. .


Feb 21 - 27, 2000

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

Iran economic reform may face deadlock after polls

A victory for Iran's reformers in Friday's parliamentary polls would boost President Mohammad Khatami's political reforms but do little for his economic liberalisation.

Khatami's coalition cabinet, a legacy of his 1997 electoral victory, is already deadlocked between advocates of market reform and statists.

Economists say history may repeat itself if reformers clinch a majority in the next parliament, to convene in May.

"We will witness more contradictions with a change in the next parliament. There will be more diversity of economic views," Jamshid Pajuyan, an economist, told Reuters.

"I don't believe the pro-reform coalition has a cohesive economic plan. Most factions don't have a programme." Conservatives who dominate the present assembly have often resisted Khatami's moves for political and cultural opening but remained largely cooperative on economic issues.

AOC to fight for Saudi rights after govt talks end

Japanese and Saudi government ministers failed on Wednesday to resolve a dispute over renewal of an oil concession, forcing Japan's Arabian Oil Co Ltd (AOC) to try to end the fight in less high-profile talks.

Any impact on Japan's economy from the loss of AOC's concession was expected to be negligible as long as Saudi Arabia maintain current supplies, analysts said.

AOC president Keiichi Konaga is due to leave soon for Riyadh carrying new proposals to Saudi Arabia to try to break the deadlock, a company spokesman said.

The proposals reportedly include an offer of $600-700 million to complement Tokyo's offer of $1.4 billion in loans for a $2 billion mining railroad project.

Saudi Arabia is insisting Japan pay for the whole railroad as a precondition for renewing the concession.

In final government efforts before the deadline expires on February 27, Saudi Oil Minister Ali al-Naimi and Japanese Minister of International Trade and Industry Takashi Fukaya held inconclusive talks in Tokyo.

Arabs see democracy lessons in Iran polls

The prospect of a victory for moderates in Iran's elections is riveting the Arab world, whose destiny was profoundly altered by the 1979 Islamic revolution.

"A radical Iran inspired radical Islamists. A moderate Iran will inspire the moderates," Egyptian political sociologist Ibrahim Saadeddin told Reuters. "Secular Arabs and moderate Islamists alike are looking with hope to the Iranian elections." "A victory for the moderates will bring Iran back into the international mainstream and it will be good for the emerging democracies of the Arab world. It will show that even radical regimes can evolve into something more moderate and acceptable." Arab analysts caution that reformist President Mohammad Khatami might not win a landslide victory in Friday's parliamentary election and say key figures of the revolution, such as former President Akbar Hashemi Rafsanjani, will endure.

They say the presence of Farsi nationalists in Khatami's disparate coalition does not herald any lessening of traditional antipathies between Iran and its Arab neighbours.

But the significance of the struggle between Khatami's supporters and hardline clerics, as well as Iran's experiment in combining Islam with democracy, is lost on no one.

In Algeria, torn apart by conflict since the military blocked an imminent Islamist election victory in 1992, moderates said the polls in Iran could entrench pluralism there, smooth Tehran's relations with the West and be a model for the Moslem world.

"The Iran experience shows that Moslems can build a free and democratic government if they are allowed to express their will," said Slimane Chenine, a spokesman for the moderate Islamist-oriented Movement for a Peaceful Society, a junior partner in the Algerian government.

Israel to reconsider handover map

Prime Minister Ehud Barak's leading security adviser said Israel would consider making changes in a proposed handover of West Bank land to the Palestinians.

In a Reuters interview, Danny Yatom called on Yasser Arafat to resume negotiations which the Palestinian President broke off last month.

Arafat had sought to include areas around Jerusalem in the 6.1 percent of the West Bank which Israel was to have transferred to the Palestinians on January 20.

Sudan's Beshir holds talks in Kuwait

Kuwaiti Crown Prince and Prime Minister Sheikh Saad al-Abdullah al-Sabah held talks with Sudanese President Omar al-Beshir, who is on his first visit to Kuwait in a decade, the official KUNA news agency said.

The agency did not give details of their discussions, which were expected to examine ways of normalising relations between the two sides frozen during the 1991 Gulf War.

