Lebanon’s climb to reconstruction, steep but manageable: No political price for trade pact with US: UAE
Lebanon’s climb to reconstruction, steep but manageable
BEIRUT (AFP) – Lebanon has a dauntingly steep path to climb towards reconstruction and a chance, though no guarantee, of recovering from the economic devastation caused by Israel’s offensive, economists have said.
Traditional oil-rich allies in the Gulf have raised hopes by pledging $800 million to rebuild infrastructure, but problems such as high unemployment and a shattered private sector could mar any recovery.
“I think that it all depends on how the conflict will end. I don’t believe that it has ended. If we can come out with the start of a real process it will only be a blip,” said Khaled Zaidan, head of securities at BankMed.
“But it would be very difficult to retain financial and human capital as well as attract necessary additional human capital if there is no clear signal or enough confidence that this war will not be replicated,” he said.
The economic destruction wrought by the Israeli offensive is indisputable.
Almost a million people were displaced, industry came to a grinding halt and the nascent tourist industry, which had been heading for a boom year, was left in tatters.
Economist Kamal Hamdan estimated that almost $3 billion worth of direct losses were caused by the Israeli offensive, with one third in infrastructure and most of the rest in housing and commercial buildings.
Indirect losses, based mostly on heavy losses in the tourist sector and idled industry may exceed another $2 billion, he warned.
“There will be no positive growth for the second year in a row. This is very bad for a country like Lebanon with serious macroeconomic and financial imbalances,” he said.
Lebanon’s public debt has spiraled to $38.8 billion, or 170 percent of GDP, since the end of its 15-year-long civil war in 1990.
With the premises of many businesses, especially in south Beirut, simply destroyed, “unemployment could reach in the very short term 20 percent”, a problem accentuated by 10-15 percent of the displaced not being able to return home in the near future, Hamdan said.
But for all the gloom, rays of light have emerged. The banking system remains liquid, with the central bank still holding solid currency reserves, bolstered by Kuwaiti and Saudi injections, after it used an estimated one billion dollars to support the local pound during the offensive.
Moreover, with the cessation of hostilities, government bonds have recovered and a bullish mood has returned to the local stock market. The share rice of heavyweight Solidere, a giant property company, is climbing.
While the service sector – especially the tourist industry – has been dealt a heavy blow by the offensive, some help could come from growth in construction as aid comes in to rebuild the thousands of destroyed homes.
King Abdullah of Saudi Arabia, a traditional economic ally of Lebanon, gave $500 million in aid to help rebuild, while Kuwait granted Beirut $300 million.
“The flow of aid funds, particularly from friendly nations such as Saudi Arabia and Kuwait bodes well for the future,” said Blom Bank analyst Nicolas Photiades in a research note.
Zaidan of BankMed says that for all the destruction Lebanon is still in better shape than it was just after the 1975-1990 civil war, but that rebuilding will take a major and sustained international effort.
“You can’t put a band aid on the problem. Lebanon needs a Marshall Plan-type program. You need to have something of that magnitude,” he said, referring to the US plan to put Europe on its feet after World War II.
Hamdan said a social priority must be to give construction jobs to those who lost homes and became unemployed – especially in the bombed-out Shiite suburbs of south Beirut – in order to build a better Lebanon.
“Despite all the dangers, if we get a political consensus there is hope we will be able to build a better way of life in the more underdeveloped areas,” in the south and the capital’s suburbs, he said.
No political price for trade pact with US: UAE
DUBAI (AFP) – The United Arab Emirates “will not pay a political price” for concluding a free trade agreement with the United States, the U.A.E.’s vice president and ruler of Dubai said in remarks published recently.
“The U.A.E. will not pay a political price for any trade deals with the United States or others,” Sheikh Mohammad bin Rashed al-Maktoum said in an interview with the Saudi daily Asharq Al-Awsat also carried in local newspapers.
He was responding to a question on purported U.S. preconditions for signing a free trade pact with the U.A.E., namely amending labor laws and allowing the formation of political groupings. Press reports during the latest round of U.S.-U.A.E. talks on a free trade pact, which took place in the Emirati capital Abu Dhabi, said Washington has made a deal contingent on amending the labor law and establishing labor organizations in the U.A.E.
Unions are banned in the U.A.E. and a minimum wage exists only for the oil-rich Gulf country’s own citizens.
