Gulf: An agreement between Gulf Arab states clearing the main hurdle to a Customs Union, and Moody's withdrawal of Iran's financial rating made the main economic news headlines in the Middle East this week.

The Gulf Cooperation Council (GCC) has agreed at a meeting on June 12 in Riyadh on a mechanism for distributing Customs revenue between its six members, Saudi Arabia, Kuwait, the United Arab Emirates (UAE), Bahrain, Qatar and Oman.

"The ministers approved the Customs one-point entry and the distribution of revenue on the basis of the final destination of imports," Omani Finance Minister Ahmad Makki said at the end of the meeting with his GCC counterparts.

The GCC approved at a summit in Oman last December a common customs duty of five percent, which will be implemented next January. The regional bloc has also plans for a monetary union in 2005 and a single currency by 2010.

Other economic news in the Gulf included a Saudi government privatisation "strategy", to stimulate the private sector's role and generate revenue to pay for the public $ 168 billion domestic debt. Saudi Finance Minister Ibrahim al-Assaf on June 5 said the strategy outlines sectors on offer, procedures of privatisation and a timetable for transferring certain services to investors.

Experts said the privatisation would cover part of the Saudi Telecom Company, power generation, public hospitals, non-associated gas exploration and production and air transport. In financial news, Moody's Investors Service on June 3 announced the withdrawal of Iran's sovereign rating, a B2 speculative investment grade, under US government pressure.

The move came as Iran plans a Eurobond issue, its first on the international market since the 1979 Islamic revolution that could raise up to 500 million euros. Abu Dhabi-based Dolphin Energy Ltd (DEL) on June 2 said it will decide in the coming weeks who will replace Credit Suisse First Boston (CSFB) as financial adviser to its estimated $ 10 billion project to export gas by pipeline from Qatar to the UAE, and then on to Oman and eventually Pakistan.

The Middle East Economic Survey (MEES) has reported that CSFB pulled out of Dolphin last month because of reservations over the choice of Occidental Petroleum as the second strategic partner in the project over majors such as BP, Exxon Mobil and Shell.

On the oil news front, OPEC kingpin Saudi Arabia's Oil Minister Ali al-Nuaimi has ruled out any plans to hike crude output when the cartel meets on June 26, saying that crude prices and stock levels were satisfactory.

The Secretary General of the Organisation of Petroleum Exporting Countries, Ali Rodriguez, on June 6 called on non-OPEC rival oil producers, such as Russia and Norway to maintain reduced export levels, which have helped shore up oil prices after September 11.

In agriculture news, Israel on June 4 reported the discovery of its first case of mad cow disease, in an animal that died in the occupied Golan Heights, a region captured from Syria in 1967. Israel's crisis-hit economy suffered another blow when the statistics bureau announced its highest ever unemployment rate, with 10.6 percent of the active population.