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LONDON/ANKARA — Despite a diplomatic thaw, Western banks are steering clear of attempts by Iran to get them involved in financing humanitarian transactions, fearing they could be penalised under US sanctions, bankers and government officials told Reuters.

Iran was never barred from buying food or other humanitarian goods under sanctions imposed because of its disputed nuclear programme, but measures by the European Union (EU) and the United States have made trade generally more difficult over the past two years by hindering payments and shipping.

As part of talks in Geneva over the nuclear question, Tehran is pressing world powers to speed up trade finance arrangements on humanitarian deals involving both Western and Iranian banks, according to an Iranian government document seen by Reuters and sources familiar with the initiative.

Iranian government officials and international trade sources say Tehran wants to simplify complex trade finance arrangements potentially worth billions of dollars, which would alleviate pressure on the country’s sanctioned banking system.

According to a joint plan of action agreed in November in Geneva, world powers would “establish a financial channel to facilitate humanitarian trade for Iran’s domestic needs using Iranian oil revenues held abroad”.

“This channel would involve specified foreign banks and non-designated Iranian banks to be defined when establishing the channel,” the action plan said.

Iran, with its economy under severe pressure, is keen to push this process forward.

“We have been informed that according to the negotiations and agreements done in Geneva, the possibility to exchange direct LCs (letters of credit) between seven European banks and eight Iranian banks for food, medication and humanitarian goods has been provided,” the Iranian government document says, although it made clear this was not final.

“Please note, that we can accept no legal liability regarding this information as it remains to be officially confirmed by the responsible authorities,” it added.

Big banks 

The US Treasury Department and EU officials declined to comment on specific banks.

A US Treasury official said the United States is working with banks and governments in Asia and Europe to establish mechanisms for humanitarian trade with Iran, and multiple channels were ready for Iran to purchase humanitarian goods.

A different US official told Reuters separately that Washington was having trouble persuading some big banks to work on the issue.

“Some banks are willing to play a part here. But not all of them. There are a lot of big banks that have been subject to fines for engaging in transactions that were in violation of US sanctions that aren’t willing to do anything - even humanitarian,” the official said.

“They just are not willing to do business with Iran. And we are not in a position to say, you have to,” he added.

Banks may well feel the need for caution in this area.

Regulators in New York and Washington are looking at potential violations by France’s Credit Agricole and Societe Generale of US sanctions imposed against countries like Iran, a person familiar with the investigation said.

In 2012, New York regulators threatened to revoke Standard Chartered’s banking licence after it broke sanctions on Iran. HSBC was fined $1.92 billion by US regulators for various violations including doing business with Iran. In February, BNP Paribas set aside $1.1 billion for a possible fine for breaching US sanctions on countries including Iran.

Several banking sources, speaking on condition of anonymity due to the sensitivity of the subject, said Western banks were wary of getting involved in the latest initiative. One said banks would need cast-iron assurances that they would not face exposure before even considering it.

“It is only natural that banks will be cautious to what the political world offers. It changes so quickly, as events in Ukraine can attest,” the banker said.

“What we could be looking at is very short-term financings or involvements and structures, so you will have optionalities to exit should anything go wrong,” he added. “Banks will need more clarity.”

Interim agreement

Iran and Western governments reached an interim agreement in November last year over Tehran’s atomic work in exchange for limited sanctions relief for six months.

By late July, Western governments hope to hammer out an accord that would lay to rest their suspicions that Iran is seeking the capability to make a nuclear bomb, an aim it denies, while Tehran wants sanctions lifted.

Iranian government officials said the document, which has been sent to Iran’s Supreme National Security Council, tasked with safeguarding Tehran’s interests, listed the following banks as “available for further actions”: Standard Chartered Bank (London), Societe Generale (Paris), Banque de Commerce et de Placements (BCP) (Geneva), UniCredit Bank (Munich), Commerzbank (Frankfurt), United Bank (Zurich) and BHF Bank (Frankfurt).

It was not clear whether these banks had been approached to provide finance. Two business executives familiar with the initiative said they were aware that Standard Chartered, Societe Generale, Commerzbank were among those on the wish list.

Commerzbank, Societe Generale, United Bank and BCP all declined to comment. A spokeswoman for Standard Chartered said the bank was not involved and would not get involved in any transaction with any party from Iran.

Unicredit said the group was “not aware of, and hence is not participating in any international initiative involving financial institutions related to Iran subsequent to the P5+1 (major powers) accord”. BHF Bank said it was “not offering or providing any financial services with links to Iran”.

Swiss and German banking regulators declined to comment, although officials in Germany said if German banks were still rigidly adhering to prohibitions on doing business with Iran, the government was ready to explain that some of those restrictions were eased in November.

“If banks in Germany apply the restrictions too rigidly and cautiously in financial transactions with Iran, the government would encourage them to clarify the possibilities that can be done under the agreement, not in order to relax or change these thresholds, but to help the banks keep in compliance with the action plan,” a German finance ministry official said.