The U.A.E. has a population of over four million, of whom less than 20 percent are nationals, and foreigners make up the vast majority of the workforce.
South Asians account for around half of the population.
Strikes and walkouts by Asian laborers demanding back pay or better living conditions have become frequent in Dubai, and international rights activists have been pressing for more rights for blue-collar workers.
Sheikh Mohammad, who also serves as U.A.E. prime minister, said the solution to the demographic imbalance in the country would not come quickly and should be two-pronged.
One is the entry of more Emirati citizens into the workforce, he said, adding that some 400,000 nationals would enter the job market in the next decade.
The second is the restructuring of the Emirati economy, which is in transition between being a traditional economy relying on an unskilled workforce to becoming a technology-based economy relying on skilled workers.
The U.A.E. is stepping up “efforts to prepare and train our sons and daughters, who will be an elite over whom private sector firms will compete,” said Sheikh Mohammad, the driving force behind the rapid transformation of U.A.E. member Dubai into a thriving business and tourism hub.
Iraq oil production rises 15 percent in southern fields
BASRA, Iraq (AFP) – Crude oil production in southern Iraq has reached 1.95 million barrels a day (bpd), a 15-percent rise over the average output of the past 10 months, the Southern Oil Company director has said.
“Production levels [have] reached 1.95 million bpd,” Jabbar al-Luwaibi told reporters. “Average production over the last 10 months has been 1.7 million bpd,” he added.
On May 23, then interim oil minister Hashem al-Hashemi said Iraq’s total oil production for the northern and southern fields reached 2.1 mpd in April, the highest level since the 2003 fall of the old regime.
An average of 1.62 mpd was exported in April, or the equivalent of the average daily exports in 2002, according to Hashemi.
Iraq’s oil sector has been hobbled by ageing infrastructure, a decade of international sanctions under Saddam Hussein, and a relentless campaign of sabotage against pipelines.
The country also loses huge amounts of money in corruption and because of smuggling rings in the oil industry.
Much of the unrest in recent weeks in the southern city of Basra is believed to stem from rivalries between gangs involved in the lucrative smuggling business.
Hussein Shahristani, the new oil minister, has vowed to clean up the sector.
EU will not abandon Palestinians: Solana
RAMALLAH, Occupied West Bank (AFP) – The European Union will not let Palestinians down, foreign policy chief Javier Solana said recently, expressing hope that a special aid fund that would bypass Hamas would be in place soon.
“The Palestinian people can be assured that the EU will not let them down and we will continue to support them as much as we can,” Solana told a joint news conference with Palestinian Authority president Mahmud Abbas.
“The amount of money which will be spent in the year 2006 will be more than that spent in 2005,” he added in the West Bank town of Ramallah.
The European Union – the biggest aid donor to the Palestinians – and the United States both suspended funding after militant Islamic group Hamas won January elections, while Israel has also blocked the transfer of revenues.
To avoid Palestinian financial meltdown, however, the EU, Russia, UN and US are working on setting up a World Bank fund to channel money to Palestinians without it passing through the Hamas-led government.
Solana said talks were still underway to set up humanitarian aid but expressed hope that a mechanism could be in place by early July. “We are working on a mechanism to put the money in a context of humanitarian aid in broader context and to get as many donors in the same mechanism,” Solana said, hoping that the matter would be finalized in a meeting of the quartet.
He said he hoped the matter would be finalized in a meeting of the quartet and that it “will be put in place by the beginning of next month” but that “in the meantime, money will continue to be coming”.
The EU diplomat welcomed the prospect of a meeting between the Israeli and Palestinian leaders.
“It is very important the Palestinian and the Israeli leaders do get together and I hope that meeting will take place very soon and will be a productive meeting,” he said.
The EU foreign policy chief earlier held talks with Israeli Prime Minister Ehud Olmert in Occupied Jerusalem where he also met Foreign Minister Tzipi Livni.
Gulf states aware oil windfall won’t last: IMF
DUBAI (AFP) – Abundant oil-revenue surpluses enjoyed by Gulf countries will not put economic reforms on the back burner as policy makers know high crude prices are only temporary, a top IMF official said.
“The current generation of politicians in these countries think differently. They really do have a view that these oil prices would not last,” the head of the IMF’s Middle East and Central Asia Depart-ment, Mohsin Khan, told AFP in an interview in Dubai.
