Business

AMMAN — About 100 merchants representing different trade and service sectors participated this week in a specialised workshop on labour inspection, employment and issues related to guest workers.The workshop, organised by Amman Chamber of Commerce (ACC) in cooperation with the Ministry of Labour, aimed at listening to the sector’s issues regarding guest workers, and inspection mechanisms the ministry follows and finding out appropriate procedures to deal with problems facing the sector. ACC President Issa Murad stressed the importance of  communication between the private and public sectors to solve problems facing businesses in a way that benefits the national economy. Murad said ACC is keen on employing the local workforce and providing services through the labour office which was opened in the ACC headquarters two months ago.

AMMAN –– Politicians and economists on Tuesday blamed the "Arab Spring" for worsening economic problems in Arab countries. 

At the 6th Jordan Afaq Economic Forum, experts said uprisings in several Arab states have negatively affected trade exchange between regional countries. 

Senate President Abdur-Ra'uf S. Rawabdeh described trade between Arab states as "very modest", saying Arab economies depend on consumption more than production.

The status quo requires genuine political and economic partnerships between countries in the region, said Rawabdeh in his speech to inaugurate the two-day event titled "Arab Economies, Disputes and Crises". 

"Things would have been much better if there was an integrated Arab economy," he added. 

Economist Omar Razzaz,  chairman of the King Abdullah II Fund for Development, called on decision makers in Arab countries to look into challenges hindering economic integration in the region, stressing the need to invest in innovation. 

Most global fortunes grew due to investments in innovation and creativity and it is time for Arab states to build such investments, Razzaz said. 

Amman Chamber of Commerce President Issa Murad said political instability in neighbouring countries such as Syria and Egypt have affected the Jordanian economy, adding that troubles in Libya forced many Jordanian professionals to return to Jordan, affecting the volumes of remittances. 

Khaldoun Nusair, chairman of Afaq group which organised the event, said the Arab Spring has badly hit Arab economies, which were still struggling with the repercussions of the international financial crisis. 

According to economist Mohammad Halaiqa, violence-hit Syria needs at least $150 billion to rebuild its economy.

Halaiqa said other countries in the region need no less than five years to exit political differences that had their toll on the economies. 

On the impact of regional instability on Jordan, Halaiqa said the Syrian crisis and the influx of refugees put large pressure on the Kingdom's resources, which he noted are already limited.

He added that troubles in the northern neighbour hit trade between Jordan and Turkey, Lebanon and eastern Europe. 

Trade exchange between Arab states declined over the past years by nearly 12 per cent due to instability, he remarked. 

Participants also blamed the Arab Spring for the decline in investment and tourism inflows in Arab countries. 

CARACAS — Venezuela will repay a small part of its debt to local importers, after currency controls have sparked mass shortages of basic goods in the oil-rich country.

The government said it will disburse roughly $2 billion — significantly less than the $14 billion the disgruntled private sector firms say they are owed in hard currency and need to pay their parent companies or foreign suppliers.

The debt stems from Venezuela's strict exchange rate controls, which require companies to sell products in bolivars, the national currency, on the government promise to reimburse them in dollars.

Rafael Ramirez, vice president for economic affairs, said $1.188 billion would be paid out this week to 939 small and medium-sized companies from "priority" sectors.

An additional $900 million will be allocated to large companies from various sectors, including $486 million for airlines, he told reporters.

With the controls in place since 2003, Venezuela is only providing US dollars at the official rate of 6.3 bolivars to importers of designated priority goods such as food and medical supplies. 

Others who need dollars have to buy them at a higher rate of 10 to 50 bolivars. On the black market, the greenback can cost as much as 60 bolivars.

Venezuela, a member of the Organisation of Petroleum Exporting Countries (OPEC) sitting atop the world's largest proven oil reserves and imports most of what is consumes, is struggling with shortages of goods as basic as toilet paper.

In addition to high inflation and soaring crime, the shortages have fueled at times violent anti-government protests that have killed at least 42 people since February, with opposing sides trading blame for the bloodshed. 

Since President Nicolas Maduro took power last year following the death of his mentor, longtime socialist leader Hugo Chavez, Venezuela has seen its economic situation deteriorate.

Separately, the government has decided to settle a small part of its $4 billion debt with international airlines, many of which have cut back or halted service to the oil-rich South American country.

The debt stems from  strict exchange rate controls, which require airlines to sell tickets in bolivars on the government promise to reimburse them in dollars at the official rate of 6.3 to the dollar.

At least since August, the government has been withholding those payments, as it deals with a deepening foreign currency crunch despite its oil riches.

But the government made its first moves towards repaying airlines, although at a worse exchange rate, about 10 bolivars to the dollar.

