RIYADH, Saudi Arabia, Jan. 13--National Commercial Bank of Saudi Arabia said that a sovereign wealth fund should be created to invest surplus revenues outside of the US. Saudi Arabia’s largest state bank urged the government to reduce the kingdom’s exposure to the dollar by investing more assets outside the US and gradually changing the riyal’s peg to the weak US currency, Reuters wrote.
The bank pointed out that the world’s largest oil exporter should set up a sovereign wealth fund to invest surplus revenues, now partly managed by the central bank which has $285 billion of foreign assets.
The bank’s statement, prepared by its chief economist, is the latest sign of pressure on the government to review exchange rate policy for the first time since 1986. The central bank and officials have repeatedly ruled out any policy shift.
“Time has come to reconsider the continued pegging of the Saudi riyal to US dollar, provided that this is done gradually,“ underlined Said Al-Shaikh, National Commercial’s chief economist. The government should set up a sovereign fund to “increase the returns on investment of most government surpluses, which are currently invested in US Treasury bonds“, Al-Shaikh said.
The kingdom should “diversify government investments in different currencies...to reduce risks and increase profitability,“ he said.
Saudi Arabia’s neighbors are reducing dollar exposure. Qatar’s $60 billion sovereign fund cut its exposure to the dollar by more than half over the last two years, the country’s prime minister said last year.
The Kuwait Investment Authority said it had doubled its asset allocation in Asia to more than 20 percent of its portfolio and the UAE bank is planning to shift more reserves into euros.
Saudi reserves are invested by the central bank and other state funds. “The continuing weakness of the dollar and declining interest rates would shrink returns achieved by these investments,“ Al-Shaikh said. “With the continuing rise of inflation rates, the real returns may become less,“ he warned.
The dollar peg forces the Saudi central bank to track US monetary policy. The Federal Reserve is cutting interest rates and inflation in the kingdom hit its highest in at least 12 years in October.
The US dollar fell more than 10 percent against the euro last year and more than 6 percent against the yen, driving up the cost of Saudi imports and fuelling inflation.

VALLETTA, Malta, Jan. 13--The euro zone economy could slow more than previously forecast, a policymaker said on Saturday, as other EU leaders voiced worries about the weak US economy and the strong euro currency.
Speaking on the sidelines of ceremonies to mark Malta’s January 1 adoption of the euro, Luxembourg’s Prime Minister Jean-Claude Juncker told reporters, “The European Commission is considering we could have (euro zone) growth of 1.8 or 1.9 percent“. The Commission’s latest forecast, in November, was for 2.2 percent growth in 2008, harder for the region’s exporters to compete, adding to the drag on growth from a sharp US economic downturn.
But France’s EU affairs minister Jean-Pierre Jouyet told Reuters the euro was rallying too fast, and came close to renewing French criticism of interest rate hikes from the European Central Bank’s last year which have increased the attractions of buying the currency. Despite the rate rises, global food and fuel price increases have pushed euro zone inflation above the ECB’s target ceiling.
Jouyet suggested the Eurogroup of EU finance ministers should “see if the (ECB’s) inflation target is appropriate in the euro zone.“
Although a global credit crisis has persuaded the ECB to keep interest rates on hold at 4 percent since last June, hawkish comments from ECB policymakers have spurred the euro’s long-running rally against the dollar, especially since the US Federal Reserve began to cut its benchmark rate in September.
The euro is not far off record highs it reached against the dollar last year and has hit record highs against sterling since the Bank of England joined the rate cutting cycle in December.
Jouyet’s latest comments mark an adaptation of earlier calls from French President Nicolas Sarkozy to make growth part of the ECB’s mandate--proposals that fell on deaf ears in Europe and met with a particularly strong rebuff from Germany.
However, Jouyet also said he would not comment on the policy of the ECB, which defends its independence from politicians fiercely.
Andrej Bajuk, finance minister of Slovenia which currently holds the rotating presidency of the EU, said euro strength “is a concern to all of us because the exchange rate should reflect the economic fundamentals of different parts of the world.“