Iran eager for deal

The document also named the following Iranian banks: Eghtesad Novin Bank, Parsian Bank, Bank Pasargad, Karafarin Bank, Sarmaye Bank, Saman Bank, Bank Maskan and Bank Keshavarzi.

“Iranians are very eager to have this as soon as possible and teams are working on it and all reports go to the Supreme Leader (Ayatollah Ali) Khamenei,” one senior Iranian government official familiar with the nuclear talks said.

“It was an Iranian initiative but the other party (Western powers) also agreed on that, though they had some internal dispute on the list of Western banks,” the official added.

“There have been some direct contacts between Iranians and various bank officials in Europe since November (the Geneva deal) but the final agreement needs more work and meetings,” he continued.

The Iranian banks named in the document referred the issue to Iran’s central bank, which declined to comment.

A Western diplomatic source confirmed the initiative was under discussion and Western powers saw such an arrangement as increasing the transparency of trade deals.

“If you have Western banks, many of whom with US operations, potentially involved in such an initiative it is a better situation than having hundreds of middle men in such trades where you cannot track where the money is going. It also allows much stricter governance on the part of those banks. This is the idea at least,” the diplomatic source said.

LONDON — European retailers are flocking to list in 2014 but traditional high-street chains are notable by their absence, replaced instead by the online, discount and convenience players that are shaking up shopping.

The flood of retail initial public offerings (IPOs) after a long drought is partly driven by recovering consumer confidence, but also by the fundamental changes wrought on the industry by the advent of e-commerce and shifting shopping habits.

“There is definitely a degree of optimism that hasn’t been seen for some time,” said Kate Ball-Dodd, a partner at law firm Mayer Brown who advises companies listing in London. “The IPOs also reflect expectations of what the retail market will look like in coming years.”

Appetite for new listings — particularly of British firms — is supported by hopes of a return to growth in retail sales in western Europe in 2014 after years of decline.

Robert Foster, co-head of European consumer and retail at investment bank Jefferies, said there had been as many British retail offerings in the past six months as there were in the previous 10 years, noting there were many more to come.

“For the first time in a long time, public investors are getting real access to all this innovation, entrepreneurship and growth,” he told the Retail Week Live conference.

Foster advised one of the highest-profile recent listings, that of online domestic appliances retailer AO World, which jumped about 40 per cent on its debut last month as investors bet it could mimic the success of fashion e-commerce site ASOS. It is still up about 30 per cent.

ASOS shares have more than doubled in the last year, helped by the fact that there are few listed online retailers for investors looking for exposure to booming e-commerce, seen doubling in Europe between 2012 and 2018.

While e-commerce expands, most high-street stores, apart from discounters and high-end retailers, have stagnant sales. 

Limited liquidity

ASOS trades on 84 times expected earnings, compared to a fashion sector average of just 19 times. Meanwhile, AO World is trading at a rich value of 140 times enterprise value (EV) to earnings before interest, taxes, depreciation, and amortisation (EBITDA), almost double ASOS on 78.5, according to Eikon data. In comparison UK high street stalwart Marks & Spencer trades at an EV/EBITDA of 7.6.

Part of the online valuation boom is down to a lack of supply. The listings of Indian e-commerce venture Koovs on Monday and fashion retailer boohoo.com on Friday will add to only a small number of listed online retailers.

But Foster said UK retail “growth” companies expected to list this year would probably only add about £4 billion ($6.6 billion) of additional liquidity to a market of less than £20 billion.

“This remains a very small opportunity set,” he added, noting that pure online stocks were up 150 per cent since last January, outperforming a retail sector rise of about 15 per cent. “As seen in the US market, we expect growth companies to continue to be rewarded for a long time to come.”

Those dynamics would likely drive investor appetite if Europe’s biggest online fashion retailer Zalando decides to proceed with a multibillion-euro float this year in what could be the continent’s biggest technology offering since 2000.

Another potential IPO candidate is the Cdiscount online business of French retailer Casino.

However, some observers urge caution given lofty valuations for e-commerce, particularly as established chains fight back with their own online sales, leveraging store networks to provide more flexible delivery options than pure players.

“People forget it is difficult to make money selling online,” said Sophie Albizua, a former investment banker who co-founded eNova Partnership, a consultancy that advises traditional retailers on e-commerce.

“Just like in the early 2000s, you have to wonder if it is sound investment if you can’t make money out of it,” she added, referring to the bursting of a bubble in listed Internet companies that ultimately failed to turn a profit.

ASOS made a pre-tax profit last year of £55 million. According to their listing documents, boohoo made pre-tax profit of £3.2 million while AO made 8.7 million.

Cautious consumers 

Those nervous about e-commerce might choose to seek exposure to a more down-to-earth retail trend which has its roots in the recession — the growth of discount stores.

