. .

 5. TRADE  6. GULF



Jan-14 - 20, 2002

GCC to press EU for trade accord

Gulf states are set to press the EU to sign a landmark free trade pact after they removed the main hurdle for the long-sought agreement by endorsing a customs union last month. Foreign ministers from the GCC and the EU are due to meet in Granada next month to discuss the accord and other economic and political issues.

It will be the first high-level meeting between the two blocs after September 11, and diplomats expect terrorism to be on the agenda.

Officials at the Riyadh-based GCC Secretariat confirmed that the foreign ministers would meet in late February, and said the trade pact would be the main issue following the approval of the customs union by the GCC summit in Muscat.

"We will present details of the customs agreement at the meeting," a GCC official said. "We will ask them to hasten measures to sign the free trade agreement now that their condition for unifying our customs tariffs has been met.

"We hope there will be no more excuses because any delay in finalising this accord will not be in the interest of GCC states."

Diplomats said they expected the EU to raise the issue of terrorism and measures taken by the GCC to support an international anti-terror drive, including tightening of anti-money laundering laws.

"There are other issues which are directly or indirectly linked to the terrorism issue," a Saudi-based Western diplomat said. "The EU has always raised such issues as democracy, human rights and illegal migration ... these matters might delay the free trade pact as they have gained more urgency since the September attacks."

Gulf economists believe the GCC customs union would pave the way for free trade agreement with the EU, but that it would not be signed before tariffs are unified.

Lebanese PM in Brussels

Lebanon and the European Union initialed an association agreement aimed at generating freer bilateral trade and stronger political dialogue, the Lebanese delegation said.

The accord "will contribute to peace and stability in the region and will stimulate trade and economic relations between Lebanon and its Mediterranean partners," the European Commission said in its own statement.

The agreement "will bring the two parties toward greater bilateral trade," and "will constitute a springboard for economic liberalization in Lebanon," said the commission statement, adding that it would "send a clear and positive message" on investment possibilities in Lebanon.

Saudi Arabia's deficit surges over $6b in 2001

Strong oil prices have again tempted Saudi Arabia to overshoot spending levels and risk a budget deficit of more than $6 billion last year despite its swelling debt, economists in the kingdom said yesterday.

The world's top oil supplier had forecast a zero deficit, but the gap surged to around 25 billion riyals ($6.6 billion) last year to aggravate the public debt and reverse the financial euphoria of the previous year.

Figures by the National Commercial Bank (NCB) showed Saudi Arabia overshot the assumed expenditure of 215 billion riyals ($57.3 billion) to 255 billion riyals ($58 billion), an 18 per cent increase.

Revenues also grew from a projected $57.3 billion to 230 billion riyals ($61.3 billion). They included nearly $50 billion in oil export earnings and $2.5 billion in import duties.

"These are preliminary official figures," said Malik Younus, an economist at NCB. "We do not have details of the expenditure, nor do we know why and how spending was increased. I do not want to speculate at this moment."

The deficit is in contrast with 2000, when the budget recorded an over $6 billion surplus on the back of a crude price surge - the highest surplus since the end of the oil boom in 1982.

Bankers said the deficit last year was shored up through borrowing from local banks, pension funds and other sources. They noted bonds issued by the government to banks rose by 10 billion riyals ($2.6 billion).

"The deficit last year was manageable as it accounted for around 3.7 per cent of the gross domestic product," Saudi economist Ihsan bu Hlaika said. "But it will be a problem in the long run if the deficit continues - this means a further deterioration in the public debt."

Saudis hit back over Mecca castle

Saudi Arabia has rejected Turkish protests over the demolition of a historic Ottoman fortress in the city of Mecca.

Islamic Affairs Minister Saleh al-Shaikh, was quoted by the French news agency AFP as saying that Saudi Arabia was exercising its sovereignty.

He added that no-one had the right to interfere and that a reconstruction of the fort would be included as part of the site redevelopment.

