. .
A



 1. INTERNATIONAL   2. INDUSTRY
 3. FINANCE  4. POLICY
 5. TRADE  6. GULF

A

GULF

June 17 - 23, 2002

GCC BRACES FOR SLOWER GROWTH IN '02

Economies of the six GCC states are set to slow down in real terms this year because of an expected decline in average oil prices and the decision to cut crude production in line with a global agreement to support prices, according to a United Nations report.

From around $251.6 billion in 2001, the GCC's combined gross domestic product (GDP) will increase by nearly 0.8 per cent in real terms to $253.5 billion in 2002, the UN Economic and Social Commission for West Asia (ESCWA) said in a report.

The level is far lower than the real growth of more than 2 per cent recorded in 2001 and as high as 5.1 per cent in 2000, the report showed.

Individually, economic performance is expected to remain strong in Qatar, with a forecast real growth of 5.5 per cent, the highest in the 21-year-old economic, defence and political group. It will also be above one per cent in the UAE and Bahrain.

In Kuwait, the GDP is projected to decline this year by around 0.6 per cent while in Saudi Arabia there will be a modest real growth of 0.5 per cent.

"Because Saudi Arabia has by far the largest economy in the region, the slow growth in its GDP is the main factor in the low growth in the GCC's combined GDP this year," it said.

The report blamed lower oil prices and output cuts by most GCC states within a collective agreement by Opec and other producers to tighten supplies to bolster crude prices.

Oil analysts expect the combined crude oil production of the six GCC countries, of which four are Opec members, to decline by at least 700,000 bpd over last year's average output.

Prices could be around $2 below their 2001 average of nearly $23.5 and this means the GCC's total oil export earning could dip by more than 10 per cent to around $90 billion this year from nearly $101 billion in 2001 and as high as $130 billion in 2000.

G8 SPLIT OVER MIDDLE EAST

Foreign ministers from eight of the world's most powerful countries have disagreed at a meeting in Whistler, Canada, over the way forward in the Middle East.

Following the meeting the chairman, Canadian Foreign Minister Bill Graham, said he did not believe the Middle East peace conference would now convene next month as had been expected.

The foreign ministers had intended to focus this meeting on measures to combat terrorism, but almost inevitably the Middle East grabbed much of the attention.

Once again it is clear the United States came under pressure to push ahead with political talks and steps towards the early recognition of a Palestinian state.

Asked about setting a timeline for the creation of such a state, the American Secretary of State, Colin Powell, said only that the idea was still being considered.

By contrast, both Javier Solana of the European Union and the Russian Foreign Minister, Igor Ivanov, said the idea would be helpful.

Back in Washington President Bush spoke about the evolution of a Palestinian state, suggesting he may be moving closer to supporting Mr Powell's idea of a provisional Palestinian state.

The president is now expected to outline his Middle East policy sometime next week.

Until then things remain very confused with domestic political pressure pulling him in one direction and most foreign allies, such as those represented here in Whistler pulling the other.

STUDY WARNS OF 'WATER WAR' IN MIDDLE EAST

Arab states and other countries in the Middle East should work for a collective agreement on sharing water resources to prevent the outbreak of a major conflict that could be triggered by fear of thirst, an Arab study said.

A severe water crisis has already started looming in the Arab world which is now classified as the worst region in terms of per capita share of sweet water, and its heavy reliance on foreign water sources mainly from Ethiopia and Turkey, said the study by the Abu Dhabi-based Zayed Centre for Coordination and Follow-up, an Arab League affiliate.

Although Arabs account for more than seven per cent of the world's population, their share of the global recoverable water resources does not exceed 0.5 per cent.

In the absence of a strategy to develop water reserves, the per capita share of sweet water in the Arab region plummeted from 3,126 cubic metres in 1950 to only 981 cubic metres in 2000, the lowest in the world, the study said.

QATAR SEALS THREE DEALS WORTH $2B

State-owned Qatar Petroleum (QP) signed three deals with foreign firms to build petrochemical plants worth more than $2 billion, Oil Minister Abdullah bin Hamad Al Attiyah said.

Chevron Phillips Chemical will take a 49 per cent stake in the $1.1 billion Q-Chem II project to produce 350,000 tonnes per year of high density polyethylene (HDP) and normal alpha olefins.

Chevron Phillips Chemical is a joint venture between ChevronTexaco and Phillips Petroleum. The second deal, the $550 million Qatofin project, will establish a world-scale linear low density polyethylene plant with an output capacity of 450,000 tonnes.

Qatar Petrochemicals Company will hold 63 per cent, ATOFINA a unit of TotalFinaElf will take a 36 per cent stake and QP will own one per cent.

The third project, a $470 million ethane cracker, will see Q-Chem II taking a 53.31 per cent stake, Qatofin holding a 45.69 per cent share and QP owning the rest.

ISLAMIC BANKS URGED TO FORGE MAJOR NICHE MARKET

Islamic banks are being challenged to diversify and develop new sources of revenue rather than simply competing on price against each other in a narrow range of products, says an industry expert. It is "the need of the hour if our industry is to grow," said Atif A. Abdulmalik, chief executive of First Islamic Investment Bank of Bahrain.

Quoted in the Jane's Islamic Affairs Analyst newsletter surveying the "vibrant new generation" in Islamic finance, Abdulmalik underlines the potential of the industry to unlock greater funds and forge for itself a major niche market.

ARAFAT TO SET POLL DATES SOON

Palestinian leader Yasser Arafat convened his new cabinet's first meeting on Thursday, saying he would soon set a date for elections and calling for an end to violence so that peace could take hold.