Poundland, which sells items for a pound, rose by a third when it listed on Wednesday. Another discounter expected to come to market this year is B&M, chaired by former Tesco boss Terry Leahy.

“Six years after the downturn started, consumers are still quite cautious,” said Euromonitor retail expert Daniel Latev. “Poundland is not as international as some online retailers but it has quite a lot of opportunity for development in countries like Ireland and Spain.”

Another trend of shopping more frequently at local stores has helped shares in McColl’s, the British convenience and newsagent retailer, hold up since floating last month, outperforming the European retail index.

Another recent expansion focus for European retailers — emerging markets — has been looking less attractive for listings in recent months as expectations of tightening US monetary policy has triggered capital outflows.

German retailer Metro’s plan for an imminent stock market listing of a stake in its Russian wholesale business is under threat because of market turmoil over the crisis in Ukraine, sources told Reuters last week.

The Ukraine crisis overshadowed last month’s debut of Russian hypermarket chain Lenta, which is down 8 per cent since listing.

Carrefour has said it would decide by the end of the year whether it would sell a stake in its business in Brazil, its largest market after France, or proceed with an initial public offer of shares in 2015.

DUBAI, United Arab Emirates — The global industry for halal food and lifestyle products — ones that meet Islamic law standards of manufacture — is estimated to be worth hundreds of billions of dollars and is multiplying as Muslim populations grow. Producers outside the Muslim world, from Brazil to the US and Australia, are eager to tap into the market.

The United Arab Emirates (UAE) is positioning itself to be their gateway, part of its push to become a global centre of Islamic business and finance.

UAE officials announced last month that the city of Dubai has dedicated around 6.7 million square feet of land in Dubai Industrial City for a “Halal Cluster” for manufacturing and logistic companies that deal in halal food, cosmetics and personal care items.

Dubai Industrial City Chief Executive Officer Abdullah Belhoul said the idea to create a zone just for halal manufacturers was driven by the increased demand locally and internationally for such products.

“This industry itself, we know it is growing,” Belhoul told The Associated Press. He said the industry is expected to double in terms of value within five years. “So we think there is a lot of opportunity... and we need to capitalise on this.”

The world’s Muslim population is estimated at around 1.6 billiion, and the majority is believed to adhere to or prefer to adhere to halal products when possible. The general understanding is that halal products should not be contaminated with pork or alcohol and that livestock is slaughtered in accordance with Islamic Shariah law. 

Similar to kosher practices, Islam requires the animal is killed with single slash to the throat while alive. It is intended as a way for animals to die swiftly and minimise their pain.

However, as with most issues in religion, opinions vary greatly over what is permissible and what is not. Despite attempts by international Islamic bodies, such as the World Halal Food Council, to achieve worldwide guidelines, there are no global standards for halal certifications.

Stricter interpreters of Shariah say chicken must be slaughtered by hand to be considered halal. Others say it is acceptable if the chicken is slaughtered by machine, as is the case in much of the fast-paced food industry around the world. To accommodate various Muslim consumers, several companies even specify on their packaging how the chicken was slaughtered.

Belhoul said that if halal products are manufactured in the UAE, they will need to be certified halal by the government body that oversees this. But, as with most countries, if the halal products, such as livestock or raw material, are being imported from abroad for processing in the UAE, then the stamp of approval comes from Islamic organisations in the exporting country.

This is where organisations such as Halal Control in Germany have an important role to play, said General Manager Mahmoud Tatari. 

He added that when the company started 14 years ago in Europe, there was little awareness or demand for halal products. Today, Halal Control has 12 Islamic scholars who offer guidance on certifications to international companies such as Nestle and Unilever who want to do business in the Muslim world.

Halal Control, which concentrates on products made in Europe, does not certify meat and poultry, but almost everything else from dairy products to food ingredients. Tatari said Muslims around the world may think they are eating halal-certified food, but that often raw materials may include alcohol or pork gelatin in candies and soups, or may have been cross-contaminated during production.

“It is a process and this will take maybe now 5 — 10 years [until] we can more safely eat halal,” he indicated.

Malaysia is the global leader in developing the halal industry and putting forth the highest standards, according to Tatari and others in the industry.

Malaysia exported $9.8 billion worth of halal products in 2013, the Oxford Business Group (OBG) indicated. That makes it one of the largest suppliers in the Organisation of Islamic Cooperation, an international group with 57 members.

US manufacturers, such as Kelloggs and Hershey, plan to build halal-compliant plants in Malaysia. 

The OBG says Indonesia, with the world’s largest Muslim population, plans to establish a centre for the halal industry in 2015. In Thailand, more than a quarter of food factories are already making halal products.

But it is in the Gulf, where countries almost entirely rely on food imports, where the halal industry seems to have the biggest potential for growth in the coming years.

Brazil is the world’s second top exporter of meat and poultry to Muslim-majority countries after the US. 