It offered to settle a $7 million debt owed since 2012 to Colombia's Avianca airline, at a 30 per cent discount, the president of the Venezuelan airlines association, Humberto Figuera, said.

Venezuelan authorities also offered to settle its debts with AeroMexico, Insel Air, Tame Ecuador and Aruba at about 10 bolivars to the dollar, he added.

Venezuela's total debt with the four companies, which Figuera estimated to be less than $200 million, would be subject to additional discounts, decided on a case by case basis.

Transport Minister Hebert Garcia Plaza, for his part, said working groups have been set up with the airlines to agree on higher ticket prices, which would be reimbursed at a rate of 50 bolivars to the dollar after July 1.

Since last August, when the unpaid debts to the airlines began to mount, bolivar ticket prices have soared.

Figuera described the government's offer to make reduced debt payments as "good news".

The authorities "are beginning to make payments so that companies can continue to operate, even though the agreements they reached [with the government] are not being respected".

American Airlines reported in the first quarter results that it has $750 million blocked by Venezuela. The Panamanian airline Copa is seeking $487 million in payments, which exceeds its 2013 earnings, and Air France has unpaid debt amounting to 199 million euros ($271 million).

Over the past several months, Air Canada and Alitalia have suspended their flights to Venezuela and dozens of other airlines have reduced available seats by 15 to 75 per cent.

CAIRO — Egypt has watered down a tax on stock market gains it announced last week as part of efforts to trim a high budget deficit, after the country's bourse recorded its biggest daily drop in almost a year on Sunday.

Beset by more than three years of economic and political turmoil since a popular uprising ousted Hosni Mubarak in 2011, Egyptian authorities are trying to steer a course between boosting state revenues while not discouraging investment.

Finance Minister Hany Dimian announced the new 10 per cent tax on dividends and on gains on share transactions on Thursday, drawing an uneasy initial response from the market.

The main share index closed down 3.5 per cent on that day and, after the two-day market break, it fell a further 4.2 per cent on Sunday.

"They are increasing budget revenues, [and the] initial reaction from investors is largely negative. [But] fiscal sustainability and government efforts to balance the budget... will be positive in the long term," said Moheb Malak, economist at Prime Securities.

The budget deficit hit 14 per cent of economic output in the last fiscal year, and it is set to stay high at around 12 per cent in the current and the coming fiscal year starting on July 1.

"They should be panicking about the deficit, it deserves panicking, but it's good that they're taking action. Nobody expected steps to lower the deficit to be popular," Malak added.

Authorities have now sugared the fiscal pill slightly, helping the market recoup some of its losses on Monday.

The finance ministry had initially set an annual tax-free limit of 10,000 Egyptian pounds ($1,400) on cash dividend payments for individuals resident in Egypt.

Financial Supervisory Authority head Sherif Samy told Reuters late on Sunday the tax threshold would be raised to 15,000 pounds. In another, earlier amendment, Finance Minister Dimian said dividends paid in shares would be tax-exempt.

'Bound to happen'

According to Ahmed Hafez, co-head of equity research at HC Brokerage in Cairo, the announcement of the new tax had lacked clarity. 

"What exactly the tax will look like has led to confusion among market participants in general," he said.

Dimian estimated late on Saturday that the tax would raise between 3.5 and 4.5 billion Egyptian pounds.

It is part of a broader package of fiscal reforms announced in conjunction with last week's presidential election.

Profits from stock market transactions in Egypt are currently tax-free, a situation Allen Sandeep, head of research at Naeem capital, said could not last forever.

"The timing might not have been ideal... but a capital gains tax was bound to happen like in any other market," he indicated.

"It might affect investments from [the Arab Gulf]. They might be a little bit disappointed with the capital gains tax," Sandeep added, noting that any negative impact would likely be temporary.

Gulf investors repatriating such profits generally do not have to pay tax at home. Several Gulf governments have helped prop up Egypt's finances during the political crisis with aid and soft loans.

After news of the amendments to the tax, Egyptian shares were up as much as 2.8 per cent on Monday. According to bourse data, local and retail investors were net sellers while institutions and foreigners were net buyers.

Investment and Industry Minister Mounir Fakhry Abdel Nour told reporters the draft tax bill had been sent to the presidency for approval and expected to be signed into law on Tuesday.

Separately, Egypt has launched a tender to import hundreds of thousands of tonnes of petroleum products in the third quarter of 2014, an energy official said, as the country tries to stave off a summer energy crisis.

Egypt's government wants to avoid major power blackouts during the months of increased consumption in the summer, when outages are worsened by a dilapidated grid and a wasteful subsidies system.

The tender comes in addition to supplies from Saudi Arabia, which will deliver energy products to Egypt in July and August as part of an aid package announced after the Egyptian army overthrew president Mohammed Mursi.

