ECONOMIC SURVEY - 05-Oct-94

(COMMUNICATED BY GPO ECONOMICS DESK)

Jerusalem, 5 October 1994

PEACE ECONOMY:

* SECONDARY AND TERTIARY BOYCOTT OF ISRAEL ENDED BY 6 GULF STATES.
On 30 September 1994, the six member states of the Gulf Cooperation Council Saudi Arabia, Oman, Kuwait, Qatar, Bahrain, and the UAE announced they would cease upholding the secondary and tertiary boycotts of Israel. The secondary boycott blocked Arab countries from doing official business with firms dealing with Israel while the third level boycott stopped these states from contacting companies dealing with blacklisted concerns. Finance Minister Avraham Shohat said the move would help the Israeli economy while Industry and Trade Ministry Micha Harish called the move political rather than economic. Harish commented that due to the peace process, multinational concerns have already begun making moves to enter the Israeli market, proving that the boycott had already lost its teeth. Danny Katarivas, head of trade with Arab countries at the Industry and Trade Ministry, said that without a doubt, multinationals which until now had been bound by the boycott will review their relations with Israel and make it part of their general Middle East business plans. He noted that international construction, insurance, banking, and trading concerns are those most likely to review their relations with Israel following the GCC's move.
Industry and Trade Ministry Avital Ber, (02)-220340

* BANK OF ISRAEL: TRADE WITH JORDAN WILL NOT GROW TO MORE THAN $150 MILLION DURING NEXT 10 YEARS.
The amount of trade between Israel and Jordan will not grow to more than $150 million during the next 5-10 years, according to the Bank of Israel. This analysis was arrived at by two economists from the Bank's research division who noted that even with free trade and warm peace relations, the amount of trade between the two states would be minimal in the short and medium term. The researchers based their evaluation on comparisons of the import and export needs of both states. Likely trade items include vegetables, fruits, and textiles from Jordan while export items from Israel include scientific instruments and industrial inspection equipment.
Bank of Israel Ohad Bar-Efrat, (02)-552712

* ISRAEL ELECTRIC CORPORATION BEGINS LINKING ELECTRICITY GRID TO JORDAN.
On 04.10.94, work began work in the Afula area to link Israel's electricity grid to Jordan's at the Sheikh Hussein bridge. The work calls for linking high tension wires over the border crossing and erecting the proper infrastructure for holding the wires. The IEC expects to complete the work shortly.
Israel Electric Corporation Rafi Ben-Sira, (03)-5605101

* GULF STATES INTERESTED IN STORING AND HANDLING PETROLEUM IN ISRAEL.
A number of Persian Gulf States are very interested in using Israel as a storage and a trans-shipment site for petroleum products, Energy Minister Moshe Shahal told the Cabinet on 02.10.94. Shahal told the Cabinet that the states have shown great interest in storing petroleum in Israel and of using Ashkelon and Haifa as trans-shipment centers for their petroleum exports to Europe. Shahal said that Petroleum Services, a Government- owned company, had already begun dealing with the issue and that multinational firms in the industry had turned to his office. These companies include Amoco and Enron, both based in the United States.

* ADDITIONAL ILLEGAL SHIPMENTS OF VEGETABLES FROM THE TERRITORIES CONFISCATED BY AGRICULTURE MINISTRY.
The Agriculture Ministry has reported that over the past few months, as vegetable and fruit prices have risen in Israel and as the agricultural agreement between Israel and the Palestinians has been implemented, the number of illegal shipments of these items has steadily increased. During the last coordinated effort using 75 agents of the Agriculture Control Authority and with assistance from the IDF and Police, 14,000 live chickens, and several tons of grapes, cucumbers, tomatoes and other produce were confiscated.

CONFERENCES

* EUROPEAN UNION MIDDLE EAST PARTENARIAT 1994.
The European Union's Middle East Partenariat 1994 will be held in Cairo on 6-7 December. This business collaboration initiative developed by the EU brings together businesses from Europe and the Middle East. More than 100 Israeli firms are expected to be registered as 'host companies' while more than 1,000 Israeli, Egyptian, Palestinian, Jordanian, and European firms will participate.

* CASABLANCA ECONOMIC SUMMIT

The Casablanca Economic Summit, officially termed the Middle East/North Africa Economic Summit is scheduled to take place 31 October through 2 November, 1994. The primary goal is to contribute to the region's economic potential by bringing together representatives from the region as well as from Europe, Russia, Africa, Asia, and the Americas. Foreign Minister Shimon Peres will lead the Israeli delegation while Prime Minister Yitzhak Rabin is scheduled to make a policy speech.

FOREIGN TRADE: