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 5. TRADE  6. GULF



Feb-11 - 17, 2002

Arab states allocate over $40b to defence

Arab states allocated more than $40 billion to defence last year and Saudi Arabia accounted for nearly 45 per cent of the total spending.

Figures published in the Arab Defence Journal showed the defence expenditure in the Arab world, excluding Iraq and Somalia, formed around 80 per cent of the overall defence spending in the Middle East.

Defence spending stood at around $18.4 billion in Saudi Arabia which, like other Gulf states, is involved in a drive to bolster its military capablity following two destructive wars in the region. Kuwait was the second biggest defence spender in the region last year, with allocations of around $4 billion.

Heavy defence and security expenditure is among the factors that are smothering economic growth in Arab League members as many of them are reeling under heavy debt and low revenue and investments.

Indebted Arab countries are paying as much as $14 billion every year in debt servicing and this has combined with large defence allocations to stifle growth and keep deficits in the budget and current account.

Last year's defence allocations accounted for more than 20 per cent of the revenues and 5.5 per cent of the combined Arab gross domestic product compared with less than one per cent in industrial countries.

Defence spending in the region covers the purchase of weapons, services for military equipment and installations, and salaries for the army.

Military sources estimate that total defence and security spending in the Arab world has exceeded $400 billion since the end of the 1991 Gulf war.

Arab missile power 'can deter Israel'

Israel's hectic bid to acquire weapons of mass destruction since it was created on occupied Palestine in 1948 has turned it into the sixth nuclear power in the world although it is unlikely to use it in a first attack, a prominent Arab military analyst said.

While Arab countries do not possess atomic weapons, they have managed to build an enormous missile power that could constitute a sufficient deterrent to Israel if it were to be used within a collective action.

"According to classified U.S. information, Israel had 13 atomic bombs in 1973 and its current arsenal makes it the sixth nuclear power in the world in terms of the size of its plutonium stocks," said Dr Zakaria Hussein, former director of Egypt's Higher Naser Academy, one of the most prominent military science institutes in the Middle East.

Manufacturing needs further boost: Khalifa

The UAE will press ahead with a drive to expand its industrial base in participation with the private sector to diversify its sources of income and immunise its economy against unpredictable oil prices, according to His Highness Sheikh Khalifa bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed forces.

"Industry in the UAE is a strategic choice and among our key future plans to strengthen our economic presence in the world, maintaining what the government has achieved for the people during the past years under the guidance of His Highness President Sheikh Zayed bin Sultan Al Nahyan," Sheikh Khalifa said in a statement on the November 2-5 industrial exhibition, to be organised by the General Exhibition Corp (GEC) in Abu Dhabi.

In his comments, obtained by Gulf News, Sheikh Khalifa said more steps are needed to be taken to expand the manufacturing sector and increase its contribution to the gross domestic product.

More than $6 billion have been pumped into the non-oil industrial sector in the UAE and most of the capital is owned by the private sector, which is gaining ground with the encouragement of the government.

The investments covered nearly 2,140 projects producing chemicals, building materials, mahcinery and equipment, paper, home appliances, electrical products, metals and other light and medium industries.

Official figures showed non-oil industrial exports have exceeded $3 billion a year while the contribution of the manufacturing sector to the GDP has increased to over 10 per cent from less than four per cent in 1985.

UAE steel factory starts production

Emirates Iron and Steel Factory has started commercial production at its facility in Abu Dhabi, with output pegged at 250,000 tonnes this year.

The full design capacity of the factory is 500,000 tonnes annually. It is the largest in the UAE with the latest rolling mill technology.

"Commercial production began in a small way last month with one shift. Our goal is to produce 250,000 tonnes of steel reinforcing bars this year," said Gerold Strahlmann, general manager.

Dh300 million was invested in the first phase of the project to make steel re-bars which conform to international standards.

Iran warns US against attack

Iranian supreme leader Ayatollah Ali Khamenei has warned the US that it would regret any action it launched upon his country.

His speech, punctuated by cries of "Death to America" from an audience of air force chiefs, represents the latest salvo in the war of words between the US and Iran.

Tehran and Washington have exchanged insults and threats since US President George W Bush described Iran, Iraq and North Korea as an "axis of evil" in his State of the Union address on 29 January.

US Secretary of State Colin Powell appeared to adopt a more conciliatory tone earlier this week and said talks were possible with those three countries.

Yet on Wednesday CIA director George Tenet said Iran remained "a serious concern because of its across-the-board pursuit of weapons of mass destruction and missile capabilities".

Iran appears to have remained angered by the comments of US leaders.

Ayatollah Khamenei said on Thursday: "If anyone tries to attack this people and threaten their interests, the reply of the people of Iran will be keen, and the aggressors will regret their action.

"The Iranian people and the whole population, as well as the various branches of the armed forces, must attain unity, be vigilant and be totally prepared to reply to any attack."

