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Feb 12 - 18, 2001

Khatami's economic reforms stranded by 'old guards'

President Mohammad Khatami's hopes of liberalising Iran's economy remain a distant dream in the face of political uncertainty and opposition from an entrenched revolutionary establishment with vested interests.

Khatami has launched an economic recovery programme promising to curb the state's massive role in the economy and encourage private business activities.

His goal is to reform an economy seen as inefficient, sharply boost growth and investment, and create about 800,000 jobs a year for the booming young population.

"We have problems in economic liberalisation. We can't persuade the private sector to take over state companies from the government," Jamshid Pajuyan, an economist, told Reuters.

"Since Khatami's goals hinge on healthy private activities, I do not see us achieving those goals any time soon in the future," he said.

The state controls more than 80 per cent of the economy, a fact which has led to mismanagement and widespread corruption.

Confusing laws and political infighting have discouraged major foreign and private local investment.

Past efforts at privatisation have generally failed amid deep-seated resistance from revolutionary old guards, senior bureaucrats or the state-affiliated labour groups.

Steps taken by this government to privatise some state holdings and liberalise the financial market are yet to show results.

The government has also failed to touch billions of dollars in state subsidies, aimed at protecting the poor and averting social unrest.

Such assistance, covering a range of essential items from food and medicine to energy, are seen as a discouragement to fair competition and as conducive to corruption.

Tunisia's foreign direct investment up 125%

Foreign direct investment in Tunisia soared 125 per cent to 1.100 billion dinars ($802.9 million) for 2000 and created 22 per cent of the total new jobs for the year, official figures showed on Thursday.

"Foreign investment rose to 1.100 billion dinars in 2000 compared with 488 million dinars in 1999, resulting in an increase of 125 per cent," the Cooperation and Foreign Investment Ministry said in a report.

About half of the investment came from the sale of two cement plants to foreign investors and the construction of a new power plant awarded to an international consortium, according to the ministry figures.

Receipts from the two privatised cement plants were at 362 million dinars while investment in the 470 megawatt combined-cycle plant at Rades area, near Tunis, was at 151 million dinars.

The construction of the Rades power plant, granted to a foreign consortium in 1997 in a 20-year build-own-operate concession, started in 1999 with an investment of 44 million dinars.

More than 100 new firms, established by foreigners in 2000, invested about 500 million dinars, mostly in the manufacturing industry.

Total foreign investment for the 1997-2000 period reached 2.9 billion dinars compared to 1.7 billion dinars targeted in a government plan, according to the ministry data.

The total number of foreign companies reached 2,139 by the end of 2000, creating a total of 192,000 jobs which included 14,750 new jobs in 2000, accounting for 22 per cent of total jobs created by the whole economy.

The Tunisian current account deficit is expected to be at about $600 million forend of 2000, or 3.0 per cent of the country's Growth Domestic Product (GDP).

Forecasts put the current account deficits at 2.9 per cent of GDP in 2001 and more than 3.0 per cent in 2002.

Iraq, Jordan sign drafts of free trade agreement

Iraq on Wednesday said it had signed drafts of a free trade agreement with Jordan, the official Iraqi News Agency (INA) reported.

"We have agreed on of the clauses two drafts of a free trade agreement put forward by the two sides," INA quoted Trade Minister Mohammed Mehdi Salehas saying after signing minutes of the meetings of the Iraqi-Jordanian committee with Jordan's Trade and Industry Minister Wasef Azzar.

"The drafts will be submitted to the two countries' governments to be ready for signing later on," Saleh said.

Saleh said they had also agreed on boosting commercial cooperation under the oil-for-food programme.

Sudan calls for regional Arab unity

Sudan's Foreign Minister Mustafa Ismail urged the Arab world to unite as one nation, faced with the new situation resulting from the election of hardliner Ariel Sharon as Israel's prime minister.

"The region is headed for a state of no-peace, no-war, which we should face with a strategy based on removal of Arab conflicts and disputes," Ismail told a press conference.

The minister warned Arab states against "failure of taking seriously" the situation he said would arise in the Middle East after Sharon's election victory.

