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

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GULF

July 01 - 07, 2002

IMF WARNS OF SLOWER GROWTH IN MIDDLE EAST

Growth in the Middle East is projected to slow significantly this year, continuing the pattern of 2001, largely reflecting lower oil production and the regional security situation, according to the latest World Economic Outlook by the International Monetary Fund (IMF).

"The curtailment of oil production associated with Opec agreements to limit global supply has depressed activity in oil exporting countries although recent increases in oil prices, if sustai-ned, will help support growth," it said.

The security situation has also had a significant negative impact on activity, including tourism, in particular in the Mashreq countries.

For oil exporting countries, growth is expected to slow from 5 per cent in 2001 to 3.4 per cent this year. The slowdown in growth has generally been limited by the use of more prudent macro-economic policies.

In particular, the boom and bust cycle of the past, associated with sharp increases and decreases in government spending as oil revenues rose and fell has been much more muted, noted the report, adding "as a result, current account and fiscal balances have broadly followed oil price developments."

This pattern is particularly evident in Kuwait, the UAE, Bah-rain, Oman and Qatar. In Saudi Arabia, however, the slowdown in activity is expected to be more severe this year, partly reflecting the more difficult fiscal situation. In order to reduce inflation and avoid a sustained appreciation of their real exchange rates, oil exporting countries should maintain prudent macro-economic policies.

The report suggests that the main policy priority remains the need to diversify production into other sectors than energy, to make these economies less dependent on oil revenues.

SAUDI-US TRADE DECLINES

The Arab boycott of the US products is starting to bite. Sharp decline has been reported in Saudi-US trade during the recent months.

The US exports to Saudi Arabia fell by more than 30 per cent to $2.8 billion between September 2001 and March this year. In the first quarter of 2002, the US exports to Saudi Arabia fell by 43 per cent to $986 million from $1.74 billion the year before.

Some recent reports indicate that airline reservation to the US in the summer holidays period is down to almost 40 per cent of what it used to be in the years before during the summer holidays season. Some Saudi businessmen, including Prince Amr Al-Faisal, were reported to have cancelled their business contracts with American companies. Zam Zam Cola, an Iranian substitute for Coca Cola, has received an overwhelming support from the Bahraini consumers, where it was launched recently.

The US fast food outlets and the more apparent US trademarks such as Pepsi have borne the brunt of this boycott campaign. Although analysts here agree that the US exports to the region accounted for only a fraction of its global trade, yet many here feel that this is the only weapon in their possession to give the message to the US that anger is seething against in the US in the Arab world.

Saudi Arabia is the largest supplier of crude to the US. Saudi exports to the US also fell by 36 per cent to $2.44 billion during the first quarter year-on-year from $3.83 billion. However, some other reasons such as drop in oil prices, changes in dollar value and Opec output curbs may also have impacted these figures, some analysts point out here. The imports from the US dropped by six per cent in 2001, as compared to the previous year. Saudi Arabia mainly imports aircraft, machinery, food products, furniture and motor vehicles from the US, whereas its major exports to the US include petroleum and petrochemical products.

UNDP PROJECT FOR ARAB STATES AWAITS APPROVAL

The UAE Government is thinking of approving a United Nations Development Programme (UNDP) project for information and communication development in Arab countries.

The $2.5 million project, called Information and Communication Technology for Development in the Arab Region (ICTDAR), has been prepared by UNDP and has been submitted to Sheikh Humaid bin Ahmed Al Mualla, Minister of Planning, for his approval.

The project was received by the UAE's General Information Authority (GIA) to submit it to the ministry. Several rounds of talks were held between GIA and UNDP to discuss UAE joining the project.

Tariq Saeed Al Noman, GIA Undersecretary, referred the project on June 18 to the Minister for his approval.

MUSLIMS TARGET OF TERRORIST ATTACKS

Foreign ministers of the 57-member Organization of the Islamic Conference continued on Wednesday their debates on the Israeli-Palestinian conflict and how to brighten an image of Islam tarnished by the September 11 attacks.

