdogan misfires

As if this were not enough, the government of the abrasive Mr. Erdogan has mismanaged overtures towards the disaffected Kurdish population, and is suspected of bargaining with the violent Kurdish nationalist PKK organization. The propaganda has been seized not only by the CHP but also by the third largest party, the far right Nationalist Action Party (MHP), which has become increasingly critical of the government both over domestic politics and over its foreign policy stances from Armenia to Cyprus. Nationalists say Turkey has been “arresting its own soldiers and letting terrorists go free”.

Greek contagion

The stock market may have been due for a correction, and strike action in Greece and low consumer confidence in the US probably paid a role. Yields on benchmark domestic bonds, held mainly by Turkish banks, remained stoically below 9%, compared to consumer price inflation of 8.2% and a benchmark Central Bank rate of 6.5% (simple interest). But more bouts of financial market volatility are only to be expected - especially if Mr. Erdogan opts for an early general election in a bid to assert his authority.

An election campaign focused on constitutional change and the perceived politicking of the armed forces and the Constitutional Court might well suit the AKP. Another court case against the ruling party could provide the premier with his cue. Even without a pre-emptive ballot, the electoral clock is ticking away loudly.

Ahead of the polls, the government might shelve planned reforms, such as income tax reform, labor market reform, further privatization and the imposition of a fiscal rule. A public spending spree could swell the budget deficit, which gaped to over 5% of GDP in the crisis conditions of 2009. Talks on a further IMF standby accord- under discussion ever since the last one expired in May 2008 - would probably be abandoned altogether.

Far from stimulating the still-sluggish economy, even the suggestion of such policies could raise the government's borrowing costs, reduce capital inflows and weaken the lira, driving interest rates higher, postponing investment and consumption decisions and trimming profits - not least in the financial sector. If the AKP does lose its majority, there is the prospect of a precarious coalition of parties with nationalist sentiments and no recent track record in economic management.

The bright side

Several factors limit these risks. To begin with, Turkey has a reasonably well functioning free market economy, in the judgment of the European Union, which it aspires to join. Business is driven by a vigorous private sector regardless of infrastructure gaps, lugubrious bureaucracy or imperfect markets. Secondly, while differences of lifestyle and culture compound a general climate of mistrust, criticism of the economic system is limited. The major political parties may have their rough edges, but none has expressed outright opposition to free capital movements, Central Bank independence or the stalled EU accession process. Organized labor is a shadow of its former self, and the have-nots are more inclined to seek patronage than to build barricades.

The government has some rope to play with. Turkey's public debt/GDP ratio of about 50% of GDP is confidence-inspiring by contemporary European standards. Meanwhile, the recession reduced the current account deficit to $14bn or just over 2% of GDP in 2009. Gross Central Bank foreign exchange reserves are around $67bn. The banking system, reformed within the past decade, barely blinked during the global crisis, and gloomy predictions of private sector debt defaults have so far failed to materialize.

Short of a renewed global squeeze, Turkey should be able to finance its perennial twin deficits without difficulty in 2010-11, even with middling economic policies. The AKP has capable economy ministers and bureaucrats. Provided they remain in charge, sensible investors need not get hurt. (Economist Intelligence Unit 26.02)

11.9 GREECE: Euro Zone Plays for Time on Aid for Greece

Der Spiegel reported that euro zone finance ministers on the evening of 15 March pledged to help Greece should it become necessary. But they declined to say how. It is the same message the EU has been preaching for weeks - in the hopes that Athens will be able to save itself.

Finance ministers from countries belonging to Europe's common currency zone have agreed on an emergency plan for debt-ridden Greece. The 16 ministers met in Brussels for a meeting that went on late into the evening. It wasn't until 10 p.m. that the head of the euro group, Luxembourg Prime Minister Jean-Claude Juncker appeared and announced that they had agreed on an emergency plan for Greece. "Greece would be supported if this would be needed," Juncker told reporters. The finance ministers have essentially confirmed what EU leaders have been indicating for some time, namely that the other euro zone members will not leave Greece in the lurch.

Juncker did not go into specifics about the plan. The finance ministers agreed to provide bilateral aid to Greece in an emergency, he said, adding "there are still a number of technical questions that need to be addressed." The scope of the relief package was left open. But it is precisely those details that are crucial. If financial markets had been hoping for a concrete figure, they were left disappointed - a fact that could further pressure the euro, which has been trending downward for months.

Doubts about the Details

Juncker's appearance was less a promise for the future than a signal that the euro zone's finance ministers were unable -- or unwilling - to reach an agreement. Now EU leaders will have to decide on the details of the rescue package at their next summit on March 25-26. But there are also doubts about whether that meeting will see concrete pledges of assistance. Juncker sought to lower expectations of the summit, saying that, although EU leaders had to make the final decisions, they would not necessarily do so at the end of March.

The finance ministers are playing for time. Although EU diplomats say that a detailed emergency plan has already been drawn up in Brussels, which envisions loans totaling €25 billion ($34 billion) for Greece and which only needs the OK from EU leaders to go into effect, finance ministers are clearly hoping that the financial markets can be seduced in the mean time with pledges that Greece will be supported should the need arise.

It is a difficult balancing act the EU has embarked on. Speculators need to be deterred - and pressure must be maintained on problem countries to clean up their finances. The euro zone wanted to send the message that everything is under control, without making unnecessary concessions to the Greek government. After all, Athens' will to save money should not weaken.

Putting Off the Pain

The finance ministers also highlighted the fact that Greece has not yet asked for help - but if it were to do so, there would be enough money available in the rest of the euro zone. It's the same line the EU has been preaching since the beginning of the Greek crisis: In an emergency, the other euro countries would save Greece from bankruptcy. But the rescue package can not be called a "bailout," because that is prohibited by the Maastricht Treaty, which governs the European currency union.

But constantly postponing the decision does not make it any easier. Sooner or later, the euro-zone members will have to answer the question of who will provide money for Athens and how much. Around €20 billion of Greek debt will come due in April and May alone. So far, the Greek government has been able to get by on its own and has always managed to refinance its loans on the financial markets. A recent issue of Greek government bonds sold well - albeit at the cost of significantly higher interest rates, something which ultimately only exacerbates the debt problem.

The other euro zone members seem to be waiting until Greece's need for additional financing becomes acute - and until the pressure to act becomes so great that helping Greece can be sold more easily to their own skeptical populations. Until that happens, details remain wanting. German Chancellor Angela Merkel in particular has been holding her cards close during the financial poker game in Brussels.

Not on the Agenda

At their meeting, the euro-zone finance ministers also discussed two fundamental issues that were not on the agenda. One of them was raised by German Finance Minister Wolfgang Schaeuble in recent weeks when he called for a European Monetary Fund. The second issue was brought up by French Finance Minister Christine Lagarde, who in an interview with the Financial Times, criticized Germany's trade surplus and added German competitiveness to the list of Europe's problems - statements that brought her immediate criticism from Merkel.

Schaeuble's proposal had already been dismissed by his colleagues in recent days as a long-term project. The consensus was that such a fund wouldn't be ready in time to help Greece. There was no new impetus regarding the plan at the meeting on Monday evening.

Lagarde's criticism of Germany also found little support. Her attitude may be shared by many countries whose economies are suffering from German exports, and Germany's export strength has certainly also added to Greece's problems. But German companies are hardly likely to choose to be more expensive and slower, just so their international competitors can catch up. Complaints about German and Chinese exporters are a perennial issue in the international debate on trade imbalances. Sensible suggestions for how to solve that problem, however, are in short supply. (Der Spiegel 16.03)

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