Business

AMMAN — Speculators' liquidity is prevailing at the Amman Stock Exchange (ASE), according to the annual report of a prominent Jordanian company.  

In a forword, the chairman of  Al Amin for Investment told the shareholders that, in the absence of institutional investments, speculators are the key bourse players influencing trading volumes and share prices.

Al Amin, established in November 1995, is listed on the ASE as a public shareholding company capitalised at JD10 million to subscribe and invest in stocks, conduct brokerage business in the ASE, develop and manage securities portfolios of third parties, and manage (Islamic) Muqaradah bonds.

The company owns 94.45 per cent of the Amman Securities and Investment Company which is capitalised at Jd1.5 million and operates as a brokerage firm for trading shares and stocks on the ASE.  

Noting that the trading volume last year amounted to around JD2.3 billion, down from JD3 billion in 2013, the chairman indicated that most banks are still reserved about investing in Amman Bourse or even extending facilities to investors on the assumption that the stock market is a "risky sector".

The chairman, Mousa Abdul Aziz Shehadah, also mentioned the regress of foreign investment, and weak liquidity as other factors behind the  decline in trading volumes.

"The unusual circumstances gripping the region, and the associated risks  continuing for nearly four years until now, blurs the outlook and makes it extremely difficult  to predict the bourse's trajectory during 2015," Shehadah wrote.

"Such a situation is spoiled by speculators whose liquidity, in the absence of institutional investments, weighs heavily on trading volumes and share prices," he said.  

The chairman expressed hope that the sharp drop in oil prices would have a positive effect on the Jordanian economy and on the ASE as such a  decline would lower production costs and operations in all sectors, especially the industrial companies that rely on energy in its activities.

Within this context, he mentioned transport and distribution firms as examples of entities that may profit, if not also liable under the new Income Tax Law that went into effect on January 1, 2015.                 

"In such cases, there will be higher demand for the shares of those companies resulting in higher prices," the chairman said.

Describing the activities at the bourse last year as quiet and the dealings as cautious, the annual report concluded that the company's operations generated a JD0.6 million profit, down  from a JD1.1 million recorded in 2013.

The shareholders on Wednesday approved a recommendation from the board of directors to distribute cash dividends at a rate of 6 per cent.

The JD600,000 in dividends were taken equally  from the profit generated in 2004 and from retained earnings from previous years.       

According to the annual report, Al Amin's capital investment stood at JD6.45 million at the end of last year. 

Total assets as of December 31, 2014, stood at JD15.2 million while total liabilities were JD0.7 million. Shareholders equity totalled JD14.3 million.

Jordan Islamic Bank and Bayt Al Tawfiq for Development Holding Company are the two major shareholders in Al Amin with a 38 per cent and an 8.7 per cent stake respectively.

AMMAN – The Housing Bank for Trade and Finance (HBTF) will extend a JD250 million loan to the National Electric Power Company to support its financial needs under an agreement signed recently.

In a statement issued on Wednesday, the HBTF noted that the agreement is part of the bank's role in supporting the national economy through providing funding to "productive" and "effective" economic sectors, especially energy, which is witnessing huge challenges.

RAMALLAH, West Bank — Israel's decision to withhold $130 million a month in revenue collected on behalf of the Palestinians is strangling the economy and leaving the banking system dangerously exposed, the Palestinian central bank governor said on Wednesday.

Israel stopped the transfer of revenues from tax and customs duties in January in protest at the Palestinians' move to join the International Criminal Court from April 1, when war crimes charges may be filed against Israel.

Since then, more than $500 million has been withheld from the economy, prompting the Palestinian Authority, which administers the West Bank, to cut most of its employees' salaries by 40 per cent and resort to an emergency budget.

The government is also in danger of not being able to service its outstanding loans, according to the governor of the Palestinian Monetary Authority, the central bank.

"We have informed the Palestinian Authority that we have reached the limits permitted to them, or are about to get there, and that banks will not be able to continue to fund it," Governor Jihad Al Wazir told Reuters.

"The situation in general is very tough. Suspending the tax transfers is leading to a rapid economic deterioration," he said.