The Brasil Food Company (BRF), which is among the world’s largest food companies, plans to open its first manufacturing site in the Middle East in UAE’s capital, Abu Dhabi, in June. The factory will process poultry from Brazil for repackaging and shipping to other countries.

“Having the factory will allow us to be closer to the market and will allow us go to different markets that today we cannot export to from Brazil,” BRF Quality Assurance Supervisor Tiago Brilhante said. The company already exports 70,000 tonnes of chicken to the Middle East each month, making the region its biggest export market.

Datamonitor, a company that provides market and data analysis, says halal food already accounts for about a fifth of world food trade, and the Muslim market is growing substantially. 

According to a Global Futures and Foresights Study, 70 per cent of the world’s population increase from 7 billion today to 9 billion people by 2050 will be born in Muslim countries.

Already in Muslim-majority countries, outlets like McDonald’s, Subway and Papa John’s pizza serve halal to their customers.

In the US, the family-run Midamar Corporation, based out of Cedar Rapids, Iowa, has been tapping into the halal market since 1974. Midamar exports American beef and chicken to around 35 countries.

Jalel Aossey said the company’s halal certification comes from an organisation his father started called the Islamic Services of America, which he says was the first of its kind in the US.

Today there are around 30 halal certification bodies in the US and several mainstream supermarkets that carry halal food items.

Even in markets where Muslims are not the majority, there are billions of dollars to be made in the halal industry. The Islamic Food and Nutrition Council of America, a not-for-profit halal certification organisation, said the domestic US halal market is estimated at $20 billion.

Mark Napier, director of the Gulfood trade show that brings together more than 4,500 food and beverage vendors from around the world to the Dubai World Trade Centre annually, said producers of halal products want to serve markets where their supply is not keeping up with demand. 

Many Muslims in the West buy Jewish kosher products when their halal counterparts are not available.

“Food business is big business,” Napier said. “Producers are increasingly aware of the need for halal standards and certification and bringing that to the fore of their export promotions.”

AMMAN — Hikma Pharmaceuticals Plc. announced Wednesday in a press statement that its earnings increased by 23 per cent last year. “In the Middle East and North Africa, where Hikma employs 5,532 people, the company focused on improving its product mix enhancing sales activities and driving further manufacturing efficiencies,” the company said in the statement. It pointed that branded revenue grew by 5 per cent and that income from global injectables business grew by 14%, driven by a strong performance in the US. According to the company, generics business benefitted from very strong sales of doxycycline which generated strong profitability. Boasting sales to 50 countries across MENA, Europe and the US, “Hikma is actively looking at opportunities to enter new emerging markets. In September, it began expansion into Sub-Saharan Africa with a joint venture with MIDROC Pharmaceuticals Limited, to enter the Ethiopian pharmaceutical market”.

AMMAN — Jordanian and European officials discussed on Wednesday a 180-million-euro soft loan that will be signed in Brussels on Tuesday by the minister of finance and the governor of the Central Bank of Jordan. The talks were held during the ninth meeting of the Jordanian-European Economic Dialogue at the Ministry of Planning and International Cooperation.

AMMAN — Turmoil in Ukraine is driving Middle Eastern grain buyers to shy away from striking new deals there and to consider rival suppliers, a shift that is likely to push up import bills.

The Black Sea region, mostly Ukraine and Russia, has become the major source of wheat and barley for Middle East importers from Libya, Egypt and Syria to Saudi Arabia and Yemen, dislodging US, Canadian and European suppliers who once dominated the market.

Middle Eastern commodity traders and officials said fears that tensions between Russia and Ukraine could come to a head, however, are discouraging most buyers from striking deals with Ukraine suppliers for the new season, which starts in July.

“At this time of the year, end of March, people are selling forward contracts for the new crop. Traders and trade houses start selling July shipments. This is not happening now. People are very reluctant; they don’t know what to expect,” said Tony Mudallal, a senior commodities trader in an international house.

Ukraine, the world’s third-biggest maize exporter, also has come to dominate in corn exports, taking market share from traditional suppliers such as Argentina and Brazil.

“Ukraine proved to be a powerhouse in the trade of grains in the last 10 years. It affected the region positively in terms of supply, mainly in wheat, corn and barley,” Mudallal added.

On the supply side in Ukraine, foreign trading houses are avoiding fixing new grain export contracts as well. Russian corn export prices also have been rising for two weeks.

Ukraine’s main ports continue to operate, but Middle Eastern traders were concerned that shipping could be affected.

“The situation could change if fighting breaks out,” said Malak Jehad Al Akiely, a dealer in International Grain Suppliers-Jordan operation.

“If Ukraine enters into more turmoil, this could mean declaring force majeure, and that would definitely cause tension around other Black Sea origins and raise insurance premiums,” an Egyptian government source said.

Conflict-torn Syria, which has relied mainly on Ukrainian wheat in the last two years to cover a shortfall in local production, is likely to be the hardest hit by the Black Sea conflict, traders say.

