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June 25 - July 01, 2001

Saudi, Kuwait create Islamic financial giant

Saudi Arabia's Dallah Albarakah Group (DBG) and The International Investor (TII) of Kuwait signed on Monday a merger deal that creates a $300 million Islamic financial entity.

DBG Chairman Sheikh Saleh Kamel said after signing the deal in Bahrain with TII Chairman Adnan Al-Bahar that eight units owned by DBG will merge with TII, forming a new regional giant to satisfy the growing demand for Islamic banking in the Gulf.

"Two Islamic institutions, both leaders in their fields, have agreed to change what they do, and how they do it, in order to respond to the changing needs of the region," Bahar said.

"We will work together to achieve our aim of being the first network providing full Islamic banking services in the region," he told reporters.

Sheikh Kamel said the new entity includes an investment bank, retail banking units and a securities company. He said more units could later be merged into the new firm.

Islamic banks and financial houses do not charge interest the core of the Western banking system as it is considered usury banned under Islamic Sharia. They make money by using a system of profit-sharing from returns on approved investments.

Under the agreement, which still needs legal fine-tuning to be complete, DBG will hold around 35 percent of the new entity which will be based in Kuwait and listed on the Bahraini and Kuwaiti bourses.

"Basically, eight financial institutions that Dallah Albarakah holds will be merged with TII, and will be using the existing TII legal infrastructure as the vehicle for the new merged entity," Bahar said.

The new group will have assets worth more than $3 billion and total equity of around $350 million.

Bahar also said the new Islamic banking facility would be looking into expanding its coverage through more mergers "We will seek to build this regional network primarily by merging with others...We hereby extend a warm invitation to all those who would like to join us," Bahar said.

No Opec output rise if Iraq oil back soon: Iran

Opec does not need to boost output at its July 3, meeting if Iraqi oil exports resume early next month especially given the current supply-demand balance, a senior Iranian oil official said on Wednesday.

If Iraqi oil exports are back in July, it is very obvious that more supplies are not needed from Opec, Hojjatollah Ghanimifard, acting vice president of the National Iranian Oil Company (NIOC) told Reuters.

The NIOC official said the $1 per barrel price drop in the past few days has underscored the fact that supplies of crude oil are adequate even with 2.1 million barrels per day (bpd) of Iraqi oil removed from the market. And the global economic slowdown has also taken its toll on demand for oil, he said.

Regardless of Iraq or not, there is ample crude oil, Ghanimifard said. Inventories of crude and products in the main consuming countries are more than what was expected for this time of year. Baghdad halted exports on June 4 for the duration of a one-month extension of the oil-for-food scheme, which awaits a United Nations vote on so-called "smart sanctions" proposed by Britain and the United States. But a key European diplomat said if there were no agreement by then, Washington would likely endorse a no-changes six-month rollover of oil-for-food instead of a second one-month extension of the humanitarian programme. Iraq has vowed to resume shipments, some five per cent of world exports, if oil-for-food are renewed as normal.

The NIOC official said a prolonged outage of Iraqi exports which pushed prices above the upper threshold of Opec's $22-$28 price band would force the cartel to honour its promise of filling any resulting supply gap. If Iraq does not come back and prices remain above $28 a barrel, then Opec will need some modification in output, Ghanimifard said. But he said it was unlikely the Opec basket would stray above $28 for long given the current supply-demand balance. If Iraq is out for a longer period, supply-demand is such that it's unlikely that the basket price will remain above $28 for a lengthy period, Ghanimifard said. Opec's basket price for its seven crude oils at $25.35 per barrel on Tuesday now stands mid-range of its $22-$28 price band.

Kuwaiti, Lebanese bourses gain in mixed week

The Kuwaiti and Lebanese bourses made strong gains in a mixed week for Arab stock markets, Bakheet Financial Advisors (BFA) reported on Saturday.

At the other end of the scale, Oman's MSM index declined 1.3 per cent to 161.62 points, its lowest level since January 1996. The Muscat bourse has now lost 19.7 per cent since the start of 2001.

The Tunindex in Tunisia also lost 1.3 per cent, closing on 1,324.76 points as blue chips weakened. The strongest performer of 2001, the Kuwait Stock Exchange index surged 2.9 per cent to 1,648.10 points, as investors anticipate strong corporate results for the second quarter.

In Saudi Arabia, the NCFEI all-shares index reached a record high of 2,408.41 points, gaining 1.5 per cent for the week.

Morocco's CSE index fell 1.1 per cent to 639.29 points, while the ASE in Jordan closed on 141.03 per cent, down 0.8 per cent. Both the BSE in Bahrain and the NBAD index in the United Arab Emirates slipped 0.4 per cent, closing on 1,711.34 points and 2,498.93 points respectively.

Israeli army: Green light for attacks

Israeli army officials said Thursday they had been given the green light to resume attacks on Palestinian activists, in what could be the beginning of the end for a fragile US-brokered ceasefire.

The decision comes as the White House announced US Secretary of State Colin Powell would return to the region in a bid to hold together the shaky truce accord Washington negotiated between Israel and the Palestinians last week.

Press reports said Foreign Minister Shimon Peres, who shared the Nobel peace prize with Palestinian leader Yasser Arafat for striking the Oslo peace accords, fought in vain against the security cabinet's decision to approve the attacks.

A top military official told public radio the army had received the approval at the security cabinet's three-hour meeting Wednesday, called by Sharon to re-think the ceasefire amid continuing bloodshed and violence.

Syria completes redeployment from Beirut

Syria has completed a surprise pullout of its troops from Beirut and surrounding areas, Lebanese officials said on Tuesday, ending in six days decades of controversial military presence hated by Lebanese Christians.

