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June 04 - 10, 2001

Iraq renews oil threats

Oil prices surged on Tuesday as Iraq rattled the market by renewing its threat to choke off oil supplies if the U.N. Security Council adopted so-called "smart sanctions."

Benchmark Brent crude last traded 70 cents higher at $29.18 a barrel on London's International Petroleum Exchange, while U.S. light crude last stood 27 cents up at $28.65 a barrel.

Iraq, which has been exporting about 2.1 million barrels per day (bpd) under a U.N. oil-for-food program, has strongly objected to proposals by the United States and Britain, dubbed "smart sanctions," which aim to ease restrictions on civilian imports while cracking down on Iraqi oil smuggling, estimated at around 350,000 bpd.

Baghdad has vowed to cut all trade ties, including oil sales, with any country that implements the new proposals.

"There is no forecasting in this. We are not bluffing," an Iraqi source told Reuters, referring to the threat to stop oil sales. "If the renewal (of the United Nations oil sales deal) is carried out as normal with no extra conditions Iraq will continue pumping."

Iraqi President Saddam Hussein told a cabinet meeting on Monday, Iraq would accept nothing less than the unconditional lifting of sanctions, imposed when Iraq invaded Kuwait in 1990.

"Discussing such sorry proposals reflects in itself a feeling of defeat (among the U.S. and Britain)," Hussein said.

"But the enemy, instead of taking the relatively right path... and lift the sanctions against Iraq totally and unconditionally, is looking for draft resolutions in the false hope of overpowering Iraq's will."

The current phase of the U.N. oil-for-food deal, which controls goods to and from Iraq, is due for renewal on June 3.

The Iraqi source declined to say whether oil exports would stop flowing if the U.N. was to extend the phase for a short period to allow deliberations over smart sanctions to continue.

S. Arabia cuts import tariff to 5% from 12%

In a major move to restructure its economy, Saudi Arabia has announced slashing of its import tariff from the current 12 per cent to five per cent only. The decision was announced on Sunday after a meeting of the Saudi Supreme Economic Council in Jeddah.

The protective tariff of a maximum of 20 per cent, on items in which the industries in the kingdom have enough capacity to meet the domestic demand, will however continue, so as to protect the upcoming nascent industrial sector from undue competition.

The lowering of tariff comes at a point in time when Saudi Arabia is making serious efforts to join the World Trading Organization (WTO).

Business circles believe the decision will go well in ultimately paving the way for the Kingdom to join the WTO.

The move comes on the heels of a decision earlier in the month aimed at easing trade regulations to allow imports of goods from fellow Gulf Cooperation Council states under preferential terms. On May 7 the Kingdom announced the decision that imports from any GCC-based manufacturing house, in which at least there is a 40 per cent local added value, will enjoy preferential tariffs in the Kingdom. The decision is expected to boost trade among the GCC states.

The decision to lower the import tariffs is also being viewed here as part of the campaign to attain a customs union within the GCC. The major hurdle between the GCC states in achieving customs union has been the varying level of import tariffs within the GCC states.

The UAE was initially at the lowest end of import tariffs of one per cent whereas some of the GCC states were levying an import tariff of as high as 20 per cent on all the imports. As a part of the GCC summit declaration, the customs union is set for March 2005, at the latest.

The world mourns the icon of Palestinian Jerusalem quest

The Palestinians lost the figurehead of their quest to make Arab East Jerusalem their capital with the death on Thursday of Faisal al-Husseini.

Husseini, 60, the top Palestinian official for Jerusalem and a leading moderate in the long quest for a settlement with Israel, died of a heart attack while on a visit to Kuwait.

"It is a great loss for the Palestinian people," said Palestinian President Yasser Arafat, a fellow founder of the Palestine Liberation Organization, on a visit to Belgium.

"He has been my colleague in all stages of life and since we were both very young."

The Palestinian Authority said: "The Palestinian people today lost one of their most prominent leaders and strugglers, who never gave up the fight despite exile, occupation or siege."

US-British Iraqi sanctions proposals hit delay

With Russia balking, the United States and Britain will be unable to meet their self-imposed deadline to overhaul sanctions against Iraq by the end of the week, UN Security Council diplomats said on Tuesday.

Instead the current UN oil-for-food humanitarian program is expected to be extended for at least a month by the 15-member council before its expiration date on June 3. But the envoys were not certain if anything would be added to the current plan or it would be rolled over on the same terms.

France had floated some compromise proposals that support the US-British draft in principle but water down several of its provisions.

The French suggestions, obtained by Reuters, were meant to bridge the gap between Moscow, which has objected to the entire US-British draft resolution, and Washington and London, which had wanted the Security Council to adopt it this week.

But Russia, a council source said, was "not interested" in the French proposals either.

Assad calls to 'fight' for recovery of Arab lands

Syrian President Bashar al-Assad called Monday for a fight to liberate Arab territories occupied by Israel, after a meeting with Pope Shenuda III, the patriarch of Eygpt's Christian Copt community, the official SANA agency reported.

