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Feb 19 - 25, 2001

Shift in US policy on Mideast likely

After implicitly criticizing and discarding former president Bill Clinton's personalized Middle East policy, the Bush administration is groping for a new strategy for the region that will apparently be based on greater consultations with America's regional allies.

To this end, Secretary of State General Colin Powell is due to leave on Feb 23 for a six-day tour of Egypt, Saudi Arabia, Israel, Gaza and the West Bank, Jordan and Kuwait during which he will meet both Palestine President Yasser Arafat and Israel's newly elected premier Ariel Sharon.

This will be the secretary's first overseas trip since he assumed office, and it seems to have been designed both to evaluate and perhaps soften up Mr Sharon, known among Arabs as the butcher of Shatila and Sabra, and to enable Gen Powell to be in Kuwait for the Gulf War's 10th anniversary. Gen Powell was chief of the joint staff during the war.

The Kuwait visit's symbolism is not likely to be welcomed by the Arab people and many Arab governments in view of the fact that public opinion in the region is now running strongly in favour of ending UN sanctions against Iraq and welcoming Baghdad back into the regional mainstream. Even states that had condemned the Iraqi invasion of Kuwait a decade ago have been increasingly appalled by the suffering inflicted on Iraqi civilians by the harsh sanctions regime which remains in place and which the Bush administration actually wants to make even more stringent.

While announcing his Middle East trip, Gen Powell told reporters at the State Department on Friday that he would want to exchange his views with the leaders of the countries he would be visiting, specially of Israel and Palestine, on the prevailing situation. He said Mr Sharon should be taken at his word that he wants peace, and he looked forward to watching the Israeli premier fulfil his promise.

Iraqi oil smuggling grows, but by how much?

Iraq's growing defiance of United Nations sanctions has put Baghdad's oil smuggling operations back into the spotlight.

And as Iraq's newest escape outlet, Syria, comes under scrutiny, industry experts are trying to calculate how much oil cash now is evading UN accounts.

"If it is going on, very few people have a real idea about the volume," said Raad Alkadiri of the Petroleum Finance Co in Washington.

"And that has given people the opportunity to make wild speculations about how much smuggling goes on and how much the regime gets." Back of the envelope sums suggest Baghdad may be selling some 350,000 barrels a day outside the UN oil-for-food deal in violation of a decade-long UN sanctions imposed after Iraq's 1990 invasion of Kuwait.

In one of its boldest challenges, Iraq has hiked unauthorised oil flows to Syria to some 170,000 bpd this month, market sources said.

Unauthorised deliveries to Turkey may be touching 150,000 bpd, while small volumes also are seeping into Jordan as well as exiting through Gulf waters, they added.

Iraq channels another 100,000 bpd outside the UN oil-for-food deal into a long-running supply arrangement with Jordan that has tacit UN approval.

Baghdad's business with Jordan could in fact be inflating some published estimates on illicit oil sales.

"There is a 600,000 bpd figure being thrown about but that is wildly exaggerated," Alkadiri said. Even potential sanctions-breaking volume of 350,000 bpd might be difficult to sustain.

"There is no accountability behind this operation and big volume fluctuation as well," an overseas-based Iraqi analyst said. "And the Syrian link is not yet a reliable connection because Washington is leaning on Damascus." "I would be surprised if sales outside UN control were more than 200,000 bpd," the analyst added.

Freedom, religion can co-exist: Khatami

Iranian President Mohammad Khatami on Saturday vigorously defended democracy by telling a crowd marking the 22nd anniversary of the Islamic revolution that popular rule was compatible with religion.

Speaking before tens of thousands the day after a rare open anti-government demonstration in Tehran, Khatami warned against the danger of a rift between "the principles of religion and those of independence and freedom."

"Religion and freedom should not oppose each other. Freedom should not be held back in the name of religion, or religion in the name of freedom. If not, there will be deceptions," he said. "We are going to introduce to the world the model of religious democracy," Khatami said.