The ayatollah, who last week denounced America as the "Great Satan", told Washington: "It is not only the Iranian people who hate you, but the whole world, as an oppressive regime, arrogant, misusing its strength and hypocritical.

Iran blocks new UK ambassador

Britain's improving relations with Iran have suffered a major reverse. The government in Tehran has rejected Britain's choice of a new ambassador. David Reddaway was denounced by conservative Iranian newspapers, which speak for the country's hardline clerics.

They called him a Jewish MI6 spy. In fact Mr Reddaway is not Jewish and the British Government denies he is in MI6, its foreign intelligence service.

Mr Reddaway has served as a diplomat in Iran twice before, speaks Farsi and has an Iranian wife.

Egypt calls for aid

Egypt is to ask international donors for financial support of $2.5bn to help it plug the gap in the country's accounts.

Income from tourism and shipping income has fallen dramatically in the wake of the 11 September attacks, and in the light of the global economic slowdown.

Egypt and the World Bank are co-chairing a donors' conference in the resort of Sharm el-Sheikh.

They hope the 40 donors, which include the US and countries from the European Union, will offer assistance in soft loans or grants.

Israel launches missile strike in West Bank

Israel launched a second retaliatory air strike on a Palestinian Authority compound in the West Bank city of Nablus on Thursday night, wounding at least one person.

The attack, which followed one early in the morning, took place while Israeli Prime Minister Ariel Sharon was in Washington preparing to press U.S. President George W. Bush to sever ties with Palestinian leader Yasser Arafat.

The missile strike carried out by an Israeli helicopter gunship was in further retaliation for the killing of three Israelis on Wednesday night by a Palestinian gunman who infiltrated a Jewish settlement in the West Bank, the army said.

Al Ain chalking out tourism strategy

Al Ain Economic Development and Tourism Promotion Authority is devising strategy to put Al Ain, known as the Floral Oasis, on the international tourism map.

The strategy, which is currently being outlined, will be implemented within the next 15 years, said Mubarak Hamed Al Muhairi, Director General of the recently established Al Ain Economic Development and Tourism Promotion Authority.

He said the strategy will be based on a two-pronged approach, and promote Al Ain on regional and international fronts. It will introduce the city as a modern oasis for families and promote its historical sites in the international tourist market.

Environment Day

The Ras Al Khaimah Free Trade Zone Authority celebrated the 5th National Environment Day with a tree planting and beach clean up at Ras Al Khaimah Industrial Park, in conjunction with staff and students of the Indian School.

Permanent office in Muscat

The GCC Advisory Committee will set up its permanent headquarters in Muscat, a move that was welcomed by the Omani government.

Sayyid Fahd bin Mahmood Al Said, Deputy Prime Minister for the Council of Ministers, who received the committee members at the end of their fifth session on behalf of His Majesty Sultan Qaboos, said the Sultanate attached great importance to the body which will enhance cooperation among the six member states.

He said the authorities in the Sultanate, which recently hosted the 22nd GCC summit, would extend full support to the committee.

EU parliament invites Arafat, slams Sharon

The European Parliament tried to break Yasser Arafat's isolation by asking him to address it.

It also slammed Israeli Prime Minister Ariel Sharon for saying he regretted not having killed the Palestinian leader in 1982, when it had him under siege in Beirut.

Arafat has been effectively confined to his West Bank headquarters in Ramallah by a ring of Israeli tanks since December.

EU foreign policy chief Javier Solana told the Parliament on Tuesday that Arafat remained the legitimate interlocutor for peace talks despite Israel's dismissal of him as "irrelevant".

15 firms bid for harbour, market deal

The Dh220 million New Mina Zayed harbour and Iranian Market project has kicked off with over 15 local, regional and international companies bidding for the contract, officials involved with the project confirmed.

"The response is good and the bids are being evaluated," an official of the Abu Dhabi Municipality told Gulf News.

The project calls for the relocation of the Mina Zayed harbour and the adjoining Iranian Market to a nearby location within the port area itself.

Dubai gold prices could rise further

Gold prices in Dubai have gone up by seven per cent during the last week following the trend in the international market, and industry officials predict that prices may go a little higher before settling down.

They said, due to speculative investment, the price might go up to $320 per ounce from the current level of $305, before settling down at $280. In the retail market, this translates into a rise of anywhere between Dh1-Dh2 per gram of jewellery.

Dubai airport traffic climbs 10pc in 2001

The flow of transit passengers through Dubai International Airport, returned to normal during the last few months after a 5 per cent decline in the aftermath of September 11, said a Dubai Department of Civil Aviation (DCA) official.

Overall traffic movement out of Dubai airport has increased by 10 per cent to 13.5 million in 2001. Projections for the current year are around 15 million another 10 per cent increase over 2001 figures, said Jamal Al Hai, DCA director, strategy and management excellence.

Bush maintains links with Arafat

US President George W Bush appears to have rejected Israeli calls for the United States to sever all ties with Palestinian leader Yasser Arafat.