BERLIN, Jan. 13--The global appetite for inventions and their money-making spin-offs has sparked an explosion in patent applications, mainly in Asia and the United States, which threatens to swamp the system responsible for dealing with them, experts have warned.
Worldwide patent applications are growing at about 4.7 percent per year, according to the 2007 report of the World Intellectual Property Organization (WIPO), and the pace is even faster among Asian economic tigers such as China and South Korea, AFP wrote.
In China, applications grew eight-fold in the decade since 1995 and doubled over the same period in South Korea.
Alison Brimelow, who heads the European Patent Office (EPO), said China has overtaken Europe in terms of patents filed, while the United States and Japan still lead the pack.
In 2005, 1.6 million applications were filed worldwide. “It is a source of anxiety in that globally, we are looking at a huge backlog of unexamined patents,“ said Brimelow, whose organization, based in the southern German city of Munich, grants patents valid in up to 34 European countries.
A recent EPO-linked report said patent applications to the organization had quadrupled over the past 25 years to reach 208,500 in 2006, mainly because of greater input by new Asian players, increased global business activity and ever-faster development in information, communication and biotechnologies.
A year ago, the backlog at the EPO stood at 440,000 files. In Japan it stood at 838,000 and in the United States at 1.1 million.
Of the applications received by the EPO, 30 percent are ruled out in the early stages of the research for “prior art“--finding out if inventions are indeed new--while nearly half of the remainder falls by the wayside later in the process.
In a bid to reduce backlogs, the EPO is looking at ways of encouraging greater cooperation among patent offices in Europe, and between top international players in Europe, the United States, Japan, China, and South Korea.
“Given the rapid growth of both Korea and China, it is very important to find ways to work effectively with them,“ said Brimelow, who points to difficulties, for example, in cooperating with China in the search for “prior art.“
But paradoxically, it is growing Chinese piracy which is currently putting a dampener on patenting in Europe, according to German business circles.

LONDON, Jan. 13--Financial analysts say the value of Britain’s 22 million homes rose to a record $8 trillion in 2007, UPI wrote.
That amount is nearly three times more than the gross domestic product of Britain and more than half of the United States GDP, The Times of London reported Saturday.
Despite a sharp rise in household borrowing in recent years, housing equity continues to outweigh mortgage debt by a three to one margin, said Martin Ellis, chief economist at Halifax, Britain’s largest mortgage lender.
The increase in housing value should more than offset any significant drops in housing prices this year, the Times said.
Citigroup predicts house prices in Britain could fall by 10 percent during the next three years while Halifax predicts prices should remain steady, except in the Midlands and northern England, where Halifax expects home prices to decrease, the Times reported.

BEIJING, Jan. 13--Fewer than one in eight Chinese are happy at work, with most complaining about dead-end jobs and wages eroded by record inflation, according to a new survey.
Only 12.6 percent of respondents said they were satisfied with their jobs, while 50 percent said they were unhappy with working conditions, according to the survey of 8,000 workers conducted by one of China’s leading online job-search agencies, www.zhaopin.com, AFP wrote.
More than 47 percent cited lack of a career path as their main gripe against employers, while 27.5 percent said poor wages were the key bone of contention in 2007 amid a rapidly rising cost of living. A total of 21.5 percent described themselves as “satisfied or very satisfied“ with their pay, while 42.1 percent were “strongly dissatisfied.“
The survey found that 80 percent of workers had received no compensation to make up for inflation in 2007 and 56 percent of workers were hoping for significant pay rises of between 50 and 100 percent in 2008.
More than half of respondents said they planned to change jobs if their pay demands were not met.
Inflation hit an 11-year high of 6.9 percent in November, boosted by surging food prices, according to official figures. December figures are due out in late January.

An Iraqi worker opens an oil pipeline at Al-Shouayba refinery station in Basra in this file photo.

