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July 02 - 08, 2001

Kuwait parliament approves heavy debt budget

The Kuwaiti parliament approved Wednesday a 2001-2002 budget which projects a deficit of 5.95 billion dollars amid criticism of the government for failing to carry out much-needed economic reforms.

The budget, approved by a vote of 35 to eight, forecasts expenditures of 17.18 billion dollars and revenues of 12.48 billion dollars. Oil income is projected at 10.63 billion dollars, or 85 per cent of the total.

By law, 10 per cent of revenues, amounting to 1.25 billion dollars in this case, are deducted for the Kuwait Fund for Future Generations, a 60-billion-dollar investment managed by Kuwait Investment Authority.

That 1.25 billion dollars, added to the 4.70 billion dollar difference between revenues and expenditures gives the deficit figure of 5.95 billion dollars.

"This budget does not reflect a government policy for economic reforms.

The economy is still suffering from distortions ... This is not a budget for development, it is only for spending," liberal MP Abdulwahab al-Haroun said.

Oil revenues in the budget were calculated on the basis of a conservative price of 15 dollars a barrel and daily production of about two million barrels. The price of Kuwaiti oil is currently over 22 dollars a barrel.

"Yes, oil revenues have increased, but returns on foreign investments have dropped. A dark future is awaiting us if we do not implement appropriate economic reforms," said opposition MP Mishari al-Osaimi.

"But this depends on political reforms," he added.

Egypt plans five-year and 10-yr bonds

Egypt is planning to offer two $500 million bonds with five-year and 10-year maturities in its debut on the international market, fund managers in France said on Tuesday. Officials from Egypt visited Paris for investor presentations on Monday. Minister of Economy and Foreign Trade Youssef Boutros-Ghali has scheduled visits to Italy, Germany, Britain, Switzerland and the Netherlands this week.

Only one bond of $500 million was originally expected.

Merrill Lynch International and Morgan Stanely, the lead managers for the bond, were not available for comment.

"What the leads are telling us is that demand for the 10-years is in the US and demand for the five-years is in Europe," said one French fund manager. "Dollar bonds of $500 million each should enter the EMBI," he said, adding that this should increase demand.

J.P. Morgan Securities' Emerging Market Bond Index plus is the industry benchmark tracked by the majority of emerging market bond funds. If a bond is included in the index, fund managers have to find a good reason to exclude the bond from their portfolios. For bonds outside the index fund managers need to find a reason to buy.

Egyptian officials have said the aim of the issue was to lengthen government debt maturities and ease the budget deficit, with some of the proceeds available for projects.

The initial price talk on the two bonds is some 250 to 275 basis points over US Treasuries on the five-year bond, and 325 to 350 basis points on the 10-year bond, said investors and a trader.

"I think it looks not bad value, compared to South Africa or Mexico," said the fund manager. Mexico is the clearest comparison because, like Egypt, it is split rated, he said.

For its external debt Egypt is rated BBB- by Standard & Poor's Ratings Group, and Ba1 by Moody's Investors Services.

Mexico is rated BB+ by S&P's and Baa3 by Moody's.

The Mexico segment of the EMBI+ was quoted at 315 basis points over Treasuries at 1512 GMT.

Oil prices hold firm as market eyes OPEC

Oil prices found solid support on Monday amid concern that the Organisation of Petroleum Exporting Countries (OPEC) would leave output quotas unchanged when it met next week.

Benchmark Brent North Sea crude for August delivery rose to 26.87 dollars from 26.59 dollars on Friday evening.

New York light sweet crude August futures closed Friday 27 cents higher at 26.83 dollars.

Crude futures clung to gains built up before the weekend after the US naval fleet in the Gulf was ordered to put to sea following what US officials described as a credible threat of attack against US interests worldwide by forces linked to exiled Saudi militant Osama bin Laden.

Prices also benefited from remarks over the weekend from Qatari oil minister Abdullah al-Attiyah suggesting that there was ample crude in the market even without Iraqi output, which raised expectations that OPEC would hold output steady when it meets in Vienna next Tuesday, analysts said.