He said his administration would maintain pressure on Mr Arafat to halt attacks by Palestinian militants on Israel.

At a news conference in Washington that followed talks with Israeli Prime Minister Ariel Sharon, Mr Bush repeated his recent strong criticism of Mr Arafat but stopped short of following Israel's policy of ending links with him.

Correspondents say that is a door the Bush administration does not wish to shut, at least for now.

Europe's growing Mid East role

Arab countries have long been pressing for greater European involvement in the Middle East peace process to counteract the perceived US bias towards Israel.

Crown Prince Abdullah of Saudi Arabia has said that Europe has a "moral and political responsibility" towards the region because of its former colonial role and its close ties to the Arab world.

Europe should play a "more prominent role than the one that is currently hardly noticeable", he said.

But until recently Israel resisted direct European participation in its peace talks with the Palestinians because it too perceived Europe to be more pro-Arab than the United States.

UAE efforts to combat money laundering win global praise

The UAE has been acknowledged as a leading example in the global fight against among other things money laundering.

And, it is not by accident that a free economy such as the UAE could achieve a place among the leading nations of the world. Freedom encourages enterprise fortunately more good, but also bad and the Emirates has got the right balance in promoting what is beneficial and restricting and limiting what is harmful.

Not many know, but the UAE's fight against money laundering not an easy task when there is no restriction on fund flows - began some 15 years ago. This is no mean task by a country which itself is just twice that many years.

The global Financial Action Task Force (FATF) discussed the UAE at its meeting from January 28 to February 1 in Hong Kong and concluded that the country has established a comprehensive anti-money laundering system, comprising a law, regulations and procedures, the National Committee for Anti-Money Laundering said on its return.

Hamad pledges to pursue reform plan

The Emir His Highness Sheikh Hamad bin Isa Al Khalifa has expressed his keen desire to announce the amended national constitution at the earliest possible to return the country to a constitutional life with all its relevant new institutions.

Sheikh Hamad said that the projected constitution would be achieved in cooperation with legal experts and the relevant committees.

Ambitious harbour project launched

The ambitious inner harbour project at Hamriyah Port adjoining Sharjah's Hamriyah Free Zone was officially launched by His Highness Dr Sheikh Sultan bin Mohammed Al Qasimi, Member of the Supreme Council and Ruler of Sharjah.

The project, spread across three phases, will entail a Dh75 million investment in the first phase, which will see the construction of 3.1 km of wharfage across 350 metres, with a draft depth of 7 metres.

Interestingly, the complex will include a drydocking facility capable of servicing small- and medium-sized vessels.

Al Gezira and SCCI to set up venture

Sudan's Al Gezira province and the Sharjah Chamber of Commerce and Industry (SCCI) have decided to set up a joint venture to develop 12,000 hectares of land provided gratis for agricultural development, said Prof Sadig K. Omara, the province's Minister of Agriculture, Animal Wealth and Irrigation.

EIB sees drop in oil prices

Oil prices are expected to decline in 2002 because of reduced demand and weak global economy, said an Emirates Industrial Bank (EIB) report.

Prices will be influenced by supply from non-Opec countries, which is increasing, and Opec production levels which are declining, said the report on the 'Economic Outlook of Global and Oil Exporting Countries'.

Oil prices changed randomly after September 2001. The average for the entire year is estimated at $24.5 a barrel. Opec resolved to cut production targets and quotas in January. It cut output twice in 2001, which reduced its market share and revenues of members.

A reduction in oil prices would boost world demand and economy but it would adversely affect the economies of Opec members, particularly their fiscal balances and spending.

Production cuts have reduced the market share of Opec from 40 to 34 per cent.

Opec has a share of 5 million barrels per day.

CC aid down sharply between 1995-01

Gulf Arab oil producers have sharply cut financial aid over the past few years and the assistance is set to slow down in the coming years as they stagger under slow growth, fiscal deficits and falling oil earnings.

Official Arab figures showed the six-nation GCC has extended only around $8 billion between 1995 and 2001 compared with $29.1 billion between 1975 and 1979 and $30.4 billion between 1980 and 1984.

Islamic liquidity centre launched

Three Gulf banks launched an Islamic Liquidity Management Centre (LMC) in Bahrain to serve Islamic banks and finance houses in a move that could pave the way for an Islamic money market. Kuwait Finance House, Dubai Islamic Bank and Bahrain Islamic Bank signed an agreement to set up the centre, which plans to issue tradable Islamic instruments called Sukuk, with an initial paid-in capital of $15 million. Each bank would provide $5 million for the centre, the first of its kind in the Gulf's financial hub, Bahrain.

Israel demolishes homes

Israeli bulldozers have begun demolishing several Palestinian homes in occupied east Jerusalem, which Israeli officials say were built without permits.

Officials say three houses have so far been destroyed in the second such operation this week.