Kuwait's emir, Sheikh Jaber al-Ahmad al-Sabah, and Sheikh Saad greeted Beshir and his delegation of senior officials and businessmen on their arrival earlier in the day.

Algeria, Jordan agree to strengthen ties

Algerian President Abdelaziz Bouteflika and Jordan's King Abdullah decided to forge ahead with efforts to bolster bilateral political and economic ties and denounced Israel's raids on Lebanon.

King Abdullah and Bouteflika pledged to encourage bilateral investments and to convene in Amman, in April, a commission chaired by their prime ministers to follow up on their decisions, Jordanian officials said.

The two leaders met for one hour at Raghadan presidential palace, at the start of Bouteflika's first visit to Jordan since his election in April.

Kuwait rules out any foreign ownership

Kuwait's new legislation on investment worth billions of dollars by the world's oil majors in the emirate's northern oilfields rules out any foreign ownership of its natural resources, a newspaper said Tuesday.

The legislation for the proposed seven-billion-dollar investment by foreign oil companies, printed in Al-Qabas newspaper, emphasised that "all natural wealth and resources are owned by the state." "All contracts to be signed with foreign investors to develop active oilfields will be done so without infringing on state ownership of oil resources," the bill said.

The new draft law also laid out all provisions that will regulate the operational services that foreign oil companies will provide.

Investors will be offered 20-year agreements which are extendable by two five-year periods, but at least 60 percent and ideally 70 percent of the workforce employed must be Kuwaiti nationals, the bill said.

Saudi to triple Internet subscribers

The Saudi Telecommunications Co (STC) is working to triple the number of Internet subscribers in the kingdom to 300,000 this year, a company official said on Tuesday.

There are currently around 100,000 subscribers in Saudi Arabia, which introduced Internet services in 1999 through the King Abdul-Aziz City for Science and Technology (KACST), the official said.

"There is a plan to increase the number of ports to 35,000 from the current 15,000 to get more customers. It (the plan) is being executed to absorb another 200,000 customers," the official said.

"There is a huge demand for the Internet from individuals and companies in the kingdom," the official told Reuters by telephone from the Saudi capital Riyadh.

Lucent Technologies of the United States said in January it had won a $35 million contract from Saudi Arabia to expand its Internet services.

Qatar to set up $137 mln industrial city in 5 yrs

Qatar is planning to set up a new industrial city for small and medium-scale industries at a cost of 500 million rials ($137 million) within the next five years, the official Qatar news agency QNA reported on Tuesday.

It quoted Energy and Industry Minister Abdullah bin Hamad Al-Attiyah as saying the ministry had started issuing tenders for the project. The minister gave no futher details.

He added that a 300 million rial project to develop the existing industrial city of Messaieed would also be implemented over the next five years.

Attiyah had said last year that the government planned to invest about 400 million rials over the next five years to develop services and infrastructure in Messaieed to attract foreign investment.

He said the money would be raised on a cost-sharing basis with both existing and new companies in the area.

Abu Dhabi non-oil foreign trade up

Abu Dhabi non-oil foreign trade rose to some 22.8 billion dirhams ($6.2 billion) in 1999 from around 20.9 billion dirhams the previous year, the United Arab Emirates (UAE) news agency WAM reported on Tuesday.

WAM quoted an Abu Dhabi Customs Department report as saying Abu Dhabi, the UAE's wealthiest emirate, imported 21.28 billion dirhams worth of goods in 1999.

Re-exports amounted to 850.75 million dirhams and exports reached 628.37 million dirhams last year, the report said. It did not provide comparative figures.

Abu Dhabi is the capital of the seven emirates which make up the UAE.

Gulf Air to borrow $170mln to buy 2 Airbus

Regional carrier Gulf Air said on Monday it expects to sign a $170 million loan with European credit agencies in April to finance the purchase of two new Airbus A330-200s.

Walter Van-West, Gulf Air's vice-president for finance, strategy and information technology, told Reuters "The loan is likely to be signed in April in Paris with a European consortium." Gulf Air officials said each aircraft costs $100 million and the carrier was aiming to finance 85 percent of the total value of the deal through loans. The rest will be financed by the carrier.

