Aug 13 - 19 , 2001

Iranian investment hit by US curbs

Iranian Oil Minister Bijan Zanganeh said on Saturday that the US sanctions were hampering Iran's drive for foreign investment and technology to modernize its ageing oil sector.

Zanganeh's remarks came a day after US President George W. Bush signed a five-year extension of sanctions against Iran and Libya to curb foreign investment in their oil and gas sectors. Although there have been some foreign venture in Iran's oil and gas industries in the form of "buy-back" deals, Tehran is keen for cooperation with the US companies.

"Eighty per cent of oil companies in the world are American. Neither us nor American firms are benefiting from these sanctions," Zanganeh told IRNA. Zanganeh said Iran needed foreign investment and technological assistance to boost its oil production capacity and develop its vast untapped natural gas reserves.

"To maintain our Opec quota and share of the world market, we have no choice but make new investment in the upstream oil sector," he said. "If we do not do so, our neighbours will continue to develop (offshore) fields they have in common with us. They are not going to wait for us to start."

The minister said Iranian oil facilities were at least 30 years old, adding that production had fallen by 1.5 million barrels a day in the past five years because of ageing facilities. Some 80 per cent of an estimated one million square kilometres of fossil layers in Iran remain unexplored due to lack of investment, he said.

The situation is equally dismal in the gas sector. "We have the world's second largest gas reserves, but we are exporting little gas due to the lack of investment," Zanganeh said, putting Iran's gas reserves at 26 trillion cubic metres.

IMF approves $1.51bn cash for Turkey

The International Monetary Fund on Friday approved a $1.51 billion disbursement for Turkey from the nation's existing loan of $15.7 billion and said there were signs that the economic slump there is bottoming out.

The money, which will be made available immediately, was freed up after a discussion at the IMF's board that took most of the day. IMF First Deputy Managing Director Stanley Fischer traveled to Ankara recently to review Turkey's progress on economic reforms personally.

Turkey found IMF approval easier to obtain than it did at the last IMF review in early July, when the lender froze payments to Ankara for about two weeks over because authorities failed to deliver on all of the promises made in return for the rescue package.

The money will help Turkey steady its economy after a difficult banking crisis earlier this year that forced the nation to float its lira, a move that caused the currency to lose almost 50 per cent of its value. Fischer was fulsome in his praise, saying Ankara had made considerable progress on economic reforms that are, creating the basis for a lasting reduction in inflation and a dynamic economy generating sustainable growth.

There are encouraging signs that the economic downturn is bottoming out, and that the targeted lowering of inflation is materializing, which could permit declines in interest rates, Fischer said in a statement after the board meeting. Lowering interest rates is key to helping Turkey meet its heavy debt rollover requirements in the coming months.

Earlier on Friday, Turkish Economy Minister Kemal Dervis said his country had more or less overcome six months of financial crisis. We will overcome the crisis. We have overcome it, more or less, Dervis told reporters on Friday. We have put in place some balances. But while Fischer said the government had improved recently, he said that they should try to communicate more effectively to investors and other observers to help build market confidence.

Khatami sworn in for second term

Iran's reformist President Mohammad Khatami was officially sworn in for a second and final four-year term on Wednesday, calling for democracy and political openness in the country and for dialogue with his conservative rivals.

In an address after his investiture, Khatami, 57, also appealed for an end to hatred and violence in politics. He urged the "establishment of religious democracy (and) reinforcement of the civil institutions" in Iran, and said he was determined to defend "the fundamental rights of the people, legitimate liberties, a free press and civil institutions."

The ceremony, which took place in the parliament chamber, began after the playing of the national anthem and the reading of verses from the Holy Quran. The investiture was witnessed not only by deputies, but also by leading figures of the Islamic regime and the diplomatic corps. Khatami, who was re-elected by a landslide vote of nearly 80 per cent in June, had been set to be sworn in last Sunday. However, that was delayed by supreme leader Ayatollah Ali Khamenei due to an institutional dispute between the reformist- dominated parliament and the conservative-controlled judiciary.

Beirut banks eye fee business as loan

Lebanon's banks will turn to retail services and other fee-earning business to help make up for conservative lending policies forced on them by the country's economic woes, bankers and analysts said on Tuesday.