It is not the first time Israel has suspended the transfers — it took similar steps in 2006, 2007 and 2008 — but the risks this time may be greater and leave the economy ever more dependent on handouts from international donors, who have not followed through on commitments in recent months.

With the deficit already at around 15 per cent of the gross domestic product (GDP) and the tax transfers accounting for two-thirds of income, the budget is falling into a deeper hole every month. 

Unemployment stands at 25 per cent and output is set to contract this year, sharply increasing the threat of instability and violence.

"The situation could become untenable, with a growing risk of social unrest and strikes that could lead to political instability," the International Monetary Fund (IMF) said in a report at the end of January.

"These serious risks could be mitigated if Israel quickly resumed transfers of clearance revenue and donors front-loaded their aid," it added.

The Israeli military has warned the government that the revenue withholdings are fuelling violence in the West Bank.

There is a chance Israel will resume the payments as soon as a new government is in place although it has given no indication that it will do so. Prime Minister Benjamin Netanyahu will be formally asked to form a coalition on Wednesday and is expected to have a new government ready in weeks.

But with the Palestinians showing no signs of backing away from the ICC, Netanyahu may decide to keep up the pressure. US Congressional funding to the Palestinians may also be cut in the event that war crimes charges are brought against Israel.

One diplomat tracking the state of play estimated that if the Palestinian Authority does not receive any transfers by June, its finances would collapse.

‘At the limit’

The situation has put ordinary Palestinians under huge financial pressure.

Nidal Sadqa is a 47-year-old father of four who works for the Palestinian economy ministry in Ramallah and for the past three months he has been paid 60 per cent of his usual salary. Half of what's left each month pays bank loans and other debts.

"I haven't paid the rent for three months and I owe the supermarket for things I've already taken," he said, describing circumstances familiar to the nearly 160,000 people employed by the Palestinian Authority in Gaza and the West Bank.

The desperation has prompted more Palestinians to try to find work in Israel. Already around 130,000 cross the border each day, 30 per cent of them without permits, and Israel is making plans to handle up to 200,000 Palestinian workers.

While that provides income, it is cheap labour for Israel and draws productivity out of the Palestinian economy. The work is also unpredictable, which means that any personal loans taken out against the expected salary can quickly turn sour.

Naser Abdul Karim, an economist in the West Bank, estimates that Palestinian Authority employees have borrowed $600-$700 million from Palestinian banks, while the Palestinian Authority owes nearly $1.5 billion to the same institutions, the limit allowed by the Palestinian Monetary Authority.

"There is a fear the authority may collapse in terms of being able to function and provide services," said Abdul Karim, adding that if Netanyahu did not release the pressure, "I am sure the entire Palestinian economy will collapse."

While some big Palestinian businesses continue to perform well,  including telecoms provider PalTel and investment conglomerate Padico Holding, the lower rungs of the ladder, and especially the economy at the family level, are under strain.

And the Palestinian Monetary Authority, which tries to hold the strands together despite not having its own currency to manage, is desperate for Israel to open the taps again.

"The economy is retreating and we are facing a stage of economic shrinkage," said Wazir, a British-educated economist who has headed the bank since 2008. 

"We have reached or are about to reach the permitted limits for borrowing according to our internal regulations," he added.

AMMAN — A meeting held Tuesday at the King Abdullah II Industrial Estate in Sahab examined means to boost and facilitate investments in the Kingdom.

Jordan Industrial Estates Corporation (JIEC) Chief Executive Ali Madadha highlighted facilities offered for investors, according to a JIEC’s statement.

He listened to inquiries made by members of Jordan Investors Association (JIA) and pledged to follow up on them with concerned parties. Madadha stressed the importance of cooperation between the two sides to resolve various issues pertaining to investment projects.

JIA members made proposals on providing housing and transport facilities for workers.  JIEC,  a financially and administratively autonomous corporation, is  responsible for managing, marketing and developing industrial estates in Jordan.

LONDON — When Saudi Arabia's Oil Minister Ali Al Naimi says he does not want the kingdom to lose market share anymore, he really means it.

