GULF

 

July 20 - Aug 04, 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

GULF OPEC STATES IN ECONOMIC COMFORT ZONE

Giant Opec producers Saudi Arabia and Iran, unlike their organisation companions Venezuela and Nigeria, are enjoying the economic comfort zone of high oil revenues.

Mid-year projections suggest the two Gulf countries, who depend heavily on oil for state coffers, have substantially improved their economic outlook with higher-than-expected crude revenues.

Opec's Gulf producers, that also include the UAE, Kuwait and Qatar, appear in a better position than most in the organisation to weather any reversal in oil prices now holding strong around $25 a barrel.

Sharp pressures born of bad fiscal management in leading non-Gulf Opec members Venezuela and Nigeria are raising oil market concerns about the burden of Opec's tough output curbs on those country's economies.

By contrast, all five Gulf producers are watching their crudes selling several dollars above modest budget assumptions.

Prices for Iranian crudes are running at an average of $23 per barrel, well above the $17 a barrel price budget forecast for the fiscal year ending March 20.

That would give the country an oil revenue surplus of $4.1 billion in this fiscal year, if prices remained stable, according to central bank calculations. This in addition to foreign exchange reserves which now stand at $17 billion.

This leaves Iran in a strong position to deal with any short-term price downturn, analysts said. But Saudi Arabia and Iran, which have the biggest economies in the Gulf, remain vulnerable to falls in oil prices, which depend on everything from the weather to an economic recovery in the United States, the world's biggest energy consumer.

INVESTMENT IN MANUFACTURING SECTOR RISES

Total capital investment in UAE's manufacturing sector is on the rise and reached Dh4 billion in 2000, which was 41.3 per cent of capital formation in the whole economy that year, according to a report released by the National Bank of Dubai.

The sector witnessed a seven per cent growth during the last few years and its contribution to UAE's GDP rose to 19.3 per cent last year from 16.5 per cent in 2000 and 13.8 per cent in 1996.

The manufacturing sector's contribution to UAE GDP last year rose to Dh30.5 billion. It ranked second, and its biggest industries were aluminium, pet-roleum products and fertilisers.

UAE's industrial exports rose from 70 per cent in 1995 to 78 per cent last year, said the paper.

The value of these exports were affected by prices in global markets. Aluminium and fertilisers were UAE's largest exports.

Output in the manufacturing sector grew in real terms from Dh17 billion in 1996 to over Dh24 billion in 2000.

This sector also witnessed a 12.8 per cent growth in the number of manufacturing units between 1998-2000, reaching 2,153 in 2000.

While commenting on a study on the country's economic performance in 2001 and predictions for 2002 released recently, Sheikh Humaid bin Ahmed Al Mualla, UAE Minister of Planning, said that despite the decline in GDP, the non-oil sector held 72 per cent of the GDP, reaching Dh179 billion.

Total value of investment reached Dh58.7 billion in 2001 against Dh57.4 billion in 2000, putting the rate of investment to GDP at 23.6 per cent.

"This is a good indication for the improvement of the economic situation in other sectors and a proof of the ability of the national economy in overcoming hurdles resulting from the decline in oil revenues," Sheikh Humaid said.

ISRAEL LAUNCHES FRESH ATTACK ON GAZA

Israeli tanks and bulldozers have rolled into Gaza City, flattening three buildings and leaving two Palestinians seriously injured.

They destroyed a police post and two metal workshops, in what was the second operation to be carried out in the Gaza Strip in three days.

Israel has been roundly condemned by Western and Arab nations alike for an air strike on Gaza City on Monday night which killed 15 people, including nine children.

In the latest operation, tanks and a bulldozer pushed their way into the city and flattened a small Palestinian military intelligence position as well as a metal workshop, before blowing up another workshop in a blast across the city.

GCC HEADING FOR SLOW GROWTH THIS YEAR

The economy of the GCC leapt more than 22 per cent in 2000 to record the highest nominal growth in the world, but receded in 2001 and is expected to remain slow this year as prices slip back and member states produce less crude.

In nominal terms, the combined GCC's GDP peaked at $321.4 billion in 2000 after jumping 22.6 per cent over the previous year, thanks to a surge in oil prices to above $27 and higher production by most members.

Such developments are a clear indication that GCC economies are still highly influenced by global oil markets despite economic reform programmes and an ongoing campaign to lessen reliance on oil exports.

The six members have reported a substantial progress in their economic diversification drive, with the oil and gas sector receding to between 30 and 50 per cent of the GDP, depending on production and prices from nearly two-thirds.

But revenues from oil and gas sales still account for more than 70 per cent of the total income of most member states.

IRAN PRESIDENT ATTACKS US WAR PLANS

Iranian President Mohammed Khatami has accused the United States of warmongering and warned that any prospective military action against Iraq could seriously threaten regional stability.

"We wish to caution the great powers against further interference in the affairs of this region and against the exacerbation of the flames of war," he said.

"We live in a very frightening situation... we have witnessed that war has never been so much promoted in the US."

Mr Khatami, speaking to journalists while on a visit to Malaysia, added that the current Bush administration's policy of a sharp divide between good and evil nation states was "neither in the interest of the US nor in the interest of today's world".

DEADLINE LOOMS FOR SAUDI GAS DEAL

The future of a landmark $25bn gas deal between Saudi Arabia and western energy firms is hanging in the balance.

The deal represents the first major foreign investment in the Saudi energy sector since it was nationalized in 1975.