Saudi looking for $25 bln investment in gas

Saudi Arabia is looking for investments up to 25 billion dollars to see through a gas project in the south of the country, economic daily Al-Iqdissadiya reported Wednesday.

"The volume of investment needed for the gas project in the Jawaher area of southern Saudi Arabia amounts to some 25 billion dollars," the paper said, adding that an agreement on exploiting gas reserves would be reached with international companies in April.

According to the paper, Riyadh will be studying with seven international firms "ways of developing the gas field in the Jawaher region in the Rub Al-Khali area" to the south of the country.

It says it is one of three major gas projects in southern Saudi Arabia, with another in the Red Sea area and a third in the Shaybah area.

Oil price touches $30 a barrel

Oil prices touched 30 dollars a barrel for the first time in more than two months on Thursday, with technical buying dominating the morning's trading, dealers said.

Brent North Sea benchmark crude for March delivery pushed up to 30.00 dollars, having closed at 29.91 dollars on Wednesday. Prices were last this high on December 4.

New York light sweet crude March futures gained 90 cents on Wednesday to 31.25 dollars.

Traders said that buying interest was keen because the Brent March contract is due to expire in the early part of next week, and dealers want to ensure they are not short of oil.

Analysts continue to point to factors such as fitful Iraqi exports and refinery bottlenecks for the rise in crude and refined product prices.

Iran to fly first domestic made plane

Iran's first-ever domestically made passenger plane, built with technical assistance from the Ukraine, will make its first test flight this week to mark the anniversary of Iran's 1979 Islamic revolution, press reports said Tuesday.

Ukrainian Prime Minister Viktor Yushenko, expected to arrive in Tehran later Tuesday, will be among the guests invited to witness the first flight Wednesday of the medium-haul Antonov AN-140 plane (Iran-140), the English-language Iran News said, citing Mohammad Islami, head of the Iran Aircraft Industries Co.

Dubai to spend over $1.3 bln on airport

The Gulf emirate of Dubai is to invest 1.36 billion dollars in a new terminal for its airport to handle 45 million passengers by 2015, civil aviation chief Sheikh Ahmad bin Said al-Maktoum said Tuesday.

"We have laid out five billion dirhams (1.36 billion dollars) for the airport's expansion and the building of a new terminal," said Sheikh Ahmad, also chairman of the Dubai-owned carrier Emirates.

Work on the new terminal, designed by France's AČroports de Paris (ADP), will begin in 2002 and finish in 2005, by which time the airport will be able to accommodate 22 million passengers, he said.

The airport "is expected to have a capacity of 45 million passengers from 2015 against 12.3 million in 2000," he added.

Foreign oil cos

Yemen will sign prospecting agreements with foreign oil companies aimed at doubling production to one million barrels per day (bpd) and boosting reserves, Oil Minister Mohammad al-Wajih said on Tuesday.

Our main objective is to increase reserves and boost production to one million bpd within five years, Wajih said in an interview with Al-Hayat newspaper.

Egypt postpones minister's trip

Egypt has delayed a trip to Iraq by its economy minister to give him more time to prepare for talks to activate the two countries' new free trade agreement, Egypt's official news agency said on Tuesday.

Economy and Foreign Trade Minister Youssef Boutros-Ghali and a delegation including more than 170 businessmen had been due to leave for Iraq on Friday.

Kuwait expected to name new oil minister

Kuwait is expected to name a new oil minister after Sheikh Saud Nasser Al-Sabah asked to be replaced after three years in the job, political sources said on Thursday.

They said that Sheikh Saud, seen as an oil price hawk within the Organisation of the Petroleum Exporting Countries (OPEC), declined another cabinet position in the country's new government which is expected to be announced within a few days.

Arab Bank weathers Middle East turmoil

Arab Bank Group, one of the Middle East's major financial institutions, said on Monday its healthy 2000 earnings were the result of better utilisation of its diversified portfolio despite a difficult business climate.

Arab Bank chairman Abdul Majeed Shoman said a healthy 10.9 per cent growth in the bank's $28.5 billion balance sheet reflected its financial strength and a diversified global reach with over 400 branches and offices worldwide.