Iraq, Venezuela, Russia and Kazakhstan all saw their oil partially replaced by Saudi crude in Asia, the United States and even Europe, with its lackluster demand, as traders said the kingdom offered customers more oil, and more cheaply.

Supplies from the leading producer of the Organisation of Petroleum Exporting Countries (OPEC) are notoriously difficult to track as they reach customers under confidential direct deals rather than via the spot market. 

But an indirect confirmation of rising deliveries came on Sunday from Naimi himself.

The veteran minister, who carefully chooses his words and figures in his speeches, said the kingdom was now pumping around 10 million barrels per day (bpd), near an all-time high and some 350,000bpd above the figure Saudi Arabia gave to OPEC for its February output.

And to stress the message, Naimi said the kingdom had the ability to increase if customers asked for more.

Gary Ross, the founder and executive chairman of PIRA, the first consultancy to predict Saudi oil output rising to 10 million bpd in March, said PIRA's research and conversations with customers showed additional crude would be delivered to Asia and the United States.

In Asia, some Chinese refineries switched from using West African barrels to the Saudi Arab Light grade. In the United States, some customers increased their use of Saudi oil because of very competitive pricing.

Also contributing to the rise in Saudi supplies were much lower loadings of Iraqi crude because of bad weather in February, Ross remarked.

"The Saudis have said they are ready to increase supply if there is more demand. So over the past months they got more demand and they supplied the market with additional crude," said Ross.

"I think Saudi Arabia is comfortable with its current production volumes and is happy to restore market share. They are unlikely to go much above 10 million," he added.

‘Super competitive’ 

Naimi has repeatedly said that Saudi Arabia's loss of its share in major markets was the main reason it decided against cutting production at OPEC's last meeting in November 2014.

The decision contributed to a steep decline in oil prices to below $50 per barrel in January from $115 in June 2014.

The Saudis are hoping the development will cut output from high-cost producers, such as US shale explorers, and win back market share for low cost producers such as Saudi Arabia.

The past weeks have shown that Riyadh was not waiting for a bigger market share to come their way, but was pro-actively managing the situation.

"The Saudis have been placing more barrels in Europe since February — something I haven't seen for a long time. It creates additional pressure on Russia and Kazakh oil grades," indicated a trader with an oil major, which buys large volumes of Saudi, Russian and Kazakh crude.

Russia and Kazakh supplies to the Mediterranean markets have fallen in January and February because of bad weather. Nigerian exports have also dropped due to disruptions.

"Basically, the Saudi selling prices have been super competitive and hence demand for their crude strong," said Amrita Sen from Energy Aspect, who also saw back in February Saudi supplies exceeding 10 million bpd in March.

According to Thomson Reuters Oil Research and Forecasts, US imports of Saudi crude stood at 30 million barrels in February, overtaking China after Saudi Arabia cut prices for America.

Sen indicated that higher than expected refinery runs and fuel demand in Asia and Europe had also allowed Riyadh to sell more.

State giant Saudi Aramco said it saw supplies to China rising over time.

"We see our energy supply potentially doubling... as China's energy demand grows," Aramco's chief Khalid Al Falih told Beijing-based media group Caixin in an interview.

Saudi Arabia tends to raise production without increasing exports in the summer months when local power demand spikes due to air conditioning needs. Demand at home has also been rising as domestic refining capacity grew. 

However, the kingdom has invested heavily in gas production so it could save more crude for exports instead of burning it for power generation.

Separately, a senior Gulf OPEC delegate told Reuters on Tuesday that stronger-than-expected global oil demand should help support crude prices at around $55-$60 a barrel in the next two months despite some signs of a growing glut in the United States.

The comments appear to counter some market forecasts that the US oil glut may push prices to as low as $20-$30  and are a sign that the core Gulf OPEC members remain confident about their strategy of defending market share.

"Global demand is definitely growing much stronger than expected. In December, January, and especially February it was beyond what forecasts anticipated," the delegate said.