Any delays in grain shipments could exacerbate Syria’s food shortages as western financial sanctions make it more difficult to switch to alternative markets, according to two Damascus-based Syrian traders.

Import bills to rise

The quality of Ukraine’s grain and its proximity to Mediterranean ports have helped it win lucrative business from Middle East state importers with lavish budgets to subsidise bread and basic foodstuffs at low prices.

Middle Eastern countries have already sealed deals for around 80 per cent of the grain they need for the current season to end-June, traders said.

A switch to other sources is likely to push up Middle Eastern import bills substantially in the coming season, however, with prices rising by $120-$150 per tonne from levels in existing contracts of around $280 per tonne FOB for Russian and Ukrainian wheat, according to regional experts.

“Ukrainian grains are very competitive price-wise, and they are as good or even better quality than say western European or other sources,” another commodities trader based in Jordan said.

“If the situation escalates, it means the Middle East consumers will pay a higher bill by up to $150 per tonne,” he indicated.

A Cairo-based trader said the crisis was already driving up prices for new deals.

“Egypt had banked on doing more buying from the US for example, but now prices are up as far as $304 a tonne on a FOB basis,” the trader said.

Middle Eastern state and private importers are likely to diversify to Romania, Bulgaria and western European suppliers, particularly France and the Baltic states.

“Russian and Romanian and other Black Sea origins could replace Ukraine, but also French wheat, which is priced slightly higher,” the Egyptian government source said.

Egypt, the world’s largest wheat importer, has said it will reconsider a rule that limits moisture content and excludes mostly French wheat.

That issue has to be resolved, the source noted. “We need to open the door to as many origins as possible and then choose.”

Even US and Australian wheat exporters may also see a comeback in shipments of corn to Egypt, which has relied on Ukraine for years.

“Today, Ukraine is still exporting. Yes, the price is going to differ. Eastern Europe will love this,” a Lebanese grains trader said.

As for shipments so far, Egypt’s main state grain buyer, the General Authority for Supply Commodities (GASC), has said the crisis would not affect any shipments already purchased.

If grain exports are disrupted through the port of Sebastopol in Crimea, Ukraine can still export to the region through its main deepwater ports of Odessa, Illichivsk and Yuzhny, traders say.

A significant volume of Russian and Ukrainian grain exports is shipped directly in 5,000-tonne vessels from small Black Sea ports in the Sea of Azov on the southern coastlines of Russia and Ukraine to ports in Egypt, North Africa and eastern Mediterranean such as Latakia and Beirut.

Also traders are concerned about the military buildup taking place in Crimea near the Strait of Kerch, a major transhipment point for Ukrainian and Russian grain shipments to the Middle East, where 5,000-tonne barges cross and 50,000-tonne cargoes load.

“Kerch is now witnessing a lot of military activity that is beginning to affect commercial vessel activity,” said one senior Middle Eastern commodities dealer.

“Even if you want to speak commercially about loading a vessel or doing some transhipment operation at this strait, the priority is going for the army not for the commercial,” the trader added.

“It disrupts Middle Eastern traders thinking of getting from Russia small barges and to top it off with mother vessels. You will think twice,” he noted.

Dealers said the potential that the conflict could lead to European Union trade sanctions against Russia was another factor weighing on their calculations.

AMMAN — Under a memorandum of understanding (MoU) signed this week between the Euro-Med Development Centre for Micro, Small, and Medium Enterprises (EMDC) and the Jordan Enterprise Development Corporation (JEDCO), the Kingdom will become a member to the regional network of National SME business support centres aiming at the implementation of the EMDC initiative — labelled as a Union for the Mediterranean Project — implemented by the Milan Chamber of Commerce (Promos). 

According to a JEDCO press statement, EMDC President Ambassador Giancarlo Aragona and JEDCO’s Chief Executive Officer Yarub Al Qudah signed the MoU, in the presence of Italian Ambassador Patrizio Fondi, to enhance targeted cooperation between Jordan and the European Union-Middle East North Africa region, highlighting the importance of offering continuous technical support to micro, small, and medium enterprises (MSMEs) in order to enhance their competitiveness in both the national and global economy.

“Activities to be implemented under this initiative includes, amongst others, favouring MSMEs’ access to markets, creating conditions that allow MSMEs in the Euro-Mediterranean region greater and easier access to financing, including by providing professional services and consultancy work (e.g., feasibility studies, business plan preparation, etc.) and creating and developing an environment which favours the growth, networking and exchange of entrepreneurial know-how for MSMEs in the Euro-Mediterranean region, aimed at job creation, with a specific focus on young entrepreneurship,” the statement said.

Aragona said: “The programme shall also offer opportunities to establish links and cooperation ventures between Jordanian and their counterpart Italian public sector institutions, Chambers of Industry and Chambers of Trade in addition to business associations.”