"Arab Bank was able to overcome a difficult political situation by its more efficient utilisation of assets," Shoman told Reuters after announcement of a 6.9 per cent rise in 2000 profits to $241.2 million.

SABIC net up

Saudi Arabia's industrial giant Saudi Basic Industries Corp (SABIC) said on Tuesday it made a 3.63 billion riyal ($968 million) net profit in 2000, up 112 per cent from 1.71 billion it made in 1999.

Saudi economic council takes over privatisation

Saudi Arabia said on Monday its Supreme Economic Council would take overall charge of planning and implementing the kingdom's privatisation drive.

The official Saudi Press Agency said the cabinet approved a measure granting the council "the responsibility of overseeing the privatisation process and following up on its implementation and the required coordination between state bodies".

The cabinet said the economic council would specify the "activities to be privatised" and form a strategic plan and timetable.

Iran 9-month oil income up

Iran's earnings from petroleum exports soared 62.8 per cent to $18.6 billion in the nine months to December on strong oil prices, Central Bank Governor Mohsen Nourbakhsh said on Monday.

Nourbakhsh said the $18.6 billion income covered exports of crude oil, gas and petroleum products, the official IRNA news agency reported.

He said gross domestic product (GDP) was expected to rise 5.2 per cent in the current Iranian year which ends on March 20.

Foreign debt was down to $8.1 billion at the end of the nine-month period on December 20, from $10.4 billion at the beginning of the year.

Arab Fund lends Tunisia

Tunisia on Monday signed a 25 million dinar ($81.84 million) soft loan with the Arab Fund for Economic and Social Development (AFESD) to help finance road projects in the North African state.

The Kuwait-based AFESD said in statement the 22-year loan, including a five-year grace period, carries a 4.5 per cent annual interest rate. The loan will partly finance a project to develop the country's road network by expanding them and building a new 67 km (42 miles) highway.

Investcorp

The Bahrain-based investment group Investcorp on Sunday announced profits of 70 million dollars in 2000, down 44 per cent compared to the previous year.

Spain's Costa Blanca Real estate

Real estate on Spain's Costa Blanca is to come under the spotlight next week at two exhibitions in the UAE.

Abbey National Offshore, the offshore arm of Britain's fourth largest high street bank says the east coast of the Iberian Peninsula is experiencing a property boom with real estate prices currently recording double-digit annual per centage growth.

Jordan cuts interest rates

Jordan's central bank cut interest rates by one-half per centage point Saturday in a bid to stimulate the economy, said the bank's governor, Omaya Tukan.

The discount rate was cut to 6 per cent, the weekly refinancing rate to 7 per cent and the interbank rate to 5.125 per cent.

Tukan said he is now looking for a cut in rates by the banking sector that would lead to "promoting economic activity in the country." He said the rate cut was justified by "the stability of the monetary situation and ... of the Jordanian dinar's exchange rate." Added to that, he said, is a "sufficient level" of foreign exchange reserves, now estimated at 1.9 billion dollars, compared with less than one billion in 1999.

Lebanon still on money laundering list

Lebanon should be removed from the OECD's blacklist of suspected money launderers in June, the secretary general of the Association of Lebanese Banks, Makram Sader, said Friday.

The Organisation of Economic Cooperation and Development's financial action task force on money laundering (FATF) said Thursday that none of the 15 countries listed as "non-cooperative" in its anti-money laundering campaign had been removed from the list, despite "impressive strides" taken by some toward transparence.

Sader said Lebanon's continued presence on the list was not due to the existence of money laundering operations, but to the absence of legislation required by the FATF.

Egypt pound-dollar fair value seen at 3.96

The fair value of the Egyptian pound, if it were freely floated instead of pegged, would be 3.96 to the dollar, according to the mean of estimates by seven economic analysts contacted in a Reuters survey on Thursday.

This compares with the official rate of around 3.85 introduced last week under a "managed peg" system. The seven analysts' estimates ranged from 3.9 to 4.0.

Their forecasts for fair value of the pound at the end of March ranged from 3.85 to 4.25 per dollar, with a mean of 4.0.