Low oil prices may have encouraged demand to pick up particularly in the United States but also in Asia, the Gulf delegate, who declined to be identified, added.

Oil prices are expected to fluctuate around $55-$60 a barrel through April, when they may come under pressure because of seasonal refinery maintenance and rising stocks in the United States, the Gulf OPEC delegate continued.

International benchmark Brent crude was trading above $55 on Tuesday.

Underlining brimming US supplies, crude stocks rose nearly three times as much as expected, as storage at the Cushing, Oklahoma oil hub reached a new record, a government report showed last week.

"There are still uncertainties, prices will stay fluctuating around 55-60 dollars," the delegate indicated. "If you look at the US, it's really tough, stockpiling is rising. But if you look at the international market, stocks are on the higher side but they are still within the five-year average."

The Gulf OPEC delegate said rising production reflects increasing exports to meet global demand as well as growing local needs.

"Increased production is due to two reasons: sales for the international market reflecting stronger demand from customers, not anything else, and local needs with the new refineries online," he indicated.

AMMAN — An annual investment forum in Dubai next week provides a good opportunity to promote Jordan's investment and economic environment, Jordan Chamber of Commerce President Nael Kabariti said on Sunday.

He added that Jordan’s participation in such forums and conferences is part of the chamber’s policy to promote the Kingdom for Arab and foreign investors.

He indicated that Jordan’s session would include working papers on the educational sector and investments realised in in Aqaba and the Dead Sea besides the campaigns promoting energy, tourism and hospitality, health, mining, finance and banking, logistics and ICT, among others.

Kabariti noted that the session, which will be held on the first day of the event, aims at acquainting participants with the legislative and economic developments  within Jordan's comprehensive reform drive.

AMMAN — The Amman Chamber of Commerce (ACC) announced Monday in a press statement that, in collaboration with USAID-funded Fiscal Reform Project, it hosted a Public Private Dialogue forum on international best practice in tax policy and administration in the Jordanian context.

"The discussion, attended by experts in fiscal and tax policy, representatives of the business community and members of the chamber’s board of directors, focused on comprehensive tax reform as well as the pillars of international best practice in tax policies, which are based on justice, neutrality, free competition, simplicity and progressiveness," the ACC said in the press release.

“Given the prominence of the debate on tax policies in Jordan’s public and private sectors, it is crucial to have an open and interactive dialogue with Jordan’s business leaders and members of the Amman Chamber of Commerce, to exchange views as well as lessons learned in Jordan’s tax system and how it is connected to Jordan’s fiscal and economic stability,” the press statement quoted Fadi Daoud, deputy chief of party of the Fiscal Reform Project, as saying.

One of the key components of the project is improving revenue mobilisation through strengthening tax administration and advancing tax reform. 

NEW YORK — The Organisation of Petroleum Exporting Countries (OPEC) and lower global oil prices delivered a one-two punch to the drillers in North Dakota and Texas who brought the US one of the biggest booms in the history of the global oil industry.

Now they are fighting back.

Companies are leaning on new techniques and technology to get more oil out of every well they drill, and furiously cutting costs in an effort to keep US oil competitive with much lower-cost oil flowing out of the Middle East, Russia and elsewhere.

"Everybody gets a little more imaginative, because they need to," says Hans-Christian Freitag, vice president of technology for the drilling services company Baker Hughes.

Spurred by rising global oil prices, US drillers learned to tap crude trapped in shale starting in the middle of last decade and brought about a surprising boom that made the US the biggest oil and gas producer in the world. 

The increase alone in daily US production since 2008, nearly 4.5 million barrels per day, is more than any OPEC country produces other than Saudi Arabia.

But as oil flowed out and revenue poured in, costs weren't the main concern. Drilling in shale, also known as "tight rock", is expensive because the rock must be fractured with high-pressure water and chemicals to get oil to flow. 

It became more expensive as the drilling frenzy pushed up costs for labour, material, equipment and services. In a dash to get to oil quickly, drillers didn't always take the time to use the best technology to analyse each well.

When oil collapsed from $100 to below $50, once-profitable projects turned into money losers. OPEC added to the pressure by keeping production high, saying it didn't want to lose customers to US shale drillers. 