During the talks, Assad stressed the "need to resist, be patient and fight for the recovery of (Arab) rights", the agency said.

Pope Shenuda III said for his part that he wished to maintain with the Syrian president, the "solid relations" he had with his father and predecessor Hafez al-Assad, who died in June 2000.

Peace talks froze between Syria and Israel in January 2000. For their resumption, Damascus demands a total Israeli withdrawal from the Golan Heights, occupied since 1967.

Israel sells stake in Egypt refinery plant

The Israeli partner in the joint venture Egyptian oil refinery MIDOR has sold its 20 per cent stake to National Bank of Egypt (NBE), an executive at the refinery said on Wednesday.

Asked about rumours that the state-owned NBE had bought the stake late on Tuesday, the executive, who spoke on condition of anonymity, said: "Yes, it's true."

An official at NBE, who asked not to be named, also said the sale had been agreed, at least in principle. A second NBE official said staff had been told not to comment on the issue.

A spokesman for the Israeli partner, Merhav, in Tel Aviv confirmed only that the company is negotiating to sell its shares in MIDOR (Middle East Oil Refinery) "Merhav confirms negotiations are taking place with Egyptian business interests to sell its stake in MIDOR. The company is studying the proposal and will make a decision very soon," the spokesman said.

Baghdad trade fair

US companies have applied to exhibit in the annual Baghdad trade fair, in which only one US businessman took part last year, organisers said Sunday.

Fawzi Hussein Al-Zawer, head of the company organising the fair, told the weekly newspaper Al-Rafidain that US private firms had applied for the November 1-15 exhibition. He did not give a number or name the firms.

One US businessman and a single Briton turned up for the Baghdad international trade fair in 2000, cutting lone figures among the more than 1,500 companies seeking contracts in sanctions-hit Iraq.

Jordan's population is mostly young, unemployed

A staggering 73 per cent of Jordan's five million inhabitants is under the age of 29 while youths aged 15-29 account for 34.4 per cent of the population and unemployment is their main concern, a report released on Tuesday said.

The Jordan Human Development report 2000, which was financed by the United Nations Development Programme (UNDP) and Britain's department for international development, is the first of its kind in Jordan.

Findings of the report show that unemployment is among the key concerns of young people in Jordan, who are also wary of "the contradiction of their roles in society and society's perception of the young's place in society".

New CEO

The board of Arab Bank has appointed Abdel Hamid Shoman as CEO and deputy chairman of the financial institution which is ranked as one of the largest in the Middle East, bank officials said on Tuesday.

Prior to the decision, Abdel Hamid Shoman, 54, was assistant general manager of the bank, a post he has occupied since 1976.

His father, Abdul Majeed Shoman, effectively ran the bank for the last six decades and was made chairman in 1974 after the death of his father, the bank's founder.

ABC to launch first Islamic credit card

Bahrain-based ABC Islamic Bank announced Tuesday that it is to launch the first credit card conforming to strict Islamic Sharia regulations.

"This card is considered the first Islamic credit card that conforms with Sharia principles and is expected to be well accepted by all customers who prefer to utilise a credit card based on Sharia principles," general manager Mohammad BuQais said in a statement.

BuQais said the card will be issued by the Islamic Credit Card Co., which ABC Islamic Bank will "soon" establish with a capital of five million dollars.

Interest is banned under the Islamic banking system, as the religion forbids usury.

Egypt's maiden Eurobond

Rosier market conditions may soon prompt Egypt to launch a long-awaited debut sovereign Eurobond.

Analysts say US rate cuts have lowered borrowing costs for dollar-denominated bond issuers and investors' appetite for emerging market debt is growing again after the Turkish devaluation in February and Argentina's financial crisis.

For debt investors wishing to diversify, Egypt offers exposure to the Middle East and Africa with an unusually high credit rating at a time when investment-grade issues are rare.

Jordan's tourism industry

Jordan's tourism industry has taken a hit from the eight-month Palestinian uprising, with revenue plummeting by 8.2 per cent in 2001's first quarter, Tourism Minister Aqel Bletaji told the daily, Al-Arab Al-Youm Monday.

Tourism revenues made up 12 per cent of Jordan's Gross Domestic Product (GDP) in 2000, up from 10 per cent in previous years.

Iraq looks to four-way free trade zone

Iraq, Egypt, Libya and Syria are to announce a free trade accord covering all four Arab countries next month at a meeting in Baghdad, Iraqi Trade Minister Mohammad Mehdi Saleh said Saturday.

"The announcement of a free trade zone between Iraq, Egypt, Syria and Libya will be made during the meeting in Baghdad of economy and trade ministers of the 10 members of the Council of Arab Economic Unity," he said.

"The ministerial meeting will also examine the means to strengthen Arab economic complementarity," said Saleh, quoted by the official news agency INA.

The council, which is an organ of the Arab League, is to meet in Baghdad on June 6-7 for the first time since the 1991 Gulf War to study how to revive a project to create a regional free trade zone.

Embargo-hit Iraq has since January signed separate free trade accords with Egypt, Syria and Tunisia.