GULF

 

July 15 - 21, 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

TURKISH GOVERNMENT IN FRESH TURMOIL

The Turkish Government has been brought to the point of collapse, with two senior members offering their resignations.

First the highly-respected Foreign Minister, Ismail Cem, stood down on Thursday.

Economy Minister Kemal Dervis the architect of his country's economic recovery also submitted his resignation but later withdrew it at the request of Prime Minister Bulent Ecevit and President Ahmet Necdet Sezer.

The US Treasury says it is closely monitoring events in Turkey a key regional ally.

"We encourage the government of Turkey to continue implementation of its economic reform package and we anticipate that it will," a spokesman said.

Correspondents say the crisis could have repercussions for Turkey's bid for European Union membership and economic reforms.

The resignations are seen as highly damaging to the authority of Mr Ecevit, who is increasingly isolated and ailing.

In total eight ministers have now walked out since the start of this week. More than 35 MPs have also quit Mr Ecevit's Democratic Left Party (DSP) in protest at his refusal to step down.

The prime minister tried to stage a fight back on Thursday, calling on party defectors to return and saying they had "fallen into a trap".

"I call on these friends to unite again under the wings of the white dove," he said in a written statement, referring to his party's symbol.

But the BBC's Jonny Dymond, in Istanbul, says there is now enormous pressure on Mr Ecevit to resign.

UAE OIL INCOME TO SWELL BY OVER $2B

The UAE's oil income will swell by more than $2 billion this year to exceed $16 billion despite an expected decline in average crude prices. But it will slip back again next year, according to a Western economic report.

From $14.5 billion in 2001, the UAE's oil export earnings will grow to around $16.8 billion in 2002 although the average price of North Sea Brent crude is expected to slide from around $23.1 to $22, the London-based Middle East Monitor (MEM) bulletin said.

The bulletin, citing estimates by the UAE Ministry of Economy and Commerce, the International Monetary Fund and the World Bank, said higher revenues would be a result of an increase in the UAE's production of crude oil and condensates from an average 2.2 million barrels per day to around 2.4 million bpd.

Although production is forecast to be maintained in 2003, revenues are expected to decline to around $14.9 billion because of a projected price drop to nearly $20 a barrel.

The high income will nearly double the UAE's trade balance surplus to around $8.6 billion this year from $4.3 billion in 2001 but the surplus in the current account is projected to recede to around $4.9 billion from $5.5 billion in the same period.

MEM, part of the Business Monitor International information group, forecast a 2.5 per cent nominal contraction in the country's gross domestic product from around $58.9 billion in 2001 to nearly $57.7 billion in 2002. But it projected a surge of 8.5 per cent to $62.3 billion in 2003 although crude prices will slip to $20 and the UAE's oil output will remain unchanged.

MEM's figures showed the UAE's economy jumped by 27.2 per cent to $66 billion in nominal terms in 2000 when oil prices shot up to $27.6. The trade surplus also peaked at around $11.3 billion and the current account recorded a mammoth surplus of $9.1 billion, accounting for as high as 13.9 per cent of the GDP.

SAUDI EQUITY-DEBT PLAN ALLAYS MART FEARS

Saudi Arabia's plan to pay part of its hefty $170 billion domestic debt in equity has allayed fears that privatisation could dent prices and absorb liquidity from the stock market, economists said.

"It is a very smart move. It has allayed fears about share prices and liquidity drain," Alhassan Goussous, head of investment services at Saudi British Bank, told Reuters.

"It amounts to a reduction of debts on the balance sheets. In any case, most of the companies they've been talking about are already listed," said Goussous.

In June, the kingdom's Supreme Economic Council pushed forward stalled privatisation plans and approved a sell-off strategy for water desalination, postal services and railways.

The market slipped 1.5 per cent on the council's move, but shares have risen since Finance Minister Ibrahim Al Assaf's announcement of the equity-for-debt plan.

IRAN SELLS FIRST GLOBAL BOND SINCE 1979

Iran borrowed 500 million euros via an international bond sale, its first such transaction since the 1979 Islamic Revolution.

But recent weakness across emerging markets, and the controversial withdrawal last month of its credit rating by U.S. rating firm Moody's Investors Service, meant the Muslim state's borrowing cost was higher than it had hoped.

The rating withdrawal had raised doubts about Iran's ability to borrow. Moody's cited U.S. government concerns that the rating was "inconsistent" with 20-year-old American sanctions against Iran, which President Bush in January identified alongside Iraq and North Korea as forming an "axis of evil".

London-based Fitch Ratings affirmed Iran's sub-investment grade B+ rating but said geopolitical risk, including relations with the U.S., continued to constrain its rating. Moody's had assigned a roughly equivalent B2 grade.

Launched via the central bank, Bank Markazi, five-year bond paid a coupon of 8.75 per cent, about 0.75 points more than initially expected.

UNDP CALLS FOR CLOSER INTER-ARAB COOPERATION

The United Nations Development Programme (UNDP) has called for closer inter-Arab cooperation and economic integration to survive and compete with the rest of the world.

In its first annual Arab Human Development Report (HDR) for 2002, the UNDP said Arab countries have what it takes to attain adequate living standards for all their people, but they need to achieve economic integration and deepen inter-Arab trade to overcome dependency and vulnerability and make globalisation work for their interests.

