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Jan 22 - 28, 2001

OPEC approves big output cut

OPEC on Wednesday agreed a substantial reduction in crude supplies that aims to keep oil prices afloat near $25 a barrel.

Ministers backed a proposal from Saudi Arabia for a cut of 1.5 million barrels a day that lowers limits for 10 members to 25.2 million.

OPEC adopted the policy despite fears among major importing nations that it could spell trouble for the slowing economies of the West by raising energy costs again.

The United States and the European Union had urged producers to make only a modest reduction.

After the deal US light crude eased 54 cents a barrel to $29.75. London Brent blend lost 51 cents to $25.00.

"This agreement will keep oil prices stable and not harm producers or consumers," said Libya's OPEC representative Ahmed Abdulkarim. Organisation of the Petroleum Exporting Countries Secretary-General Ali Rodriguez said the group had been determined to stem a swift decline in oil prices from a recent 10-year high of $35.

"Stocks are increasing and in the second quarter we saw a sharp fall in prices coming," he said. "We wanted to maintain the stability of the market and of course of prices." "This is significant because it is the first time that OPEC has cut production to defend the new higher price level of $25 a barrel," said Gary Ross of US consultancy PIRA Energy.

"This deal should do the trick but there are risks that the economy slides out from underneath them."

OPEC last year was blamed for stirring inflation by moving too slowly to restore output curbs put in place after the price collapse of 1998.

Inventories of crude and petroleum products slipped to record lows in 2000 and consuming nations are worried that OPEC's new cutbacks will prevent stocks rebuilding.

Egypt plays the Iraqi card through free trade accord

Vice President Taha Yassin Ramadan, the highest ranking Iraqi to make an official visit to Egypt since the 1991 Gulf War, arrived in Cairo by plane Tuesday to sign a free trade accord.

It was only the third time since UN sanctions were imposed on Iraq for its 1990 invasion of Kuwait that an Iraqi official had flown out of Baghdad, testing a UN air embargo.

Ramadan, accompanied by the ministers of trade, transport and agriculture, is expected to sign a free trade agreement between Egypt and Iraq, and to meet with Egyptian President Hosni Mubarak on Wednesday.

Quoted by Baghdad's official INA news agency as he began his flight, Ramadan "welcomed the level of economic and commercial relations between the two countries despite the unjust embargo imposed on Iraq." Iraq was giving "priority to Arab countries in the framework of the (UN) oil-for-food programme," under which Baghdad exports crude in exchange for imports of food, medicine and other essential goods, he said.

Baghdad broke off diplomatic ties with Cairo after Egypt joined a US-led coalition that evicted Iraqi forces from Kuwait in the Gulf War that began 10 years ago Wednesday.

Ramadan said his "extraordinary visit and the first of its kind" was a sign of a restoration of relations between the two countries.

Egyptian government newspapers reported in December that Iraq would sign a deal to set up a free trade zone with Egypt as part of wider moves toward removing tariffs in the Arab world.

Egypt, Iraq and Libya intend to set up a trilateral free trade zone, according to Arab League sources.

The Arab world, which has plans to set up a region-wide free trade zone by 2007, has been warming to Iraq increasingly in recent months with moves to boost trade and resume flights despite a decade of UN sanctions.

UAE reserves right to impose duties

Although the UAE is commitment to Gatt agreements since it joined the World Trade Organisation in 1996, the country still has the right to impose special customs duties on imports to protect the national industrial production against the dumping of cheap imports in the local markets, according to Shaikh Fahim bin Sultan Al Qasimi, Minister of Economy and Commerce.

"The UAE has removed all obstacles in the trade of industrial products. The country, in accordance with the WTO rules, has reserved its right to intervene in the market to protect the country's industrial production by puting restrictions on the entry of products that harmed the local industry...," he said.

Shaikh Qasimi's statement came in his reply to a question by Mohammed bin Khadem, member of the Federal National Council, during the FNC's session on Tuesday.

He assured the FNC members that the country still had the right to intervene in the trade of industrial products if it suffered a severe imbalance in the balance of payments situation.

Arafat, Ben-Ami, Mubarak in talks

Palestinian leader Yasser Arafat and Israeli Foreign Minister Shlomo Ben-Ami held talks with Egyptian President Hosni Mubarak aimed at ending violence and reviving a moribund peace process.

But Israeli government sources in occupied Jerusalem played down chances of a breakthrough , as US President Bill Clinton prepared to leave office in three days after having offered last-ditch peace proposals in December. The talks here took place against a backdrop of violence in the Palestinian territories and reservations both the Israelis and Palestinians have over Mr Clinton's proposals for a final settlement. The talks were being held at one of Mr Mubarak's palaces in northern Cairo, the Israeli embassy said without specifying what issues were discussed.

In occupied Jerusalem, an Israeli foreign ministry source said the meeting "was initiated by President Mubarak" to see where the two sides agree and disagree, but he "did not expect anything dramatic to happen." Egypt plays a key role in trying to bridge the gap between the Palestinians and the Jewish state.

Iran drops visa requirements for Gulf states

The Iranian government has dropped visa requirements for citizens of member states of the Arab Gulf Cooperation Council (AGCC) coming to the country for three months or less, Iranian television reported last night.

The measure, which the report said was approved at a recent cabinet meeting, is to take effect on Saturday.

The lifting of visa requirements falls within a policy of detente adopted by Iranian President Mohammad Khatami towards the Gulf states.

Earlier this month, Mr Khatami launched a call for the creation of an economic bloc among the countries of the Gulf, saying the Gulf states are on the way to becoming a unified economic powerhouse that could also give them expanded political influence across the globe.

