Business

FRANKFURT — German Economy Minister Sigmar Gabriel has given the go-ahead for defence technology company Rheinmetall to build an amoured vehicle factory in Algeria, the weekly Der Spiegel reported on Sunday. The 28-million-euro ($37 million) contract covers an assembly line for Fuchs armoured personnel carriers and their parts, the magazine said, quoting the economy ministry. The plant is to be built around 400 kilometres east of Algier, the report stated. The contract dates back to a visit to Algeria by Chancellor Angela Merkel in 2008 and had already been largely approved by her previous administration, it added.

MADRID — Shoppers risk paying more for their olive oil this year as a drought in Spain and a blight in Italy wither trees in the two top producers, driving up prices.

Months of dry weather have struck Andalusia in the south of Spain, the world's biggest producer of the "yellow gold".

In the second-biggest grower Italy, the bacteria xylella fastidiosa has shrivelled olive branches in the southern Puglia region.

"Prices will rise by 30 to 40 per cent because there will be fewer olives and therefore less oil produced," indicated one olive farmer in Puglia, Raffaele Piano. "But quality will not be affected." 

"There is no cure. The only solution is to burn the infected trees to stop the bacteria spreading quickly," he said.

Producers in parched Spain say they expect their prices to rise too over the coming months as the October harvest approaches, but hesitate to forecast by how much.

In an early warning sign, the market price of virgin olive oil has crept up over recent weeks from 2.40 euros to 2.70 euros ($3.59) a kilogramme, says the Spanish olive oil federation Infaoliva. It warns the rise will continue.

Fewer olives rolling into farmers' nets this autumn makes a recipe for higher prices when combined with ever-mounting demand worldwide.

Olive oil has long been a staple of the Mediterranean diet, and over recent decades it has become popular in cooking in many parts of the world because of its perceived benefits for health.

Demand has surged by 60 per cent in the past 20 years, driven by China, the United States, Australia and Canada, according to the International Olive Oil Council.

Praying for rain 

Spain produced 1.77 million tonnes of olives in the last harvest from October 2013 to June 2014, according to the agriculture ministry.

"Last season was exceptional. Production was very big," 40 per cent higher than the average of the previous four years, indicated Cristobal Gallego, an olive oil official for a cooperative of food producers in Andalusia.

"Everything indicates that the next harvest will be very close to the level of the one two years ago" which was just 618,000 tonnes, he warned.

Enrique Delgado Hidalgo, secretary general of Infaoliva, forecast that the harvest could be "between 800,000 and a million tonnes".

"The harvest will be limited but sufficient to supply the domestic and international markets," he said.

The Germany-based analysis institute Oil World gave a more optimistic forecast, estimating that Spain will produce between 900,000 and 1.1 million tonnes this coming harvest.

A price rise, meanwhile, would be "good news for producers", who suffered losses when strong production last year drove prices down, said Thomas Mielke, director of Oil World.

In the life cycle of olive groves, "there is often a decline in production per tree after a year of strong production", which will be aggravated this year in Spain by the drought, he added.

Watering the olive trees cannot make up for the lack of rain in sweltering Andalusia, Gallego warned.

In the heart of the poor farming region of Andalusia, where olive groves blanket the hillsides as far as the eye can see, the province of Jaen alone accounts for 45 per cent of Spain's production. It is among the areas hit by the drought.

Ahead of the harvest which starts in October, farmers will be watching the skies for signs of September rain which could change their fortunes.

AMMAN — Amman Chamber of Industry Chairman Senator Ziyad Homsi on Saturday called for activating the National Product Protection Law and the Competitiveness Law to face importation practices that harm Jordanian products. He said the government needs more international expertise to safeguard national interests in the face of harmful practices and accompanying trade violations within the import process from various countries around the world.  Homsi called for having reciprocal relations in the foreign trade policy the government uses with international partners, stressing the existing practices negatively affect national products in trade exchange in some export markets. Homsi said the Jordanian industry faces obstacles and sudden decisions at customs crossings in some markets due to administrative measures and technical constraints other than the credited standards. He added that the chamber will enhance its relation with educational, training and research institutions to provide the industrial sector with suitable expertise and needs. This procedure aims to develop the sector’s products and increase their technological component in a way that would improve relative characteristics and competitiveness in the national industry. 