Oman Chlorine launches its $26 mln plant

Oman Chlorine Co SAOG officialy launched a chlorine plant built at a cost of around 10 million rials ($26 million), the official Oman News Agency (ONA) reported.

It said Oman's Economy Minister Ahmad bin Abdul-Nabi Mekki opened the plant in Sohar industrial zone in northern Oman. The factory, which has a capacity to produce 10.15 million gallons of hydrochloric acid and 3.91 million gallons of caustic soda a year, was expected to cover the needs of the Gulf Arab state. The factory also plans to produce hydrochloride.

Oman Chlorine's initial public offering in 1997 was 44 times oversubscribed, with 80.75 million subscriptions received for 1.848 million shares representing some 40 percent of the company's capital which were on offer.

Saudi Arabia sold old planes to US firm

Saudi Arabia sold 24 old planes to a US company for $100 million and plans to start work this year on building hangars for its new fleet from Boeing, the national carrier's director was on Tuesday quoted as saying.

Khaled bin Bakr said Saudi Arabian Airline sold 16 L-1011 aircraft, also known as TriStars, and eight Boeing 737-268 aircraft that had been in service for 20 years to the Miami-based Custom Air Support Holding for $100 million.

His comments were published in Saudi newspapers.

The US company had said in December it would convert the L-1011 passenger aircraft to freighters. The privately-held company said it intended to resell some of the planes and lease others.

Iran makes push for WTO membership

Iran's commerce minister made a push for membership of the World Trade Organisation (WTO), and accused unnamed countries of blocking its efforts to join.

"We arrived at the definite conclusion that political matters are influencing the prevention of accession of the Islamic Republic of Iran in the WTO," said Mohammad Shariatmadari, who is attending UN trade talks here.

"Some countries are influencing the secretariat not to allow the application to be put on the agenda of the general council," he said, describing the campaign as an "insult to the international community".

Saddam wants dinar strengthened

Iraqi President Saddam Hussein has urged cabinet ministers to curb rampant inflation in Iraq's sanctions-hit economy and improve its volatile currency by making better use of resources.

Iraqi newspapers on Monday quoted the official Iraqi News Agency INA as saying that Saddam had called on his ministers to "check the deteriorating value of the Iraqi dinar and curb inflation".

Last week the dinar slipped to 2,000 against the US dollar from 1,900 a week before that.

But Saddam urged his ministers to release expenditure on projects which would create more job opportunities for Iraqis hard-hit by United Nations sanctions.

At a cabinet meeting last September Saddam called for public spending to be cut to improve Iraq's economy and reduce inflation.

Oil hits 9-year high, bruising consumers

The price of crude oil rose above $30 a barrel this week, triple the year-ago price to levels not seen since 1991. For those who recall the '70s, bad memories emerge: Double-digit inflation, gas lines and presidents in sweaters urging lower thermostats. Don't count on it this time around, analysts say.

Rising oil prices won't go unnoticed. But they won't cripple the economy like the once did.

"It matters a lot less because the economy has changed," said Kate Warne, oil and energy analyst at Edward Jones.

But while oil is less important, it's hardly obsolete. The gains in oil have showed up at the gas pump, and the cost of home heating oil is rising. Energy stocks, meanwhile, jumped this week as investors anticipate higher corporate profits.

And members of Congress, worried about the bite of higher prices, are pressuring the White House to release the nation's oil reserves.

The jump in oil prices comes as the Organization of Petroleum Exporting Countries, which controls about 40 percent of world oil, continues to adhere to strict production cuts it set last year. And while oil supply has fallen, demand has jumped as Asia recovers from recession.

The cost increases have trickled down. The American Automobile Association said gasoline prices jumped an average of 7.8 cents per gallon this month, bringing the average price of gas to $1.367 per gallon, the highest since December 1990. Pump prices have jumped 40.7 cents since February of last year.

With oil rising, so too has the price of home heating oil. The jump has become political, as members of Congress press the White House to release the nation's reserve of oil.

This week he reiterated calls for the Clinton administration to release part of the nation's 470 million barrel strategic petroleum reserve.