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Oct 16 - 22, 2000

Israeli gun-ships pound Palestine offices

Israeli helicopter gun-ships blasted Palestinian targets in the West Bank and Gaza Strip with missiles on Thursday to avenge the killing of three Israeli soldiers by a lynch mob.

A senior Palestinian official accused Israel of unleashing an allout war and appealed for international intervention. The Israeli army said its helicopter attacks were merely a token response.

Helicopters struck Palestinian targets in Gaza City near Palestinian President Yasser Arafat's office in a steep escalation of two weeks of violence in which 97 people, almost all of them Arabs, have been killed. Arafat was unhurt.

"Arafat is fine and he is stronger than before," Palestinian security chief Mohammed Dahlan said, adding that the Palestinian leader was "in a safe place".

The Israeli army said earlier that two of its soldiers, whom it described as uniformed reservists, had blundered into Ramallah and were detained in Palestinian police headquarters before a mob stabbed them to death.

"What happened...is unforgivable, intolerable and we didn't establish a state so that Jews would be lynched," said Israeli Deputy Defence Minister Ephraim Sneh. "We established it so that never again would Jews be lynched."

Sneh said Israel was investigating whether a third soldier had been with the other two and if he was missing.

Palestinian officials said it was unclear what the soldiers were doing in the area and that Palestinian security forces tried to save them from the crowd outside the main police station in the town, north of Al Quds.

Four missiles struck the main Palestinian security headquarters for the West Bank, the witnesses said.

At least 12 people were hurt and nine missiles were fired on Ramallah, witnesses said.

Oil prices soar to 10-year high

World oil prices skyrocketed Thursday to 10-year highs above 35 dollars a barrel amid acute market nervousness over a dramatic escalation of the Middle East crisis.

Prices surged more than 10 per cent, before easing back sharply below 34 dollars in a trading frenzy that was sparked by Israeli rocket attacks on Palestinian targets and a blast on a US destroyer in the Gulf, possibly caused by a terrorist attack.

"The market has just gone crazy," said Royal Bank of Scotland analyst Andrew Hartree. "It's a combination of Israel going ballistic and of the US destroyer."

In London, the Brent North Sea benchmark crude, which had closed at 31.79 dollars a barrel on Wednesday, surged more than 11 per cent to 35.30 dollars, before easing back to 33.50 dollars.

In New York, the price of light sweet crude for the November delivery contract firmed more than three dollars to 36.40 dollars before softening, as investors fretted that events in the Middle East could interrupt supplies from the vital producer region.

The first upward spike in prices hit screens early Thursday afternoon as the news that a US destroyer had been involved in an explosion in the Yemeni port of Aden filtered through.

The market remains concerned that the escalating crisis will draw in regional power brokers such as Saudi Arabia, the world's number one oil producer and kingpin of the Organisation of Petroleum Exporting Countries (OPEC).

Oil prices soared to levels not seen since the 1990 Gulf War in September. The market was concerned that supply might struggle to meet demand if the winter turned out to be cold because oil stocks were at chronically low levels.

Prices had since eased after OPEC promised to boost its output and Washington decided to mobilise a strategic petroleum reserve, but the market remains highly volatile because of the tight supply.

Suicide boat kills five US sailors

An explosives-laden boat rammed a US Navy destroyer at a Yemeni port on Thursday in what US officials said was an apparent suicide bombing that killed five sailors aboard the warship.

US Navy officials in Bahrain, where the Fifth Fleet is based, said the small boat rammed into the USS Cole, one of the world's most advanced guided missile destroyers.

The blast also injured 36 others aboard, five seriously. Twelve were missing several hours after the explosion caused a big hole on the left side of the listing vessel, which was on a refuelling stop at Yemen's southern port of Aden.

Syria sets 7b 2001 budget

The Syrian government said Tuesday it envisions a 2001 budget of 322 billion Syrian pounds (7 billion dollars), an increase of 17 per cent over the previous year, according to the official SANA news agency.

