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ZAGHREB — Damir Hajduk likens paying off his mortgage to the tale of Sisyphus in Greek mythology, condemned forever to push a boulder uphill, only for it to roll back down again and again.

"You keep paying and the debt never goes down," said the 47-year-old Croatian father of three. "After ten years of monthly payments, if we calculate in the [local currency] kuna, today I owe more than the principal I originally took."

Hajduk is one of 60,000 borrowers in Croatia, and many hundreds of thousands across ex-Communist central and eastern Europe, who took out home loans denominated in Swiss francs in the early 2000s, attracted by far lower interest rates than the double-digits offered on mortgages in historically unstable local currencies.

It came back to haunt them when the global crisis that began in 2008 drove up the value of the franc as a safe-haven currency for investors.

Some respite came when the Swiss National Bank (SNB) imposed a cap to rein in the currency, a policy that lasted three years until it was abruptly abandoned ealier this month, stunning financial markets, and Hajduk.

The drama raises fresh questions over the lending practices of European banks, already dragged through the mud during the financial crisis, and the vigilance of their state regulators.

"No one cautioned or warned us about anything; they were saying the franc is a stable currency and there wouldn't be any big oscillations," said Hajduk.

The value of the franc has jumped 18 per cent against the kuna since last week, and 20 per cent against Poland's zloty. Some borrowers have seen their monthly mortgage instalments increase by hundreds of euros, threatening banks with a fresh wave of defaults.

‘Gullible’ 

More than half a million homeowners are affected in Poland, central Europe's biggest economy, where the stock of loans denominated in Swiss francs was worth $36 billion in November, or 8 per cent of national output.

Croatia's is equivalent to 7.5 per cent of the gross domestic product (GDP). Serbia and Romania are also embroiled.

Hungary, the country that stood to lose most, escaped by the skin of its teeth, after the government of Prime Minister Viktor Orban ordered that all foreign-currency loans be converted into forints at the tail end of last year to end the ordeal of borrowers.

Hungary had been guilty of failing to regulate the banks well enough; Poland was stricter, and Serbia banned the practice of issuing loans denominated in Swiss francs in 2011. But the damage was done.

"It should have been banned a long time before that," said former Serbian central bank governor Dejan Soskic. "We were always advocating that participants in the system should not borrow in a currency which is not their source of income."

Soskic added that it was "illogical" to think borrowers were not aware of the risk, and Serbia's finance minister, Dusan Vujovic, this week called them "gullible".

But a former central bank official, who declined to be named because of his current post, told Reuters: "The fact is we don't know how much borrowers were warned [by banks] about the currency risk at the time they were taking loans in Swiss francs."

Poland's government, facing close-run elections this year, has ordered an investigation into the practice, to verify that the banks' activities "do not affect the legally protected interests of borrowers-consumers".

Lawsuits have already been launched on behalf of thousands of borrowers in Serbia and Croatia over interest rate hikes during the global crisis.

In 2013, a Croatian court ruled against eight commercial banks, saying they had overcharged holders of loans denominated in Swiss francs and failed to provide them with enough detail to make an informed decision. The banks dispute this.

‘Absurd situation’

In Croatia, No. 2 lender Privredna Banka Zaghreb (PBZ), majority-owned by Italy's Intesa Sanpaolo and with 6.5 of its loan portfolio denominated in Swiss francs,  said that "from the very beginning" it had pointed in loan contracts to the possibility of exchange rate movements, and had offered to convert loans into kuna at the first sign of turbulence in 2007.

Raiffeisenbank, which has some 270 million euros worth of loans indexed in Swiss francs in Croatia, said in a statement to Reuters that it had "regularly and conscientiously" informed clients of the risks.

Austria's Erste, the third biggest bank in Croatia, said it had told clients that "no one could predict the currency movements in the next 10, 15 or 20 years", had provided graphs showing past movements and "continuously" offered options to make repayments easier.

In Poland, a spokesman for BCP's Polish arm Millennium, with franc-denominated loans worth 18.8 billion zlotys (4.45 billion euros) in September, said its clients were "absolutely sufficiently informed about risks linked to foreign exchange loans" and were shown a simulation of how instalments may change with rate changes.

The Polish unit of Commerzbank, mBank, and Getin Noble Bank did not immediately respond to requests for comment.

"It's too easy just to blame the banks; they were selling their financial product," said independent Croatian analyst Damir Novotny. "On the other hand, the government, which is in charge of consumer protection, should have warned citizens not to take loans in Swiss francs because their earnings are not in that currency."

In Serbia, Belgrade pool hall owner Dragan Cuca, 50, took out a mortgage indexed in Swiss francs from Unicredit Bank in 2007.

