The Weekly Circuit
👋 Good Monday morning in the Middle East!
The latest salvo in the Israeli-Palestinian conflict appears to be quieting this morning in the Gaza Strip, but the flare-up is yet another reminder for investors about the region’s inherent risks. Amid nearly 1,000 rockets fired at Israel by the Iran-backed Islamic Jihad group, scores of Israeli air strikes against the overcrowded coastal territory and more than 40 Palestinians killed, nations around the world expressed hope for curtailing the violence. The two sides agreed to a cease-fire just before midnight on Sunday.
Food Insecurity: While tensions simmer in Gaza and Israel, a broader crisis affecting economies across the MENA region — especially Egypt and northern Africa — is the issue of food insecurity that worsened with Russia’s invasion of Ukraine. While some relief arrived last week with the departure of grain-filled ships from Odesa, The Circuit reports that lack of dependable food supplies presents an enduring threat of hunger and political instability on the continent.
Peace Park: Relations between Jordan and Israel may be chilly, but the two countries are showing modest benefits from their 28-year peace treaty, including a new bridge across the Jordan River and revived efforts to develop the Jordan Gateway Industrial Park.
Snow in Saudi: Does the notion of skiing in Saudi Arabia sound crazy?Not only is the desert kingdom building an outdoor ski resort but it’s bidding to be the home of the 2029 Asian Games. Details below in Circuit Culture.
Welcome to The Weekly Circuit, where we cover the Middle East through a business and cultural lens. Read on for the stories, deals and players at the top of the news. Please send comments and story tips to [email protected].
Ukraine export deal averts grain crisis threatening Egypt and neighboring states across North Africa
As ships loaded with wheat and corn finally departed from the Black Sea port of Odesa last week, it appeared the world had dodged yet another humanitarian crisis in North Africa. Whether the grain deal arranged after weeks of complex negotiations involving Russia, Ukraine and Turkey will hold remains to be seen. What’s clear, though, is the role Ukraine and Russia have played through their exports in preventing civil disruption in capitals from Cairo to Tripoli, Larry Luxner reports for The Circuit.
Food Shortages: “Egypt has probably been affected directly by this war in Ukraine more than any country in the region,” Motaz Zahran, Egypt’s ambassador to the United States, said in an interview, pointing to food shortages that shook past governments. “We consider ourselves among the victims.” The two warring countries have until now supplied 80% of Egypt’s wheat imports — 50% from Russia and 30% from Ukraine — as well as 40% of its tourist traffic. The fighting brought both to a halt, trapping some 20 million tons of grain inside Ukraine, with virtually no room to store it all.
Gulf Watching: Middle East risk manager Ghanem Nuseibeh said the Gulf states — particularly Saudi Arabia, the UAE and Qatar — will do whatever they can to help Egypt, such as financing grain imports, because they fear a repeat of the popular insurrections from 2010 known as the Arab Spring that spread through the region and were touched off, in part, by food shortages and rising prices. “Egypt’s stability is paramount to the Gulf and the rest of the region,” Nuseibeh, founder of London-based Cornerstone Global Associates, told The Circuit.
Getting Worse: David Beasley, executive director of the United Nations World Food Program, said that even before the Russia-Ukraine conflict, the situation in Africa was dire. Then came Ukraine — “a nation that grows enough food to feed 400 million people — from the breadbasket of the world to now the longest bread lines of the world,” he said at a July 19 forum with the Council on Foreign Relations. “It’s going to get much worse,” warned Beasley, whose agency, before the war, typically sourced half the wheat, barley, corn and other grains purchased for distribution worldwide from Ukraine.
Read the full story here.
Three decades on, Israel-Jordan border project revives peace dividend prospects
Nearly three decades after signing a peace treaty, Israel and Jordan took a tiny step forward toward warming ties this week with the announcement by Israeli Prime Minister Yair Lapid that his government would accelerate a long-neglected project to build a joint Israeli-Jordanian industrial zone straddling the banks of the Jordan River, The Circuit’s Ruth Marks Eglash reports.
Tension remains: Touted as a “breakthrough” and a step toward “civil peace,” the Jordan Gateway plan fits snugly within the broader process of normalization taking place between Israel and other Middle Eastern countries. However, while both Israel and Jordan stand to gain economically from this shared venture, lingering tensions between the countries, including anti-Israel sentiment among many Jordanians and Israeli bureaucracy tied up with ongoing electoral chaos, will likely mean progress is slow, analysts and those working on the project say.
Important step: “I’m hesitant to say this signifies a normalizing of relations between Israelis and Jordanians,” Oded Eran, Israel’s former ambassador to Jordan, told The Circuit. “However, if this project does finally come to a conclusion, it will be an important step, psychologically, because it has become a lingering symbol of the failure of the relations between Israel and Jordan,” added Eran, now a senior fellow at the Institute for National Security Studies in Tel Aviv.