No details were given on forecast revenues, outlays or sectoral distribution, but the budget will have to reflect a 25 per cent hike in public sector salaries that went into effect last month.

The budget must still be approved by parliament, which inaugurated its 2000-2001 session on Tuesday.

The budget for 2000 forecast expenditures of 275.4 billion Syrian pounds (5.98 billion dollars), an increase of 7.8 per cent on 1999.

Arabs unlikely to reach for oil weapon

For Arab states enraged by Israeli killings of Palestinians, there could hardly be a better moment to unsheath the oil weapon and punish Western support for the Jewish state. But at a time when prices are high and rich nations are crying out for more oil, the signs are that Arab producers are unwilling to risk a petrodollar windfall by cutting exports.

"This is not even being talked about. It is not being considered. It is out of the question," a source familiar with Saudi thinking told.

"Using the oil weapon would be using a weapon against ourselves. We would lose status in the world order and our economies would be hurt," he added.

Arab debt hit $375 b in 1999

The level of public debt in Arab countries reached 375 billion dollars last year, the head of the Arab Monetary Fund (AMF) said Monday.

The high level of indebtedness was largely due to some governments setting up economic projects "which it is beyond their means to finance", Jassem Al-Mannai told a conference on public debt in the Emirati capital Abu Dhabi.

The figure included 156 billion dollars in foreign debt.

Mannai said domestic debt among members of the Arab League was 219 billion dollars, or 41 per cent of their global Gross Domestic Product (GDP).

First Islamic e-bank launched

The first global Islamic bank on the Internet and the first e-bank in the Middle East and North Africa was launched with a paid-up capital of $32.5m by a group of investors from the Gulf states.

The bank is poised to provide a wide range of Islamic Sharia compliant financial instruments to investors, including the foreigners. The bank's investors included Islamic banks and financial organisations in Bahrain and Saudi Arabia. The Jeddah based Injazat Technology Fund one of the shareholders in this first ever web bank in the region.

As per the chief executive of the bank, it will not be just another portal or a dot com site, rather it will be an independent entity that will serve a large spread population of investors and customers.

The bank would be based in Bahrain, the Gulf's traditional banking and financial hub. It is not known yet, when the bank would start operations. The new bank, is to cater to over 1.3m Internet equipped Muslims in addition to possibly the non-Muslim customers who are interested in investing in high yielding Islamic investment products.

Saudi FM meets Irani President

Saudi Foreign Minister Sheikh Saud al-Faisal met and conferred with President Seyed Mohammad Khatami. Referring to the deep interest of authorities of both Iran and Saudi Arabia to boost the Tehran-Riyadh bilateral relations, President Khatami termed as "very successful and good" the ties between the two states, IRNA reported.

President Khatami stated that the neighbourhood of Iran and Saudi Arabia as two big powers in the region has greatly contributed to promotion of the Muslim world's standing and has brought about positive results for all Muslims at the international arena.

Turkey sends relief goods

An aircraft from Istanbul carrying a surgeon among a Turkish delegation landed at the Iraqi capital on Monday in the latest initiative against a decade-old UN air embargo.

The Arkas air flight, the first from Turkey since the campaign against the sanctions began in August, was to be followed by a second Turkish aircraft on Tuesday, a Turkish official said in Baghdad.

Jordan halt inspections

Jordan has called for British insurers Lloyd's to halt its inspections of imports through the Jordanian port of Aqaba bound for sanctions-hit Iraq, Prime Minister Ali Abu Ragheb said Wednesday.

Iraq demands oil payment in Euros or else

Iraq could suspend oil exports if the United Nations fails to convert to euros billions of Iraqi dollars blocked in special account, the central bank's deputy governor told a weekly published Thursday.

"Iraq may suspend crude exports if the United Nations refuses to reply favourably to its request to convert into euros its account at the French bank BNP," deputy governor Abdel al-Ilah Boutros told Al-Zawra. Iraqi Finance Minister Hekmat Ibrahim al-Azzawi announced last month a decision to ditch the dollar in foreign trade transactions.