"I took 55,000 Swiss francs that totalled 37,000 euros at the time. Six months ago I got a statement from the bank saying my remaining debt in euros was 41,000, and after the recent franc strengthening my debt in euros would be around 47,000," he told Reuters.

Faced with the prospect of a spike in defaults, and a fight to hold onto power in elections, governments in Poland and Croatia in particular are looking at a range of measures to alleviate the burden on borrowers.

Croatia has returned the rate of the Swiss franc against the kuna to the level it was at before the Swiss National Bank abandoned its cap, and says it will also consider following Hungary's example of forcing a conversion of the loans.

Poland appears to have succeeded in pressing banks to ease interest rates on Swiss franc-denominated loans. But it may have to take bolder steps long-term, depending on the effects of Thursday's announcement by the European Central Bank of a government bond-buying programme to pump hundreds of billions in new money into the sagging eurozone economy.

Initial signs were promising, as currencies in central and eastern Europe firmed on optimism that some of the money would spill over into their own financial markets.

Some, like Poland's deputy finance minister, are resigned simply to paying more. "I have a mortgage in Swiss francs and I was taking advantage of this while my friends were paying higher instalments as they had Polish zloty loans," Izabela Leszczyna told TOK FM private radio. "Now it's the other way around, and I pay higher instalments." 

RIYADH — World oil prices have fallen too far, the president of state-owned energy giant Saudi Aramco said Tuesday, stressing it was for the market not OPEC producers to shore them up.

"It's too low for everybody," Khalid Al Falih told a conference. "I think even consumers start to suffer in the long term."

Falih also said American shale oil production is important for the world's long-term energy future and Saudi Aramco has marked an additional $7 billion for its own shale projects.

Saudi Aramco is the world's largest oil company in terms of crude production and exports.

The kingdom is the leading exporter and top producer in the Organisation of the Petroleum Exporting Countries (OPEC).

In November, the group decided to maintain its output ceiling at 30 million barrels per day, deepening the global price drop which began in June.

Oil was then trading at more than $100 a barrel but on Tuesday international benchmark Brent crude for March delivery was fetching just $48.28 in Asian trade.

Saudi Oil Minister Ali Al Naimi has been quoted as saying it is unfair to expect the group to reduce output if non-members, who account for most of the world's crude production, do not.

Falih reiterated that policy, saying: "Saudi Arabia will not single-handedly balance the market on a downturn."

The company's production has been steady over the past few years, while domestic demand rose and exports gradually declined, he said.

"So the reason for the imbalance in the market absolutely has nothing to do with Saudi Arabia," Falih told the Global Competitiveness Forum.

'The next frontier' 

Falih said "it will take time" for the current excess supply to be removed.

He declined to speculate on the price at which the market will ultimately settle.

"It will be the price that will balance supply and demand. I think we're going to just wait for the forces of supply and demand," he said.

Saudi Arabia, the only producer with significant spare capacity, had traditionally acted to stabilise the market by adjusting output.

Technological innovations have unlocked shale resources in North America and raised US oil output by more than 40 per cent since 2006, but at a production cost which can be three or four times that of extracting Middle Eastern oil.

In an increasingly competitive market, analysts have said the kingdom is content to see shale oil producers suffer from low prices.

But Falih said: "US shale is needed, is welcome, on the global scene," because the world will require more energy resources for a growing population.

The economy is still going to be driven by oil and gas for generations, he added.

Falih noted that US shale innovation had led the way for Saudi Arabia to pursue similar techniques.

"Saudi Aramco has invested already $3 billion in developing our unconventional gas. We just earmarked an additional 7 [billion]. This is the first time I share this publicly," he told the forum.

"Saudi Arabia will be the next frontier after the US where shale and unconventional will make a contribution to our energy mix, especially gas," he concluded.

RIYADH — Saudi Arabia's new leadership will push forward efforts to diversify the growing but oil-dependent economy, while easing procedures for investors, senior officials said on Monday.

"The smooth transition of power to King Salman is a testament of the stability and the commitment that our leadership has," Abdul Latif Al Othman, governor of the Saudi Arabian General Investment Authority (SAGIA), told a conference.

Salman acceded to the throne of the world's leading oil exporter on Friday after his half-brother King Abdullah died aged about 90.

"King Salman has been a strong supporter of promoting the kingdom as an investment destination," Othman told the Global Competitiveness Forum.

The annual event, organised by SAGIA, brings together high-ranking Saudi officials with world business leaders.

Among those attending is Eric Schmidt, executive chairman of tech giant Google. 