An official from the Egyptian General Petroleum Corp (EGPC) told Reuters that Egypt launched a tender on Thursday to import 90,000 tonnes of diesel each in July and August, and 120,000 tonnes of gasoline and 500,000 tonnes of diesel in September.

The tender would remain open until the first week of June, the official said, declining to be named.

Saudi Arabia would give Egypt about 240,000 tonnes of gasoline, and 850,000 tonnes of diesel in July and August "as a gift", he indicated

The country has enjoyed strong support from Gulf Arab states since Mursi was ousted last year amid widespread discontent over power cuts and long queues at petrol stations.

Saudi Arabia, Kuwait and the United Arab Emirates (UAE) pledged more than $12 billion in loans and donations.

The head of the EGPC told Reuters in May that Egypt would receive about $650 million to $700 million worth of petroleum aid per month in August, totalling to more than $3 billion from April to August.

Raising energy prices could cause more unrest, but analysts say failing to reform the system will inhibit economic growth.

In the agricultural sector, Egypt aims to buy about half of its domestic wheat harvest this year at 4.4 million tonnes and is unlikely ever to get much more from farmers, who need to reserve the rest for seed and to feed their families.

Egypt, the world's largest wheat importer, is striving to boost self-sufficiency and reduce its 32 billion Egyptian pound ($4.6 billion) food import bill.

But at most, the government will be able to increase domestic supply by around 1 million tonnes a year through improving storage and transportation.

Supplies Minister Khaled Hanafi, whose ministry is in charge of local wheat procurement, said last week the government had purchased 2.75 million tonnes in the harvest season that began in mid-April, on track to meet its target.

The harvest is now in full swing in northern parts of the breadbasket region of the Nile Delta and nearly finished in fields further south.

Hanafi said his ministry was pushing ahead with the plan to buy 4.4 million tonnes of domestic wheat this year. The target is consistent with the target set, but not met, last year by the government of Mursi.

The government says that improvements to the outdated storage system, and the addition of new silos could cut down on the more than 1 million tonnes lost yearly due to storage and transportation problems.

Yields for the Egyptian wheat crop are already among the highest in the world. Unlike fellow wheat producers such as Australia with inconsistent production, the Egyptian crop is reliable.

Many farmers in rural agricultural areas in the verdant Nile Delta region are willing to sell only about half of their harvest to the government.

Men who eke out a subsistence living on their land, using mostly the technology that their fathers and grandfathers did, say they are already selling the maximum amount they can.

Farmers such as Ahmed Sagheer say, given the needs of his own family, he cannot sell more wheat unless their small plots produce much more.

Sagheer, from a small village in Sharqiya province in the heart of the Egypt's breadbasket north of Cairo, complains of water shortages and expensive fertiliser, and says he does not expect the yield on his roughly one acre of land to increase dramatically soon.

"We don't have a good supply of water, fertiliser is too expensive and sometimes insects attack our crops," he said.

Traders surveyed in a Reuters poll ahead of the harvest put the year's crop at around 7 million tonnes, in line with last year's total.

Private traders' estimates for the local crop are consistently below government estimates, which also do not vary significantly from year to year.

The US Department of Agriculture expects Egypt's production to reach 8.95 million tonnes this year, up only 300,000 tonnes from last year.

Any efforts to expand wheat production onto uncultivated land are hampered by soaring population growth and illegal building on farmland, which officials say has increased since the 2011 uprising that ousted Hosni Mubarak.

‘Living day to day’

The government has steadily increased the fixed price it pays for local wheat in recent years. This year it raised the fixed price from 420 Egyptian pounds ($58.88) per 150 kilogrammes from 400 pounds, hoping to encourage farmers to sell to the government.

The local price exceeds the price Egypt pays in the international market by more than $100 per tonne.

But 59-year-old farmer Hussein Sobhi Hussein, standing by his water buffalo near his already harvested field, said the Egyptian pound "buys less than it used to", suggesting that it was a safer bet to keep a large part of his crop for his family rather than taking cash for it.

Another farmer from Al Baheira province, in the northernmost part of the Delta, where the harvest is currently in full swing, explained why he cannot afford to give up more of his crop.

"I have only one feddan [1.038 acres]. I have to plant it half with wheat because the other half is alfalfa for my livestock to eat," said Mohamed Seshar, a father of three who farms part of his late father's land, having split it with his brothers.

"Then I need to keep half of my wheat harvest for my family to eat," he said. "I'm living day to day," he added.

"I'll store half at home and sell the rest because of my family's needs," said Walid Ali, 25, a father of three who stood sweating in the midday heat. He and his young wife worked with other family members to put stalks of wheat that they had cut by hand into a threshing machine, which would have been replaced by a combine machine in a more mechanised farm.