MOSCOW — Russia's farm sector needs an additional 636 billion rubles ($17.6 billion, 13.2 billion euros) of investment to replace the products it banned in response to Western sanctions, Agriculture Minister Nikolai Fyodorov said on Friday.

"We prepared a reasonably optimistic scenario of the sector's development that foresees additional financing of not one trillion, but just 636 billion rubles from 2015 through 2020," the minister was quoted as saying by the state-run RIA Novosti news agency. 

Russia earlier this month imposed sweeping bans on food from the United States, the European Union (EU) and a handful of other countries in response to Western economic sanctions. 

The trade war is part of a broader crisis in East-West relations sparked by Russia's perceived attempts to split strife-torn Ukraine in two after Kiev's decision to seek a closer political and economic alliance with Europe.

Officials expressed confidence at the time that Russia would be able to make up for the shortfall with imports from Latin American and other allied countries as well as additional investments in its own agricultural sector.

But the cost of doing so is only now becoming clear. The figure cited by Fyodorov is as much as three times a recent estimate from Deputy Prime Minister Arkady Dvorkovich.

Russia relies heavily on foreign fruit and vegetables because its long winters and inhospitable climate keep farmers from growing produce desired by the country's booming middle class.

It imports huge volumes of Australian and European meat along with US poultry and Norwegian salmon — all banned under Russian President Vladimir Putin's orders earlier this month.

Russia also depends to a large degree on foreign seeds for the foods it does grow.

While the Russian government has considerable revenue from oil and gas exports, the slowing economy and uncertainty has nearly choked off growth.

Separately, Russia has lifted a ban on dairy imports from two firms in Serbia, the government's food health service said on Saturday, in an apparent attempt to woo the EU membership candidate amid Moscow's stand-off with the West.

The veterinary and phytosanitary service Rosselkhoznadzor said on Saturday that it has included two Serbian firms in the list of the companies which are allowed to sell dairy produce to Russia and its Customs Union with Belarus and Kazakhstan.

It said the firms had previously been banned for unspecified breaches of food regulations on a recent, unspecified date.

The service has lifted the ban just as the EU has asked new candidates, including Serbia, not to exploit the Kremlin's ban on Western food imports.

"Why now? Maybe the Serbs want to use the current situation and get into the [Russian] market as far as it can get," a spokesman for the service told Reuters.

Some Serbian food producers, particularly fruit farmers, have reported a spike in demand from Russia, but capacity is limited. In 2013, just 7.2 per cent of Serbia's total exports worth some $65 million, went to Russia.

Serbia said it would honour a call from Brussels not to profit from Russia's ban on Western food — but stopped short of saying it would curb its own exports.

Prime Minister Aleksandar Vucic said his government would not intervene to stop Serbian farmers from shipping their produce to Russia as that would be "contrary to the interests of the state".

But he pledged to "comply with the EU recommendations" and not provide any subsidies to Serbian producers to help them boost exports to Russia. 

Serbia's food and agriculture exports to Russia totalled $117 million in the first half of the year, according to official figures.

Agriculture Minister Snezana Boskovic Bogosavljevic, who has been in Moscow for talks meat and dairy trade talks, said that represented just 0.2 per cent of Russia's annual food imports.

"Even if Serbia reaches a peak of its export to Russia, it would be only 0.4 to 0.5 per cent of Russian imports, an insignificant percentage that threatens no one," she said.

Last week Russia said it will allow imports from neighbouring Belarus and Kazakhstan of food processed from Western raw materials.