Oil makes up about 90 per cent of Saudi government revenues but Othman said the kingdom aims to expand the health, transport and mining sectors, along with information and communications technology.

"Already we've identified healthcare and transportation investments valued at $140 billion in the coming five years," Othman indicated.

There was also a plan to "transform" the financial services, tourism and real estate sectors while focusing on education and "innovation", he said. "Now we have one of the most tech-savvy populations in the world."

'Fast-track'  

Critics have complained of the administrative obstacles to doing business in Saudi Arabia but Civil Service Minister Abdul Rahman Al Barrak told the gathering that "fighting red tape... is a priority".

Othman noted that after detailed study the government has been trying to address investors' concerns.

"We've introduced a fast-track process that will enable investors to obtain licences within five days," he said.

During King Abdullah's "transformative" rule, Saudi Arabia joined the Group of 20 of major world economies as well as the World Trade Organisation.

"Foreign direct investment grew at an average rate of 10 per cent [and] increased by fivefold to reach $220 billion," Othman pointed out. "Productivity growth in the private sector has averaged an impressive 8.4 per cent annually since 2005."

A 50 per cent fall in world oil prices since last June has left Saudi Arabia projecting its first budget deficit since 2011, emphasising the need to diversify.

"We expect that the government will continue spending in the near future because we have great surpluses," despite lower projected revenues, the civil service minister said.

The kingdom's reserves are estimated at $750 billion.

The chairman of the Capital Market Authority told the forum that Saudi Arabia is on track to open its stock market to foreign investors by the end of June.

A final date will be announced after relevant regulations are issued but it "will be before the end of the first half of 2015", said Mohammed Al Sheikh, chairman of the Capital Market Authority.

Penny-stock players, however, will not be welcome on the expanded Tadawul All-Shares Index, the largest Arab bourse.

"We really want to attract large, sophisticated, experienced institutional investors and the requirements actually show that," Sheikh told the forum.

Britain's Peter Mandelson, now Lord Mandelson, a former European trade commissioner, told the forum that Saudi Arabia's accomplishments are "impressive, but there is still a long way to go".

AMMAN —  Energy service companies and individual consumers want to save money by putting in new lighting, air conditioning, heating and ventilation systems, but often cannot afford them under current lending terms, an energy and finance specialist told a gathering this week. According to a press statement from the USAID Energy Sector Capacity Building (ESCB) Activity, Tom Dreessen presented for discussion suggestions for new energy efficiency loan products which would make it easier for banks to lend funds, and easier for customers to borrow. These could include extending loan payment periods, thus reducing monthly payment, increasing credit lines for borrowers, and reducing or eliminating the need for additional collateral. The gathering, co-sponsored by the Association of Banks of Jordan USAID's ESCB Activity, was attended by senior officials from 20 major banks. The USAID ESCB Activity aids government and private sector energy sector agencies to support adoption of renewable energy and energy efficiency.

AMMAN — Jordan Investment Commission (JIC) President Montaser Oqlah on Monday acquainted Li Jianhua, Ningxia committee secretary at the Communist Party of China, with the economic reforms that Jordan has achieved. Oqlah said these reforms contributed to achieving important developments in economic fields by amending some laws and signing agreements with Arab and foreign countries that provided Jordan with new export markets. The new investment law will provide investment incentives such as exemptions from customs fees and sales tax in an automatic way to save time on investors, Oqlah said, stressing that JIC is ready to provide Chinese investors with all facilities to establish their projects in Jordan. Jianhua expressed his appreciation for Oqlah’s briefing on the investment environment in the Kingdom, noting that the Chinese-Jordanian relations have developed during the past few years. He also said that His Majesty King Abdullah’s participation in the 2015 Chinese and Arab Countries Exhibition will add value to the event which is considered a good opportunity for Jordan to promote investment.

LONDON — Oil prices at current levels may have reached a floor and could move higher very soon, the secretary-general of the Organisation of petroleum Exporting Countries (OPEC) said on Monday, 

In his first public comment that oil's second-biggest decline on record may have run its course, Abdulla Al Badri also warned of a risk of a future price spike to $200 a barrel if investment in new supply capacity is too low.

"Now the prices are around $45-$50 and I think maybe they reached the bottom and will see some rebound very soon," Badri told Reuters on the sidelines of a conference at Chatham House.

The 12-member OPEC pumps about a third of the world's oil and until last year had a policy of adjusting its supply to support prices.

Oil prices have fallen almost 60 per cent since June to below $49 a barrel on global oversupply. Prices kept falling after OPEC's surprise refusal in November to cut its output to retain market share against rival suppliers.

