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Feb 28 - Mar 05, 2000

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

Egypt, Israel ties survive 20 tense years

Egypt and Israel, once deadly enemies, look back this week at 20 years of diplomatic relations thankful to be at peace, but still frustrated with each other.

Israel's raids on civilian targets in Lebanon in reprisal for guerrilla attacks in the occupied south drew heated criticism from Cairo, pointing up the enduring strains of a peace forged after three wars in Israel's first 25 years.

President Hosni Mubarak's weekend visit to Lebanon, where he endorsed the right of Lebanese to resist Israeli occupation, signalled anger at Israel for endangering wider peace-making, argued Tahseen Bashir, former adviser to Mubarak's assassinated predecessor Anwar Sadat.

"Egypt, like many others, was shocked that escalation in Lebanon was ruining the peace process unnecessarily. We don't want it to fail, we want it to succeed," he said.

Israeli Deputy Defence Minister Ephraim Sneh denounced Mubarak for legitimizing the struggle of Hizbollah guerrillas fighting to oust Israel from Lebanon.

Algeria's Bouteflika confers with Moroccan envoy

An envoy of Moroccan King Mohammed held talks with Algerian President Abdelaziz Bouteflika in an attempt to improve strained relations.

Algerian state-run radio said the envoy, Youth and Sports Minister Ahmed Moussaoui, delivered an oral message from the Moroccan monarch to Bouteflika.

It gave no details about its content but quoted Moussaoui as saying his visit was aimed at improving bilateral ties.

Relations between Algeria and Morocco have been cool during much of the past four decades due to regional rivalry and a long dispute over the Western Sahara.

The ties deteriorated in September after Bouteflika said Rabat had become a haven for radical Muslim rebels trying to topple the Algerian government. Morocco denies the charge.

Gradual OPEC increase from April 1 seen

Officials from OPEC Gulf Arab member states said the 11-member producers' group was headed for a gradual production increase from April 1.

The officials, who declined to be identified further, said there was growing support amongst producers inside and outside the Organisation of the Petroleum Exporting Countries to loosen supply curbs to cool down high oil prices.

But they said any increase would be minimal. One official said the initial increase could be between five and eight percent or about 1.25-2.0 million barrels per day (bpd).

"There is support for a gradual and minimal increase, not a big one, from April 1," one official said.

Another official said how much to release into the market and when was also under discussion.

Other officials said the group was keen not to unleash too many barrels too quickly to avoid a price collapse.

On Wednesday, Gulf Arab oil ministers from OPEC members Saudi Arabia, Kuwait, UAE and Qatar and non-OPEC Bahrain and Oman agreed to work with other producers to stabilise the market and avoid harming the world's economy.

But they did not say if this action would include releasing more supplies to cool off high prices and replenish dwindling fuel stockpiles.

Producers have been under pressure from the world's biggest oil consumer, the United States, to loosen the reins on output after a collective production cut of 4.3 million bpd since March last year pushed oil prices to nine-year highs.

Influential Saudi Oil Minister Ali Al-Naimi is to meet his Venezuelan and Mexican counterparts in London on March 2 for talks. The trio is expected to urge other producers to loosen the reins on the output cut pact which expires on March 31.

Kuwait stock market falls

Kuwait's stock market fell on Wednesday for the fourth consecutive day to a new low for the year, ending the trading week just above a 4-1/2 year low.

The benchmark Kuwait Stock Exchange (KSE) ended the week down 10.4 points at 1,373.6 points after a 16.7-point decline last week. It fell during Wednesday's 2-1/2 hour trading session to 1,372.2.

The index closed down 4.7 percent from the start of the year and 51.6 percent below an all-time high recorded in November 1997, mainly due to an economic recession and lack of investor confidence despite improving finances by the OPEC member.

Egypt Watany says Deutsche Bank, CitiBank eye stake

Deutsche Bank AG and Citibank have held talks to buy a controlling stake in Egypt's Watany Bank, Nazly Dahy, assistant general manager of Watany, said on Wednesday.

Dahy said Deutsche was in talks to buy 54 percent of the shares of Watany at 43 Egyptian pounds ($12.55) a share, while Citibank and one other bank had also held talks over a stake.

Watany Bank's shares were up 1.36 pounds, or nearly the five percent maximum allowed by the bourse, at 28.74 pounds.

A market source had said Watany's share price was already moving on a strong rumour that Deutsche was set to buy 54 percent of Watany Bank at 43 pounds a share.

Jordan King task force to develop Aqaba port

Jordan's King Abdullah II has given a group of experts a six-week deadline starting to draw up a plan to develop the southern port of Aqaba into a major seaside resort and economic hub.

Abdullah formed the committee on Tuesday during a meeting with the 20-member Economic Consultative Council which he chairs to implement social, economic, administrative and educational reforms in the kingdom.

US, Palestinians sign LoI

The United States and the Palestinian Authority signed a letter of intent (LoI) on energy cooperation that Washington said it hoped would enhance economic development in the West Bank and Gaza.

US Energy Secretary Bill Richardson, who is on a tour of the Mideast, signed the deal with senior Palestinian Authority official Abdulrahman Hammad in the presence of Palestinian President Yasser Arafat.

