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Apr 02 - 08, 2001

Kuwait set to post record budget surplus

Opec-member Kuwait is set to post a record budget surplus of $5.6 billion at the end of the current shortened financial year on the back of high oil prices, an economic report said on Monday.

The monthly report of the National Bank of Kuwait (NBK), the largest bank in the emirate, said that in the first eight months of the year revenues were up 37 per cent from last year, posting a surplus of 7.5 billion dollars.

But the final closing figure for the full fiscal year is expected to be substantially smaller once year-end adjustments are made, NBK said in its report.

We expect the final surplus to amount to 5.6 billion dollars, which is equivalent to $7.5 billion on an annualized basis. This would make it the largest budget surplus in 20 years, the report added.

The year 2000-2001, which started on July 1 last year and ends on March 31, was reduced to nine months to bring the start of the next fiscal year to April 1.

The projected budget forecast a deficit of five billion dollars. Oil revenues were calculated at a conservative price of $13 a barrel, but the actual price averaged around $25.6 a barrel in the July-February period.

Kuwait's current OPEC quota is 2.021 million barrels a day, but will be reduced to 1.941 million barrels from April 1.

Ten per cent of revenues are deducted for the Kuwait Fund for Future Generations (KFFG), a $60 billion investment managed by the Kuwait Investment Authority (KIA).

Kuwait posted a net surplus of $2.3 billion in the 1999-2000 fiscal year which ended on June 30, 2000.

Gulf Arab states face new economic realities

The Arab summit concluded in the Jordanian capital Amman Wednesday has been overwhelmingly dominated by a political agenda overshadowing an equally important economic one.

Arab ministers discussed a series of recommendations issued by a meeting of Arab industry and economy ministers to bolster inter-Arab trade and forge an Arab free economic zone.

The economic axis specifically highlights a proposal by Egyptian President Hosni Mubarak to convene an Arab economic summit in Cairo in November.

The social axis of the agenda stipulates ways to reach consensus to draft a common Arab declaration to safeguard the rights of children.

Yet the Arab Gulf States may face economic challenges of their own, as the rising rates of unemployment in the Gulf take on new dimensions.

A recent headline in a Saudi Arabian newspaper read: "Jobless Saudi man in suicide bid".

At a cafe in Dubai, Adel Hassan, 35, said he understood the desperation of being unemployed.

"I lost my job in a contracting company two years ago. I never thought I would be unemployed. I am beginning to lose hope of finding another job. There is a lot of competition," he said.

"When we were young we all thought we would have a job and our government would ensure that. Not any more." Unemployment is a relatively new challenge in the oil-rich Gulf Arab region where most people were guaranteed well-paid jobs in the public sector and in family businesses.

Most private sector jobs are taken by a huge foreign workforce, which on average makes up more than 30 per cent of the 30 million population in Saudi Arabia, Kuwait, the United Arab Emirates, Oman, Bahrain and Qatar.

Finding jobs for a growing number of unemployed nationals in the six states has now become a priority for governments worried about the social and political effects of a growing number of job seekers and the large number of foreigners.

Qatar sees $136.5 m budget surplus

Qatar said on Wednesday it expected a surplus of 497 million riyals ($136.5 million) in its 2001/2002 budget, the official Qatari news agency QNA reported.

It quoted Finance, Economy and Trade Minister Youssef Hussein Kamal as saying the surplus for the fiscal year starting in April was based on projected revenue of 18.1 billion riyals and spending of 17.56 billion riyals, and an average price of $16.5 for a barrel of oil.

The minister put spending in the 2000/2001 budget at 15.4 billion riyals and revenue at 12.62 billion riyals, unchanged from previous forecasts. The 2000/2001 budget was based on an oil price of $15 per a barrel.

"By basing next year's budget on an average oil price of $16.5, there are positive indicators that that budget will realise a surplus which could reach more than three per cent of gross domestic product (GDP)," the minister said without providing figures.

He said the government had kept a squeeze on spending to achieve a surplus which could reach 12 per cent of GDP for 2001/2002.

UAE GDP rises by 17pc

The United Arab Emirates (UAE) saw its gross domestic product (GDP) rise 17 per cent in 2000 on the back of high oil prices, according to a central bank report published Saturday.

GDP reached 223 billion dirhams (60.8 billion dollars), compared with 190.5 billion dirhams (51.9 billion dollars) in 1999.

GDP per capita rose from 56,600 dirhams (15,422 dollars) to 63,800 dirhams (17,384 dollars).

Oil revenues rose 55 per cent to 70 billion dirhams (19 billion dollars) from 45 billion dirhams (12.3 billion dollars).

The balance of payments surplus widened to 10.4 billion dirhams (2.80 billion dollars) from 6.4 billion dirhams (1.74 billion dollars).

The trade surplus increased to 42 billion dirhams (11.4 billion dollars) from 12.4 billion dirhams (3.37 billion dollars). Meanwhile, the report said the population of the UAE rose to 3.106 million people in 2000 from 2.938 million.