Defending OPEC's decision, Badri warned that any oil supply cut would lead to spare production capacity, a lack of investment and an eventual shortage and price spike that could exceed that of 2008, when oil hit its record high above $147 a barrel.

"Suppose we cut production, and then we'll have spare capacity," he said. "Producers, when they have excess capacity, they will not invest."

"If they do not invest there will be no more supply, if there is no more supply there will be a shortage in the market after three to four years and the price will go up and we'll see a repetition of 2008," Badri indicated.

"Maybe we will go to $200 if there is a real shortage of supply because of the lack of investment," OPEC's secretary general added.

Oil's decline in 2014 was its second-biggest ever, after the collapse in 2008 which followed the record high.

Non-OPEC help?

Some OPEC members, including Venezuela, have continued to call for output cuts. Its President Nicolas Maduro earlier this month visited several OPEC countries, and non-member Russia.

While praising Maduro's efforts, Badri noted that there was no imminent prospect of OPEC and non-OPEC producers sitting down to discuss cutbacks.

"It will take some time," he said. "It will take another four to five months and we will not see some concrete efforts before the end of the first half of the year due to the reason that we will see how the market behaves at the end of the first half of 2015."

Badri further defended OPEC's decision in November to leave its output target unchanged.

"It was a collective decision," he added. "Everybody participated in the decision, there are some remarks and some reservations but at the end of the day all the ministers agreed to this."

Asked about the prospect of a change in oil policy in top OPEC producer Saudi Arabia under its new king, Badri said: "Saudi Arabia is a stable country, is a stable government, and I think things will be normal."

AMMAN — The Amman Chamber of Industry (ACI) is proceeding to implement the second phase of the “Made in Jordan” campaign in cooperation with the Jordan Enterprise Development Corporation. Musa Saket, head of the campaign’s supervising committee, said the campaign will be targeting school students in order to acquaint the new generation with the high quality achieved by national products and the role they play in supporting the economy and employing local workforce. Saket added that the Ministry of Education has directed education departments to cooperate with ACI in arranging campaign teams’ visits to schools. The campaign also includes arranging meetings between factory owners and students to acquaint them with their personal experiences and success stories, in a way that would urge these students enter the industrial sector. 

AMMAN — The private sectors in Jordan and Thailand have to work harder to enhance the volume of trade exchange and establish joint projects, Amman Chamber of Commerce (ACC) President Issa Murad said on Sunday. Inaugurating the Jordanian-Thai Business Forum, Murad described the trade balance between the two countries as still low, with Jordanian exports to Thailand in 2014 reaching $28 million and imports from the Asian country standing at $225 million in the same year. He said that ACC, established in 1923, is one of the most important service institutions in the Kingdom that includes over 46,000 companies with total capitals of JD34 billion. On the sidelines of the forum, an exhibition was held with the participation of 20 Thai companies that produce halal foods. Chemical industries and leathers top Jordan’s exports to Thailand, while the Kingdom imports food, transportation tools, machines, minerals, wood and textile products. 

AMMAN — Jordan will be organising a large delegation from the public and private sectors to participate in the Chinese and Arab Countries Exhibition which will be held in China, Industry and Trade Minister Hatem Halawani said Sunday. He added during a meeting with a Chinese delegation headed by Li Jianhua, Ningxia committee secretary at the Communist Party of China, that Jordan appreciates being chosen as a guest of honour in the exhibition. Halawani continued that the Kingdom's participation will focus on economic achievements achieved during the past few years, in addition to discussing the possibility of cooperation with the Chinese in different sectors, especially investment, industry, trade, health, education, communication, IT and tourism. In a statement sent to The Jordan Times, Halawani called on Chinese businessmen to invest in the Kingdom and benefit from available opportunities in different sectors. For his part, Jianhua said China is interested in developing cooperation with Jordan in small- and medium-sized projects, among others. 

LONDON — With oil prices tumbling and ageing equipment making extraction ever more expensive, Britain's North Sea oilfields face a struggle for survival, threatening a vital source of income and energy.

The oil industry has been hard hit by crude prices falling more than 50 per cent since June to less than $50 a barrel.

Energy giant BP recently announced it was cutting 300 local jobs, mostly in the Scottish city of Aberdeen, Britain's oil "capital" and Europe's oil hub in northeast Scotland.

Others, including Shell, Chevron and Conoco Phillips, warned late last year of similar scale cuts.

The publication of the oil majors' financial results in a few weeks augurs more bad news, with British subcontractors particularly nervous that they may be deemed expendable.

In anticipation, oil services company Wood Group has already cut staff salaries by 10 per cent.