The 220-year-old al-Ajyad fortress was demolished last week to make way for a $533m project to house pilgrims to Mecca.

RAK exports hit Dh348m in first half

Ras Al Khaimah's exports topped Dh348 million in first-half 2001, said a Ras Al Khaimah Chamber of Commerce, Industry and Agriculture report, issued yesterday.

The exports were to 38 Arab and foreign countries, with most of the trade concentrated within the region.

Saudi Arabia with a dominant 47.58 per cent share totalling Dh165.58 was its biggest market, with second-placed Kuwait accounting for 21.84 per cent (Dh76 million), and Bahrain in third slot with 7.05 per cent (Dh24.52 million).

Oman followed with 4.75 per cent (Dh16.53 million), Qatar with 4.62 per cent (Dh16.09 million), Lebanon with 2.53 per cent (Dh8.8 million), and Libya with 1.98 per cent (Dh6.88 million).

Jordan, Sudan and Australia completed the top 10 listing.

Pharmaceutical products topped the demand listing with 32.5 per cent, with ceramics contributing 31.3 per cent, rocks aggregates 15.5 per cent, cement 14.7 per cent, and glass 3.2 per cent.

The report placed re-exports during the period at Dh116.73 million to 33 countries. Turkey received Dh35.96 million, or 30.1 per cent, with Jordan (Dh26.15 million, or 22.4 per cent), Iraq (Dh12.68 million or 10.86 per cent) and Saudi Arabia (Dh11 million or 9.42 per cent) following.

Bangladesh, Qatar, Kuwait, Romania, Lebanon and Oman also placed on the top 10 list.

Textiles with 24.1 per cent was the top re-export, followed by electronic equipment with 13.3 per cent, industrial machinery (9 per cent), electric machines (7.9 per cent) and domestic appliances (6.5 per cent).

Dubai witnesses brisk business in auto parts

Heavy demand from relatively newer re-export destinations such as Libya and Sudan have sustained a 50 per cent plus growth for Dubai's trade in after-market automobile spare parts, according to a senior source.

"Libya has come on strongly since the lifting of sanctions, and especially so during the last 12 months. Several of the African markets too have stepped up their sourcing activity out of Dubai for spare parts," said Pradeep Handa, chief executive of Auto Zone Spares Parts Est.

"Together, these markets, plus the Subcontinent, have more than compensated for any falloff from other territories."

Documentary credits to go online

Banks in UAE are readying themselves to introduce electronic uniform customs and practice (eUCP) for documentary credits from the first week of April, this year. International Chamber of Commerce (ICC) has asked the banks here to be in line with developments in the developed world, where the eUCP is already in place.

Fujairah to hold seminar in March

A three-day seminar on sea ports and marine transport will be held in Fujairah from March 16-18. It is organised by the Commercial Arbitration Centre of the GCC countries. Participants at the Centre's Oman meeting this week agreed to put in efforts to develop new methods to solve commercial disputes, especially among banking and insurance establishments," said Khalifa Khamis Mattar Al Kaabi, chairman of the Fujairah Chamber of Commerce, Industry and Agriculture, and representative of the UAE Chambers of Commerce and Industry Federation to the meeting of Oman.

Iraq to maintain 2m bpd exports

Iraqi Trade Minister Mohammed Mehdi Saleh said his country would maintain its oil exports at around two million barrels per day (bpd) this year.

The minister told reporters during a stopover in Bangkok for bilateral trade meetings with

Thailand that Iraq would continue to supply oil to the market. He gave no further details. Indonesia says fuel price hike possibly 20 per cent.

Iraqi crude oil exports via the Turkish port of Ceyhan are still on hold yesterday due to poor weather, although two vessels stand ready to begin loading when conditions calm, industry sources said.

Ceyhan has been idle since the start of the year as end-users and traders avoided lifting Iraqi barrels due to the UN's policy of pricing the oil after the fact.

Iran 'blocks UK ambassador'

Britain's new ambassador to Iran has had his appointment blocked by Iranian Government officials, according to reports.