Intifada precipitates dramatic fall in Israel's GDP

The four-month-old Palestinian uprising triggered a 9.8 per cent slide in Israel's Gross Domestic Product (GDP) during 2000's final quarter, the central bureau of statistics said Thursday.

The wave of bloodshed, which has now left more than 400 dead, slammed the brakes on a year of tremendous economic growth, with the GDP surging by 6.5 in the second to a record 9.3 per cent in the third quarter.

Even with 2000's dark end, Israel's growth still stood at 6.0 per cent for the year.

Since the start of the uprising, Israel's hammering blockade on the West Bank and Gaza Strip has crippled the Palestinian economy and taxed Israel.

The border closures have cut off Israel's supply of 125,000 Palestinian labourers, provoking a labour shortage in Israel's construction, agriculture and service industries and costing the Palestinian territory 1.15 billion dollars, according to the United Nations.

Iraq seeks $2 bln of imports from Egypt in 2001

Iraq said on Wednesday it wanted to import $2 billion of goods from Egypt this year after signing a free trade agreement with its former Gulf War foe in January.

"This year, $2 billion has been allocated for trade with Egypt," Iraqi Trade Minister Mohammed Mehdi Saleh told reporters after talks in Cairo with Egyptian Prime Minister Atef Obeid.

"The meeting focused on activating last month's (free trade) protocol between Egypt and Iraq," he added.

Egyptian officials had previously said they expected the free trade agreement, which was signed in Cairo in January, to boost Egyptian exports to Iraq to $1 billion a year. They said the total value of Egyptian exports to Iraq since 1995 stood at $1.3 billion dollars.

The Iraqi minister said he had outlined the needs of the Iraqi market which included vehicles, food, construction materials and industrial products during his meeting with Obeid.

"We have signed contracts for the import of large and medium-sized vehicles from Egypt," Saleh said.

Kuwait's oil minister says no change its Opec policy

Kuwait's new oil minister Adel al-Subaih on Wednesday said his country will not change its policy of cooperation and coordination with Opec and vowed to push ahead with a plan to allow foreign oil majors to eventually operate domestic fields.

The oil policy of Kuwait is that of the government and I do not foresee any change towards Opec, the minister told Reuters after the formation of a new government was announced.

He replaced Sheikh Saud Nasser al-Sabah, often seen as an oil price hawk within the Organization of the Petroleum Exporting Countries (Opec). Sheikh Saud, a career diplomat and a former information minister, has served as oil minister in two governments since March 1998.

Subaih said that Opec coordination has proved in recent months its importance in achieving a just price for both consumers and exporters.

Oil below $28 a barrel

The price of oil fell below $28 a barrel in London on Wednesday after the latest inventory of US crude stocks showed a larger-than-expected increase in reserve levels.

A barrel of Brent North Sea reference crude for April delivery was going for $27.62 in early trading. The March contract expired late on Tuesday at $28.46 a barrel.

In New York, a barrel of light sweet crude for March fell 15 cents on Tuesday to 30.36 dollars.

Jeddah trade fair to boost exports by Muslim states

More than 40 countries will attend the first International Islamic Trade Fair in Jeddah next month, the organisers said Thursday, as part of efforts to boost exports between Muslim states.

The March 18-23 fair, which follows the annual Mecca pilgrimage, is backed by the Islamic Development Bank and the Jeddah chamber of commerce and industry.

"The fair promises businessmen and delegates unrivalled access to established and flourishing Muslim economies and to some of the most exciting investment opportunities available in the developing world today," the organisers said in a statement.

All political prisoners freed

Bahrain has released all political prisoners under an amnesty in the Gulf Arab state where citizens voted for a second day on Thursday in a referendum on landmark political reforms.

Opposition Shiite leaders in Bahrain threw their weight behind democratic reforms flocking to vote "yes" on the second and final day of a referendum to restore parliament.

"There are no longer any prisoners in Bahrain held for crimes linked to national security. The prisons have been emptied of them," Bahrain's Information Minister Mohammed Ibrahim Al-Mutawae said.