Bahrain to allow foreign firms to own land

Bahrain has taken a landmark decision of allowing foreign firms to own land for setting up and carrying out business from the country.

The Amir, His Highness Shaikh Hamad bin Isa Al Khalifa, issued a decree in this regard, facilitating ownership of property by non-Bahraini commercial and industrial firms, as well as financial establishments and banks, which are owned fully by non-Bahrainis.

Foreign firms will be allowed to own land and construct property for the purpose of establishing permitted economic projects in the country, it said.

The Amiri decree opens a new chapter in Bahrain's economy as foreign firms will feel more secure and confident in the country's economic process, said leading Bahraini businessman of Indian origin Mohamed Dadabhai, who is also a member of the Shura Council's finance and economy committee.

Syria phosphate reserves up

Syria's known phosphate reserves have more than doubled in the last three years to reach 1.7 billion tonnes as a result of exploration and survey work, a senior official said on Wednesday.

Talal Ballani, general director of the geology and mineral resources department at the oil ministry, told Reuters that annual production was running at 2.65 million tonnes.

He said in an interview that output was expected to increase to 3.85 million tonnes in two years with the completion of a 1.2 million tonne phosphate washing and drying plant.

"Syria is rich in phosphate reserves which are mainly located some 170 kilometres north east of Damascus. The proven reserves are estimated at 1.7 billion tonnes," Ballani said.

"Syria is one of the largest world phosphate exporting countries exporting around two million tonnes per year through annual contracts to European, Asian and American countries." "Syria and Togo are exchanging third and fourth places as biggest exporters after Morocco and Jordan," he said.

Lebanon opts for sales tax

Lebanon plans to introduce a sales tax on consumer products and not value added tax (VAT) as had been planned by the previous government, Prime Minister Rafiq Hariri said Wednesday.

"We are planning, this year if possible, to introduce the system of sales tax. For our country it is easier, less complicated than VAT," he said during an interview with AFP.

The plan to introduce VAT had been developed by the former government of Salim Hoss (1998-2000).

Oman bourse delists four firms

Oman has stopped four firms from trading on the Muscat Securities Market (MSM) to protect investors after they lost more than 75 per cent of their capital, a bourse official said on Wednesday. The officialfrom Capital Market Authority (CMA), which oversees the bourse, named the companies as National Carpet Company, Gulf Plastic Industries Company, National Packaging Co and Marina Bander Al Rawdah.

More tourists

Egypt has chalked out a comprehensive plan to attract more tourists from all over the world.

Talking to a delegation of Dubai-based mediamen and representatives of travel and tourism agencies at his office in Misr Travel Town in Cairo, Minister of Tourism Dr Momdouh El-Beltagui said that Egypt, a cradle of civilisation that represents one of the world's oldest-recorded history which is visible in the Pharaonic, Greco-Roman, Coptic, Islamic and modern monuments, has plans to set up a complex, which will accommodate artefacts about revealed religions.

AHI drydock opens

Arab Heavy Industries (AHI) officially opened its 30,000 dwt drydock in Ajman. Built within a year with an investment of Dh72 million, Al Zora drydock is equipped with modern facilities for enhanced operations and improved flexibility, a Press release from AHI said.

Lebanon has $3.4b budget deficit

The Lebanon's finance ministry has released its long-awaited draft 2001 budget, giving the first clear indication as to how the new government will manage the public finances.

The budget has projected total spending of $6.6 billion and revenues of $3.2 billion. That leaves a deficit of about $3.4 billion, equivalent to 50.87 per cent of spending, the ministry said. The deficit in the first 11 months of 2000 was equivalent to more than 52 per cent of spending, underlining the tough task the new government has in controlling the public finances.

The draft budget, which will be discussed by the Cabinet Friday before it goes to Parliament for final approval, suggests that the new government of Prime Minister Rafik Hariri is emphasizing economic growth rather than fiscal austerity.

First Islamic Investment Bank

Bahrain-based First Islamic Investment Bank (FIIB) said on Tuesday it made a net profit of $20.5 million in 2000, up 28.1 per cent from 1999's net of $16 million.


Orascom Telecom said on Monday it will pay $171 million in four instalments over two years for a further 10.51 per cent stake in Egyptian mobile phone holding company MobiNil.

Sea link

The Egyptian and Jordanian Red Sea resorts of Sharm el-Sheikh and Aqaba will be linked by sea for the first time on Tuesday in a bid to bolster regional tourism, travel officials said on Monday.

Gasoline price

Jordan has postponed a controversial rise in domestic gasoline prices, due to have taken effect this month to bolster state finances, officials said on Sunday.

They said Prime Minister Ali Abu Al-Ragheb took the decision because of concern that a large price rise would aggravate popular anger with government policies and could lead to civil unrest.

Tourism project

Bahrain will embark in March on a one-billion-dollar tourism project to build a string of artificial islands northeast of the Gulf state, a newspaper reported on Saturday.

Saud Kanoo, chairman of the Gulf property firm Ossis, told Al-Ayyam that the six-year venture called the Salman Islands would be "the first integral investment project in the Gulf." The project spread over five islands will comprise nine five-star hotels, a zoo and a number of homes, apartment blocks, recreation facilities, commercial complexes and sports centres, he said.

Egyptian pound

The Egyptian government is not planning to let the Egyptian pound float free, despite its sliding value against the dollar, Prime Minister Atef Ebeid was quoted as saying by newspapers on Saturday.

The pound, which for years was fixed at 3.40 to the dollar, is now selling at 3.77 to the dollar in banks and nearly four pounds in street exchange booths after the government began to let it slide last year.