The Palestinian leader opened the first meeting of his reshuffled cabinet in Ramallah after Israeli forces ended a three-day occupation of the West Bank city, a siege which had prevented the session from taking place earlier in the week.

UASC POSTS $41M PROFIT LAST YEAR

United Arab Shipping Co (UASC) posted a profit of Dh150 million ($41 million) last year despite it being a gloomy period in which the sector saw overall lower business, including UASC itself.

BAHRAIN OKAYS FOUR LICENCES

Bahrain approved four new licences to banks and financial institutions to be established in the kingdom, the government announced.

The licences were approved "this week" by Prime Minister Sheikh Khalifa bin Salman Al Khlaifa, who chairs the board of the Bahrain Monetary Agency (BMA), an official statement said.

BELLELI TO STEP UP INVESTMENT IN UAE

Belleli Energy has invested more than Dh20 million in the UAE with the development of a company headquarters and two new workshops.

At the beginning of the year, the company moved into its new 50,000 sq mt base at Jebel Ali Industrial Zone. The new facility, which cost about Dh13.5 million to set up, includes a workshop and the company's regional office.

DIFC TO HOST MALAYSIAN BOND ISSUE

The hosting of the Malaysian trust certificates issue roadshow on June 17 will mark the first move of the Dubai International Financial Centre (DIFC) even as the official operation of the centre is yet to take off.

Dubai is expected to subscribe heavily to the floating rate sukuk (trust certificates) to be globally issued by Malaysia, based on Shariah compliant terms.

LIBERAL GROUP TO TAKE PART IN BAHRAIN POLLS

Eighty per cent of one of Bahrain's major liberal groups' members voted in favour of participating in the October's parliamentary elections, president of the party told Gulf News.

"The board will meet on Saturday to formally state our position with regard to the election," said Abdul Rahman Al Nuaimi, president of the leftist National Democratic Action Society (NDA), Bahrain's largest liberal political association.

He expected the decision to be in favour of participating in the elections, scheduled to take place on October 26.

OMAN TO ESTABLISH NEW AREAS FOR MANGROVES

Oman is working to establish new areas for mangroves as part of the government efforts to protect its marine resources, according to a top official at the Director General of Environmental Affairs.

"Soon we would launch a 22-month project with Japanese experts to develop new areas for mangrove," the acting Director General at the department, Mohammed bin Abdullah Al Muharrami told Gulf News.

The Sultanate of Oman has a 3165 km coastline and mangroves are vital to preserve its resources, including marine life like endangered species of turtles.

MODHESH FUN CITY

Children everywhere, including a few adults, will be waiting in anticipation for the opening of Modhesh Fun City on June 20, located in the expansive Airport Expo hall.

The focal point for live children's entertainment will be a specially created Modhesh Fun City Auditorium area, capable of seating up to 700 visitors.

ARAFAT CALLS NEW CABINET TOGETHER

Palestinian leader Yasser Arafat has opened the first cabinet meeting after a major reorganisation and streamlining of his Palestinian administration.

At the start of proceedings, Mr Arafat announced: "As soon as possible, we must prepare for the local elections as well as presidential and legislative elections."

He declared that the government must "quickly put in place and carry out plans that would bring back the ministries and institutions to make us more effective in carrying out our tasks."

BUSH STEPS UP MID-EAST DIPLOMACY

US President George W Bush has met with the Saudi Foreign Minister, Prince Saud al-Faisal, in Washington the latest in a series of contacts before new US proposals for Middle East peace are unveiled.

The meeting came only a day after confusion about US policy on the region deepened, with Secretary of State Colin Powell seemingly at odds with the White House.

ISRAEL PULLS OUT OF RAMALLAH

Israel has withdrawn its forces from Ramallah, saying its latest security operation there is over.

Troops and tanks entered the West Bank town on Monday, setting up positions around Palestinian leader Yasser Arafat's headquarters.

They withdrew on Wednesday night as Israeli Prime Minister Ariel Sharon held talks with his British counterpart, Tony Blair, in London.

But shortly after the Ramallah withdrawal, the military mounted a new search operation in the Palestinian village of Tubas, near Jenin.

ARRESTS FOLLOW SYRIA DAM BURST

The Syrian authorities have arrested several people involved in building and managing a dam which burst last week causing at least 20 deaths and making thousands homeless.

Some reports put the number of those detained as high as 50.

They include a former minister of irrigation and the manager of the Syrian company that built the dam north of the city of Hama.

BLAZE RUINS SAUDI ART TREASURES

A collection of precious Islamic and other antiquities has been destroyed in a blaze which gutted much of one of Saudi Arabia's largest private museums.

One of three buildings housing the collection in Jeddah was completely destroyed, despite efforts to contain the fire.

Saudi officials say a second building in the Abdul Rauf Hasan Khalil Museum was also affected by the fire.

An adjacent apartment block had to be evacuated as a result of the fire, which is believed to have been caused by an electrical short circuit.

MOROCCAN JOBLESS LEFT ADRIFT

It sounded too good to be true. When Saed, 25, heard on the grapevine that Gulf-based Al-Najat Marine Shipping wanted to hire 30,000 Moroccans to work on cruise ships, it was a chance not to be missed.

With thousands of other young Moroccans, he filled out a form and travelled to Casablanca for a pre-employment medical check-up for which he was charged 900 dirhams almost $80 and more than the weekly wage at his last job, as a car salesman.