Fondi said: “Jordan heavily depends on human capital as its primary driver of economic growth, and Jordanians, by nature, are innovative and entrepreneurial with positive cultural reinforcement of risk-taking and enterprise. The passion that Jordanians have is our main driver to assist them in nurturing their entrepreneurial spirit and growth oriented businesses, especially with the aim of boosting economic relations, commercial two-way trade opportunities and socio-cultural environment in Jordan.”

Qudah said: “Our aim at JEDCO is to provide a coordination platform for all stakeholders in the field of entrepreneurship and SME development, excellent and transparent services to enhance the competitiveness of Jordanian enterprises especially SMEs, through providing technical assistance and financial support to achieve sustainable development and economic growth, in addition to raising those enterprises’ positioning in global markets ensuring that they benefit from Jordan’s preferential trade agreements where possible.” 

He concluded that the MoU signed with EMDC is a clear support to the innovative initiative they are bringing to Jordan, as it will be setting our long-term and strategic partnership for SMEs’ joint-investments, and further highlighting our shared goals.

WASHINGTON — A US financial regulator warned consumers Tuesday that using the online currency bitcoin is fraught with risks including theft by hacking and fraud.

The Financial Industry Regulatory Authority (FINRA) issued the general warning amid a spate of scandals involving the digital currency, which has rocketed in popularity and been the focus of much speculation over the past two years.

“Buying and using digital currency such as bitcoin carry risks. Speculative trading in bitcoins carries significant risk,” FINRA said.

“Platforms that buy and sell bitcoins can be hacked and some have failed. In addition, like the platforms themselves, digital wallets can be hacked. As a result, consumers can — and have — lost money,” it added.

The agency, which regulates the securities industry, said digital wallets, where users hold their bitcoin on computer files, are vulnerable to theft, and have none of the legal protections and guarantees that depositors in US banks and credit unions enjoy.

Bitcoin transactions — designed to transfer funds between two parties without a bank or other intermediary — are also subject to fraud and robbery, and are irreversible, FINRA added.

It also pointed to the use of bitcoin in money laundering and drug payments. The agency said that exchanges involved in such activity could be shut down, costing other users not involved in illegal activity.

FINRA noted the closure of Japan-based Mt Gox, once the largest bitcoin exchange which said it had been robbed of nearly half a billion dollars’ worth of the digital currency, most of it clients’ money.

Mt Gox filed for bankruptcy protection in Japan at the beginning of this month and in the United States on Monday.

Separately, the first bitcoin ATMs are cropping up in North America, enabling consumers to swap cash for units of the crypto-currency, or cash in their bitcoins. ATMs are coming in Europe and Asia as well.

The machines could allow bitcoins, generated by a complex computer algorithm designed in 2009, to move out of the realm of geeks to the broader public.

The US startup Robocoin, after unveiling its first ATM in Vancouver last year, announced plans last week for bitcoin ATMs in Austin, Texas and Seattle, Washington, ahead of a wider global launch.

Removing bitcoin barriers 

“We have completely removed the barriers for people to buy and sell bitcoins,” Robocoin Chief Executive Jordan Kelley told AFP. “You no longer have to wait days, you don’t have to provide your bank account.”

Kelley said Robocoin provides the only “bi-directional” bitcoin ATMs, meaning that consumers can either buy or sell the digital currency.

Robocoin provides the hardware, made in the United States, to local operators, who must get certification from state and federal authorities, and comply with anti-money laundering rules.

Operators around the world will also need certification in the countries where they operate, Kelley noted.

“We were built to be fully compliant [with finance regulations] globally,” he said.

Kelley declined to provide the number of orders for the ATMs, saying only, “We have a lot.” 

He noted that the company is awaiting certification for its shipments to locations in Europe and Asia.

The Robocoin ATMs perform a biometric scan of each user’s palm, as well as take a facial photo, which is matched to the user’s government-issued identity card. The system also runs a check to determine if the user is a wanted criminal or terror suspect.

“We provide a profile of the customer that gives our operators full visibility and trackability,” Kelley said.

The first operational ATM in the United States started up last week in a New Mexico cigar shop, according to manufacturer Lamassu bitcoin Ventures.

Lamassu has some 200 orders around the world and has opened bitcoin ATMs in two Australian cities as well as one each in Helsinki, Berlin, Bratislava and Vancouver.

The New Mexico operator Enchanted bitcoins is “paving the way for mainstream bitcoin accessibility in the Unites States”, says Zach Harvey, chief executive officer of Lamassu, a company registered in the British Virgin Islands.

The operator is following guidelines from FinCEN, the Financial Crimes Enforcement Network, to avoid running afoul of the law and has registered as a money exchange service.

Despite the growing popularity of bitcoins, the digital currency has been linked to crime and drugs in exchanges like the dark Web bazaar Silk Road. And many economists warn that the currency has no hard value.

Bitcoins have been exceptionally volatile, rising to more than $1,200 last year, before falling to around $600 in recent weeks. And some bitcoin exchanges have been shut down by regulators.