Positive dynamic: Ksenia Svetlova, a senior non-resident fellow at the Atlantic Council, a Washington, D.C.-based think tank, and the Israel Middle East program director for Mitvim, an Israeli think tank, drew a parallel between the new momentum on the industrial zone and the Abraham Accords, saying that the Accords might be playing a role in renewing ties and reviving the joint economic plan. “The generally optimistic and positive dynamics of the Abraham Accords have had an impact on Israel’s veteran normalization partners, Egypt and Jordan,” she maintained. “There have been more developments in the past two years than there were in the previous 10 years with both these countries, so I think that generally, there was more inspiration in promoting important economic projects between Israel and Arab countries in the region.”
Investment Watchdog: Saudi Arabia established a new government marketing authority to help raise and oversee some $3.2 billion of investment the kingdom hopes to attract through 2030.
Scouting Startups: Seed Group, which is partly owned by Dubai’s royal family, appointed Tech It Forward as its country manager to scout for investments in Israeli startups.
Dining Out: Abu Dhabi’s Adia sovereign wealth fund will invest in a series of stylish new restaurants as primary partner in the €500 million McWin Restaurant Fund.
Egypt Focus: Saudi Arabia’s Public Investment Fund launched the Saudi Egyptian Investment company, which will focus on a range of industries including infrastructure, real estate, health care and agriculture.
Tissue Transplants: Renewal Bio, an Israeli startup, used stem cells from mice to demonstrate its technology that potentially can create embryo-stage versions of human beings and harvest the tissue for use in transplants.
Postcard from Muscat: Oman has attracted $4.4 billion in tourism investments as it seeks to diversify its economy from dependence on oil production.
Realm of the Sensors: Israel’s Innoviz Technologies landed a $4 billion contract to provide Volkswagen with millions of lidar sensors used in making self-driving cars.
Well-Furnished: Egypt’s Homzmart raised $23 million for its home furnishings e-commerce platform with participation by Saudi venture capital fund STV.
Gates-Funded: Israeli biotech company Eleven Therapeutics raised $22 million in a seed round that included the Bill & Melinda Gates Foundation.
Sky High: Saudi Arabia gave permission for more airlines to overfly its territory en route to Israel, including Cathay Pacific and Air Seychelles.
Lemonade Squeeze: Israel’s Lemonade will pay $145 million for U.S. insurer Metromile, or about 70% less than originally agreed upon, because of the decline in Metromile’s shares since the acquisition was announced in November.
Looking Up: Israel’s Kibbutz Shamir sold its interest in lensmaker Shamir Optical to French-based EssilorLuxottica for a sum estimated at hundreds of millions of dollars.
Bio-banking: Abu Dhabi’s G42 Healthcare will work with Amazon Web Services on a database for research in genomics, bio-banking of body tissue and protein study.
On the Circuit
Kuwait’s Sheikh Ahmed Nawaf Al Sabah, son of the emir, took the oath of office as prime minister after being appointed in July.
Moshe Barkat said he will resign in October as head of Israel’s Capital Market, Insurance and Savings Authority, which supervises some $600 billion managed by institutional investors.
Noga Knaz was appointed by Prytek Holdings as chief executive officer of its corporate venture capital business. She was previously deputy chairperson of Rosario Capital. Prytek has offices in Tel Aviv, Singapore, Chicago and London.
Ahead on the Circuit
Aug. 11-16, UAE: NFT World Investment Expo. International gathering of investors to discuss future trends in the market of non-fungible tokens. Dubai Chamber of Commerce and Industry, Residential Building.
Sept. 5-6, Israel: Cleantech, an international conference bringing together business executives in water technologies, renewable energy and recycling. Jerusalem International Convention Center.
Oct. 23-27, Israel: ECCV 2022. European Conference on Computer Vision holds the biennial event in Israel, gathering companies involved in computer vision and machine learning. Expo Tel Aviv.
Ski Saudi: Saudi Arabia will bid to host the 2029 Asian Winter Games with plans to build the Gulf’s only outdoor ski resort in the northwestern mountains near Tabuk. With massive investment in snowmaking equipment, the Trojena winter resort is part of Saudi Arabia’s trillion-dollar Neom megacity project on the shores of the Red Sea. The Saudi bid includes plans to build facilities for competition in sports including Alpine and cross-country skiing, ice hockey and figure skating.
Hebrew Tunes: Global music companies are taking notice of Israeli bands, according to Variety, even though the country’s estimated $55 million market is comparatively tiny. UMG opened a Tel Aviv office housing a recorded music division and an arm of Universal Music Publishing Group. The Hollywood newspaper said Universal Music Israel’s A&R team has hit the ground running, signing local talents like Michael Ben David and Ozel. Warner Music has opened an office in Israel, announcing in May that Mariah Mochiach would lead a Tel Aviv affiliate as general manager.
Pitching Indies: For those who aren’t quite ready for the major record labels, there’s Israel’s IndieFlow, a one-stop shop for artists to build and promote their careers with the help of a software that organizes everything needed to grow a musician’s brand, as Jewish Insider’s Sophie Cohen reports.