Industrial zone

The Palestinian Authority and Israel shrugged off deadlocked peace talks to break ground on a joint industrial zone project, aimed at boosting economic prosperity and paving the way for peace.

Israeli Industry and Trade Minister Ran Cohen and his Palestinian counterpart Sa'id Al-Krunz lay a cornerstone for the industrial park in the northern West Bank town of Jenin.

Aimed at delivering the fruits of peace to Palestinians and Israelis alike in the form of jobs, the industrial zone was the second such project between the two sides since the opening of the Karni industrial estate in early 1999.

Israel-Egypt gas pipeline

US Energy Secretary Bill Richardson urged Israel and Egypt to push ahead with a long-planned natural gas pipeline project, saying regional energy cooperation would lead to warmer ties.

Richardson also encouraged Israel to use high technology to develop alternative energy sources, particularly solar energy, and lessen dependence on oil imports.

Israel and Egypt have been talking about a natural gas pipeline for years. But setbacks in Middle East peacemaking have hampered progress. The line is planned to run under the Mediterranean from Egypt to Israel, then to Lebanon and Turkey.

Saudis aim to take over Japan oil concession

Saudi Arabia is finalising plans to take over operations in the Neutral Zone as a deadline to renegotiate terms of a Japanese oil concession looms, the Middle East Economic Survey.

The weekly industrial newsletter quoted "authoritative Saudi sources" as saying negotiations between Saudi Arabia and Japan's Arabian Oil Company (AOC) will terminate "one way or another" on February 27, the day AOC's offshore concession ends.

AOC President Keiichi Konaga has been in Saudi Arabia since last week to try to hammer out an agreement. Talks had been deadlocked over Saudi Arabia`s request that Japan build and operate a $2 billion mining railway in return for the renewal, a demand Japan has refused.

The Japanese government has offered an interest-free $1.4 billion loan, but this has been rejected by the kingdom.

Japanese media reported last week that AOC has offered $600-$700 million to Saudi Arabia to try to win an extension of the concession in its latest proposal.

MEES said the Saudis were upset that the Japanese government had withdrawn from the negotiations, leaving AOC to handle it on its own.

"The Saudi rejection of (the) Japanese government offer therefore came as no surprise. But — following the Japanese government's decision to withdraw from the fray and leave the field to AOC — it has all been downhill," MEES said.

MEES said the Saudis have taken a crucial step in preparation for the takeover of the kingdom's half-interest in the AOC concession — Kuwait holds the other half — when they invited Saudi employees working at the AOC concession to voluntary transfer to a unit set up by the kingdom to take over the concession from AOC.

Lebanese economy

In a move that signals growing world confidence in Lebanon's promising economy, international financial institution Standard Chartered PLC has announced its acquisition of a majority of the share capital of the six-branch Metropolitan Bank of Lebanon, according to a Headline Public Relations press release dated Feb 22nd.

As per the terms of the agreement, Standard Chartered PLC will control 89 percent of the share capital while the Baaklini family, founders of Metropolitan Bank, will retain the balance 11 percent. Following the acquisition, the bank will re-branded Standard Chartered s.a.l.

Islamic bonds, T-bills

Bahrain is studying plans to issue Islamic government bonds and treasury bills to help boost liquidity in the Islamic financial market, the governor of Bahrain's central bank said.

Bahrain Monetary Agency (BMA) governor Sheikh Abdullah bin Khalifa Al-Khalifa told a banking seminar the proposed bonds and treasury bills would support the creation and developing of an Islamic financial market in the island.

Bahrain, the Gulf's main financial and banking hub, is home to around 18 Islamic financial institutions.

It was not immediately clear how the planned bonds and treasury bills would deal with the issue of interest, which is banned under Islamic sharia laws.

Deposit certificates

Oman's Bank Muscat International has issued deposit certificates worth 10 million rials ($26 million), the first Omani bank to issue such certificates, a senior bank official said.

Sunder George, BankMuscat's general manager told Reuters the certificates issue was aimed at institutional and corporate businesses.

Oil prices continue to rise

Oil prices continued to rise early on Thursday as the markets pondered future output levels from the world's leading producer countries.

The price of benchmark Brent North Sea crude for April delivery was showing a gain of eight cents at 27.14 dollars a barrel in early trading on the International Petroleum Exchange.

In New York, April had contracts closed at 29.39 dollars overnight.

Prices in London and New York had risen on Wednesday after Gulf Arab oil ministers stated their "satisfaction" at the recent rise in crude prices, but made no mention of future output levels.

UAE fertiliser industry battles imports

Hit by growing imports from neighbouring GCC countries, the UAE's domestic fertiliser industry is battling the twin problems of over-supply and the need to find new markets abroad, according to the UAE daily Gulf News paper dated Feb 24th.

More important, domestic producers want government protection through stricter controls on imports, the paper said.

The UAE's requirement is 400,000 tonnes annually, of which nearly a half is supplied by neighbouring GCC countries and another 10 per cent by several European countries, the paper added.

Domestic producers meet only about 40 per cent of demand, industry sources said, according to the paper.