The move has enabled Damascus has to change its military profile to appease Christian anger, but its troops remain elsewhere in Lebanon and its political influence continues through Lebanese allies in the parliament, government and army.

Beirut and nearby mountains were virtually empty on Tuesday of the Syrian troops who for years have been part of the city's scene.

"The massive military pullout from Greater Beirut has been completed," a Lebanese official told Reuters. He said some "strategic and sensitive" positions remained guarded by Syrian soldiers, waiting to be handed over to the Lebanese army. Greater Beirut includes the capital and surrounding towns.

Riyadh asserts claim to disputed Iraq pipeline

Saudi Arabia has laid full claim to a disputed oil pipeline crossing its territory from Iraq, saying Baghdad has no right to protest against its seizure by Saudi authorities.

"The pipeline, as you know and as everybody knows, basically belongs to Saudi Arabia," Defence Minister Prince Sultan said.

"The pipeline and the land are Saudi. Therefore Iraq has no right to protest against anything," he said.

His comments were carried by the official Saudi Press Agency (SPA) on Sunday night.

Saudi Arabia said last week it seized the $2.25 billion facility, which has been shut since the 1990 Iraqi invasion of Kuwait, in retaliation for what it said were Iraqi raids on Saudi border outposts in recent months.

Assad says he did not attack Judaism

Syrian President Bashar Al-Assad denied in a television interview aired on Thursday that he had attacked Judaism during a visit by Pope John Paul to Syria.

Speaking to the French Television Channel Two, Assad said that his remarks, made at a welcoming ceremony for the Pope on arrival at Damascus airport on May 5, were misinterpreted.

In his remarks while welcoming the Pope, Assad said that the Jews betrayed Jesus Christ and tried to betray and kill Prophet Mohammed. The United States and Israel conveniently criticized the remarks.

Assad said he respected Judaism because it was, like Islam and Christianity, a divine religion.

Turkey to launch commercial flights

A Turkish travel company is to run two commercial flights between Istanbul and Baghdad later this month and will operate them regularly if they prove popular, a company source said on Monday.

The source from the 3-F company said the planes would be chartered from Turkish Airlines.

"We first want to know if these flights are commercially beneficial. If so we will organise regular flights between Istanbul and Baghdad," she said.

Crude falls 1.38 dollars to 26.10

The price of crude fell 1.38 dollars to 26.10 dollars Wednesday in New York, its lowest level since April 2, as fears of a fuel shortage in the United States were assuaged by a boost in US reserves.

Account for 'professionals'

The National Bank of Kuwait has announced the launch of a new account package 'Al Mumaiz'. This new account package is for Kuwaiti and non-Kuwaiti professionals over the age of 35 years. This account is specifically designed for those people who have established themselves in their career and family life.

Arab boycott

Saudi Defence Minister Sultan bin Abdul Aziz said Sunday that Arabs should consider boycotting firms doing business with Israel, if it will force world powers to put an end to the suffering of the Palestinian people.

"As Arabs, we should support our Palestinian brothers morally and politically", Prince Sultan told the press in Al-Kharj, south of Riyadh.

He said Arab countries should take this step "if the efforts led by world powers and members of the UN Security Council do not yield positive results capable of solving the Palestinian issue and put an end to the tragic situation of the Palestinian people".

New Iraqi-Emirati transport company created

The Iraqi government gave the go-ahead Sunday for the creation of an Iraqi-Emirati transport and trade company, the official INA agency said.

The government of President Saddam Hussein approved a request by the Iraqi transport ministry for the creation of the company, to be called Al-Aqsa.

With a capital of three million euros (2.58 million dollars), the company will be evenly shared between the Iraqi transport ministry and a group of Emirati investors, INA said.

IDB lends Chad $7.3 mln

The Islamic Development Bank (IDB) announced Sunday a 7.3-million-dollar (8.5-million-euro) loan to Chad for educational projects.

The loan will finance the construction and development of schools and a French-Arab bilingual training scheme for school teachers, the Jeddah-based bank said in a statement.

The new loan raises to 69 million dollars the total funds granted by the IDB to Chad.

Bakery operation in Kabul

An Islamic organisation Saturday opened four bakeries in Kabul as the World Food Programme (WFP) stopped its bread distribution programme over the Taliban regime's ban on employing women.

The Al-Rashid Trust has decided to set up a chain of bakeries to feed hundreds of families in the impoverished Afghan capital, its Kabul representative Abdul Hadi MullaKhel said.

"We have decided to run our own chain of bakeries in Afghanistan," Mullakhel told AFP.

He said the organisation had already supplied wheat flour to run the bakeries.

Kuwait to spend project oil income on salaries

OPEC member Kuwait, which has yet to move on unpopular economic reforms, plans to spend almost all of its projected oil income of $10.6 billion in the current fiscal year on state salaries under a cradle-to-grave welfare system.

MP Adnan Abdel-Samed, head of the budgets committee, told a news conference the size of total salaries in the draft budget would be 3.158 billion dinars.

Iraq to set up free trade zone near Syrian border

Iraq is to open a free trade zone near the Syrian border under the terms of an accord with Damascus launched in April, the Iraqi customs chief said Sunday.

Hamid Shaker Mahmoud, quoted in Al-Ittihad newspaper, said the zone would be inaugurated soon in the western town of Al-Qaim under the terms of the free trade accord, but he gave no date.

Iraqi authorities in 1999 set up two other free trade zones, in the northern town of Fleifil and in Khor Zubeir, in the southern region of Basra.