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May 14 - 20, 2001

Four Arab states agree on free trade zone

Egypt, Jordan, Morocco and Tunisia agreed on Tuesday to set up a free trade zone ahead of the 2010 target for trade barriers to end in the Euro-Mediterranean area.

"Morocco, Jordan, Tunisia and Egypt have decided to work to set up a free trade zone including Arab Mediterranean countries which would also be open to other Arab countries," Moroccan Foreign Minister Mohamed Benaissa told journalists.

The agreement was signed by the four countries' foreign ministers at a ceremony in the southern city of Agadir. A Royal Palace spokesman said the accord was signed following an intiative by King Mohammed who attended the ceremony.

"Today's event is a first step towards setting up the Great Arab Free Trade zone. We are now in a new era ... ahead of the 2010 deadline for a free trade zone in the Euro-Mediterranean area," the spokesman said.

"We hope that our drive will not be limited only to accords.

We hope it will translate into reality," the spokesman said.

Benaissa said the four-state free trade zone would "be ready in the short-term probably by the end of the year".

He compared the document announcing the free-trade zone between the four countries to Rome's 1958 Steel and Coal Pact, which eventually grew into the European Union.

Libyan Foreign Minister Mohammed Abderrahmane Chalgam told Reuters the accord would change the way Arab countries deal with their main trading partner, the European Union.

"When Arab countries negotiate with the EU, they talk to a bloc, while they look on Europeans as bits and pieces," he said.

Benaissa added that a team of experts from the four countries would meet periodically to define the technicalities of the project.

"The free trade zone will be extended to the six other Arab countries," he said in reference to Algeria, Libya, Mauritania, Syria, Lebanon and the Palestinian Authority.

LNG exports reshaping Qatar's economy

OPEC member Qatar is starting to reap dividends from its massive hydrocarbon investments and is pushing ahead with gas development despite heavy debts, officials and bankers said on Tuesday.

The Gulf Arab state has invested around $28 billion in its oil and gas sector over the past six years, concentrating mainly on tapping the North Field the largest single concentration of natural gas in the world and setting up a cluster of industries centred on gas.

"The six years of investments have begun to yield returns and the economy is entering a new era where gas and allied industry will gradually replace oil as the principal source of state income," said a Finance, Economy and Trade Ministry official.

"LNG (liquefied natural gas) is changing the face of our economy and is going to be the future provider for us," the official told Reuters.

Last year, Qatar earned more than $2.5 billion from LNG sales, which accounted for 27.7 per cent of total export income.

It earned an additional $1 billion from condensates (ultra light oil) and other products extracted during gas production.

Fundamentals seen strong despite debts Bankers said Qatar's investment programme has saddled the country with massive debts, which stood at $13.1 billion at the end of 2000 89.7 per cent of gross domestic product (GDP).

But they are not alarmed at the magnitude of the loans.

"With the development of gas, (Qatar's) fundamentals are strong and the majority of debts are tied to the revenues of gas-related project," one Western banker said.

In March, US ratings agency Standards and Poor's upgraded its long-term foreign currency ratings on Qatar to BBB+ from BBB, citing the "prospect for continued fiscal prudence which, together with high oil and gas prices, is resulting in further declines in the public external debt burden".

Buoyed by the positive outlook, Qatar has intensified efforts to exploit its gas reserves, the third largest in the world.

Saudi Arabia needs $116b investments

Opec giant Saudi Arabia needs investments of more than $116 billion in its electricity sector over the coming 23 years to match increased demand from a rapidly growing population, a top economist said on Saturday.

Said al-Shaikh, chief economist of the National Commercial Bank, said current electricity production capacity of 23,438 megawatts was projected to more than double by 2023 to over 50,000 megawatts.

More than half of the required investments will be needed for generation (54 per cent), 29 per cent for transmission and 17 per cent for distribution, he said. Only Saudi nationals can invest in the transmission and distribution sectors, but generation, which will require an annual investment of $2.74 billion annually for the next 23 years, is open to foreigner investors.

Missiles strike Palestinian

Israel pounded Palestinian security and Fatah headquarters in Gaza City with missiles Thursday, injuring some 20 people and starting a fire, after a bomb blast killed two Romanian workers elsewhere in the Gaza Strip.

Smoke rose from a Palestinian security compound, hit by three surface-to-surface missiles, in the heart of Gaza City.

Another missile struck offices of Palestinian President Yasser Arafat's Fatah faction near the beach.

Hospital officials said four Palestinian policemen and eight civilians were wounded.

The compound, surrounded by residential buildings, contains offices of Palestinian Public Security, Military Intelligence and General Intelligence. Witnesses said only a one-storey building housing a research department was hit.

Arab Oil & Gas Show 2001

The UAE Ministry of Petroleum and Mineral Resources will support the show, which is organized by International Conferences and Exhibitions (IC&E) and held every two years.