But the conditions of the agreement have been fought over since it was first agreed in June 2001.

The oil firms have now been told to submit their final offers, with Saudi Foreign Minister stressing his determination to press ahead with the liberalisation of the energy sector "under all circumstances".

Unnamed sources and press speculation has repeatedly suggested that the deal is on the verge of failure.

Such a failure would be an acute embarrassment to both the foreign minister Prince Saud al-Faisal and Prince Abdullah who were keen advocates of the deal.

KUWAIT LEADS ARAB MARKETS IN GROWTH

Arab stock markets did well generally during the first half of the current year with Kuwait leading the pack with a 30.7 per cent growth followed by Qatar, which witnessed a growth of an impressive 23 per cent with the lowest price/earnings ratio of around 11.

With the kind of activities taking place in UAE's financial arena like the announcements of several bonds, Dubai 2003, DIFC, and the likely long-term bond from Emirates airline, and moves by a few listed companies like Oasis Leasing to open up to foreign investment, the UAE's stock markets are also set to make a comeback in the second half of this year.

UAE IS SECOND MOST POPULOUS STATE IN GCC

The population of the six-nation GCC grew by nearly nine million over the past decade to reach around 31 million at the end of 2000, an annual increase of about one million people, according to official estimates.

The high growth of around four per cent was a result of a continued influx of expatriate workers and long-standing policies in the 21-year-old Gulf group of encouraging nationals to have more children so that they become a majority in their home country.

The combined GCC population stood at 21.89 million in 1990 and recorded a high growth over the following years to reach 25.99 million in 1995. It increased by an average of one million annually in the ensuing years and most of the growth was in the local population.

ACTION ON IRAQ NOT IMMINENT, SAYS BLAIR

British Prime Minister Tony Blair said an attack on Iraq was not imminent but held out little hope for negotiations about weapons inspectors returning.

"We are all getting a bit ahead of ourselves," Blair told reporters in his Downing Street office. "It is not imminent, we are not at the point of decision yet. There are many issues to be considered before we are at the point of decision."

ZAYED, ABDULLAH HOLD TALKS

President His Highness Sheikh Zayed bin Sultan Al Nahyan received at his Geneva residence King Abdullah of Jordan.

The leaders reviewed various Arab issues and developments in the Palestinian occupied territories. They discussed ways to pull the peace process out of its current stalemate. They also discussed fraternal relations between the two countries.

USED GOODS MARKET GROWING RAPIDLY

Low and middle income groups are increasingly being attracted to the used electronics market which has recorded a phenomenal growth over the last three years.

Used televisions, VCRs, refrigerators, air-conditioners, washing machines, computers, CD, VCD and DVD players, video cameras, irons and photocopy machines are easily available in these shops in the Sharjah Industrial area.

MUBARAK SAYS SHARON SABOTAGING PEACE

Egyptian President Hosni Mubarak accused Israel's Ariel Sharon of deliberately seeking to sabotage recent peace efforts by ordering a strike on a residential area in Gaza City that killed 15 people.

Speaking after talks in Paris with French President Jacques Chirac, Mubarak said the Israeli prime minister had sought deliberately to wreck efforts involving the Palestinian side to halt the chain of violence.

KUWAIT AHEAD OF THE REST IN TELECOM LIBERALISATION

Broadly speaking, Kuwait is generally not known for having the most liberal business environment within the GCC.

However, in the telecommunications sector, the Kuwait economy stands out unlike the rest of the GCC, not a single monopoly firm controls telecom services.

This phenomenon has positive implications for consumers, the government and the telecom sector at large.

Two firms, Mobile Telecommunications Co (MTC) and National Mobile Telecommunications Co (Wataniya) provide the GSM services. The government has minority stakes in both firms and acts as a regulator of the industry.

GULF CRUDES LANGUISH

The Abu Dhabi crude market was in a lull, seeking direction after a surprise buying spree by Japanese buyers that lifted premiums to double digits ran out of steam.

Japanese end-users appeared to have mostly covered their September requirements, and the outlook for the Abu Dhabi market was unclear given uncertainty over remaining regional demand.

Kenya, at least, was expected shortly to issue its regular tender to purchase Murban. It is expected to seek about 600,000 barrels, its usual purchase volume, traders said.

Some traders said Murban was most recently sold at Adnoc plus 12 cents per barrel, similar to the last deals confirmed done.

BAHRAIN RETAINS ARAB TOP SPOT IN HDI

For the second consecutive year, Bahrain has come at the top of the Human Development Index (HDI) among the Arab states, according to this year's Human Development Report (HDR).

QATAR AIRWAYS

Enthused by a 27 per cent increase in cargo tonnage last year, Qatar Airways has signed a contract with EADS for the conversion of an Airbus A300-600 freighter in early 2003.

OMAN SIGNS $100M GAS PLANT ACCORD

The Omani government on Tuesday signed a $100 million contract to build the Saih Nihayda gas plant.

The contract was won by a joint venture between SNC Lavalin of Canada and a local company, Al-Hassan Engineering.

IRAQ SAYS FLEXIBLE ENOUGH IN UN TALKS

Iraq said that it had shown enough flexibility in talks over the return of UN arms inspectors and they needed a new remit to prevent future disputes.

"We have shown enough flexibility. We said in the Vienna round of talks that monitoring and return of inspectors should be part of a comprehensive solution," Foreign Miniser Naji Sabri said in an interview in the London-based Arabic daily Al Hayat.