Kuwaitis 'await' formation of new government

Ordinary Kuwaitis, politicians and newspapers called on Wednesday for an end to an alleged dispute within the ruling Al-Sabah family over the long-awaited formation of a new government.

MP Hasan Johar, a Shi'ite Islamist and a US-educated political scientist, said: "We must see an immediate resolution. This is unprecedented and it is having a negative impact on the country."

Kuwaitis have been waiting for more than two weeks for the announcement of a new government after the last cabinet, formed in 1999, resigned due to differences among key members.

Politicians say that differences within the ruling family over the composition of a new cabinet are behind the delay.

SABIC signs contracts for MTBE exports

Saudi Basic Industries Corp. (SABIC) has signed contracts with Iran and Egypt for exports this year of 260,000 tonnes of methyl tertiary butyl ether (MTBE), the company announced Wednesday.

The industrial giant's vice chairman, Fahd bin Nasser, said 200,000 tonnes of the anti-pollutant would go to Iran and the rest to the Egyptian General Petroleum Corp., in the seventh consecutive annual deal with Egypt.

The contracts are part of Iranian and Egyptian efforts to cut air pollution, a major factor in both Tehran and Cairo, he said, quoted by the official news agency SPA.

He gave no value for the two deals.

Iraq submits distribution plan for goods

Iraq has submitted a $5.55 billion plan for humanitarian supplies it will purchase in the UN-administered oil-for-food program for a six-month period ending in early June, UN spokesman Fred Eckhard said on Tuesday.

But unless Iraq increases flagging oil exports, Baghdad will only raise about a third of the money needed to meet this ambitious target, UN figures show.

Iraq is on a pace to sell only about a third as much oil in the six-month ninth phase of the humanitarian program as it sold in the eighth phase.

The $5.55 billion in proposed humanitarian supplies assumes that sales for the ninth phase of the program, which runs from Dec. 6, 2000 to June 3, 2001, will be about the same as the previous six-month period.

Iran to accept foreign bids

Tehran will in the coming months launch a major international tender inviting oil giants to bid for 17 contracts to develop oil and gas reserves in southern Iran, the Jomhuri-Eslami paper said Tuesday.

Hojatollah Qanimifard, the head of the Iranian oil ministry's international department, was quoted as saying that the contracts would be signed according to the customary "buy-back" formula, which means that the foreign company recoups its investment and gets its profit from a share of production.

The bids will cover the oil and gas fields of Tanghestan, Tshemeh-Khosh, Dehloran and Sarvestan, as well as phases 9, 10 and 11 of the giant South Pars field and Sirri C and Sirri D, Qanimifard said without revealing the value of the projects.

Lebanon's Hariri, eyeing economy

Lebanese Prime Minister Rafik Al-Hariri begins an official visit to main European ally France on Tuesday to seek support in tackling worsening state finances and a weak economy.

Hariri, a personal friend of President Jacques Chirac, will head a large economic team in the hope of drawing aid and investments from France, the former colonial power in Lebanon.

France is among Lebanon's biggest trading partners and one of few sources of foreign direct investment in the debt-ridden economy, which fell into recession in 2000. French exports to Lebanon were $527 million last year compared to $37 million of Lebanese goods exported to France.

Saudi 'bans' foreign investment in oil production, telecoms

Saudi Arabia will exclude its oil production, broadcasting, land and air transport, and telecommunications sectors from foreign investment, the official SPA news agency reported Monday.

The Supreme Economic Council made the ruling at a meeting Sunday presided over by Crown Prince Abdullah bin Abdul Aziz, SPA said.

Also ruled out of foreign investment were industries manufacturing military and explosive equipment, property ownership in Islam's holiest cities, Mecca and Medina, and tourist activities linked to the annual Muslim pilgrimage, or hajj.

Saudi Arabia has since last year announced a package of legal reforms to encourage foreign investment and diversify sources of revenue.

Rajhi Banking

Saudi Arabia's Al-Rajhi Banking and Investment Corp said on Saturday its 2000 net profit rose 23 per cent to 1.85 billion riyals ($494 million) compared with the previous year.