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The Economy The Consumer Price Index (CPI) for January rose considerably; by 1.1%, due to the major depreciation (6.1%) in the shekel. This was largely the result of interest rates that were cut by 2% at the end of December. January's index does not reflect the full intensity of the devaluation and the ensuing price hikes, which will be reflected in the CPI for February, to be published on March 15. Due to the high CPI, the Governor of the Bank of Israel is expected to raise interest rates by at least 0.5%. This week, the Governor said that the Bank will review the data and decide whether to adjust interest rates accordingly. The Minister of Finance believes that interest rates in Israel should be the same as in the US - 1.75 %. The Motorola Corporation has decided to focus on the development and manufacture of its telemix products (cellular communications in motor vehicles) in Israel. The Motorola plant in Arad will be responsible for manufacturing the system, and the telemix division will coordinate the design and export of fixed cellular systems in cars. The demand for such systems in Israel is relatively high, compared with other markets around the world, due to Israeli legislation that prohibits driving while speaking on mobile phones. This law exists in only a few countries. Several countries that are looking into the possibility of similar legislation, are also considering the possibility of also prohibiting the use of hands-free systems during driving. A plan by international corporation Nestle to establish a $3.5 million development center for salted and sweet snacks in Israel, was approved by the Ministry of Trade's Investment Center this week. The company will receive government grants to help implement the program. Nestle is one of the world's leading food companies producing coffee, chocolate, and milk products. Microsoft and the Israeli government have signed a strategic partnership agreement, as part of Israel's "accessible government" project. The agreement includes major activity by the international Microsoft corporation in Israeli government computer projects. The agreement was signed in Paris by Microsoft Chairman, Bill Gates, and Nir Gilead, Finance Ministry Comptroller General. Under the agreement, Microsoft will help the Israeli government carry out the project, designed to improve service to the public through the Internet, and to create new on-line government services. Microsoft will also allow Israel to use software licenses purchased by the State in the past, in the development of the Merkavah project - lateral development of government ministries. In addition, Microsoft will donate licenses to Microsoft servers for the Lehava project, aimed at closing the digital gap in the weaker sectors of Israeli society through the establishment of community computer centers. The Israeli company Electra is expanding its investments in income-yielding real estate ventures overseas and is currently closing a new deal: the purchase of 90% of a residential project in the center of Montreal, Canada for NIS 137 million (Can. $ 47M). The transaction was signed with a group of three companies that have acquired several buildings in the city, leased to tenants for different periods. One of the buildings is leased to the Canadian government for 10 years. Annual rents amount to Can. $8.2 M (NIS 24 million). Net rental income after expenses comes to Can $4.95 M - a net yield of 10.5%. The Israeli company RSL signed an agreement with a European country this week, according to which RSL will supply speedometers for the mouths of the cannons. The items, that will initially cost a total of $2 million, will be supplied to the largest industrial company in the European country (whose name has not been released). The speedometer, which has been chosen as standard equipment for the US army, is an original development by the Israeli company. Further orders are expected. RSL manufactures smart electronic products and systems for the civilian and military market. The Israeli company Mei Eden purchased in just one week, three European companies that market mineral water, at a cost of Euro 30 million. It first acquired two companies in northern Europe that supply mineral water in jars to homes and offices in Estonia, Latvia, Lithuania, Norway and Sweden, at a cost of Euro 28 million. Finally, Mei Eiden purchased the shares in the Spanish company Aqua 2000 for Euro 2 million The Israeli company LIMS, which develops data-management systems for laboratories, has won a tender to supply such systems to the forensic institutions in Puerto Rico. The tender, worth almost half a million dollars, includes the supply of licenses for the Start LIMS program and assimilation services. This project is in addition to similar projects that the company has supplied to America and western Europe in recent years. BVR Systems, part of the Elissra group controlled by Koor, and a manufacturer of investigative systems for air battles and flight simulators, is negotiating the purchase of an American company specializing in aircraft simulators. The purchase of the American company will allow the Israeli company to compete on an equal footing against American companies in a tender to supply simulators for the advanced F-16 fighter planes purchased by the Israel Air Force. This week, BVR. revealed a series of advanced technology products that it has already begun to supply to foreign armies. One such product, simulators for the armored corps, was sold to an Asian company for $40 million. Another development, a training and study system for naval forces was sold to a foreign company for $12 million. A training and study system for air battles was sold to the South African air force for $43 million. The Israeli fuel company Delek is negotiating for the purchase of a chain of gas stations in Turkey. In recent years there has been a decline in profits in the Israeli oil market, and oil companies in Israel have begun to examine the purchase of oil assets overseas. A few months ago, Delek acquired 249 gas stations in Louisiana and Tennessee for millions of dollars. The fuel company Allon purchased the oil-related assets of the Totalfina group in Texas and New Mexico for $150 million.
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