Kuwaiti refinery shuts down after breakdrown

A Kuwaiti crude oil refinery in Showaiba was shut down due to a technical problem Monday, the Kuwaiti National Oil Company said.

A company official, quoted by the official KUNA agency, said the closure of the refinery, which has a capacity of 200,000 barrels per day, was decided on after partial congestion in pipelines due to overheating in one of its boilers." He said "work to clear the pipes would take between one week and 10 days" during which time the unit would remain closed.

The problem was discovered when the unit was re-started after overhaul work at the refinery, some 80 kilometres (50 miles) south of Kuwait City, following a fire in February.

Japan to offer oil plan

Japan is expected in days to present Iranian oil officials with its development plan for the Islamic republic's giant Azadegan oilfield, Iranian sources said on Monday.

A Japanese delegation is now in Tehran and they are due to submit the Azadegan development plan which involves Royal Dutch/Shell in less than a week, an Iranian source said.

Tehran gave Japanese firms exclusive negotiating rights last November for development of part of the world's biggest undeveloped oilfield, Azadegan, which has the potential to pump up to 400,000 barrels per day (bpd). The Yomiuri Shimbun daily said on Sunday a Japanese unit Japan National Oil Corp (JNOC), Indonesia Petroleum Ltd, Japan Petroleum Exploration Co (JAPEX) and Tomen and Shell had agreed to invest about a $8 billion into jointly develop the onshore Azadegan field. But an official from Japan's Ministry of Economy, Trade and Industry (METI) said on Monday that final agreement had not been reached. Iran has yet to give Tokyo the official go-ahead on Shell's participation which has already secured a deal to develop Iran's Soroosh/Nowrooz oil fields.

Jordan: King allows Ghoshe to return

Jordan said on Thursday that King Abdullah allowed a Jordanian leader of the Palestinian group Hamas to return to the kingdom after he pledged to freeze his ties with the group.

A government source was quoted by the state news agency Petra as saying the monarch had consented to a request by Ibrahim Ghosheh to come back after the exiled promised in handwritten appeal to freeze his political activity in Hamas.

"I hope to return to Jordan in the next few days as I will freeze my political, media and organizational activities that relate to Hamas movement,"

Ghosheh was quoted as saying in a signed letter to the authorities. Petra said it had obtained a copy of the letter.

Ghosheh, 67, said in the letter he left of his free will on a Royal Jordanian flight for Bangkok overnight to help defuse the crisis that erupted after he was banned from re-entering Jordan when he returned on a Qatari airliner on June 14.

Palestinian worker shot

A Palestinian worker was shot and seriously wounded by Israeli troops Thursday in the Gaza Strip, a medical source said.

Fares Lafi, 22, was trying to go to work in the Erez industrial zone between the Gaza Strip and Israel when he was hit in the chest by a bullet, the source said.

Iraq rejects Russian counter-proposal

Iraq on Wednesday rejected a Russian counter-proposal to the UN Security Council that would establish a timetable for suspending UN sanctions against Baghdad.

"We will not accept any idea, any project that does not have as its purpose the (unconditional) lifting of the embargo," Information Minister Hoammed Said Al-Sahhaf was quote by Qatari satellite television Al-Jazeera as saying.

Sahhaf, who was responding to a question on the Russian proposal, added that "our position is not directed against any country. It is dictated by the situation in a country that suffers from an unjust embargo and daily crimes, while it fulfils all of its commitments."

On Tuesday, Russia told the Security Council it could not accept a US-backed British plan to revamp the UN's Iraqi sanctions regime, and submitted a counter-proposal with a timetable for suspending sanctions.

Political debate

A Moroccan prince's rare public remarks about politics led to a debate on Wednesday on whether a member of the royal family had the right to openly criticize the government.

Prince Moulay Hicham Al-Alaoui, in a commentary published by the French daily Le Monde on Tuesday, said Morocco was facing a social crisis and was "in a state of political paralysis."

Saying the situation "forbids me silence," he said the time had come to speed up reforms to avoid political unrest similar to that rocking neighboring Algeria.