Last month, US authorities filed criminal charges against two operators of a bitcoin exchange, including the head of a company with high-profile investment backers.

Some analysts see advantages in the move to bitcoin — it has little or no transaction costs, is quickly and easily transmitted, and has verifiable and traceable transactions based on its software.

“The deeper I dive, the more impressed I am with this as a technology solution, as an incredible idea for finance, as a stored value for payments,” said Staci Warden, executive director of the Centre for Financial Markets at the Milken Institute.

Warden added that bitcoin has advantages over other currencies because it can be divided into extremely small units — one quadrillionth of a bitcoin — for micropayments.

“bitcoins can be sent to you with no transaction costs at all,” Warden told an online forum. She said that contrary to popular belief, bitcoin transactions are not anonymous but “pseudonymous” and can be traced and verified on the bitcoin master ledger.

“If Target used bitcoin, none of the 70 million customers would have had their accounts compromised, because Target wouldn’t know anything about the customers,” she said.

But a report last month by the International Institute of Finance, which represents more than 450 banks and financial institutions, said bitcoin’s future as a broadly accepted exchange medium is limited.

Mark Williams, a Boston University banking and risk management specialist, argues that bitcoins are dangerous for the financial system and that ATMs heighten the risks.

“An ATM makes it easier for the average person to get access to bitcoins,” Williams said. “But there is no consumer protection. There is no guarantee you will get your money back.”

Williams argues that bitcoin is not really a currency but a commodity, “and it’s a high-risk commodity, a speculative commodity”.

He said bitcoin values have fluctuated more than 50 per cent in a single day, like other speculative assets.

“So I don’t think they should even use the term ATM machine,” he added. “It’s really a betting machine.”

Warren Buffett, founder of Berkshire Hathaway and routinely touted as the most successful investor of the 20th century, said last week that he didn’t expect bitcoin to stay around in the longer term.

Buffett posited that in wartime it is much better to hold stocks rather than money or bitcoin, referencing his first investment in 1942, when World War II wasn’t going well for the US. He was right to do so because the stock market appreciated during the war and the dollar weakened.

Buffett offered this piece of wisdom: “American businesses are going to be worth more money. Dollars will be worth less, so that money won’t buy you quite as much, but you’ll be much better off owning productive assets over the next 50 years than you will be holding pieces of paper or, I’m not sure, bitcoins.”

As regards bitcoin, Buffett expressed the view that the self-styled crypto-currency “is not a currency”, in that “it is not a durable means of exchange”. The “Oracle of Omaha” said that he “wouldn’t be surprised if it [bitcoin] wasn’t around in the next 10-20 years”.

Eric Spano, director of finance at the bitcoin Embassy in Montreal and a director of the bitcoin Alliance of Canada, asserted last week that the rally is due to the fact that investors are starting to understand that the crypto-currency is separate from the exchanges which trade it. 

“Any issues these companies may be having are not necessarily rated to the bitcoin protocol or the network itself,” Spano claimed.

“In bitcoin, nobody is too big to fail,” Spano said. “But overall by weeding out the bad actors, bitcoin will become stronger.”

He believes that, whilst the Mt Gox collapse may have been catastrophic for some investors, bitcoin is still extremely young and that such failures are part of a maturing market. “The people who can’t keep up with the industry or are not prepared… will eventually get kicked out.”

The bitcoin expert observed that, with the dust starting to settle, exchanges are experiencing a trend toward accountability and transparency as the industry shift its focus to prove to customers that the digital currency is secure. He noted that bitcoin exchanges and websites for e-wallets are now implementing different types of audits.

“This [MtGox’s closure] has brought the community together in a way most crises don’t really bring anyone together.”

FARAYA, Lebanon — The mountains north of Beirut, usually a snowy winter playground for skiers and other tourists vital for Lebanon’s services-based economy, are brown, muddy and completely empty this season.

Hotel rooms lie vacant and winter sports rental shops are idle, with the lack of snow deterring even the keenest visitors.

An unseasonably warm and dry winter — the mildest in decades by most accounts — has also endangered the harvest of vineyards which export prize-winning Lebanese wines around the world.

Along with worsening security problems and political gridlock, the fickle weather has exacerbated a three-year drop in tourism in this small Mediterranean country. Before the conflict in neighbouring Syria erupted in 2011, the sector generated about 10 per cent of economic output.

“This is the first time the slopes have not opened at all,” said Joost Komen, general manager of Intercontinental Mzaar, the largest hotel and ski lodge in Faraya.

“That there is limited snow, it happens. But that there is absolutely no snow? No, this has never happened,” he added.

Komen told Reuters revenues were down more than 80 per cent, directly affecting around 600 families dependent on hotel jobs. Ski instructors, rental shops and other businesses that benefit from seasonal activity have also taken a severe blow.

“God forbid we have another year like this. If it happens again, you’ll see many shops shutting down,” said one vendor, sitting in a parking lot full of idle all-terrain vehicles.