OPEC nations can still make good profits at low oil prices because their crude costs $10 or less per barrel to produce.

Now drillers and service companies are laying off tens of thousands of workers, smaller companies are looking for larger, more stable companies to buy them, and fears are rising of widespread loan defaults. 

OPEC said in a recent report that it expects US production to begin to fall later this year, echoing the prediction of the US Energy Department.

To compete, drillers have to find ways to get more oil out of each well, pushing down the cost for each barrel. Experts estimate that shale drillers pull up just 5-8 per cent of the oil in place.

"We're leaving behind a large amount of hydrocarbons, and that's quite unacceptable," Freitag says. "It requires different thinking now."

Engineers have adapted some of the best sensor technology and mathematical models, developed first for deep offshore drilling, to see into the rock better. 

As they drill, they use imaging technology to find natural cracks in the rock that they can then use as a target when they fracture the rock, to leverage natural highways for oil and gas.

After they fracture the rock, they can map the new cracks. That way they can know how close they can drill another well to target more oil without sapping production from the first well. 

EOG Resources, one of the pioneers of shale oil drilling, has reduced the space between wells in an area called the Leonard Shale, in Texas, to 560 feet from 1,030 in 2012.

Drillers are finding they can back into wells drilled only a few years ago to re-frack them or inject specially tailored fluids to get oil flowing again. That can return a well in some cases to peak output, without the expense of drilling a new well.

The companies are also getting much faster.

Exxon says it has cut the time it takes to drill a well in North Dakota's Bakken formation by one-third over the past four years. It has also cut by half the cost of fracturing the rock and preparing the well for production. 

Exxon will run 13 rigs in the Bakken this year, the same number it did last year, despite the low prices.

Companies will save money in the coming months because service companies, rig operators and other suppliers to the industry will lower rates to keep business. 

Oil companies have been telling investors in recent weeks they expect to see cost reductions of 10-40 per cent, depending on location and type of service.

Drillers are also focusing on the wells in the parts of formations that they know to be the most prolific, and cutting back drilling in places where they aren't quite sure what's below. That reduces overall spending without dramatically decreasing production.

US shale drillers will never push costs as low as OPEC countries. But the US industry may be able to survive, or even thrive, if drillers can learn to quickly adapt.

"There is a significant portion of this that is competitive on a global basis," said Exxon Mobil Chief Executive Officer Rex Tillerson at an annual investor meeting earlier this month. "North American tight oil supply is more resilient than some people think it is."

Separately, Saudi Arabia's oil minister stressed that oil producers outside OPEC must cooperate to boost falling crude prices as the group refuses to take responsibility alone.

"We refuse to take responsibility alone because [OPEC] produces 30 per cent of market output and 70 per cent comes from outside," Ali Al Naimi said in remarks carried Monday by the Saudi Press Agency (SPA).

Crude prices slumped by about 60 per cent between June and February, weighed down by a glut of global supplies and concerns about stalling demand.

The slide was exacerbated in November when OPEC refused to cut production to rescue falling prices, saying it wanted to maintain its market share.

The 12-member group, led by top producer Saudi Arabia, pumps around a third of the world's oil but other major producers, such as Russia, are not tied by its decisions.

Asked whether OPEC would be willing to work with non-members, Naimi pointed to the crash of 1998 when the group cooperated with other producers to cut output and support oil prices.

"Today, the situation is difficult. We tried, met with them but did not succeed because they insisted that OPEC should take the responsibility alone," said Naimi, in reference to talks with non-OPEC producers ahead of the group's meeting in November.

"All must contribute if we want to improve prices because it is in the interest of all," the Saudi minister added.

Naimi remarked that the kingdom had the capacity to supply any new client with crude.

Saudi Arabia had no objection to new oil producers joining OPEC, he noted, indicating that several countries have in the past turned down invitations to become members of the group.

The Saudi minister also defended the oil policy of Gulf states, saying they were taking measures to stabilise the market.

"We are not against anyone. We are with all to support stability in the market and to support a balance between supply and demand," Naimi said.