Iran unveils its new national car

Iran's flagship automobile company, Iran Khodro, has unveiled the Islamic republic's long-awaited national car at this week's Tehran auto fair.

Six models of the car, whose working name is the "X-7" and whose emblem is a horse, were on display at the exhibition in which 26 foreign companies and 20 Iranian firms are participating.

"The X-7 is a car with a new design, based on European norms in matters of safety and environment," explained Behruz Javadi, research and development chief at Iran Khodro, which has 64 per cent of the Iranian automobile market.

Javadi stressed the importance of Iran developing its own national car for the lucrative domestic market in which 300,000 cars are sold yearly.

West Bank city bans Israel mobile phone companies

Shopowners in the West Bank city of Jenin were ordered on Thursday to stop selling Israeli mobile phones to try to prevent the "assassination" of Palestinian activists, a senior city official said.

Acting governor Haider Irsheid said Cellcom and Pelephone mobile phones, Israel's two largest cellular companies, were banned also to encourage Palestinians to boycott Israeli products.

"Cellcom and Pelephone mobile phones have been banned for two reasons, first for security, second for the sake of developing Jawal," Haider told Reuters, referring to the Palestinian mobile phone company.

Telephones and mobile phones have been booby-trapped in the past, killing several Palestinian activists, including Hamas bombmaker Yahya Ayyash in 1996.

Records profit

The biggest joint Arab shipping venture announced Thursday net profits of 40.76 million dollars in 2000, a year that saw it handle more than 820,000 tonnes of cargo.

KSE hit new 30-month high

The Kuwait Stock Exchange (KSE) hit on Wednesday a new 30-month high, edging up despite widespread profit-taking sales.

The KSE index closed at 1,687.3 points, up 0.2 per cent on the week and 25.2 per cent on the year, but was still down 40.5 per cent on its all-time high of November 1997.

The market has boomed over the past few months amid heavy trading as investor confidence continues to climb on the back of long-promised government reforms and compensation payments by Iraq to many listed companies.

New Dubai-JFK service

Delta Air Lines, the only US carrier to serve the UAE market, is offering passengers on its new thrice-weekly Dubai-New York JFK service, bonus miles in its SkyMiles worldwide rewards programme until the end of October.

"Our SkyMiles programme is one way of ensuring customers share in the celebrations marking the launch of this new service," said Richard Michaels, Commercial Director UAE, Delta Air Lines.

Saudi Prince's investment strategy pays off well

Forbes magazine has published its annual list of the world's super rich for the year 2001. Prince Alwaleed Bin Talal Bin AbdulAziz Alsaud, Kingdom Holding Company chairman came in sixth this year with a $20 billion fortune.

The listing is for individuals running a business or managing their own assets.

Separate listings are published elsewhere for those who inherit their wealth.

This is Forbes' fifteenth year listing the fortunes of the world's richest. The financial publication calculated net worths based on personal asset valuation as of 21 May 2001.

Cheney oil firm had extensive Iraq dealings

The oilfield services company Dick Cheney headed before he became US vice president had far more extensive financial dealings with Iraq than

Cheney has acknowledged, The Washington Post reported on Saturday.

Citing UN records and oil industry executives, the newspaper said two subsidiaries of Halliburton Co. had contracts to sell $73 million dollars in oil production equipment and spare parts to Iraq while Cheney was chairman and CEO of the Dallas-based company.

The newspaper said, according to UN records, the subsidiaries, Dresser-Rand and Ingersoll Dresser Pump Co., sold material to Baghdad through French affiliates from the first half of 1997 to the summer of 2000.

Egypt says it's no haven for dirty money

Egypt, which has just been added to an international money laundering blacklist, denied on Saturday it was a haven for dirty money and said it was introducing news legislation to combat illicit cash.

"An official source at the Ministry of Economy and Foreign Trade affirmed today (Saturday) that Egypt is not and will not be a place for laundering money," the official Middle East News Agency (MENA) reported.

"Rather, it has strict procedures and guidelines given by Egyptian regulatory authorities to financial institutions working here which are designed to fight such operations," it added.