An early snowstorm in December battered the Middle East with high winds and dropped around 30 centimetres of white powder in Faraya. Many thought it was a harbinger of a long and cold winter to come. Aid agencies worried about hundreds of thousands of Syrian refugees living in crude shelters at high altitudes.

But that first snowfall was not enough to open the slopes. There has been almost no precipitation since. Though it could still snow in March or even April, the damage has been done.

“What happened in January and February is gone. This is money unrecoverable,” Komen said.

Marwan Barakat, chief economist at Bank Audi, said those two months witnessed a decline in arrivals at Beirut Airport, one of few metrics available for analysing the tourism sector.

“This is probably due to some tourism foregone because of the adverse winter conditions,” he added.

Lack of precipitation and mild temperatures are creating problems for vineyards and farms across Lebanon.

Government observations put rainfall through the beginning of March at less than half the average for this time of year.

Massaya vineyard, spread out over 40 hectares in the Bekaa valley, is one of several struggling to cope.

Ramzi Ghosn, the winemaker at Massaya, said the lack of moisture would cut volumes of wine production significantly, although it might not jeopardise the quality. “The more the vines suffer, the better the wine usually,” he remarked.

But the mild winter will make vines start growing again and sprouting earlier than usual, meaning that a late winter storm or even just a brief cold spell could devastate the harvest.

“In Lebanon, we always said we don’t have to worry about the vines because we have perfect weather... but we have to worry about other issues. This year, in addition to the geopolitical issues, we have to worry about the vines,” said Ghosn.

Farmers of other crops are already feeling the effects of the abnormal winter weather.

Hassan Mheish, a farmer in the northern region of Tripoli, said the lack of rain had drastically reduced his almond crop, and threatened to destroy the olive and lemon harvests.

Standing on dry, cracked soil in an olive grove he manages, he said the government should build dams and take other steps to alleviate the impact of dwindling water resources on farmers.

“The wells are drying up. Now they’re mostly giving only mud and soil,” the farmer sighed.

AMMAN –– The European Bank for Reconstruction and Development (EBRD) on Monday officially launched a special unit to help the Kingdom’s small- and medium-sized businesses, which according to a government official struggle to access finance. 

On Monday evening, the EBRD’s Small Business Support (SBS) held an official launch event –– attended by executives from the London-based bank, government officials and a large number of private sector representatives –– to increase the awareness of local companies about the activities of the unit in Jordan. 

Speaking at the event, head of EBRD office in Jordan Heike Harmgart said SBS has been active in Jordan since 2012, providing business advice through more than 40 projects, helping companies access the know-how they need to succeed and grow. 

The programme’s activities in the southern and eastern Mediterranean (SEMED) region are funded by the SEMED Multi-Donor Account and the SEMED cooperation funds account, which have provided 2.4 million euros in donor support, according to the bank.  

Accounting for more than 98 per cent of active enterprises in Jordan, around 70 per cent of total employment, 40 per cent of national exports,  SMEs in Jordan still face challenges in access to finance, said Yarub Qudah, chief executive officer of the Jordan Enterprise Development Corporation. 

He indicated that the sector’s share of credit facilities extended by banks is only 5 per cent, describing the figure as “ironic”. 

Qudah said that in the past decade, Jordan’s exports grew from JD1.6 billion to JD7 billion, thanks to SMEs. 

“Without small- and medium-sized enterprises the Kingdom’s economy would not have grown,” he added, calling on the private sector to seize the support of  EBRD programme. 

Strengthening small businesses is a top priority for EBRD activities in Jordan as the country faces significant regional disparities, according to Hildegard Gacek, the bank’s managing director for SEMED. 

Smaller businesses continue to suffer from poor access to finance, limited exposure to managerial best practices and low productivity, which hamper their potential to create jobs, she said.

Charlotte Ruhe, director of the Small Business Support team at the EBRD, noted that the SBS facility can play a key role in supporting small businesses. 

“Improving access to external advice is important in helping them grow and become catalysts for the country’s economic development,” she said.

Drawing on the expertise of local consultants and international experts, SBS connects small- and medium-sized enterprises with the expertise that can boost their businesses, transferring the skills and know-how that help them innovate, attract finance and source further expertise, she added. 

The EBRD’s SBS team introduces the latest best practice in marketing, operations, information communication technology, human resources and energy efficiency to improve quality, resource efficiency and growth, according to the bank’s official. 

In addition to working with individual businesses, the EBRD also engages with government agencies, local business associations and chambers of commerce.  

In October last year, the EBRD opened a permanent office in Jordan in a step that was described by executives as long-term commitment to supporting economic development in the Kingdom.

The bank has also invested in two major projects in Jordan: A $100 million loan for Al Manakher Power Plant, and a $80 million credit for the Abdali shopping mall and entertainment centre in Amman.

Late last year, the bank granted Jordan the status of a recipient country, allowing the Kingdom to benefit from the bank’s capital resources.