Saudi Arabia and its Gulf partners have been criticised for allegedly using oil as a political weapon against countries within and outside OPEC.

Oil prices fell in Asian trade Monday with US benchmark West Texas Intermediate for May delivery down 65 cents at $45.92 and Brent tumbling 58 cents to $54.74.

Bloomberg News quoted Naimi as saying on Sunday that his country is producing almost 10 million barrels of crude a day.

Saudi Arabia pumped 9.85 million barrels a day in February, according to Bloomberg.

AL BAIDA, Libya — The battle for Libya's oil wealth has taken on new dimensions as rival governments lay claim to the National Oil Company (NOC), further deepening divisions in the volatile North African nation.

The latest row erupted last week as UN envoy Bernardino Leon, who is mediating between Libya's warring factions, warned the country was heading towards destruction unless a political deal is found.

It also comes as the Daesh terror group, which has made huge profits from illegal oil sales in Syria and Iraq where it has seized chunks of territory, has gained a foothold in Libya.

The once lucrative oil industry has fallen victim to the unrest that has gripped the country since dictator Muammar Qadhafi was toppled and killed in the 2011 NATO-backed uprising.

Militants have stepped up attacks on the industry which had a pre-revolution output of about 1.6 million barrels per day (bpd), accounting for more than 95 per cent of exports and 75 per cent of revenues.

The economy has been reeling since December, when production fell to around 350,000 bpd as the Fajr Libya militia alliance, which includes Islamists, attacked oil terminals in the east.

Fajr Libya seized Tripoli in the summer and installed a government and parliament opposed to the internationally recognised government and legislature elected in June.

On Monday, the recognised government, which sits in the remote east between the cities of Tobruk and Baida, severed ties the Tripoli-based NOC.

"The legitimate Libyan government... is the only legitimate channel that has the right to deal and to contract companies to authorise gas and oil sales," it said in a statement. 

'A messy situation' 

To be valid, such sales must be made via the new NOC headquarters in the eastern city of Benghazi and approved by company Chairman Al Mabrook Abu Seif, it added.

The statement, published on its Facebook page, did not elaborate on how new contract payments should be made, but anyone who violates its decisions will be prosecuted.

On Thursday, the NOC board in Tripoli hit back.

"The NOC's position is neutral and receives no directives from either the Tripoli- or Baida-based governments and operates in complete independence from both sets of authorities," it said in a statement in English. 

 The NOC said it would continue to operate from Tripoli, where it was founded in November 1970, and would "remain an independent institution that operates outside political disputes".

Libya slid into chaos after the 2011 revolt, with former rebels and powerful tribes vying for power in a state whose oil reserves are estimated by OPEC at around 48 billion barrels.

"It really is a messy situation, with two governments, two parliaments, two heads of the same central bank, and now two NOCs!" said Valerie Marcel, an associate fellow at London's Chatham House.

The expert on oil and energy issues noted that "the two governments and their militias were already battling it out for control over oil production and export infrastructure".

'New level of complexity'  

"Creating a rival NOC in Benghazi creates a whole new level of complexity and uncertainty for oil buyers," she said.

But Abu Seif disagreed.

"We sought to run the NOC in a neutral fashion but we have failed since Fajr Libya seized Tripoli and put the headquarters under its control," he said.

Abu Seif added that he would respect the terms of contracts which have already been struck with the Tripoli headquarters, but stressed that new ones must get his approval.

Marcel said the internationally recognised government has a clear advantage over its Tripoli rival because it controls export terminals.

This was not always the case.

In July 2013, rebels blockaded four export terminals to press for restored autonomy for the eastern Cyrenaica region, slashing output to just 200,000 bpd from 1.5 million bpd.

Under a deal with the then government, the rebels returned control of two terminals in April 2014 and the remaining two in July last year.

The deputy prime minister of the internationally recognised government, Abdul Salam Al Badri, has warned that dealing with NOC officials in Tripoli is "unlawful" and tantamount "to financing terrorist groups".