"Our Customs Union colleagues can win in this situation because some products, which were previously coming to us directly, will be processed there," Russian news agencies quoted Dvorkovich as saying.

A duty-free Customs Union was set up this year by Russia, Kazakhstan and Belarus to boost economic ties and trade.

Russian Prime Minister Dmitry Medvedev said he hoped Western food import bans would not last too long.

Belarus and Kazakhstan said they will continue to import food banned by Russia but Minsk has said it will make sure sanctioned goods do not cross into Russia.

However, since Moscow announced the bans some traders have been looking for ways to sidestep them.

Last year, Russia imported $17.2 billion worth of food from the countries covered by the sanctions, of which $9.2 billion was in the affected categories, according to the International Trade Centre, a joint venture of the United Nations and World Trade Organisation.

NEW YORK — New York state on Monday fined Pricewaterhouse Coopers (PwC) $25 million and suspended some consulting work for two years after finding the company hid a Japanese bank's US sanctions violations. Bank of Tokyo-Mitsubishi UFJ (BTMU), Japan's biggest lender, pressured PwC to scrub a report on wire transfers the bank submitted to regulators to hide its dealings with blacklisted Iran, Myanmar and Sudan, the New York State Department of Financial Services said. "Under pressure from BTMU executives, PwC removed a warning in an ostensibly 'objective' report to regulators surrounding the bank's scheme to falsify wire transfer information for Iran, Sudan, and other sanctioned entities," the department said. Under the terms of the settlement, PwC's Regulatory Advisory Services unit will be suspended for 24 months from accepting consulting work at financial institutions regulated by the New York state agency and undertake a series of reforms. Benjamin Lawsky, the superintendent of Financial Services, said this was the latest case of improper influence and misconduct in the bank consulting industry, which had a "troubling web of conflicts". In 2013, the DFS reached a similar settlement with Deloitte Financial Advisory Services that involved a 12-month suspension of consulting activities.

LONDON — An Iraqi Kurdish crude oil tanker has reappeared off the coast of Israel having offloaded its cargo, ship tracking data on Reuters showed, in the latest sign the autonomous region is finding buyers for its oil in defiance of Baghdad.

It was not possible to determine who bought the oil or where it was sent to, but crude originating from Iraqi Kurdistan was delivered to Israel in June even though many Middle Eastern states refuse to trade with the country.

A spokesman for the Kurdistan Regional Government (KRG) Ministry of Natural Resources did not respond to phone calls and e-mails seeking comment. The KRG has previously denied selling oil to Israel "directly or indirectly".

Baghdad has actively tried to block independent oil sales from Iraqi Kurdistan and cut the autonomous region's budget in January over the dispute, despite complaints from the KRG it needs funds to fight militants of the Islamic State.

But the latest delivery means the KRG has delivered at least four large cargoes or around $400 million worth of crude since May, when it first started major exports via the Turkish port of Ceyhan that is connected to a new pipeline from the region.

In the latest delivery, the Kamari tanker switched off its satellite transponder on August 17 before reappearing near Israel two days later having offloaded its cargo.

Growing oil sales could increase the KRG's economic independence from Baghdad and bolster their push to form a separate Kurdish state.

On Thursday, Turkish officials and industry sources said the capacity of the Kurdish pipeline has been upgraded to 200,000 barrels per day (bpd) with plans to soon increase it up to 250,000 bpd, doubling its previous capacity.

Iraq's central government in Baghdad has repeatedly called independent Kurdish exports "smuggling", saying only state marketer SOMO has the right to sell Iraqi oil. The KRG says the Iraqi constitution allows it to sell oil independently.

Baghdad has successfully blocked one Kurdish tanker that has now been anchored off Morocco for more than two months, while another was stopped from delivering to a refinery in the United States.

So far, 7.8 million barrels of Kurdish oil have flowed through the independent pipeline of which 6.5 million have been loaded onto tankers. Including the latest tanker, more than 60 per cent of that oil has now been successfully delivered.