Many of the country's leading banks reported stagnant or falling first-half profits, and said that macroeconomic pressures were forcing them to adopt conservative lending strategies to reduce the ratio of bad loans in their portfolio.

The Lebanese government, with debt of over $24 billion or about 155 per cent of GDP, is facing mounting pressure on the currency while it turns to politically sensitive plans for fiscal reform and privatisation to cope with the debt and end several years of recession.

Local banks, meanwhile, are major holders of Lebanese pound-denominated debt, whose prices would drop with a devaluation. While reducing lending, they are seeking to draw income from retail services, such as processing payments of mobile phone and utility bills and offering Internet bank accounts and services, said a strategist for one bank.

Iraq's weekly oil sales surge to 17 mln barrels

Iraq's oil sales under UN supervision surged to 17 million barrels last week, from 12 million the previous week, the office administering the UN oil-for-food programme said Tuesday.

In the week ending August 3, there were six loadings at Iraq's Gulf port of Mina al-Bakr and three at the Turkish Mediterranean port of Ceyhan, the only two export outlets authorised under the UN sanctions imposed on Iraq in 1990.

The average price of Iraqi oil last week was around 21.96 dollars (25 euros) a barrel, and the sales earned an estimated 356 million dollars (404 million euros), the office said in its weekly update.

Iraq has exported 51.7 million barrels of crude since July 4, the start of the current phase of the programme. The phase is the 10th since the programme was established in December 1996 to enable Iraq to import essential goods under UN supervision.

Four new purchase contracts for nine million barrels of crude were approved last week by the UN oil overseers and the sanctions committee, taking to 69 the number of contracts awaiting completion in the current phase.

Egypt devalues pound-dollar rate

Egypt has devalued its core pound-dollar rate to 4.15 from 3.90 previously and broadened the band in which it allows the currency to trade either side of it, the Central Bank said on Sunday.

"The band for banks and non-bank dealers is plus or minus 3.00 per cent," the Central Bank said.

The band was previously 1.5 or two per cent either side of the 3.90 core pound-dollar rate, depending on the currency.

The devaluation of the core pound-dollar rate is six per cent, and at it weakest the new band allows it to trade to 4.2745.

The government has been trying to stabilise the exchange rate after intermittent dollar shortages over the past three years, and has come under increasing pressure from foreign analysts and ratings agencies to introduce a more flexible exchange rate in line with market forces.

2 die in Bahrain blast

Two Bahraini soldiers were killed and 10 others were injured on Sunday when a bomb exploded during a military exercise, the Gulf News Agency reported.

Fatah leader escapes Israeli rocket attack

Israel launched a rocket attack against a top official of the Fatah movement of Palestinian leader Yasser Arafat on Saturday, stepping up its policy of targeting Palestinians seen as a threat to the Jewish state.

Israeli forces fired missiles at the three-car convoy of Marwan Barghuti, Fatah secretary general in the West Bank, as he was leaving his offices in Ramallah, Barghuti and witnesses said. When asked if he thought he had been targeted by the Israelis, he replied: "Yes, of course".

Israel storms the Orient House

Israeli police seized the main Palestinian headquarters in and around East Jerusalem on Friday in a deeply symbolic campaign to assert control over the city after a Palestinian suicide bombing killed 15 people.

Israeli fighter jets, described by the Palestinians as F-16s, also flattened a police post in the West Bank and tanks levelled a Gaza Strip police position in response to the bombing at a West Jerusalem pizza restaurant packed with families.

The suicide attack was the worst in Jerusalem since a Palestinian uprising erupted over 10 months ago after peace talks stalled.

Israel's takeover of the Palestine Liberation Organisation's East Jerusalem headquarters, known as Orient House, and nine other offices nearby was sure to anger the Palestinians and provoke a strong reaction.

Egypt demands US action against Israel

Egyptian Foreign Minister Ahmed Maher urged the United States Monday to do more to rein in Israel for its targetted attacks on Palestinians, saying his country was "astonished" at the lack of US action.