"I'd like to sell more but for now it is not possible," Ali said as he turned to get back to work.

SHANGHAI — China will further ease monetary policy to kick-start the world's second largest economy by cutting the amount of funds that some banks must hold in reserve.

According to a statement posted on the central government website, the state council, China's Cabinet, decided after a meeting last week that it would trim reserve requirements for banks which lend to the agricultural sector and small enterprises.

It gave no details of the timing or sum involved.

China launched a similar, targeted reserve cut for banks in rural areas just over a month ago as worries mount that its economy — a key driver of world growth — is slowing more sharply than expected.

"Currently, the movement of the economy is stable, but downward pressure is still relatively large," the state council said, adding the government would "fine-tune" policy at an appropriate time.

China's economy grew an annual 7.4 per cent in the first quarter of this year, weaker than the 7.7 per cent in the October-December period and the worst since a similar 7.4 per cent expansion in the third quarter of 2012.

Premier Li Keqiang in March announced an economic growth target of "around 7.5 per cent" for this year.

"It is clear that the government has become more concerned about the continued economic slowdown and wants to further increase the strength of policy support," Wang Tao, a Hong Kong-based economist for bank UBS, said in a research note.

"Policy support will strengthen as the economy weakens further, so as to defend the growth target for 2014," she added.

The state council announced a basket of other measures on Friday, including more financial support for small companies, lowering the cost of financing and cutting administrative fees, the statement indicated.

China's economy grew an annual 7.7 per cent in 2013, the same level as 2012, which was the worst pace since 1999.

But some analysts believe China will refrain from more aggressive measures to boost growth, such as slashing interest rates or cutting reserve requirements for all banks, on worries excessive credit could pose financial risk.

"Broad cuts to [reserve requirements] and benchmark interest rates are only likely if May and June data continue to surprise on the downside," investment bank Goldman Sachs said in a research note on Saturday.

Separately, data showed that fixed-asset investment, a main measure of government spending on infrastructure, rose at its slowest pace in more than 12 years in January-April, fuelling calls for Beijing to act to boost the economy.

Growth in the world's second-largest economy is decelerating, but leaders in Beijing say they want to wean the country off investment as the key driver of expansion and shift the focus to consumer spending.

Fixed-asset investment increased 17.3 per cent year on year in the first four months of 2014, slowing from 17.6 per cent in the first three months, the National Bureau of Statistics (NBS) indicated.

The figure is only released cumulatively, and the reading was the lowest since a 13.7 per cent increase for the whole of 2001, NBS data showed.

It was one of several statistics adding to concerns over the weakening of China's economy, a key driver of global growth, and analysts called on Beijing to ease its monetary policy.

"The pressure for more policy easing continues to build," Zhang Zhiwei, Nomura's economist based in Hong Kong, said in a research note. 

Industrial output, which measures production at factories, workshops and mines, increased 8.7 per cent year on year in April, the NBS said, edging down from 8.8 per cent a month earlier. The indicator rose 8.6 per cent in the first two months of the year, the slowest in five years, previous data showed.

And retail sales, a gauge of consumer spending, grew 11.9 per cent year on year, the NBS added, down from a 12.2 per cent rise in March.

Officials have publicly ruled out a massive stimulus to kick start growth but have instead introduced a series of smaller measures, including a cut in the amount of money rural banks have to keep in reserve, tax breaks for small enterprises and targeted infrastructure outlays.

Further stimulus? 

But ANZ analysts Liu Ligang and Zhou Hao said the growth target was unlikely to be achieved without a cut in interest rates as well.

If the government still views that achieving a 7.5 per cent growth target is important for its credibility, China's monetary policy will have to play its necessary role by easing further in order to help pull the economy out of a state of lethargy," they said in a report.

China in April cut the reserve requirement ratio for rural banks by up to two percentage points, the first such move since May 2012, when it slashed the ratio to 20 per cent for large financial institutions and 16.5 per cent for smaller ones.

It has not reduced lending rates since July 2012.

Some economists, however, believe the current policies are sufficient to prevent growth from decelerating further and Beijing is unlikely to rush to take more aggressive measures.

In a research note Louis Kuijs and Tiffany Qiu of Royal Bank of Scotland attributed the investment growth deceleration to earlier monetary tightening, corporate reluctance to expand capacity, and a slowdown in the real estate sector.

"We expect the current approach to macroeconomic policy — supporting growth without resorting to major stimulus — to be broadly maintained," they said.

China's bank lending fell sharply in April from March, data showed, after central bank governor Zhou Xiaochuan reportedly ruled out the possibility of any massive stimulus at a recent forum, noting that his institution would only fine-tune its policy.