Israel's prime minister and several officials openly called for the recognition of an independent Kurdistan this summer, though a Kurdish diplomat later played down coordination between the two countries.

Kamari tanker

The Suezmax tanker, Kamari, which can carry up to 1 million barrels of crude, has made two deliveries of Kurdish crude into the eastern Mediterranean since the start of August, tanker tracking data on Reuters show.

It was partially loaded with Kurdish crude when it turned off its satellite transponder on August 17 as it sailed near Egypt's Sinai Peninsula. When it reappeared on August 19, about 30 kilometres off the coast of Israel, its cargo had been offloaded, based on how high the ship was sitting in the water.

The tanker first loaded its latest cargo of Kurdish crude at the Turkish port of Ceyhan around August 8, and made a partial delivery to Croatia via a ship-to-ship transfer last week.

Hungary's MOL Group said on Monday that it had purchased just under 600,000 barrels of Kurdish crude that discharged at Croatia's Omisalj port at the weekend. The company has exploration and production assets in Iraqi Kurdistan.

Two weeks ago, the same 1 million barrel tanker loaded Kurdish oil at Ceyhan before sailing to a point just under 200 kilometres off the Israeli and Egyptian coasts.

Ship tracking showed the ship was fully loaded, based on its draft in the water. After turning its satellite tracking off on August 1, the ship reappeared four days later sitting far higher in the water, again indicating it had offloaded its cargo.

In June, a tanker carrying 1 million barrels of Kurdish oil sailed from Ceyhan that was delivered into Israel's Ashkelon port after first being transferred at sea to another vessel.

The KRG has repeatedly declined to identify buyers of its oil or say who is helping to coordinate the sales.

LONDON — Amman-based Hikma Pharmaceuticals Plc announced on Wednesday a 44 per cent jump in first-half profit helped by a strong performance at its US injectibles business, but the company cut its sales growth forecast for branded drugs citing shipment issues in some North African markets.

The Jordanian drugmaker, which makes and markets branded and non-branded generics and injectibles, lowered its full-year revenue growth forecast for the branded drugs business to a low-single digit percentage from about 10 per cent earlier.

Hikma said limited availability of foreign currency reserves restricted product shipments in Sudan, while a restructuring of distribution channels in Algeria dragged on sales in that country in the first half.

The Middle East and North Africa region accounted for 40 per cent of Hikma's branded drugs sales.

"The growth is going to slow in these markets... It might be slightly below last year, but we continue to expect to supply products into these markets," Chief Financial Officer Khalid Nabilsi told Reuters.

The company expects political disruptions in Iraq and Libya to further impact sales this year.

Hikma shares fell as much as 2.3 per cent on Wednesday morning on the London Stock Exchange.

"The only disappointment that came out of the first-half results was the weakness of the branded business as Sudan and Algeria performances disappointed," UBS analysts said in a note.

Injectibles sales soar

Hikma, which was founded in Amman in 1978, said adjusted profit attributable to shareholders rose 44 per cent to $176 million in the six months ended June 30.

Earnings rose 16 per cent to $738 million. Income from injectibles rose 41 per cent to $346 million.

The company, which benefitted from a shortage of the antibiotic doxycycline last year, said in May that it was focusing on high-value products in its injectibles business.

Adjusted operating margins in the business rose to 41 per cent in the first half from 28.5 per cent a year earlier.

"This reflects exceptionally strong sales from certain market opportunities in the US, a focus on higher-value products and tight control of overhead costs across our manufacturing facilities," the company said.

Hikma strengthened its injectibles business earlier this year by acquiring Boehringer Ingelheim's US generic injectibles business and manufacturing operations in Ohio.

According to Nabilsi, the company's low net-debt-to-EBITDA ratio even after the acquisition gave it significant headroom for more acquisitions.

