GULF

 

Nov 04 - 10 , 2002

 

1.INTERNATIONAL

2. INDUSTRY

3. FINANCE

4. POLICY

5. TRADE

6. GULF

 

REPATRIATION BOOSTS SAUDI BANKS

The coffers of Saudi Arabia's banks are swelling with money brought home following the 11 September attacks last year.New figures released by the country's central bank, the Saudi Arabian Monetary Agency, show that the assets of Saudi Arabia's 10 commercial banks were up 8.1% over the 12 months to September.

Total assets were $133.4bn, having climbed steadily over the past year from $123.4bn at the end of September 2001.

But bank deposits grew even faster, rising 11.5% to $81.4bn as money was repatriated from overseas.

Rapid growth in the money supply the amount of currency actually available for use in the kingdom supports the view that repatriation has driven the build-up in funds, the central bank said.

Liquidity is up 10% on a year ago, it said.

The figures also appear to shed some light on public finances.

Commercial banks' claims on the public sector borrowing from the banks is a major source of funding for the kingdom's huge budget deficit have fallen 3.7% in the past three months to $34.2bn.

Recent reports from the Saudi banking sector have suggested that higher-than-expected oil revenues up as much as 50% mean the deficit will shrink this year.

That would help counterbalance last year's budget, driven $6.7bn into the red in the aftermath of 11 September.

In contrast to the government position, private sector borrowing has soared thanks in part to low interest rates, the central bank said, climbing 12.3% to $55.5bn over the past year.

ARAB FUNDS LEAVE U.S. AS MARTS FALL

The gloomy performance by U.S. markets, not politics or fear, led to the much-publicised withdrawal of some Arab funds from the U.S., according to a senior HSBC Investment Bank plc official.

David Bloom, London-based currency strategist, who says investors, Arab and non-Arab, have been exiting U.S. markets, expects the trend to continue as the U.S. economy remains under pressure.

"It is a sensible move, I expect more. We have had one movement, and I would expect another of the same size," he said.

He said the much-touted $200 million was totally arbitrary. "We in our bank looked and found it very difficult to determine how much money has moved. How can anybody outside the banking system throw up a figure?"

Meanwhile, Gulf currencies are expected to lose up to 10 per cent over a year, if the award-winning strategist is to be believed.

Bloom is pessimistic and puts up a strong argument for a rather depressing global economic outlook; and recent events look like proving his viewpoint.

He also predicts that the Federal Reserve will cut rates by 100 basis points with the European Central Bank following with a 75 basis point cut in a year. Consequently, he says fixed income instruments such as bonds are the best for investors over the next year.

"When the heartbeat of capitalism is strong, nothing beats the dollar. But the dollar has declined by about 10 per cent and I expect another fall of 10 per cent over the next year or so. The decline would not be dramatic, but the dollar would be under persistent pressure," Bloom said.

With it would be the GCC currencies, which are pegged to the greenback.

SHARJAH PLANS NEW BODY TO SPUR GROWTH

A centre for investment and strategic planning is likely to be set up in Sharjah to help in economic development, Sheikh Tareq bin Faisal Al Qasimi, member of the Sharjah Executive Council and chairman of the Sharjah Department of Economic Development, said during the Consultative Council meeting.

The council's meeting was the second and last to discuss economic plans and policies. It concluded with a list of recommendations.

NEW ISRAELI DEFENCE MINISTER WANTED IN UK

The legal case to investigate and potentially "arrest" the newly appointed Israeli Defence Minister, Shaul Mofaz, seems to be gathering momentum by the day.

This followed the naming of Mofaz, former Chief of Staff of the Israeli Army, as a potential defendant by the British Human Rights solicitor Imran Khan, representing specific individuals and families in the West Bank, who lodged complaints to the British Director of Public Prosecutions (DPP) against the Israeli general requesting his arrest.

The complaints cover a broad range of violations amounting to warcrimes and crimes against humanity, including those under article 147 of the Fourth Geneva Convention.

In a significant move by the (DPP) of the UK's Crown Prosecution Service, the case has been referred to the highest investigative authority and anti-terrorist squad in Scotland Yard.

U.S., FRANCE CLOSE TO DEAL ON IRAQ DRAFT

The United States and France appeared on the brink of agreement on a UN resolution that would allow weapons inspectors to test Iraq's cooperation before any possible military action.

But diplomats said differences were still crucial enough for the Bush administration to postpone calls for a vote until after mid-term elections or run the risk of failure.

"It is looking better than it ever was," said one Western diplomat closely involved in the negotiations. "There is a small ravine left but it is still 400 feet deep."

IRAQ REOPENS SAUDI CROSSING AFTER 12 YEARS

Iraq reopened a border crossing with Saudi Arabia, allowing through people and goods for the first time since it was shut in the 1990-91 Gulf War.

The reopening is one of several signs that Baghdad, facing a U.S. and British campaign, wants to improve its relationship with its former 1991 Gulf War foe.

Witnesses at the crossing said 100 Saudi trade officials and businessmen crossed into Iraq at the opening to attend Baghdad's 10-day trade fair.

CUSTOMS UNION

Six GCC oil producers have begun a countdown for an historic customs union with a flurry of meetings before the summit of their heads of state in December to clear remaining obstacles and ensure the project will not be put on the back burner again.