PROPOSAL TO SET UP SIX CHARITY PROJECTS

The Projects Committee at the Mohammed bin Rashid Al Maktoum Charity and Humanitarian Foundation has recommended implementation of six charity projects in several African countries including mosques, religious schools, health centres and orphanages.

The committee, which recently convened at the foundation's headquarters under the chairmanship of Engineer Ahmed Hassan Al Rostamani, Board of Trustees Member and Head of the Committee, has made the recommendation to the Board of Trustees of the foundation.

PLAN TO ATTACK IRAQ IN PLACE

The United States will inform its allies in the Gulf Cooperation Council (GCC) in advance about its plans to attack Iraq, a senior US General was quoted by newspapers as saying.

Amidst apprehensions that the US is preparing to launch military strikes against Iraq to overthrow President Saddam Hussein's government, the US air force chief, Gen John P. Jumper, has said the US would go ahead with its plans even if regional governments oppose the move and do not allow US troops the use of their facilities.

He said the US troops were capable of deployment outside the region and using other bases to attack targets inside Iraq.

UAE FAIR OPENS IN MOROCCO

Prince Rashid, brother of King Mohammed VI of Morocco, opened the UAE fair in Morocco, which is being held under the patronage of Deputy Prime Minister Sheikh Sultan bin Zayed Al Nahyan. About 35 companies and a number of government organisations are participating in the fair, which is being organised by the General Exhibition Corporation (GEC) in collaboration with the UAE Federation of Chambers of Commerce and Industry, the Ministry of Economy and Commerce and the Ministry of Finance and Industry.

UAE PROVIDES SYRIA EXPERTISE

The UAE has offered Syria its experience and expertise in combating desertification and the country's efforts to meet the increasing agriculture and water demands to strengthen the basic infrastructure of the agriculture sector.

DAHLAN WILL NOT RUN AGAINST ARAFAT

Mohammed Dahlan, who was appointed on Wednesday as National Security Advisor at the Palestinian National Authority (PNA), says he will not stand against President Yasser Arafat in a leadership contest.

Although he has been a critical of Arafat's handling of the intifada, Dahlan has told the Britain's Guardian newspaper last week: "As long as the Israelis are against Arafat, I'm with him whatever reservations I have about some of the decisions that have been made."

Q-TEL INKS DEAL WITH GTSS

Qatar Telecommunications (Q-Tel) has signed a Dh92 million ($25 million), global system for mobile (GSM) communications network infrastructure expansion deal with Motorola's Global Telecom Solutions Sector (GTSS).

KUWAIT'S GULF BANK

Kuwait-based Gulf Bank has received its first ever rating from Standard & Poor's (S&P), which has given it a stable outlook. The rating agency has also given 'Triple - B plus long-term' and 'A-2 short-term on counterparty credit and certificate of deposits.

EMNEX MAKES MARGINAL GAIN

The Emnex made a marginal gain to close the week, through a 0.67 point upswing to 2,007.07. Market capitalisation by the end was Dh104.56 million.

The financial services index was up 0.8 points to 2,184.73, while Islamic gained 1.11 points to 944.44 and property was 1.37 points higher at 761.44.

The Telecom and insurance remained intact at 1.064.68 points and 1,213.63 points respectively.

DUBAI ISLAMIC BANK

The Dubai Islamic Bank (DIB) has expanded its operational network in the UAE with the opening of its second branch in Al Ain and the announcement of its plans to set up four more branches in other parts of the country.

ISRAELIS KILL TOP MILITANT

The Palestinian militant group Islamic Jihad says one of its leading members has been killed in a dawn raid by Israeli special forces.

TIES WITH UAE MAKING STEADY PROGRESS IRAN

A spokesman of the Iranian government described relations between the UAE and Iran as "good and making steady progress."

During his weekly press briefing, Abdullah Ramadan Zadah said that a date has not been fixed yet for the visit to the UAE by Iranian President Mohammed Khatami, but went on to say that relations between the two countries are positive and moving in the right direction of strengthening bilateral cooperation.

SAUDISATION

With unemployment running at around 20 per cent in Saudi Arabia, the Kingdom is faced with the daunting task of finding employment for its ever growing number of youth.

By announcing to nationalise the work force in 22 new categories, authorities in Riyadh are once again indicating that they are serious in resolving this issue.

SHARJAH, AJMAN IN OIL DEAL

A unique unitisation or joint petroleum production sharing agreement was signed between Sharjah and Ajman to joint develop the Zora field, a gas reservoir located around 40 kilometres off the two coasts. The pact is believed only the second of its nature in the Gulf between two governments.

BANK SADERAT IRAN

Bank Saderat Iran (BSI), which operates eight branches in the UAE, has recently increased its capital base to Dh400 million from Dh180 million.

GCC AUTOMOBILE MARKET

Closely mirroring wider economic sentiments, the Gulf's automobile market continues to remain flat, according to a senior industry source.

"It is becoming more difficult to operate than in earlier years," said Per Rasmussen, president and chief executive of DaimlerChrysler ME.

His forecasts are for DaimlerChrysler to maintain the 25,000 units sold in the region for 2002.

GOLD PROMOTION BECOMES A BIG HIT

The Double Chance Gold promotion run by the Gold and Jewellery Group has so far resulted in Dh105 million in sales and 350,000 raffle coupons given to customers.

The promotion started on June 20, which is equally successful among expatriates and visitors, will run until July 31.