The industry has ridden out previous fluctuations, with prices dropping as low as $38.37 per barrel during the depths of the global economic crisis in 2008.

"We've seen oil prices fall in the past and it has recovered," said Neil Gordon, chief executive of Subsea UK. "There is confidence that it will recover, but that you'll have to go through an amount of pain, until the price recovers."

The recent price fall has only magnified existing problems of high operating costs in the deep offshore fields, with producers desperate to trim budgets even when prices were higher.

Faced with dwindling margins, the majors are beginning to think the unthinkable — abandoning Scotland's oil and gas fields, which have seen a 50 per cent fall in production over the past decade.

The BP-owned "Forties" field, which celebrated its 50th anniversary this year, produced around 500,000 barrels per day (bpd) at its peak, according to Colin Welsh, chief executive officer of the investment bank Simmons & Company. 

Today, the combined production of all Britain's North Sea fields is estimated at 800,000 bpd.

'Vital industry' 

"They'll have to make the North Sea a lot more attractive, and that involves reducing the tax rates," said Welsh.

The government for too long has treated the oil industry as a "cash cow", argued several officials who highlighted the 60 to 80 per cent tax rates levied on oil companies.

"If you look at Norway, they get very significant tax breaks for drilling exploration wells, which encourage them to deploy that money to do another one and another one," said Graham Stevens, finance director of Plexus, which specialises in wellheads.

"We don't get that kind of money in the UK," he added.

With Britain's general election just months away, politicians have recently been much more keen to show support for the North Sea, particularly in Aberdeen where more than half the jobs depend on oil.

"This is a vital industry," said Labour's Ed Balls, who would likely become Britain's finance minister if his opposition party wins the nationwide vote.

"Labour... will do what it takes to make sure we secure the jobs and the investment which is so important for livelihoods... but also for tax revenues coming in," he added.

The Conservative-led government of Prime Minister David Cameron has promised to include support measures in its budget for the financial year 2015-2016, which will be presented in March.

But in Aberdeen, concern is already growing that there may be no industry to revive if prices remain low for any length of time. 

"We need to make sure the industry is still in a fit state to recover," said Anne Begg, MP for Aberdeen South.

For Jake Molloy, regional organiser of the RMT Union, "it is a very serious situation that Westminster need to address, not only for Aberdeen but for the UK economy".

In 2013-14, tax revenues fell by a quarter to $4.7 billion due mainly to lower production. With prices at $50 a barrel, the wells could soon run dry.

On the docks in Aberdeen, oil workers put a brave face on hundreds of job cuts linked to sinking crude prices while union leaders warn that the worst is yet to come.

"It has happened before and it will happen again. There will probably be job losses but that's the way the industry works," said Tony Maguire, a rig worker.

But for Molloy, workers who lose their jobs face "a lifetime crisis".

Molloy was one of 20,000 people who lost jobs in a downturn in 1986 and said the decline is more dangerous now because North Sea offshore fields are depleting.

"I hope this is just a blip... but I am more concerned now than I was [then]," he told AFP in an interview in the city, which has been built on oil revenues.

At a time when the industry might be facing the biggest crisis in its history, the atmosphere in the Scottish hub has remained strangely calm.

In the port of Aberdeen, where dockers are busy loading equipment for a rig onto massive vessels, workers were trying to stay optimistic.

Robert, who has worked on the dock for 29 years and whose son is doing an apprenticeship in the sector, dismissed the latest fall in prices as "a few blips".

Residents still complain about traffic jams, seen as a positive sign reflecting the city's commercial buzz and the failure of road infrastructure to keep up.

"If things were really bad, the big building outside the airport would stop progressing," said Dave, a taxi driver, referring to a luxurious office complex being prepared for Norwegian oil services firm Aker Solutions. 

'A ghost town' 

Job cuts and their potential consequences on the city have not really sunk in but the warning signs are there.

"Aberdeen could be a ghost town in 10 years' time," indicated Welsh.

Begg remarked that job cut announcements have not resulted in actual layoffs yet.

"There will be a time delay, and there always is, so we could be looking at another six months to a year before it really starts to impact the economy," she said.

The oil and gas industry has made Aberdeen prosperous, salaries in the industry are two and a half times the national average, and the Scottish National Party (SNP) based its failed drive for independence on a prediction of future bountiful revenues from the North Sea.

Local residents, a majority of whom voted against independence, now point out that the SNP had based its budget calculations on a $110 barrel.

"The oil prices have fallen, I did not predict that but nobody else did," said Fergus Ewing, the SNP's regional minister for commerce, energy and tourism.

"In politics, you play the cards as they fall, we respond to the challenges, the challenges are very serious," he added.