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Dec 06, 1999

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

Doubts grow in Iran over quick recovery

Doubts are growing in Iran over quick economic recovery, amid parliamentary resistance to President Mohammad Khatami's liberalization plan and apparent policy confusion.

Parliament, dominated by Khatami's opponents, recently blocked several key market-oriented elements in the reformist president's economic plan for the next five years and imposed provisions deemed contrary to the programmers spirit.

A senior Khatami official said an earlier forecast annual six per cent economic growth was beyond reach because of amendments to the plan, due to begin in March 2000.

"Laws were passed which are contrary to the general direction of the plan. This can strike many blows and damage the goals of the plan," said Massoud Nili, deputy head of the Plan and Budget Organisation (PBO) and a top architect of the plan.

He told an economic conference the amendments were expected to limit growth to four per cent or less. That would still be impressive, given 1.6 per cent growth in the year to March 1999.

Deputies vetoed a Khatami proposal to ease high state subsidies on food and energy as part of gradual market reforms, and imposed ceilings on price rises on goods and services provided by the state.

They also demanded more spending on social welfare to ease economic hardship on the poor and avert popular discontent.

Nili said the changes would lead to jobless and inflation rates of 19 and 18.3 per cent respectively, instead of the originally forecast 12 per cent and 16 per cent. Inflation is 22 per cent in the current year and unemployment about 16 per cent.

The amendments raised state spending by an estimated 205 trillion rials, on total forecast state earnings of 800 trillion during the plan, about half of it from oil exports.

The increased spending is equivalent to $68 billion at the official exchange rate, or a third of that on the black market.

The harshest blow was a move by hardline deputies which blocked a government initiative to generate 33 trillion rials by raising Iran's energy prices, some of the world's lowest.

Qatar launches $460 mln gas liquids plant

Crown Prince Jassem bin Hamad Al-Thani on Tuesday laid the foundation stone for a 460 million dollar gas liquids plant to be fed by Qatar's giant offshore North Field, the official news agency QNA said.

The project — a joint venture between Qatar Chemicals Co. (Q-Chem) and Phillips Petroleum Co. of the United States — is part of a 2.5 billion dollar investment in the Gulf emirate's gas sector.

It is due to go on stream in early 2002, producing around 3,150 tonnes of ethane, 5,000 tons of propane and butane, and 1,200 tons of condensates, QNA said.

Italy's Snamprogetti and Hyundai Engineering and Construction of South Korea will build the plant, which is being financed by a consortium of 14 banks led by Britain's Barclays Bank.

The North Field contains proven non-associated reserves of more than 10 trillion cubic metres (350 trillion cubic feet), making Qatar the world's third-richest country in gas reserves after Russia and Iran.

Gulf leaders reach compromise over tariff deal

Oil-rich Gulf Arab states reached a deal on Sunday to unify their customs tariffs in March 2005, resolving a last-minute dispute that threatened their 18-year ambition to create a regional trading bloc.

"The higher council has approved the customs tariffs....The implementation of the customs union will be in March 2005," Saudi Arabia's Foreign Minister Prince Saud Al-Faisal said in Riyadh, where Gulf Arab leaders opened their summit on Saturday.

Prince Saud told a news conference the agreement outlined three categories of goods. He said some were excluded from tariffs while basic commodities would have a 5.5 percent tariff and other goods would carry a 7.5 percent duty.

"During this period (until March 2005) other measures will be finalised such as single entry points, re-exports, the distribution of revenues and the role of customs points," he said.

The deal was reached after tortuous, closed-door debate to resolve disagreements, mainly between Saudi Arabia and the United Arab Emirates, over the percentages of the unified tariffs and the start date for implementation, officials told.

A common tariff has been a goal of the GCC since it was formed in 1981. Diplomats say such a deal is needed to create a regional trade bloc and a trading zone with the European Union.

Gulf officials said earlier on Sunday that Saudi Arabia, which has some of the highest tariffs in the six-nation Gulf Cooperation Council (GCC), had reservations about a compromise proposal of five to seven percent.

Leaders from Bahrain, Kuwait, Oman, Qatar and Saudi Arabia and senior UAE officials were meeting in the Saudi capital Riyadh for their annual summit which ends on Monday.

Bahrain to host Islamic banking conference

Bahrain plans to host a three-day Islamic banking conference from December 4 to discuss the latest developments in Islamic banking and challenges in the new millennium, organisers said on Tuesday.

They said the finance ministers of Bahrain and the United Arab Emirates as well as the deputy finance minister of Brunei and Bahrain's central bank governor would be the key speakers.

Around 250 participants are expected to attend the annual conference on the island, the Gulf's main financial and banking hub, they added.

Baghdad, Pretoria aim to boost cooperation

A South African delegation held talks on plans to boost economic and political cooperation with Iraq, the official news agency INA said.

It said the 30-member delegation, led by Deputy Foreign Minister Aziz Bahad, met Foreign Minister Mahammad Said al-Sahhaf, who in June represented Iraq at the inauguration of President Thabo Mbeki.

They also met Commerce Minister Mahammad Mehdi Saleh and officials at the agriculture ministry, said

Arab unions hold 10th conference in Damascus

An international gathering of Arab unions opened in Damascus Monday to discuss the economic and social conditions of Arab workers and the challenges of globalization.

The 10th International Confederation of Arab Unions' congress will cover the "economic and social conditions of Arab workers and the liberation of Arab lands occupied by Israel," the organizers said.

The representatives from 19 Arab countries at the four-day conference will also discuss "the negative consequences of globalization and how to safeguard unions' rights and gains," they said.