The participants have "denounced terrorism," Sudanese information minister Mahdi Ibrahim, head of Sudan's delegation, told a press conference on the gathering's second day.

"How can the Islamic nation be accused of terror, while it is a nation that aspires to dialogue?" Ibrahim asked reporters on Wednesday.

An alleged "unfair" campaign against Islam in the wake of the September 11 attacks and the Middle East crisis have topped the agenda of this three-day OIC conference in Khartoum, being held under the banner of "Solidarity and Dialogue".

IRAN QUAKE TOLL REVISED DOWN TO 222

Iran's Red Crescent on Sunday revised down the number of dead in a powerful earthquake in northern Iran to 222 from an earlier estimate of 500 as rescuers picked through rubble to find any remaining survivors.

"There was a mistake, the previous number was the number of dead and injured together," state television reported Red Crescent official Majid Shalviri as saying.

Emergency services tried to cope with hundreds of injured and other survivors of the quake which measured 6.3 on the Richter scale, and took steps to prevent disease spreading.

The quake, which struck early on Saturday razing dozens of villages in north Iran's Qazvin province, killed many women, children and elderly people at home while men were working in the fields and vineyards.

BOYCOTT U.S. GOODS

A Bahraini group called for stepping up the campaign to boycott American goods and strongly criticised a Jordanian minister who described the pan-Arab grassroots campaign as "economic sabotage".

The Bahraini Society against Normalisation with the Zionist Enemy said the Minister Qufatn Al Majali was "only trying to appease the nation's enemies the U.S. and the racist Zionist entity."

On Tuesday, Jordanian police prevented a scheduled meeting of representatives of several local unions that was supposed to discuss stepping up the U.S. goods' boycott campaign.

The campaign has gathered momentum over the past few months across the Arab world as a result of the American support for the continuous Israeli military drive into Palestinian territories.

PALESTINIANS SET ELECTION DATE

The Palestinian Authority, under pressure from U.S. President George W. Bush to dump Yasser Arafat as its leader, announced on Wednesday that presidential elections would be held next January.

Palestinian cabinet minister Saeb Erekat said Arafat had given the order for presidential and legislative balloting sometime between January 10 and 20 and also pledged an overhaul of security services, finances and courts within two to three months.

HEAVY RUSH FOR EMIRATES HILLS

Hundreds of property buyers thronged the Golf Academy at Emirates Hills on Wednesday evening taking up the 78 villas on offer in the first phase within minutes and forcing Emaar officials to put the second, third and fourth phases on sale.

"We are having a tremendous response from customers for our properties. The first phase consisting of 78 villas was sold out in 15 minutes. We then had to put the second phase, which had 69 villas for sale. That also being sold out, we are now offering another 400 plots for booking for Dh25,000 each," said Mohammed Alabbar, chairman of Emaar Properties and director general of the Dubai Department of Economic Development.

PALESTINIANS REJECT BUSH THREAT ON AID

Palestinian officials brushed aside a threat by U.S. President George W. Bush to withhold financial aid and said Palestinians would defy growing pressure to replace their longtime leader, Yasser Arafat.

Israel's army, buoyed by a tougher U.S. line against the Palestinians, fired missiles at a government compound in the West Bank city of Hebron in an effort to dislodge suspected militants holed up inside for the past three days.

GCC STATES IN JOINT DRIVE AGAINST MART MANIPULATION

GCC states have drafted laws to coordinate action against insider-trading in their stock markets by forcing listed firms to provide regular information about their financial position. Violators of such laws could spend up to three years in jail.

The six Gulf states, which account for more than two-thirds of the total Arab stock market capitalisation, have prepared a joint draft law requiring transparency by all trading companies and warning dealers against spreading rumours in the bourses.

