ARAB AFFAIRS - Jan. 2 - Oil Exporters Head For Another Growth Year.

Arab oil exporting countries' economies are heading for a new expansion despite an expected decline in oil prices. But the price fall will be limited; more damaging to the Gulf oil states is the fall of the US dollars. According to an EIU report the Arab countries in 2004 will record an average 3.4% growth. Iraq is heading for a whopping 19% growth, under the combined effect of the end of the international sanctions and an expected increase in oil exports. Iraq's post-war reconstruction has also been a bonanza for neighbouring countries like Jordan and Lebanon. Lebanese ports have seen activity nearly double and car dealers in Jordan are reporting brisk business in the continued absence of customs duties since the fall of Saddam Hussein's Baathist regime in April. US Pres. Bush said on Jan. 1 after meeting with his special envoy for Iraqi debt, James Baker, that the former secretary of state would next travel to the Middle East. (Bush tapped Baker to lead US efforts to convince Iraq's creditors to help reduce its debt, which Washington says clouds efforts to put the war-ravaged country on course for democracy and prosperity). Saudi Arabia in 2003 posted a healthy SR 45 bn ($12 bn) surplus on the back of strong oil prices, and reported an actual growth rate of 6.4%. But for Egypt, the EIU only expects a 3% growth, below the 5% level required to resorb unemployment in the most populated Arab country. On a positive note, Moody's Investors Service said tourism flows in Egypt have been recovering and may gradually help ease its chronic shortage of foreign currency which caused its pound to lose 25% of its value since it was free-floated on Jan. 29, 2003. Moody's noted that the sharp devaluation has improved the prospects for tourism and export-related companies in Egypt. The Egyptian government said the Suez Canal earned the country record revenues of $2.57 bn in 2003, up from $1.947 bn in 2002. The canal is the country's third hard currency earner after tourism and exports. Syria's parliament on Dec. 29 ratified a draft 2004 budget of LS 449.5 bn ($8.99 bn), up 12% compared to the previous year. But official figures show Syria continued to depend heavily on oil sales that make up 82% of its exports. Lebanon's foreign currency reserves climbed to a record $12 bn in 2003 thanks to a positive investment climate born from a successful donors' conference in November 2002, the country's third largest bank, Banque Audi, said in its annual market outlook report. Israel's Central Bureau of Statistics on Jan. 1 said Israel's GDP rose 1.2% in 2003 after dropping 1.1% in 2002 and 0.9% in 2001. The Israeli economy has been left reeling by the twin impact of the 3-year-old Palestinian intifada and the global economic slowdown which has left about 11% of the population unemployed. The rise in 2003 was driven by a 5.5% boom in exports, yet GDP per capita slumped 0.6% in 2003 to $16,300 - still ten times that of the occupied Palestinian territories. It came as economic growth in the US, which has close links with Israel, exploded to an 8.2% annualised pace in the third quarter, the fastest since 1983. A drop in US jobless claims, as reported on Dec. 31, signalled that growth in the US might accelerate in 2004.