Iranian newspaper Jomhuri Islami said that the decision to appoint David Reddaway had angered Iran, who claimed he was not acceptable for the role as he was both Jewish and linked to Britain's MI6 secret service.

Mr Reddaway was to replace Nicholas Browne, who left the post in December.

UN concern at blocked Iraq deals

A senior United Nations official has expressed grave concern about a dramatic increase in

the number of holds that have been put on contracts requested by Iraq as part of the UN's Oil for Food Programme.

Under the programme the UN controls the proceeds of Iraqi oil sales and approves the purchase of supplies for humanitarian and industrial use.

UN Security Council members are however in a position to block the provision of these supplies.

Libya wants Arab summit in Cairo

Libya has asked for the summit of the Arab League - scheduled to take place in March in the Lebanese capital, Beirut - to be moved to Cairo.

Libya's move follows demands from the Shia Amal party in Lebanon to bar the Libyan president, Muammar Gaddafi, from the summit.

Lebanon's Shias hold Mr Gaddafi responsible for the disappearance of their spiritual leader, Moussa Sadr, in 1978.

Costa coffee heads for Middle East

The international expansion of Whitbread's Costa Coffee chain is set to continue with 55 new stores planned for the Middle East.

Whitbread said it plans to open the new stores in Saudi Arabia, Oman, Qatar and Bahrain over the coming year, and the new outlets should create more than 500 jobs.

It ultimately aims to open about 140 stores in the region during the next five years.

Whitbread has signed a franchise deal with the Bahrain-based retail, restaurant and food distribution company Jawad Business Group.

Iran-India study on gas project by June

Iran and India will conclude by mid-2002 a feasibility study for a gas pipeline linking the two countries, a project dogged by New Delhi's security concerns of the pipeline traversing Pakistan, Pakistan's energy minister Usman Aminuddin said on Wednesday.

"Iran and India have jointly initiated a study for a sub-sea gas pipeline and an onshore pipeline simultaneously to meet India's security concerns. The study will be ready by June this year," Aminuddin told newsmen.

Aminuddin was talking in the Emirati capital of Abu Dhabi where he met his counterpart Obeid bin Seif al-Nasseri for talks on bilateral energy cooperation and possible investment in Pakistan's energy sector.

Buyers warned on fake diamonds

Synthetic diamonds are allegedly making their way into Dubai from Italy, Thailand and Russia, an expert has revealed to Gulf News. The super-quality synthetic diamonds were a few months ago wreaking havoc in UK's jewellery trade.

At that time, Anita Dillen, certificates manager at Diamond High Council in Belgium, warned that "everybody should be aware of super-quality fakes that are emerging around the world." Back then, Dubai's wholesalers, jewellers and official groups stressed they were on top of the problem even before it reared its ugly head.

But now, it appears synthetic diamonds, which are 'grown' in machines and have the same composition as a natural diamond, are in Dubai. The 'problem' is pretty hard to avoid.

Iran rejects Bush's warning

The Iranian government rejected as "unfounded" a warning from US President George W. Bush that Tehran must not seek to destabilize Afghanistan's interim government.

"We reject the comments of Mr. George W. Bush. These are unfounded comments that rely on undocumented information," said foreign ministry spokesman Hamid-Reza Assefi, in a statement received by AFP.

"Iran used all the means at its disposal to oppose the inhuman phenomenon," he said, speaking of Afghanistan's former ruling Taliban regime, "even before the international community was worried by the terrorist groups in Afghanistan."

Assefi insisted Iran had worked for stability inside Afghanistan, but the US-led coalition which removed Afghanistan's former ruling Taliban militia from power was having an unsettling effect.

Iraq sings a conciliatory tune to Arab neighbours

Iraq, infamous for vitriolic attacks on some Arab states, is taking an unusually conciliatory tone with its neighbours ahead of a rare visit by the Arab League secretary general to prepare a March summit.