The Riyadh-based GCC Secretariat has sent copies of the draft law to member states for consideration and it would be presented to the GCC heads of state for approval, according to the Abu Dhabi Chamber of Commerce and Industry.

TAJIKISTAN SEEKS TO BOOST TIES WITH UAE

Dr Talbak Nazarov, Tajikistan Foreign Minister, said that Tajikistan is seeking to enhance its relations and cooperation with UAE on the basis of common interests and mutual respect.

Dr Nazarov indicated that the bilateral relations which commenced in 1992 after Tajikistan's independence, have been strengthened by the visit of Imam Ali Rahmanov, President of Tajikistan, to Abu Dhabi, and his meeting with President His Highness Sheikh Zayed bin Sultan Al Nahyan in 1995.

SHARJAH PROJECT TO TREAT WASTEWATER

A multi-million-dirham project for the treatment of wastewater contaminated with oil or chemicals is under way in Sharjah.

The move is an attempt to curb the environmental danger posed by the disposal of wastewater in open areas, said Abdul Aziz Al Midfa, Director General of the Sharjah-based Environment and Protected Areas Authority.

"Such wastewater often gets dumped in open places that must be known to many residents of Sharjah," he told Gulf News. He criticised the manner in which water coming from car washes, gas stations, laundries or factories is being disposed of.

"The oil and chemicals contained in such water not only pollute the soil, but also spread the danger to the flora and fauna, including humans," he said.

HIGH OIL INCOME HELPS RIYADH CUT LOCAL DEBT

Saudi Arabia has paid nearly $1.4 billion to local creditor banks this year as strong oil prices have pumped more cash into its coffers to support its bid to keep its swelling domestic debt under control, economists in the kingdom said.

Total bond claims on the government by the Gulf country's 11 commercial banks dropped from around 124 billion Saudi riyals ($33 billion) at the end of December to nearly 118 billion riyals ($31.4 billion) at the end of April, they said.

EU MOVE TO BOOST LOCAL FISH INDUSTRY

The European Union's (EU) approval of the UAE as a third country exporter of fisheries products and farmed fish will enhance the prospects of the local fish industry, especially the International Fish Farming Co (Asmak), officials said.

A large portion of farmed fish from the UAE will now be destined to the EU markets as 60 per cent of the region's fisheries products' consumption come from outside.

The EU last week approved the UAE as a third country exporter of fisheries products and farmed fish to its markets.

The approval had taken a lot of efforts by the UAE in updating its health and hygiene standards to be in line with those of the EU, Asmak said.

UAE fisheries products exports to the EU was banned in 1998 due to the non-conformity to the European hygiene regulations which were based on the HACCP system (hazardous analytical critical control point) in their food establishments.

AL AIN DAIRY TO DOUBLE CAPACITY

Al Ain Dairy, a 100 per cent local entity, will double production capacity to around 200 tonnes per day (tpd) by next year, a senior company official said.

"The market in the UAE is growing rapidly and Al Ain Dairy will increase production to 200 tpd from the present 100 tpd with more investment," Mohammed Al Suwaidi, board member of Al Ain Dairy, said. The investment outlay was not disclosed.

DEMAND FOR GOLD IN DUBAI REMAINS DULL

Demand for gold in Dubai was slack in June and the market seems set for a flat season as soaring summer temperatures keep tourists away, traders said, Reuters reports from Dubai.

They said a rise was due later in June and early July as expatriates buy jewellery and gold bars to take home and with some local marriages taking place. But demand is only expected to pick up in September.

EGYPT AND JORDAN'S MID-EAST DILEMMA

Egypt and Jordan, two key American allies in

the Middle East, have extended a cautious welcome to US President George W Bush's long-awaited policy statement on the Arab-Israeli conflict.

The two countries appeared to be trying to put the best possible interpretation on what must have come as a serious setback.

In his statement, Mr Bush did not mention Yasser Arafat by name, but made it very clear that the ousting of the Palestinian leader was a condition for American support for the creation of a Palestinian state.