With just two months to go, the six members are holding marathon talks to detonate possible land mines that could blast off their ambitious plan and to ensure a smooth transition from scattered economic entities into one powerful bloc. A single economic bloc encompassing giant oil producers will push them into history but economists argue whether the six members will be able to make history.

MIDEAST NEEDS 620 PLANES

Airbus estimated that the Middle East will need 620 aircraft worth $50 billion in the next 20 years.

Airbus is manufacturing a military aircraft for European airforces and will start manufacturing it once the German airforce collects the fund for its participation in the project. The aircraft will be marketed globally once there is a need for it, said David Velupillai, regional press manager.

JORDAN FUND

Deutsche Bank, Atlas Investment Group and Foursan Group announced the launch of the Jordan Fund, a private equity fund created to make investments in Jordanian companies.

The Jordan Fund will be Jordan's first private equity fund, and will be a $50 million closed end fund targeting mid- to late-stage private Jordanian companies.

ENOC TO USE TOTALFINAELF JAFZ FACILITY

Emirates National Oil Co (Enoc) will produce lubricants at TotalFinaElf's facility in Jebel Ali Free Zone, said an official closely involved with the project.

An agreement between Enoc and TotalFinaElf was signed between Hussein Sultan, chief executive, Enoc; and Jehan Eric Blumereau, chief representative, UAE, TotalFinaElf.

RACE ON TO ATTRACT FOREIGN INVESTMENT

An old story goes that once an investor from Australia planned to set up a business in the Gulf region and wanted to clarify the requirements with the concerned authorities.

He approached Saudi Arabia and was told it must meet several conditions. Then the would be investor approached Bahrain, which enlisted fewer restrictions. Finally, he wrote to Dubai, and to his surprise the authorities told the firm to list conditions that would satisfy him to set up a venture in the emirate.

Dubai is reaping the benefits of opening up before others and taking initiatives to remain on the top. The robust Jebel Ali Free Zone (Jafz) is home to hundreds of foreign firms which, in turn, benefit exports.

Dubai's success has been envied in other emirates within the UAE as well as the Gulf at large.

G77 LAUDS UAE'S INITIATIVE

G77 experts have welcomed the UAE's initiative to launch, through Unesco, a South-South solidarity programme in the field of education, aimed at reducing illiteracy and improving education in the developing countries.

The final recommendations, called the Dubai Declaration, noted with deep concern the huge knowledge gap between the North and the South, which has contributed to the marginalisation of many developing countries, most already afflicted by poverty.

The final text of the conference noted that in this interdependent world, the endemic poverty and deprivation in the South constitutes a threat to the security and prosperity of the global community.

BATELCO THIRD-QUARTER PROFIT UP 22PC

Results for the nine months show that the Batelco Group returned profits of 52.3 million Baharaini dinars ($139.6 million) from a gross turnover of 138 million dinars ($368.5 million), which represents a 10 per cent increase on turnover for the same period last year.

GCC MINISTERS DISCUSS DEFENCE COOPERATION

Sayyid Badr bin Saud Al Busaidy, Oman's Minister Responsible for Defence Affairs, stressed that military cooperation among the GCC states was inevitable and determined by ties of fraternity, joint interests and shared concerns.

He was speaking at the first meeting of the GCC Joint Defence Council at Al Bustan Palace Hotel.

KHALIFA OPENS BOROUGE COMPLEX

His Highness Sheikh Khalifa bin Zayed Al Nahyan, Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces, opened the Borouge Petrochemicals Complex. High-ranking officials, Sheikhs and ministers were present.

The $1.2 billion complex consists of an ethylene-breaking industry with a production capacity of 600,000 tonnes a year and two power star polyethylene lines with a production capacity of 450,000 tonnes a year.

AMAN IPO OVERSUBSCRIBED

The Dh33 million first public issue of Aman the newly established Islamic insurance company promoted by Dubai Islamic Bank, has been oversubscribed more than three times for a total of Dh120 million.

The allotment of the shares, which will be on a pro-rata basis will be announced on November, 30, 2002.

A UNIFIED GCC CURRENCY

It would seem that it is almost fashionable now for a reference to be made once in a while about work on a unified GCC currency. I say fashionable because the idea of a single currency came about after the birth of the euro and I do wonder if the finance officials of the GCC really want to have a single currency.

It is not as if the trade between GCC partners is anywhere near the level where it would warrant huge trade balance of payment issues. On the whole the entire GDP of the GCC countries is in the region of $250-$300 billion a year, which is less than the GDP of Netherlands alone.

The 1999 GDP of all Arab countries was $531 billion and that too does not surpass the GDP of some countries within the EU. Statistics on inter-GCC trade are a small proportion and capital movements within the GCC are insignificant.

ARABS URGED TO INVEST IN SCIENTIFIC EDUCATION

The Arab countries need to invest heavily in scientific education in order to create an equipped and skilled human resources base for future economic growth, experts said at the concluding day of the three-day Dubai Strategy Forum.

They also emphasised educational reforms, democratisation of education, reforming the curricula that will help reduce unemployment and relating the curricula to the economic growth requirements of the future.

LEBANON SET FOR FRESH LOAN TALKS

Lebanese premier Rafiq Hariri is to hold talks with the International Monetary Fund as part of an attempt to raise $5bn (3.2bn)in fresh loans.

Spokespeople for Mr Hariri said he would travel to Washington for discussions with IMF executive director Horst Koehler on 3 November.

The talks come ahead of a conference of lending institutions and overseas aid donors, due to begin in Paris on 23 November.