In the meantime, China is stepping up a crackdown on perks for military officials, targeting extravagant wedding ceremonies and funerals as it widens a graft probe into the use of public funds for banquets, travel and gifts, state media reported.

Perks enjoyed by officials of the People's Liberation Army, including the use of secretaries, are among the issues being investigated by the military inspection teams, official news agency Xinhua has reported.

Inspectors will look into "extravagant wedding ceremonies and funerals" held by military officials, besides strengthening investigations into public funds used for banquets, travel and gifts, it said.

The anti-corruption drive has made progress in cleaning up illicit apartments and vehicles, Xinhua reported, but is still "far from expectations".

A campaign on widespread corruption by President Xi Jinping has led to the detention of some senior government officials and executives in state-owned firms, including the country's biggest oil and gas producer, PetroChina Co. Ltd.

Xi has also targeted officials in the military in the bid to weed out graft and consolidate his power. Late last year 18 military inspection teams fanned out to various departments and area commands.

WASHINGTON — After warning for years that the US electric grid and other critical infrastructure are dangerously vulnerable to hacking, security experts fear it may take a major destructive attack to jolt chief executive officers out of their complacency.

While awareness about cyber-security has increased in recent years, infrastructure consultants say the industry remains reluctant to spend the money needed to upgrade their aging equipment — especially in the absence of much pressure from the US government, regulators or shareholders.

"I'm convinced the C-level executives don't understand the risks they're accepting," Digital Bond Chief Executive Officer Dale Peterson, a leading expert in industrial control systems, told the Reuters Cyber-security Summit in Washington last week.

"These systems are insecure by design," said Peterson. "If they truly understood the risk they were taking, they would find it unacceptable."

Peterson and other security experts say the problem lies with tiny computers known as PLCs, or programmable logic controllers, used to control processes in energy plants, water treatment facilities, factories and other industries. 

The PLCs are designed to blindly obey all commands, regardless of what impact they might have, according to the experts.

To wreak havoc, someone would need only to hack into that system and send malicious instructions to the PLC, such as to cause an explosion at an energy facility or chemical plant, flood a water system, or poison food supply.

Top executives at critical infrastructure companies think of cyber-security as a standard business risk and are reluctant to spend millions of dollars to mitigate that risk, said Stuart McClure, chief executive of cyber-security firm Cylance.

They "can't seem to get out of their own way of paranoia to a point of paralysis”, McClure told the summit. "What government does have to do, unfortunately, is to step in and provide a stick of some sort."

The Obama administration has encouraged industries to test themselves against a newly drafted set of cyber standards, and has encouraged more sharing of information about cyber threats and best practices.

Experts say that is a step in the right direction, but there is still a long way to go. Some urged the Department of Homeland Security to mandate stricter regulations, but the agency does not have that kind of enforcement power.

"I think what they benefit most from is not just hard and fast regulation: 'You shall do it this way’, Department of Homeland Security (DHS) Jeh Johnson said at the summit. "I don't believe that the answer is to regulate standards."

Cyber reports
nearly double

DHS's Industrial Control Systems Cyber Emergency Response Team says it responded to reports of 256 cyber incidents last year, more than half of them in the energy sector. While that is nearly double the agency's 2012 case load, there was not a single incident that caused a major disruption.

The incidents include hacking into systems through Internet portals exposed over the Web, injecting malicious software through thumb drives, and exploitation of software vulnerabilities, DHS said.

"I fear that things won't change until there is a major attack and people are shocked into taking action," McClure said.

Still, he and several other summit guests said they have noticed an increase in interest in cyber-security following the data breach at Target Corp, which led to the departure of the US retailer's chief executive, Gregg Steinhafel.

"This is ringing bells at the C-suite," said Charles Croom, vice president of cyber-security solutions at Lockheed Martin Corp. "This is just the beginning of a bow wave."

While some security experts hope the government can take a stronger role on cyber-security, some US officials say the private sector needs to step up.

The new head of the National Security Agency, Admiral Mike Rogers, said he hopes industry and the government can work quickly enough to improve communication about emerging cyber threats and prevent catastrophes.

"I don't want a major disaster being the driver that pushes us," Rogers told the summit.

BERLIN/MUNICH — The chief executive of German conglomerate Siemens tried to calm a brewing storm over job cuts on Friday after he let slip at an investor conference in New York that his plan to restructure the company could put up to 11,600 staff at risk. Joe Kaeser unveiled an overhaul earlier this month that removes layers of management by abolishing a corporate structure, along sectoral and regional lines. Pressed to give details on his goal to save 1 billion euros annually through restructuring, he said according to a podcast of the remarks posted on the Siemens website: "We do away with the four sectors; 7,600 people work in sector coordination, coordinating a middle layer that is gone," Kaeser said. "Another 4,000 people were doing a regional cluster analysis, which is not necessary anymore." A union representative in Berlin said: "We are shocked to learn that Joe Kaeser announced in New York that he plans to cut some 11,000 jobs.” The reports sent Siemens into damage control mode with a memo to the company's German staff, reassuring them that no final decisions on cuts had been taken. Siemens employees 360,000 staff, a third of which are based in Germany.