The kind comments appearing in the state-controlled press about the pan-Arab body, not long since a target for violent rhetoric, well illustrate the change of tone in Baghdad, where Amr Musa is due to arrive on January 18.

It will be only the second visit by the head of the league to Iraq since the Gulf War in 1991 and concerns the summit slated for March 25 and 26 in Beirut.

Oman LNG in $1.3b loan deal with banks

Oman LNG signed with a consortium of 12 major international and regional banks a $1.3 billion term loan facility along with a $64 million letter of credit to refinance the company's original debt raised in 1997 for the ambitious plant at Qalhat in the Sharqiya region.

Consortium partners included ANZ Investment Bank, Arab Petroleum Investment Corp, Arab Banking Corp, Credit Agricole Indosuez, Credit Lyonnais, Gulf International Bank, HSBC Investment Bank, Bayerische Hypo-Vereinsbank, the Mizuho Group (comprising Fuji Bank Ltd and Industrial Bank of Japan), Sumitomo Mitsui Banking Corp, the Bank of Tokyo-Mitsubishi Ltd and the Royal Bank of Scotland.

Borouge starts exports

The Abu Dhabi Polymers Co (Borouge) yesterday commenced exports through Mina Zayed, the main hub port and storage centre for the company's exports to the Gulf, Middle East, Asia, Africa, Europe and beyond.

Jebel Ali Free Zone

During the last two decades, with the government's increasing emphasis on diversification of the economy, the manufacturing sector has made significant progress in Dubai.

Jebel Ali Free Zone has played an influential role in attracting manufacturing industries and, today, hundreds of factories cover a wide range of manufacturing fields.

Joint venture

A company to market Palestinian products throughout the Arab world will be set up as a joint venture between the private sectors in Palestine and the UAE, Dr Saadi Al Kronz, Palestinian Minister of Industries, stated.

UAE, Switzerland 'can jointly fight money laundering'

UAE and Switzerland, both service-oriented countries with a long tradition of financial efficiency, can forge partnerships in countering money laundering, a senior Swiss diplomat said yesterday.

"The events of September 11 have made it imperative for peace loving countries to work closely to combat the menace of terrorism and other associated crimes such as money laundering," Francois Barras, Swiss ambassador to the UAE told a gathering at the Zayed Centre yesterday.

"The UAE and Switzerland have two financial systems that are open and efficient and this openness can be abused," he said.

Qatar, Pakistan reaffirm strong support to Gusa venture Sharjah

The ambitious Gulf South Asia (Gusa) gas pipeline project from Qatar to Pakistan took a big step towards implementation, with both governments reaffirming their continued strong support to the venture.

The project is expected to entail an estimated $3 billion outlay in the construction of the downstream facilities.

Four Israeli soldiers, two Palestinian raiders slain

A rare Middle East calm was shattered when Palestinian gunmen from the radical Islamic movement Hamas killed four

Israeli soldiers in the first successful attack into southern Israel from the Gaza Strip.

The two gunmen disguised as police officers used automatic rifles and grenades to attack the army post outside the kibbutz of Kerem Shalom, across the border from the Gaza town of Rafah, before being gunned down themselves by the Israeli army.

The Israeli army said the soldiers killed were Bedouin Arabs, while relatives of the gunmen said they too were Bedouins.

Israeli tanks start to bulldoze homes in Rafah

Twelve Israeli tanks and bulldozers stormed the southern Gaza Strip town of Rafah and started razing homes early Thursday, less than 24 hours after members of the militant group Hamas killed four Israeli soldiers in Israel, just across the border from the Rafah area, security sources said.

The tanks and bulldozers had begun destroying homes under cover of heavy machine-gun fire, in Block O, a neighborhood under Palestinian self-rule in the town on the Egyptian border, witnesses and security sources said.

Israel halts mosque construction

Israel has decided to halt construction of a controversial mosque in the town of Nazareth, an Israeli official has said.

Plans to build the mosque next to a major Christian shrine had been fiercely opposed by Christian groups and had led to tension between Israel and the Vatican.