BEIJING — China received critical support from the International Monetary Fund (IMF) and the Asian Development Bank (ADB) on Sunday for its goal of establishing a new Chinese-led multilateral lender, adding to a growing wave of endorsements that has worried the United States.

Leaders of the IMF and ADB, speaking at a conference in Beijing, said they were in talks with or happy to cooperate with the Asian Infrastructure Investment Bank (AIIB), a $50 billion lender to be majority funded by China that is seen by some as a rival to these established international financial institutions.

The United States, concerned about China's growing diplomatic clout, has urged countries to think twice about signing up and questioned whether the AIIB will have sufficient standards of governance and environmental and social safeguards.

Some 27 countries have already signed up to participate in the AIIB, China's Finance Minister Lou Jiwei told China National Radio on Saturday. It will provide project loans to developing countries and is slated to begin operations at the end of 2015.

The United States' key strategic allies in the region, Australia, Japan and South Korea, are also considering joining the proposed Beijing-based bank.

Early opposition to the AIIB from Western countries partially dissolved after Britain said this month it would join.

"We have decided to become the first major western nation to be a prospective founding member of the new Asian Infrastructure Investment Bank, because we think you should be present at the creation of these new international institutions," British Finance Minister George Osborne, said in a pre-election budget speech to parliament last week after rebuffing a telephone plea from US Treasury Secretary Jack Lew to hold off.

The move by Washington's close ally set off an avalanche. Irked that London had stolen a march, Germany, France and Italy announced that they too would participate. Luxembourg and Switzerland quickly followed suit.

Canberra could formally decide to sign up to the AIIB when the full Cabinet meets on Monday, Australian media have said.

At least eight more countries may join the lender by the March 31 deadline, Jin Liqun, secretary general of the interim secretariat that is establishing the AIIB, told a panel at the conference on Sunday.

The fund will have approval from its shareholders at the start to double its capitalisation to $100 billion, he said.

"China will follow the rules of the international community and will not bully other members but work together with them and try to reach consensus in all the decisions we make without brandishing the majority shareholder status," he added.

Bandwagon 

In an editorial published on the same day, China's official Xinhua news agency suggested that the United States might be embarrassed that many of its allies had not heeded its warnings.

"For decision makers in the United States, they really have to be reminded that if they do not jump on the bandwagon of change in time, they will soon be overrun by the bandwagon itself," it said.

IMF Managing Director Christine Lagarde said on Sunday that the fund would be "delighted" to cooperate with the AIIB.

China's Lou and ADB President Takehiko Nakao said at the conference they had held discussions on possible cooperation, with the Chinese finance minister adding that topics discussed included safeguard standards.

Lou has previously said AIIB would complement rather than compete with other institutions such as the ADB, the Manila-based multilateral lender dominated by Japan and the United States.

Jin said developing countries in Asia would receive the bulk of loans for infrastructure projects, which could be co-provided with commercial banks and pension funds.

Non-Asian countries would also only hold 25 per cent of the AIIB's shareholding, lower than their stakes at the founding of the ADB, he added.

The trail of transatlantic and intra-European diplomatic exchanges points to fumbling, mixed signals and tactical differences rather than to any grand plan by Europe to tilt to Asia.

That is nevertheless the way it is seen by some in Washington and Beijing.

As recounted to Reuters by officials in Europe, the United States and China who spoke on condition of anonymity because of the sensitivity of the subject, the episode reveals the paucity of strategic dialogue among what used to be called "the West".

It also highlights how the main European Union (EU) powers sideline their common foreign and security policy when national commercial interests are at stake.

China's official Xinhua news agency reflected Beijing's delight.

"The joining of Germany, France, Italy as well as Britain, the AIIB's maiden Group of 7 (G-7) member and a seasoned ally, has opened a decisive crack in the anti-AIIB front forged by America," it said in a commentary.

"Sour grapes over the AIIB makes America look isolated and hypocritical," it added.

"The Americans are starting to look very mean-spirited with their criticism", said a Beijing-based Asian diplomat. "This is not a battle they are winning. Even their closest allies in Asia are starting to fall in line," he added.