Exploration, extraction, processing, storage and transportation of oil and gas are but a few of the topics that will be discussed over the 4-day event.

The show aims at oil, gas and petrochemical onshore and offshore industries serving the Arab Gulf States.

Targeting the public and private sectors; more than 40,000 invitations are sent out to major GCC oil and gas producers and an additional 20,000 sent out to the exploration, engineering and contracting private companies in the region.

In addition, invitations are also sent to GCC based companies who provide equipment and services including maintenance, safety and rescue, fire fighting and corrosion protection.

Saudi eases regulations for Gulf imports

Saudi Arabia on Monday eased regulations to allow imports of goods from fellow Gulf Arab states under preferential tariffs, as part of steps towards a unified Gulf market, the Saudi Press Agency reported.

It said the cabinet, at a meeting chaired by King Fahd, agreed to drop a requirement that imports must be made by firms owned by Gulf citizens in order to qualify for preferential treatment in the Gulf Cooperation Council's tariff regime.

Instead, it decided that products imported into the kingdom from fellow Gulf Cooperation Council (GCC) members must have at least 40 per cent local added value to enjoy preferential tariffs.

The six-nation GCC which also includes Kuwait, Oman, Bahrain, Qatar and the United Arab Emirates agreed in 1999 to drop the regulations requiring goods to be produced by firms with majority ownership by Gulf citizens.

Egypt pharmacists seek Lilly boycott

Egypt's pharmacists' union has called on its members to boycott drug maker Eli Lilly and Co to protest against what the group considers a bias towards Israelis to the detriment of Palestinians.

The Syndicate of Egyptian Pharmacists accused Eli Lilly of granting medical aid to Holocaust survivors in Israel while ignoring the suffering of Palestinians fighting against Israeli occupation.

"They have helped the victims of the Germans and refuse to help the victims of Israel," syndicate secretary-general Mahmoud Abdel-Maqsoud told Reuters on Wednesday.

A Lilly spokesman said the company was disappointed by the boycott, saying the drug maker sought to help people all over the world regardless of their background.

Saudi to slash foreign labor

The foreign workforce in Saudi Arabia must be slashed to one million from the current seven million within the next 30 years to make way for Saudi job-seekers, the labor ministry said in a report published Tuesday.

By 2030, the ministry said in a report carried by Al-Riyadh newspaper, the labour market will offer a total of 13.5 million jobs while the Saudi workforce will swell from the 3.2 million at present to 12.5 million.

That would leave one million jobs for expatriate workers.

To achieve the target, the labor ministry said the government and private sector would have to join forces to replace expatriates with Saudis. The number of expats must be cut by more than 150,000 a year.

Murabaha fund

The National Bank of Kuwait (NBK) has announced the launch of the Al Kawthar Murabaha Fund in US dollars which invests according to the Islamic Shariah.

This fund is another cooperation between NBK and the National Commercial Bank of Saudi Arabia (NCB).

Mr. Isam Jassem Al Sager Deputy Chief Executive Officer at NBK stated that this new fund aims to provide investment in the form of Murabaha, which invests specifically according to the Islamic Shariah.

The monthly income gained from participating in this fund is in US dollars and is deposited on a monthly basis, in addition both the subscription and the redemption to the fund can be done on a monthly basis. Al Sager added that one of the main features of this new Murabaha fund is that all investments will be short term, and will not exceed one month in duration in order to minimize risk.

Iranian interest rates

Iran's Economic Affairs and Finance Minister, Hossein Namazi announced a cut in banks' interest rates across the board in order to stimulate the domestic economy, Iranian television reported Monday.

Namazi said "this initiative aims to create jobs and to augment the growth of interior production" to Iranian television.

Interest rates for loans to the agricultural and mining industries will drop by one per centage point to 14-15 per cent and 16-18 per cent respectively.

For property loans, the interest rates will be lowered from 18 to 17 per cent. And for the export sector, interest rates will be cut from 22 to 18 per cent. Short term rates for savings accounts were lowered from eight to seven per cent and long term rates were sliced from 17 to 13 per cent.

Duty-free zone

Iraq Trade Minister Mohammad Mahdi Saleh and his Jordanian counterpart Wassef Azar studied ways Sunday to put in place a duty-free zone on the countries' shared border, the official INA agency said.

The two ministers examined "the general structure" for the zone, which was included as part of a trade protocol signed by the two countries on February 7.

Oil production

President Saddam Hussein called on Saturday for domestic manufacture of key oil-production equipment to improve crude output by the dilapidated industry, the state news agency INA said on Saturday.

INA said Saddam met Oil Minister Amir Muhammed Rasheed and senior ministry aides to discuss "methods to improve the oil sector.