"We have a war chest of $1 billion plus for acquisitions, so we have increased the number of merger and acquisition and business development teams across different regions," he said.

The company said it would pay a special dividend of 4 cents per share. It's regular interim dividend was unchanged at 7 cents per share.

Hikma paid a special dividend of 3 pence per share last year to reflect the strong performance of its generics business.

Hikma shares were down 1.6 per cent at 1775 pence at 0945 GMT. The stock has gained 50.4 per cent this year until Tuesday.

AMMAN — Jordan’s trade deficit widened  by 10.5 per cent during the first half of 2014 to around JD5.4 billion compared to JD4.8 billion at the end of the same period last year. 

According to the Department of Statistics (DoS), total exports (including re-exports) rose at the end of June this year by 6.8 per cent to JD2.9 billion compared to JD2.8 billion during the same period of 2013. 

The DoS report indicated that national exports rose by 8.6 per cent to JD2.5 billion whereas re-exports dropped by 3.4 per cent to JD406 million.

It also indicated that imports rose by 9.2 per cent to JD8.3 billion compared to JD7.6 billion. 

Subsequently, exports coverage of imported goods stood at  around 35.5 per cent down from 36.3 per cent during the first six months of last year. 

Garments, fruits and vegetables, pharmaceuticals and fertilisers were foremost of the country’s exports which increased  while the value of potash and crude phosphate exports dropped, according to the DoS report. 

Imports of crude oil and its derivatives, machinery, vehicles and their spare parts were among the main imports that went up while the value of imported electric machines and steel products declined. 

The DoS report showed that exports to Greater Arab Free Trade Area countries including Iraq, the North American Free Trade Agreement, including the US, and the European Union countries, including Italy, increased while national exports to non-Arab Asian countries, including India, regressed. 

Imports from Gulf Cooperation Council countries were valued at JD2.3 billion while Jordan’s total exports to those states totalled JD605.8 million. 

The Kingdom’s energy bill rose by 22.7 per cent during the first six months of 2014 to JD2.3 billion compared to JD1.9 billion during the January-June period of 2013. 

BENGHAZI, Libya — Libya may be on the brink of chaos but it is gradually boosting output in the vital oil sector after a crisis blocked export terminals for a year, sector executives say. "The country's production is rising constantly and should return to its level prior to this year if the situation stabilises in the various oilfields," interim Oil Minister Omar Al Shakmak said. Mohammed Hrari, spokesman for Libya's National Oil Corporation, said: "Production on Monday reached 550,000 barrels, up from around 400,000 barrels a day previously." In a statement to AFP, Hrari forecast "a production level of one million barrels a day [bpd] in September, with an increase in production in the Sharara and Al Fil [southwest] fields and a resumption of production in other fields in the east, west and south of the country". A first export cargo of 690,000 barrels of crude left Ras Lanuf, 700 kilometres east of Tripoli, last week bound for Italy, Hrari indicated. Another cargo should leave Al Sedra terminal "probably next week”, he said. Libya's return to the market has hit oil prices, which slumped to a four-month low in London on Monday before recovering in Asian trade on Tuesday.

RAMALLAH, Palestinian Territories — In Gaza, Israelis and Palestinians are battling it out with rockets and air strikes. But in Israel and the West Bank, the two sides have found a new weapon: boycotting.

Local products are flying off the shelves in the occupied West Bank while Israeli goods are being left untouched. 

And in Israel, Arab shops are deserted — even on the Jewish day of rest, when Arab Israeli businesses have always made their biggest takings. 

“These days I have changed my habits. Because of the Israeli war against Gaza, we stopped buying any Israeli products,” said Salah Mussa, a Ramallah resident. “Now we are only buying Palestinian products. This is not only my decision, it’s a family decision.”

Overseas, a Palestinian-led boycott campaign has seen growing success in recent years. 