DAMASCUS — As Syria approaches a surreal presidential election in the midst of civil war, the capital has avoided the worst of the conflict but reminders are increasingly coming out the water taps and appearing on the dinner table, to the dismay of Damascenes.

Before the war, the government of President Bashar Al Assad maintained tight control on food prices and quality. Distracted by war, its grip has slackened, and shady business practices have flourished to the detriment of water and food supplies.

Rushing to the kitchen sink the other day to fill up a container with water, Mayada, a Damascene, wanted to store as much water as possible. 

"I must hurry, because sometimes the water cuts off in an hour," she said. "And look at all this sand. We can't drink the water anymore without filtering it first." 

She pointed to black and brown grains sinking to the bottom of her freshly filled water jug. "And God knows what else is floating in there that I can't see."

Residents say the quality of food is also deteriorating, coupled with price rises, especially fast food favourites like shawarma and falafel as well as "farouj", or roast chicken.

"Taste the falafel and you'll know they add bread crumbs to it to save on chickpeas," said Issam, a restaurateur in central Damascus, referring to the main ingredient in falafel. 

"You can easily tell the difference. Today's 'fake' falafel is greasier and darker and just looks wrong all around. People eat it because it's cheap, but everyone is complaining," he added.

Shawarma, cut from a giant rotating hulk of meat, is also under scrutiny. 

"Only God knows what meat they're using these days. Is it even beef? All I know is it doesn't taste the same as before," said Lamia, 32.

As for poultry, the birds look either skinnier than usual or unusually plump but without taste, prompting many Damascenes to wonder what poultry farmers might be feeding the chickens.

"Is it hormones? Animals protein? Garbage? Sewage? We cannot know," said Marwan, who considers himself an amateur nutritionist. "Back in the good days, poultry farmers got away with dubious practices. Now? I hate to even think about it."

Damascenes anxiously await the presidential election on June 3 which Assad looks certain to win, given that voting will be held only in state-controlled areas, but which they fear will be marked by a fierce mortar barrage from rebel-held suburbs.

The government, however, is waging a "Together, We Rebuild" campaign that now peppers the capital's streets with posters that feature hands clasped together — despite Syria's widespread fragmentation into sectarian and tribal enclaves.

Damascenes have been luckier than Syrians living in areas of the country beyond government control, bombed daily and cut off by prolonged but inconclusive army sieges.

Malnutrition is rampant and doctors say children have starved to death in besieged zones.

Price rises

In Damascus, people notice the small changes — daily staples soaring in price, sometimes selling at three or four times what they used to be, with the quality plummeting.

"Almost every single dairy maker these days is adding water to milk and to cheese and yoghurt," said Abu Mustafa, a dairy shop owner in the middle-class neighbourhood of Mazraa. He denies that he does it himself.

Before the war, the authorities kept a close watch on dairy makers to deter cheating and enforced fixed prices, forcing the dairy makers to compete with each other based solely on quality and taste.

Now there is hardly any oversight. White Syrian cheese, a daily must-have in every Syrian household, used to sell for 250 Syrian pounds ($1.60) per kilogramme. Now, it varies between 400 Syrian pounds to 1,300 Syrian pounds ($8.70), the latter closer to Abu Mustafa's prices.

Marwan is a regular customer at Abu Mostafa's, though he privately complains about the prices.

"I don't know what it is, but everything is starting to taste terrible. Dairy, bread, even the meat we buy these days. It's the same cut and everything as I've always purchased, and from the same neighbourhood butcher, but it now tastes like rubber," he said.

The outlying district of Ghouta was long one of the main food supply sources for Damascus but it has been in rebel hands for almost two years, rendering most of its produce, poultry and meat inaccessible to Damascenes.

Much of Ghouta's farmland has also turned into danger zones as Syrian warplanes routinely bombard it and government snipers prevent farmers from tending to their crop.

A dairy supplier who was unloading merchandise at Abu Mustafa's said he had been unable to access Ghouta for months, but instead now supplies them from Quneitra, 73 kilometres away in the Golan Heights near the Israeli border.

"They still have good farms there, cattle and poultry and everything, though it's not always easy for us to transport the goods into the city," he added.

ASTANA — Russian President Vladimir Putin signed a treaty with Kazakhstan and Belarus on Thursday creating a vast trading bloc which he hopes will challenge the economic might of the United States, the European Union (EU) and China.