He said that oil-rich countries in the Gulf region are aware that if they miss the chance to “utilize this period to undertake those reforms and develop the private sector (they) will be back in the 1990s.”
Oil-producing countries suffered a sharp drop in their revenues in the 1990s due to record low oil prices and production.
“Many of the policy makers interestingly enough that are still in power lived through the 1990s while in power, when oil prices were in the single digits, and Saudi Arabia was selling between four and five million barrels per day (bpd) only,” he said.
Saudi Arabia which sits on a quarter of world proven oil reserves, produces currently a 9.5 million bpd, while crude prices have surged to over $70 per barrel.
Impoverished Yemen asks for Saudi boost.
AL-MUKALLAH, YEMEN (AFP) – Yemen’s prime minister said recently that his impoverished country was pinning its hopes on oil-rich Saudi Arabia to provide a much-needed economic boost
Abdel Kader Bajammal stressed “the Saudi Arabian role for economic Integration between Yemen and the Gulf Cooperation Council,” ahead of a economic conference co-presided by Saudi Crown Prince Sultan bin Abdel Aziz.
Yemen, one of the world’s poorest countries, wants to become a full member of the GCC, which agreed in December 2001 to Yemen’s incorporation into its education, social affairs, health and sports councils.
“The kingdom is the locomotive for Yemen (to enter) the GCC,” Bajammal told reporters.
The GCC, created in 1981, groups six Gulf Arab countries, of which four are members of the Organization of Petroleum Exporting Countries (OPEC) – Saudi Arabia, United Arab Emirates, Kuwait and Qatar.
The GCC has drafted an action plan for investments in Yemen over the next 10 years, which Sanaa says will be presented to a donor conference this November in London.
China, Arab countries target energy sector in ambitious trade plan
BEIJING (AFP) – China and the Arab world will target the energy sector as they seek to double their trade volumes over the next few years, the two sides said as they wrapped up a recent ministerial forum.
An agreement signed on the final day of the China-Arab Cooperation Forum said that Beijing and the 22 Arab League members would begin holding meetings on oil issues as part of an expansion of ties, according to Xinhua news agency.
“The two sides attach importance to energy cooperation, particularly the cooperation in the sectors of oil, natural gas and renewable energy,” said a document outlining the forum’s plans for 2006 to 2008, Xinhua reported.
Mohammed Hussein al-Shaali, state minister for foreign affairs of the United Arab Emirates and a co-chair of the forum, told reporters there was a common target to double bilateral trade to $100 billion by 2010.
Trade between China and the 22 oil and gasrich member states of the Arab League last year totaled $51.3 billion.
Arab League Secretary General Amr Mussa, who also co-chaired the forum along with Chinese Foreign Minister Li Zhaoxing, was even more optimistic about the pace of economic development with energy-hungry China.
“This represents just a beginning and we hope it can be even greater,” Mussa said of current trade levels between the Arab world and China, adding he hoped volumes would double within two to three years.
During the first day of the forum, Chinese State Councilor Tang Jiaxuan urged Arab countries to expand energy cooperation with China.
China, the world’s second largest energy consumer behind the United States, has already worked extremely hard in recent years to secure energy resources from the Arab world and the Middle East.
Fifty-eight percent of China’s oil imports currently come from the Middle East, according to the Washington-based Institute for the Analysis of Global Security.
But, with domestic demand increasing by about 15 percent annually as its population of 1.3 billion people has become increasingly wealthy, it has made no secret of the fact that it needs more oil and gas from Arab nations.
Chinese President Hu Jintao traveled to Saudi Arabia in April and discussed a proposal with King Abdullah to set up a Saudi-fed strategic oil reserve in China.
Saudi Arabia is already China’s biggest crude supplier, exporting 22.18 million tons last year.
At the end of the forum, officials from the two sides signed other agreements including a joint communiqué in which they agreed to step up anti-terror cooperation, and an environmental protection document.
The Middle East conflict was also in focus with the Arab League’s Mussa again calling for Israel to end its occupation of Palestinian territory.
“The Palestinian question is one of military occupation. It is not a terrorist issue,” he told reporters.
The China-Arab Cooperation Forum ministerial meeting was a gathering of foreign ministers or their representatives and the radical Palestinian Hamas organization scored a diplomatic coup by securing an invitation.
Copyright AA Business, LLC Aug/Sep 2006
Provided by ProQuest Information and Learning Company. All rights Reserved