Anger at stalled IMF reform 

In Europe as in Washington, China's launch of a new institution to channel a fraction of its massive currency reserves into infrastructure investments in Asia posed a political conundrum and provoked turf disputes.

Western countries had long urged Beijing to recycle some of its trade surplus into building transport, energy and telecommunications networks in developing nations, but they wanted it to use the World Bank and the ADB.

China, angered that the US Congress has not ratified a 2010 agreement to increase its voting share and that of other emerging economies in theIMF, chose to go its own way instead.

With initial capital of $50 billion, the Beijing-based AIIB can offer at most a complement to the larger World Bank and ADB, but it is starting point for expanding Chinese influence.

Officially, the United States says it is concerned about whether the bank will uphold human rights, environment and labour standards and be open and transparent in its governance.

In private, senior US officials acknowledge this is about power. One Obama administration member said congressional foot-dragging on IMF reform had "created an opportunity for China to assert itself".

Lew gave a blunt assessment last week, telling US lawmakers: "It's not an accident that emerging economies are looking at other places because they are frustrated that, frankly, the United States has stalled a very mild and reasonable set of reforms in the IMF."

Republican Senator Jeff Sessions of Alabama acknowledged irritation about IMF voting rights may have been a factor.

"I think this could be an unfortunate event and it might be bigger than we understand today," he told the Brussels Forum, an annual transatlantic dialogue organised by the German Marshall Fund of the United States.

In Washington, the issue resided between the State Department, the Treasury and the White House National Security Council, which may have muddied US communication with European allies, officials say.

"There just wasn't a clear and coherent and unified message on this from the beginning. It kind of languished for a while in a state of indecision and that produced the outcome that you've seen," said a Congressional source familiar with the discussions.

Within European governments there were debates about tactics and timing but the prevailing view was that it was better to try to influence the Chinese project from inside, several officials said.

"The debate mostly pitted national security advisers, who leaned towards hugging the Americans close ... against economic and Asia advisers, who argued that this big train was leaving the station and it was in our interest to jump aboard," a European diplomat involved in some of the discussions said.

In Berlin, the ministries of foreign affairs, finance and overseas development, run by rival wings of Chancellor Angela Merkel's coalition, jostled for influence.

Merkel's office instructed the finance and foreign ministries to take charge. Given Germany's prioritising of Chinese trade, there was never much doubt Berlin would join the AIIB.

"It was a no brainer," a German aide said.

‘Eyes open’

British, German, French and Italian officials held several meetings to discuss a common approach then London leapt first, causing resentment if not surprise.

"We want to be a Chinese partner of choice in international finance," a British government source said.

Inconclusive talks were also held by officials of the G-7 economies, which includes the United States, Japan and Canada alongside the four European states.

"We knew the US was not in the same place as us on this, we went into it with our eyes open," the source said.

The Chinese invitation to join the AIIB was delivered to individual states. The issue was discussed only once in the EU's 28-nation Economic and Financial Committee, which prepares meetings of finance ministers.

It was never raised to EU ambassadorial level, let alone to ministers. The big four did not include the European Commission or smaller EU states in their deliberations.

A French government source said issues such as governance were unresolved. "But it was important for the Europeans to show an interest from the outset. We'll see how it goes."

In Italy, the decision took a single phone call from Economy Minister Pier Carlo Padoan to Prime Minister Matteo Renzi, the European diplomat said.

Dutch Prime Minister Mark Rutte will meet Chinese President Xi Jinping this week. Officials said the Netherlands was weighing whether to join but it may have missed the deadline to become a founder member.

Having failed to persuade European allies, US officials are looking to regain the initiative, but partisan battles on Capitol Hill may continue to stymie a response.

The administration is using the spat to press Congress to grant President Barack Obama fast-track powers so he can conclude a Trans Pacific Partnership (TPP) trade pact with 11 Asia-Pacific nations other than China, and to finally ratify the IMF reform.

"We are acting proactively with trade promotion authority and TPP because other countries are acting. We want to be on the field, defining the rules of the road," the Obama administration member said.