Noor Islamic Bank sets up Tunisia operation

Noor Islamic Bank announced Saturday that it is opening premises in Tunis to offer sharia-compliant financial services across North Africa.

Chief executive officer Hussein al-Qemzi said the group, which had a market capitalisation of 3.16 billion dollars (two billion euros) in March having started operations in Dubai early this year, will target clients in Algeria, Egypt, Mauritania and Morocco, as well as Tunisia, from its new base.

Qemzi said Tunisia offered "economic opportunities, stability, a legislative framework and a favourable geographic location." Emirates investors have ploughed more than 22 billion dollars into Tunisia, which predicts annual growth rates of six percent over the next decade.

Qemzi underlined that services would meet the basic principle of Islamic finance, which is the prohibition of Riba (usury), correlated with interest in today's banking. Islamic funds are also banned from investing in companies associated with tobacco, alcohol, pornography, pork or gambling, all considered taboo by devout Muslims.

The Islamic finance industry worldwide is worth around 700 billion dollars, Moody's Investors Services estimated in a February report. Islamic products, which were first sought to help pious Muslims in managing their wealth, have proved popular with non-Muslims in the United Arab Emirates where expatriate oil workers, for instance, have found Islamic mortgage rates attractive.

Profit-sharing is a typical way for Islamic banking to deal with interest considerations. A high-level committee of Muslim scholars meets regularly to interpret issues raised by financial instruments, using a variety of sources from the Koran through to modern-day Muslim law to settle debates.
AFP

Turkey reforms controversial law

Turkey's parliament has approved the softening of a law criticised by the EU for limiting free speech.

Article 301 of the penal code has been used to prosecute Nobel Prize winner Orhan Pamuk and other intellectuals. Since 2003, hundreds of people have been tried under the controversial law for "insulting Turkishness".

However, critics argue the amendments do not go far enough. Insulting the Turkish nation will still be a crime, punishable by two years in jail. Parliament voted 250-65 in favour of a government-backed proposal to make changes to the law late on Tuesday night. Under the reformed law:

• It will be a crime to insult the Turkish nation, rather than Turkishness.
• The justice minister will be required to open each case.
• The maximum sentence will be two years in jail, rather than three.

The EU has long called for changes to Article 301, arguing that the law places severe restrictions on free speech in Turkey. The issue has threatened to scupper Turkey's EU accession talks. Demands for the repeal or reform of the law had been growing since the murder last year of the outspoken newspaper editor, Hrant Dink, who had been charged under the law.

European Foundation for Democracy through Partnership

European Foundation for Democracy through Partnership was launched 15.04.2008.

Václav Havel, former President of the Czech Republic, and founding Chair of the Council of Patrons of the new European Foundation for Democracy through Partnership (EFDP), will join other patrons of the EFDP in a public event launching the new foundation in Brussels on 15 April 2008. He will be joined at the event by other EFDP patrons, including former Vice-President of the European Commission Etienne Davignon, former Minister of Foreign Affairs of Denmark Uffe Ellemann Jensen, and former Minister of Foreign Affairs of the Netherlands Bernard Bot. On 15 April 2008, together with European Commission President José Manuel Barroso and former president of Mozambique Joaquim Chissano, they will introduce this new initiative to strengthen European efforts to support democracy around the world.

http://www.efdp.eu/homepage

“By investing in the democratisation of its neighbours and their partners, it invests in their openness and development. It invests in fairer societies in which the incidence of social problems, the use of force, and political, religious or cultural radicalisation is decreasing. Ultimately, the return on the investment made is collective and translates into prosperity, stability and peace for all." Barroso

ENP Assistance priorities

Activities aiming towards the reform of the social sector in the Mediterranean Partner countries will be financed from the 1,4 billion euro 2007 budget committed by the European Commission, to assist the 17 countries along the EU’s Southern and Eastern border.

Under the new European Neighbourhood and Partnership Instrument (ENPI), the other priority objectives in which concrete actions will be financed are

• economic reforms and governance,
• employment,
• competitiveness and trade

Libya economy committee backs free market reforms

Reuters

TRIPOLI (Reuters) - Libya said on Saturday it was looking at relaxing restrictions on foreign and domestic trade, part of investor-friendly reforms which long-time leader Muammar Gaddafi has said are inevitable in the modern world.

The government's economy committee proposed that restrictions on imports be freed up and eventually cancelled, a source on the committee said. Export barriers would also be removed, except for cement, steel and subsidised commodities. The influential committee, part of the economy ministry, is made up of experts who study policy and issue recommendations to the government.

"The committee expressed the intention to remove the quantitative restrictions on imports to reach the stage of cancelling them in order to achieve price stability ... as well as create job opportunities," the source said.