Arab summit outcome satisfies few in Middle East

This week's two-day Arab summit in Amman drew fire from many parts of a tense Middle East on Thursday, with Arabs blasting their leaders for failing to agree on Iraq or act tough on Israel.

Reactions in the Arab press were mixed following the summit, with Egypt and Gulf countries branding it a "failure" and Iraq regretting it only achieved a "bare minimum", while only Syria hailed its "important results".

Syria's state-run media praised the Amman gathering that ended on Wednesday as a success heralding united Arab action.

Iraq, which together with the Palestinian issue topped the agenda of the first ordinary meeting of Arab leaders since the 1991 Gulf War, lamented Thursday that the Amman summit offered no more than the "bare minimum".

Newspapers in Egypt and Jordan, the only two Arab countries to have signed peace deals with Israel, put a positive spin on the summit's outcome while acknowledging its shortcomings.

Israel called the summit's decisions an "obstacle to peace", while one Israeli daily spoke of "a missed opportunity".

Gunships blast Arafat base

Israeli troops shot dead two Palestinian teenagers on Thursday as fierce clashes erupted in the Gaza Strip a day after Israeli helicopter gunships blasted bases of Palestinian leader Yasser Arafat's Force 17.

A third Palestinian, a member of the preventive security forces in the Gaza Strip, was also killed by Israeli forces, the army and Palestinian security sources said.

Arafat condemned Wednesday night's Israeli air strikes which killed a member of Force 17 and a woman and injured more than 60 as part of a deliberate strategy by Prime Minister Ariel Sharon against the Palestinians.

"The Israeli aggression is the beginning of the 100-day Sharon plan," Arafat said, referring to Palestinian charges that the hardline Israeli leader had mapped out a plan to crack down against the six-month-old uprising.

Arabs fail to reach consensus on Iraq

Arab leaders on Wednesday pledged funds for Palestinians fighting Israeli rule and edged towards reviving a boycott of Israel, but failed to agree on Iraq.

They decided to send 240 million dollars in emergency aid to the Palestinian Authority over the next six months and chided Israel for its "retreat" from the principles of a Middle East peace process launched in Madrid in 1991.

A final communique after a two-day summit of the 22-member Arab League said a committee led by Jordan's King Abdullah would pursue discussions on the "situation between Iraq and Kuwait".

The rift over Iraq, festering since the 1990-91 crisis, proved unbridgeable despite intense mediation efforts involving several Arab nations which had sought a last-minute compromise.

Russia plans to sell hi-tech missiles to Iran

Moscow officially confirmed on Wednesday it was negotiating sales of high-tech missile defence systems to Iran in defiance of US warnings, but denied the deal would breach any international accords.

Deputy Prime Minister Ilya Klebanov, in charge of Russia's military-industrial complex, reiterated President Vladimir Putin's argument that Moscow had every right to sell defensive weapons to Iran.

"First of all, we are talking about air defence systems. The rest of the (deals) are relatively minor," Klebanov told journalists.

However, Klebanov failed to specify whether Russia was negotiating the sale of its top-range S-300 system capable of knocking rockets and jets out of the sky at a distance of 300kms or the shorter-range Tor-M1 weapon.

The United States has threatened to impose strict sanctions should Russia go ahead with the sale of any new-age missile defence systems to Iran.

Oil prices weak

Oil prices dipped on Wednesday in response to a stronger-than-expected build-up in US stock levels. Reference Brent North Sea crude for May delivery fell 29 cents to $25.60 a barrel.

In New York, May light sweet crude futures rose 27 cents overnight to 27.75 dollars ahead of the data.

Traders expressed surprise at the figures from the private American Petroleum Institute (API) showing a 8.9-million-barrel rise in US crude stocks last week, to 302.6 million barrels.

ED and F Man trader Graham Flint said the data had been "very bearish news" and was the reason for the fall of Brent prices.

Eagles said that the drop in refinery capacity utilisation by 1.8 per cent to 89.5 per cent was also surprising.

The basket price of seven crudes worldwide used by the Organization of Petroleum Exporting Countries (Opec) to help set output quotas rose to $23.77 on Tuesday from $23.58 on Monday, the OPECNA agency reported. Opec is targeting a basket price of $25.

Arabs 'indignant' at US veto

Arab leaders voiced "extreme indignation" Wednesday over the US veto of a UN resolution to send an observer force to the Palestinian territories and said they would continue to press for the force.

"The leaders express their extreme indignation at the United States` use of its veto in the Security Council against the draft resolution about protection for the Palestinian people," an Arab summit final communique said.

At the end of a two-day summit that coincided with discussion of the Palestinian-inspired proposal at UN headquarters in New York, the leaders accused the United States of neglecting its responsibilities to peace.

Iran: IDB offers $34 mln

The Saudi-based Islamic Development Bank (IDB) has accorded Iran a 34-million-dollar loan, Iran's official IRNA news agecny said on Tuesday.

Citing an economic ministry statement, it said the IDB loan would be used to build a sewer system in the western city of Hamedan.

The loan is repayable over 12 years at six per cent interest, with a 15 per cent reduction in interest charges if the payment is completed on time, IRNA said.