Putin denies the forging of the Eurasian Economic Union with two other former Soviet republics, coupled with Russia's annexation of Crimea from Ukraine, means he wants to rebuild a post-communist Soviet Union or as much of it as he can.

He does, however, intend the alliance, with a market of 170 million people, a combined annual GDP of $2.7 trillion and vast energy riches, to demonstrate that Western sanctions imposed over the crisis in Ukraine will not isolate Russia.

But the world's major economic powers may not be quaking in their boots.

Ukraine has snubbed the union, other ex-Soviet states are wary of joining a body that could give Moscow leverage over them again and Kazakhstan fiercely defended its sovereignty during negotiations, forcing Putin to water down his ambitions.

"Our meeting today of course has a special and, without exaggeration, an epoch-making significance," Putin said of the treaty, signed to loud applause from rows of seated officials in the modern Kazakh capital, Astana.

"This document brings our countries to a new stage of integration while fully preserving the states' sovereignty," he added.

Kazakh President Nursultan Nazarbayev, seated at a long white table at which he, Putin and Belarussian President Alexander Lukashenko signed the treaty, envisaged the new union as being a major competitive force.

"The main mission of our union in the first half of the 21st century is... first, to gain a natural competitive advantage as an economic bridge between the East and the West, between Europe and Asia," he said.

Putin's dream

The Eurasian Economic Union will formally come into force on January 1, once it has passed the formality of being approved by the three former Soviet republics' parliaments.

The union — an idea first raised by Nazarbayev in 1994 but widely ignored at the time — brings to life Putin's dream of uniting like-minded countries, capitalising on the nostalgia of many Russians for the order and relative economic and political stability of the communist Soviet empire that collapsed in 1991.

After 14 years in power, he sees its creation as a personal political legacy for when he eventually steps aside and it has become one of the "big ideas" of his third term as president.

The treaty deepens ties forged when the three countries took the initial step of creating a customs union in 2010, guarantees the free transit of goods, services, capital and workforce, and coordinates policy for major economic sectors.

Putin noted that Kazakhstan and Russia accounted for one-fifth of the world's natural gas reserves and 15 per cent of oil reserves — although Belarus is not an energy producer, and its struggling economy looks like a burden for Astana and Moscow.

Asked on Saturday if he was trying to revive the Soviet empire, Putin said: "They try to stick this label on us — a label that we are trying to restore an empire, the Soviet Union, make everyone subordinate. This absolutely does not correspond to reality."

The new union, however, reinforces Putin's drive to show Russia will not be isolated by sanctions, a message he sent by reaching a $400-billion gas supply deal with China last week.

Any hopes of rebuilding a large part of the Soviet Union have been thwarted by Ukraine, which opted not to join the union after its Moscow-leaning president was ousted and decided to build trade and political ties with the much larger EU instead.

That was a huge blow, depriving the union of a market of 45 million people and, in the words of ex-Kremlin spin doctor Gleb Pavlovsky, making Putin's original dream "impossible" to fulfil.

Armenia and Kyrgyzstan, hardly economic powerhouses, are considering joining but other ex-Soviet republics, including oil and gas producer Azerbaijan, gas-rich Turkmenistan and  Uzbekistan with its market of 30 million people, have steered clear of the union.

The creation of the new alliance also involves costs for Russia, posing an extra burden on an economy already on the brink of recession.

Russian Deputy Finance Minister Sergei Shatalov told Reuters in March that Belarus and Kazakhstan received about $6 billion annually from Russia in direct and indirect support, and said that could increase by $30 billion if all trade restrictions were lifted in 2015 after the union is created.

MAPUTO — Africa is "taking off" with strong, steady growth but poverty is unacceptably high so that governments need to build infrastructure and institutions and educate people to share the benefits more widely, the head of the International Monetary Fund (IMF) said on Thursday.

Sub-Saharan Africa is expected to grow by around 5.5 per cent this year — well above the global average — with some of its poorest countries expanding by closer to 7 per cent, Christine Lagarde, IMF managing director, told an IMF conference in the Mozambican capital Maputo.

But the IMF chief said although the region had become a growing investment destination for both advanced and emerging economies, with a record $80 billion of inflows expected this year, the economic benefits of the growth surge had yet to be widely distributed across the region's population.

"Poverty remains stuck at unacceptably high levels — still afflicting about 45 per cent of the region's households,"  Lagarde told the meeting of African finance ministers and development experts.

Despite forecasts of continuing strong expansion for the region, its positive outlook has been darkened this year with flare-ups of conflict, insurgency and violence. 

This has ranged from civil war in the world's newest state, South Sudan, an insurgency waged by radical Boko Haram group in Africa's largest economy Nigeria and attacks by militants hurting tourism and business in Kenya.