Maher told reporters he had informed US charge d'affaires in Cairo, Reno Harnsh, that Egypt "cannot accept this Israeli behaviour which is unacceptable for any civilised state which believes in the law." "I told him Egypt is astonished that the United States has not reacted with the necessary firmness to this Israeli behaviour," he said quoting recent Israeli attacks on the cars and homes of "Israel's current policy is immoral, illegal and ineffective," he said, warning that it would only provoke more anti-Israeli attacks and expose western interests to danger.

Iraq set on developing anti-aircraft defences

Iraq is intent on further developing anti-aircraft defences with the aim of shooting down US and British war planes that fly over its territory, an official Baghdad newspaper warned Sunday.

"We promise the US administration that we will work harder to develop our anti-aircraft defences and shoot at any plane that attacks us no matter where it comes from," said Ath-Thawra, mouthpiece of the ruling Baath party.

The move to boost Iraq's defences was "only a threat to those whose attack us and try to harm our people," the paper said.

Saudi stocks' annual gains seen higher

Saudi stocks are expected to have outstripped last year's 11.3 per cent rise by the end of 2001, pushed higher by firm oil prices, strong blue chips and economic reforms, Saudi economists said on Wednesday.

However, they warned the market — which on Tuesday reached an all-time high — could be held back from even higher gains by concern over political instability in the Middle East and the continued absence of a regulated market.

The Saudi all-share index has climbed 11.6 per cent so far this year. On Tuesday, it closed at 2,521.65 points, the highest level since the index was launched in 1985.

Iran seeks partner for Armenian gas pipeline

A top Iranian diplomat said on Thursday that Teheran needs to find a third partner before it can launch the construction of a natural gas pipeline to Armenia.

The announcement is a blow for Armenia, which hopes that the proposed 140-kilometer (48-mile) line will solve its persistent energy shortages. Armenia had earlier announced that construction on the 140-million-dollar project would begin by the end of the year.

However Iran's Deputy Foreign Minister Ali Akhani said on a Thursday visit to Moscow that "it would be welcome if a third state became interested in this project." In that case Iran and Armenia "would take more decisive action in the near future, which would lead directly to the start of construction of the gas pipeline," Interfax quoted Akhani as saying.

Kuwaiti stocks edge up amid lull in summer trading

The Kuwait Stock Exchange (KSE) closed the week Wednesday slightly up amid a traditional summer lull in trading and widespread profit-taking.

The KSE index closed at 1,699.7 points, up 0.2 per cent on the week and 26 per cent on the year, but still down 40.1 per cent on its all-time high of November 1997.

The average value of daily trading on the bourse was below 30 million dollars, up from last year's 16 million. It was down from an average of 42 million dollars in the first half of 2001 and well below the 1997 average of 134 million dollars.

The market has boomed over the past few months, with the index rallying past the 1,700-point barrier for the first time since December 1998 after dropping to a five-year low in January.

The market's capitalisation has increased by some 30 per cent to 26 billion dollars since the start of the year, just below its 1997 peak of around 30 billion.

Aqaba port for trade

Jordanian Prime Minister Ali Abu Ragheb urged Iraq to ship goods via Jordan's cutting edge port city of Aqaba on the Red Sea, the official Petra news agency said Friday.

Abu Ragheb was speaking during a meeting with Iraqi Trade Minister Mohamed Mahdi Saleh in Amman, the agency said.

"The prime minister appealed to the Iraqi side during this meeting to increase its exports through the Jordanian port of Aqaba," Petra said.

The government has reduced port tariffs since July 2000.

Oil reserves

Iraq aims to increase its oil reserves to 270 billion barrels and overtake Saudi Arabia as the world's top reservoir, Oil Minister Amer Rashid was quoted Saturday as saying.

"By transforming potential reserves into proven reserves, Iraq will occupy the top position in the world with 270 billion barrels and overtake Saudi Arabia," Rashid said in a government daily, Al-Jumhuriya.

"To achieve this objective, we must step up efforts in oil prospecting in Iraq," the minister said.

Iraq's proven reserves currently stand at 112 billion barrels, leaving it in second place behind Saudi Arabia, whose reserves are estimated at 261 billion barrels.