BAGHDAD, Iraq,
Jan. 13--Iraq’s oil output rose again in December, wrapping up 2007 with a roughly 25 percent increase over last January’s average, the country’s oil ministry said Saturday.
The average output last month reached 2.475 million barrels per day, about 73,000 bpd more than in November, according to figures released by the State Oil Marketing Company, AP reported.
The figures showed that exports nearly exceeded 1.9 million bpd: about 1.6 million bpd from Basra in the south and more than 300,000 bpd from Kirkuk in the north.
The December figures brought the total average of the Iraqi output for 2007 to 2.181 million bpd, a rise of 28,000 bpd over 2006. In January 2007, output was 1.9 million barrels.
The average production in December from northern fields stood at about 536,000 bpd, 14,000 bpd more than in November. Production from southern fields also rose to 1.939 million bpd, from 1.88 million bpd in November.
Since the 2003 US-led invasion that removed Saddam Hussein from power, Iraqi production has mostly hovered between 1.7 million and 2 million barrels per day, according to the International Energy Agency. Its prewar production was 2.58 million barrels per day.
The resumption of oil shipments through a pipeline from Iraq’s Kirkuk oil fields into the Turkish Ceyhan export terminal, which was often halted in previous years because of sabotage, has given Iraq more flexibility to increase production.
Iraq, the holder of the world’s third-largest crude oil reserves with an estimated 115 billion barrels, aims to boost production to 3 million bpd by the end of 2008.
In dire need of expertise from international oil companies, Iraq early this month decided to rely on the Saddam-era law until a new law is approved. It set a Jan. 31 deadline for international oil firms to register to compete for tenders to help develop a number of oil and gas fields. Tenders are expected to concentrate on the redevelopment of Akkas, as well as other fields such as Rumeila South, Rumeila North, Subba/Luhais, Zubair and Missan in southern Iraq, and Kirkuk in northern Iraq.

PARIS, Jan. 13--French President Nicolas Sarkozy on Saturday defended banning a strain of GM corn, as a high-profile activist ended a hunger strike in response and farmers complained politics had trumped science.
“It does not mean that France does not participate in GMO research. It does not mean that there will not be GMOs in the future,“ Sarkozy said at a meeting of his Union for a Popular Movement party (UMP), referring to genetically modified organisms, AFP reported.
“It simply means that with the principle of precaution at stake, I am making a major political decision to carry our country to the forefront of the debate on the environment.“
Opponents of GMOs--a fiercely contested issue in Europe -- welcomed the French government’s decision, announced late Friday, to invoke a European Union procedure to bar the Monsanto 810 maize. It is the only GM crop grown in France.
Anti-globalizations activist Jose Bove ended a hunger strike begun Jan. 3 to press for a year-long ban on GM crops, eating from a bowl of soup at a news conference in Paris on Saturday. Bove has kept up a steady campaign against GMOs and has been convicted of ripping up GM crops in southern France.
Some farmers’ associations were in favor of the move, with France’s third-largest agricultural union calling it a “wise“ decision that “will go down in history“.
About 400 people marched in the northwestern city of Brest, expressing their appreciation for the ban.
“It is the first step toward the recognition of the danger that GMOs represent,“ said Paul Hascoet, head of a regional federation of organic farmers.
But France’s main agricultural union said it was an “appalling“ decision. “It was not taken with sufficient hindsight, and I have serious doubts about its objectivity,“ said Jean-Michel Lemetayer, head of the National Federation of Agricultural Workers’ Unions.
A federation of agricultural companies said “demagoguery has triumphed over agricultural innovation.“
The decision sparked criticism from within Sarkozy’s party as well, with National Assembly president Bernard Accoyer saying the issue should be debated in parliament.

TOKYO, Jan. 13--Japan suspended beef imports from a US meatpacking plant after recent shipments from the facility contained products that failed to meet Japanese import regulations, officials said Sunday.
Imports from Smithfield Group’s Moyer packing factory in Pennsylvania will be suspended because 1,264 boxes of a recent shipment contained beef from cattle 21 months old, the Agriculture and Health ministries said in a joint statement issued late Saturday. Japan allows only meat from cows 20 months old or younger.
Two Japanese importers were ordered to recall the products after officials found an estimated 1.2 metric tons (1.3 tons) of the 15.4 metric ton (17-ton) shipment was meat from cattle 21 months old, the statement said.
The violation stemmed from a computer programming error, the ministries said, citing US investigators’ findings.
The mistake was found by US agricultural department officials during a regular inspection, an official of the Agriculture Ministry told AP, speaking on condition of anonymity, citing government policy.
Washington notified Tokyo of the error Saturday and shipments from the Smithfield plant will be banned until Japan receives a detailed report on the mistake, the statement said.