Hizbollah, Israel duel pressures Lebanese pound

Fears of a regional military confrontation put pressure on the Lebanese pound with the central bank heavily intervening to keep the exchange rate stable, dealers said.

They said Banque du Liban supplied the market from its reserves with all the $65-$100 million demanded, but it still had ample tools to mount a prolonged defence of the currency if Israel launched a military strike on Lebanon.

Financial concern was sparked by an exchange of threats between Israel and Lebanon's Hizbollah. Israel threatened action if Lebanon did not reign in Hizbollah and the guerrilla group said it would hit back.

WB approves $9.5 m credit

The World Bank on Tuesday said it had approved a 9.5 million dollar credit to the Palestinian Authority to improve solid waste treatment and environmental monitoring in the Jenin district of the West Bank.

The project targets 200,000 people, who will benefit from the closure of pollution-causing dumps, according to a Bank statement.

The overall project cost is 14 million dollars. The Palestinian Authority will contribute 1.25 million dollars and the European Union 3.25 million.

Gulf official: EU not serious on GCC trade pact

A senior Gulf Arab official said on Sunday the European Union was "not serious" about forging a long-stalled free trade pact with the Gulf Cooperation Council (GCC).

"They (EU) want to keep restrictions on our exports, tax our products and be nice to European producers of petrochemicals," said Abdullah Al-Kuwaiz, general manager of Bahrain-based Gulf International Bank (GIB).

GIB is majority-owned by state agencies of the six GCC countries Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain and Oman.

Iran seeks foreign partners for LNG projects

Iran is looking for foreign partners to set up two major liquefied natural gas (LNG) projects by 2005, a senior Iranian official said on Monday.

"We are looking for two major international groups which can provide modern technology and take charge of marketing and shipping," said Ahmed Rahgozar, deputy managing director of international affairs at National Iranian Oil Company (NIOC).

Briefing international oil and gas executives at a gas seminar in the Qatari capital, Rahgozar said the two projects are aimed at tapping Iran's mammoth gas reserves to produce 15 millions tonnes a year of LNG in the country's third five-year plan which began this year.

Iraq willing to do business with Kuwait

Iraq is willing to sign contracts with Kuwaiti companies as part of the UN-sponsored program that lets Iraq sell oil to purchase basic necessities, Iraqi Trade Minister Mohammed Mehdi Saleh said Monday.

"We affirm that we have no reservations about commercial transactions with Kuwaiti companies, if they asked to supply goods to Iraq as part of the 'oil-for-food' program," Saleh told the Iraqi parliament.

Iraq has commercial ties with most Arab countries, which account for 45 per cent of Iraq's trade, he said.

Iraq central bank ditches dollars

Iraq's central bank has begun to buy european currencies, following Baghdad's decision to stop using the dollar, the INA agency reported.

The central bank said in a statement Sunday that it was "disposed to buying european currencies against their equivalent in American dollars".

The statement said that "the currencies which will be bought are the French franc, the German mark, the Austrian schilling, the pound sterling, the Dutch florin and the Italian lira".

Kuwait braces for biggest surplus in years

Oil-rich Kuwait, which made a record post-Gulf war surplus of 3.9 billion dollars last year, is bracing this year for the biggest surplus in almost two decades thanks to high oil prices, a think-tank said Saturday.

The independent Al-Shall Economic Consultants said that based on the current oil price and production level, Kuwait is expected to post 3.95 billion dollars of surplus during the 2000/2001 fiscal year.

Qatar sets up development fund

The wealthy Gulf emirate of Qatar on Sunday announced it had set up a development fund with launch capital of 200 million dollars to finance projects in Arab and Islamic countries.

The Qatar Fund for External Development was set up at the behest of the Emir Sheikh Hamad bin Khalifa Al-Thani to aid "economic development in the poorest Islamic countries," the official QNA news agency said.

Kuwait, Saudi Arabia and the United Arab Emirates have also launched similar funds financed largely through the oil and gas wealth of the Gulf.