The body also proposed that a system of obligatory domestic price restrictions be phased out, although price limitations would remain on commodities, medicines, electricity and oil derivatives.

Draft laws are expected to be drawn up covering competition, monopolies and the protection of consumers, the source said. The committee also decided on a mechanism to monitor wholesale commodity prices.

Libya has a tightly-controlled, command economy that is hamstrung by red tape, a bloated civil service and complex tax, customs and financial rules that have deterred private sector investment, leaving it reliant on oil and gas exports.

The Iraq war endangers Jordanian economic reform

The Daily Star

Since its economic crisis in the late 1980s, Jordan has pursued an economic reform program with several inter-related objectives: controlling inflation, cutting the government's budget deficit, fostering exports, supporting private-sector development, and rebuilding foreign reserves. Jordan largely succeeded in achieving these goals until the outbreak of the Iraq war in 2003. Since then, however, ripple effects of the war have caused rising inflation, undermining efforts to cut the deficit and promote exports.

Jordan's inflation rate in the period 1999-2003 was below 2 percent per annum, but it has now risen to over 6 percent. Higher food prices have accounted for half of the total inflation over the last three years, partly because Jordan is exporting many of its fruits and vegetables to the United States' armed forces in Iraq. The end of subsidized oil shipments from Saddam Hussein's government, rising world oil prices, and reduced government subsidies have combined to cause fuel prices to Jordanian consumers to rise 54 percent since 2002. Real estate and housing prices in Amman have also risen due to the influx of some 800,000 Iraqis, though this contributes less to overall inflation than is commonly believed. In addition, the Jordanian dinar's weakness relative to the Euro since 2002 has made imports from Europe more expensive for Jordanians, reinforcing the other inflationary trends.

Inflation is causing widespread discontent among Jordanians as it reduces their purchasing power. The opposition press frequently features stories about rising food prices, faulting the government for curtailing food subsidies over the last 15 years. Inflation is actually worse in rural areas than in Amman, because it is driven by rising prices for food and fuel - necessities that form a greater percentage of poorer Jordanians' consumption. This poses particular problems for the Jordanian government, which counts on East Bank Jordanians from outside Amman for much of its political support.

Sensitive to this constituency, the government has responded by raising the salaries of public-sector employees (who are mostly East Bank Jordanians), to compensate for their eroding purchasing power. This wage hike is a major driver of the government's fiscally expansionary budget for 2007, the first time that a Jordanian government departed from the contractionary fiscal policy that was central to Jordan's economic reform. The 2007 budget was 11 percent larger than the previous year's budget, significantly outpacing Jordan's real GDP growth. While the political logic of boosting civil servants' salaries and public-sector spending is clear, the expansionary budget is likely to boost inflation even further and to increase the budget deficit to a potentially unsustainable level.

Inflation also threatens to harm Jordanian exporters. Some Jordanian economists fear that the influx of spending from Iraqis who have moved to Jordan, in an environment of rising oil and food prices, risks sparking a form of "Dutch Disease" in Jordan. In such a situation, the foreign exchange and other inflationary factors would combine to overvalue the Jordanian dinar's real exchange rate relative to the US dollar, making Jordanian exports less competitive in the United States and the Arab world, Jordan's two main export markets.

Early signs of the impact of the increasingly overvalued real exchange rate on exports are already visible. Exports grew from 23 percent of GDP in 2003 to 29 percent in 2004, but as inflation picked up, Jordan's export growth relative to its GDP correspondingly disappeared. As of 2006, Jordan's exports remained stable at 29 percent of GDP. Jordan's exports are no longer growing more quickly than the economy in general. First quarter figures for 2007 show that Jordan's manufacturing exports, after driving Jordan's export growth the last several years, have now stagnated. (The export figures overstate Jordanian manufacturers' international competitiveness in any case, as they include clothing and textile exports from Jordan's Qualifying Industrial Zones, which have preferential access to the US market.)

To control inflation while maintaining an expansionary fiscal policy, Jordan is relying upon a tight monetary policy. But even if raising interest rates are able to keep inflation to tolerable levels, high rates risk stifling investment that is needed by many sectors of the economy and will only exacerbate the difficult situation of those seeking to buy real estate.

Jordan has, since its brief political opening in the late 1980s and early 1990s, sought to defer democratization in favor of economic reform. Now, inflation largely caused by the Iraq war threatens to undermine the pillars of Jordan's economic reform agenda. Jordan faces a severe challenge of creating new jobs and lowering its unemployment rate, which cannot be done sustainably by public-sector spending. If the private sector does not close that economic gap, discontent with the country's economic situation could be felt soon, particularly by the time of parliamentary elections scheduled for November.