As African countries tap new sources of funds through natural resource discoveries and international dollar bonds, questions have also arisen about how governments are managing this money in fast-growing economies like Ghana and Zambia.

With the international recovery still looking weak and uneven, Lagarde indicated that Africa's positive outlook also faced risks from slower growth in the world's advanced economies and in emerging markets, which are the region's main trade partners.

The region could face lower demand for its exports should growth slow in increasingly important emerging markets like Brazil, India and, in particular, China. 

Beijing is a top buyer of African resources from copper to oil and gas.

In rapidly growing cities like Maputo, the Chinese presence is manifest, from a Chinese-built airport to the country's businessmen chattering on cell phones as they walk from meeting to meeting.  

Other risks included lower prices for some commodities, tighter external financial conditions and market volatility.

The IMF head recommended three priorities to ensure the region's growth can be wide, inclusive and sustained: "Build infrastructure, build institutions, and build people."

Infrastructure, jobs

Lagarde said Africa still had big infrastructure gaps, which represented huge costs to businesses and to people.

She cited as an example the fact that over the past three decades, per capita output of electricity in sub-Saharan Africa remained virtually flat. Only 16 per cent of all roads were paved, compared with 58 per cent in South Asia. 

The investment needs to address this in the region were estimated at about $93 billion annually, she pointed out.

The IMF chief said Africa also needed to improve governance, transparency and create sound economic frameworks for growth — she called this "building institutions".

This would ensure that revenues and benefits from the continent's mineral riches — Africa has more than 30 per cent of the world's mineral reserves — could be better captured for national budgets and generating more jobs.

According to Lagarde, Africa needed to "build people" in order to reap the dividends of its rapid population growth. 

She cited estimates that a one percentage point increase in the working age population could boost gross domestic product (GDP) growth by half a percentage point.

"For this to happen, however, 'good' jobs need to be created in the private sector. Today, only one in five people in Africa finds work in the formal sector," Lagarde indicated. 

"This must change. With wider access to quality education, healthcare and infrastructure services, it can change," she stressed.

Technology could extend access to financial services to millions, and this was already happening in several countries, such as Kenya.

"Africa Rising will benefit the lives of people on the continent. Beyond that, Africa Rising will benefit the world," Lagarde said describing the leaps made by African economies in the last decade as "nothing short of remarkable". 

Lagarde added that it was time to kick start the "next phase of its economic development". 

Yet, rights groups questioned the current optimistic view of "Africa's rise". 

"Africa is not rising for ordinary citizens," said Oxfam International's Executive Director Winnie Byanyima, who said she intended raising issues of growing inequality at the IMF conference.

She added that tax dodging multinationals were draining revenue from the continent.

"We have six of the top 10 fastest growing economies in the world, and the fastest rising number of dollar millionaires of any other region in the world,” Byanyima indicated. "Yet sub-Saharan Africa is home to six out of the 10 most unequal countries in the world. The 50 richest people in Africa own about 15 per cent of Africa's GDP."      

The conference's host nation Mozambique, provides a stark example.

According to Byanyima, it is still one of the poorest countries in the world despite recording galloping economic growth of over 7 per cent a year over the past decade. 

Two decades after the end of a devastating civil war the country is experiencing vast foreign capital inflows on the back of coal and natural gas discoveries.

Separately, a report by Ernst & Young (EY) said international investors putting money in Africa are increasingly looking beyond the oil and mineral sectors and Africa's top economies as they hunt for new business.

The London-based advisory firm's survey of more than 500 global business leaders showed investors "are looking beyond the more established markets of South Africa, Nigeria and Kenya to expand their operations".

The number of projects in South Africa and Nigeria actually declined in 2013, while there were notable increases in Ghana, Mozambique, Tanzania and Uganda.

South Africa in particular has seen a significant slowdown in economic growth in recent years, amid labour unrest, policy uncertainty and vast unemployment.

According to Capital Economics, Africa's most developed economy grew at the slowest pace in five years in the first quarter of this year, slumping to 0.2 per cent quarter-on-quarter.

Investors are also moving away from sectors like mining and energy — which no longer figure in the top ten for number of investments — "into more consumer-related sectors as Africa's middle class expands," the report indicated.

The largest number of projects were found in technology, media and telecoms; retail and consumer products; and financial services.

"Resource driven sectors are expected to remain the industries with the highest potential over the next two years. The actual numbers show that infrastructure and consumer-facing sectors will increase in prominence as the middle class expands and consumer spending on discretionary goods increases," said EY's Michael Lalor.

According to the International Monetary Fund, about 150 million people can be considered firmly in the continent's middle class. 

Ernst & Young reported most of the investments came from Britain, the United States and South Africa, with a "sharp uptick" in investments from Japan and Spain.