Jordan King heads East to expand economic ties

Jordan's King Abdallah II and his wife Queen Rania head off East on a nine-day tour of Japan, South Korea and China to renew old friendships and weave stronger economic and bilateral ties.

The visit coincides with the start of a new era for the cash-strapped desert kingdom with a formal announcement due Tuesday in Seattle, Washington, of Jordan's official entry into the World Trade Organisation (WTO).

Much of the tour will be devoted to Japan — Jordan's main creditor nation which accounts for 20 percent of the kingdom's total foreign debt estimated in September at around 1.8 billion dollars.

Since ascending the throne in February Abdullah has said that strengthening the economy was his top priority, and has toured creditor nations to strike debt reduction deals and woo new business partners.

Gulf trade surplus with Japan more than halved in 1998

Two-way trade between Japan and the Gulf Arab states slumped by 23 percent to 31.695 billion dollars in 1998 due to the collapse in oil prices, an official report said Sunday.

The Japan External Trade Organisation (JETRO) said the surplus in favour of the Gulf countries shrank by more than 50 percent to 12.535 billion dollars in 1998, compared to 25.463 billion dollars the previous year.

Japan's imports of crude from the six nations of the Gulf Cooperation Council (GCC) also slipped by three percent, from 1.203 billion barrels in 1997 down to 1.168 billion barrels last year.

But the Gulf monarchies supplied almost 50 percent of Japan's fuel oil needs last year, while crude made up nearly 52 percent of overall trade. Japan's exports were mainly of machinery, cars and raw materials.

The United Arab Emirates (UAE) was in top place as supplier of 18.8 percent of Japan's fuel needs with 443 million barrels, followed by Saudi Arabia with 384 million barrels, a share of 15.8 percent.

The UAE and Saudi Arabia accounted for 70 percent of Japan's overall two-way trade with the Gulf in 1998, exchanging goods worth 11.2 billion dollars and 11.1 billion dollars respectively.

Gulf aluminium to overcome EU import tax

A key Gulf Arab aluminium producer said on Saturday regional exporters will eventually gain unrestricted access to markets in the European Union which levies a six percent tax on some aluminium imports.

"If we keep the pressure on and keep pushing the issue hard, they will (EU) come around and meet our demands," vice-chairman of Dubai Aluminium Co (Dubal) Mahammad Al-Abbar told Reuters in an interview. Abbar also heads the government of Dubai's Economic Development Department.

Abbar partly blamed officials in the United Arab Emirates and other Gulf Cooperation Council (GCC) states for failing to block the tax by main trading partner the EU after they spent billions of dollars on greenfield aluminium projects in the past two decades to lessen dependence on oil exports.

Syria 'must' reform economy

Syria's leaders have accepted the need for market-oriented economic reform but have yet to produce a badly needed vision of where they want the changes to lead, an independent Syrian economist said.

"Now the thinking of the party and the government officials and overall in the business community is that we have to have economic reform along the lines of a market economy, major private sector growth," Nabil Sukkar told Reuters. "I think there is a consensus that is building around these broad elements of reform."

Syria behind on economic growth Sukkar, who in the 1970s worked for the World Bank and now runs the Syrian Consulting Bureau, said reforms were urgently needed to boost annual economic growth from rates of two to three percent seen since 1995 — far below the level needed for a population growing more than three percent a year.

GCC summit to set framework for a common market

Gulf Arab leaders gathered to give the go-ahead for a long-awaited customs union as the basis for a common market in 10 years time, at a three-day summit opening here in the Saudi capital.

The leaders of Bahrain, Kuwait, Oman and Qatar flew in to be greeted on the tarmac by Saudi Crown Prince Abdallah bin Abdel Aziz, who is in charge of the everyday business of government in Riyadh.

Saudi King Fahd looked well as he waited in the airport's VIP lounge for the arrivals, exchanging only a few words as he clutched a walking stick.

The United Arab Emirates (UAE) was represented by its vice president, Shaikh Maktoum bin Rashid Al-Maktoum.

The oil-rich Gulf Cooperation Council (GCC) has for the first time put the economy above the political considerations of its ties with neighbouring Iran and Iraq as it prepares for its 20th summit meeting.

Oman opens new station to treat gas

Oman officially launched a gas treatment station in central Oman, the first stage of an upstream project under an ambitious plan to turn the Gulf state into a leading gas exporter.

The official Omani news agency ONA quoted Oman's Oil and Gas Minister Mohammad bin Hamad bin Seif Al Ramhi as saying the gas station in Saih Rawl had been completed and would supply natural gas to a liquefaction plant at Sur, in eastern Oman.

Oman inks by $25.5m deal with Hyundai

Oman signed a 9.8 million Omani rials ($25.5 million) dredging and reclamation contract with South Korea's Hyundai Engineering and Construction Co for a new port in the north, the official news agency ONA said.

Oman had said the contract will take 21 months to complete.

Oman had launched the project in October to build the new port in Sohar, which it is.seeking to develop as a major industrial area. In June, it signed a $65.5 million deal with South Korea's Daewoo Corp to build a reef at the port.

GAS starts trial output at new plant

A unit of Saudi Basic Industries Corp (Sabic) has started trial production at a new plant for industrial gases in the Red Sea city of Yanbu.

National Industrial Gases Company (GAS) has begun trial production of oxygen and nitrogen at a new plant with capacity of 1,200 tonnes per day of gaseous oxygen, 170 tonnes per day of liquid oxygen, 1,500 tonnes of gaseous nitrogen and 150 tonnes of liquid nitrogen, Al-Eqtisadiah daily said.