Known as the BDS movement — boycott, divestment and sanctions — it aims to put political and economic pressure on Israel over its occupation of the Palestinian territories in a bid to repeat the success of the campaign which ended apartheid in South Africa. 

Now, spurred on by the recent bloodshed in Gaza, the campaign is making its first inroads in the West Bank where locals have had little alternative to Israeli products due to import restrictions. 

Omar Barghouthi, a Palestinian human rights activist and co-founder of the BDS movement, believes the deaths of more than 2,000 people in Gaza has changed the picture and will lead to a sustained boycott campaign.

“The massacre committed by the Israeli regime... in Gaza has triggered almost unprecedented popular campaigns of boycott against Israeli companies and institutions,” he told AFP. 

The movement, he says, is working to ensure the boycott lasts “well after the end of the current phase” of the Gaza war.

Product warnings  

To boost the campaign, the boycott is being widely publicised through television ads as well through social media.

And in shops across the West Bank, Israeli products have been slapped with labels reading: “Boycott Israel” and “For your information: in buying this product, 16 per cent of the price goes to the Israeli army.”

Other shops have gone even further and taken Israeli products off the shelves. 

“We have completely removed Israeli products from the supermarket and replaced them with local substitutes,” explained Nidal Hamerani, manager of a Ramallah supermarket.

Boycotting Israeli products is also a way of strengthening the Palestinians economy which has been badly stifled by restrictions imposed by Israel, says campaigner Riyad Hamad. 

“We need to make people aware of the damage they cause to the Palestinian economy when they buy Israeli products: a high unemployment rate and a ravaged economy,” he said.

The boycott has already paid dividends for some Palestinian businesses.

Pinar, a Ramallah-based firm which manufactures diary products, has already had to increase its number of employees, who are working round-the-clock to meet the surge in demand. 

Managing Director Muntasser Bedarna says production had increased by “between 30 and 40 per cent”.

He believes that Palestinian dairy producers now hold “a 60 to 65 per cent market share of the milk market in the West Bank and Gaza. 

“Before the boycott, Israel controlled 60 per cent while the Palestinians shared the remaining 40 per cent,” he indicated. 

According to Avi Nudelman, former head of the Israeli-Palestinian Chamber of Commerce, the boycott is unlikely to have much of an effect on Israel’s economy.

“It’s a nice idea but it won’t last long,” he said. “The Palestinian sector is only a tiny part of the overall market for Israel.”

Data from Israel’s Central Bureau of Statistics show that in the first quarter of 2014, Israel exported $816 million worth of goods to the Palestinian Authority. 

The overall volume of Israeli exports in the same period was $12.9 billion, meaning trade with the Palestinian Authority accounted for around 6.3 per cent of the total.

Arab Israeli shops struggle 

On the Israeli side, Foreign Minister Avigdor Lieberman, known for his bellicose anti-Arab statements, called on the public to boycott Arab businesses after the community staged a one-day solidarity strike early on in the war with Gaza. 

At the Arab market in the northern port city of Haifa, William Rahil who runs the Mama Pita eatery says he has lost “100 per cent” all of his Jewish customers.

Next to his restaurant, someone has put up a sign requesting donations for medicine for the children of Gaza, which he says has sparked calls to boycott his restaurant and even extreme postings calling for the air force to “blow up Mama Pita”, he said. 

At a cafe nearby, Fawzi Hanadi said he’d lost “50 per cent” of his customers since the beginning of the Israeli offensive which began on July 8.

Effects of the boycott can also be seen on the roads where Jewish taxi drivers display Israeli flags in order to attract customers who don’t want to pay an Arab driver.

For Arab Israeli MP Bassel Ghattas, the boycott is reason to reflect on the economic contribution of Israel’s Arab minority who represent about 20 per cent of a population of around 8 million people. 

The descendants of the 160,000 Palestinians who remained on their land after the creation of Israel in 1948, Arab Israelis account for around $14 million of consumer spending every year, he indicated.