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ROME — Europe will be saddled with its dependence on Russian gas for years, ministers from the Group of 7 (G-7) industrial nations said last week, condemning the use of energy as a weapon of political coercion.

"I don't know anyone in the world who could tell us how Europe's dependency on importing Russian gas can be changed in the short term," German Economy and Energy Minister Sigmar Gabriel told reporters.

Meeting in Rome as the crisis in Ukraine intensified, G-7 energy ministers said they were "extremely concerned about the energy security implications of developments in Ukraine as a consequence of Russia's violation of Ukraine's sovereignty and territorial integrity".

They promised to improve energy efficiency, develop a broader mix of energy supplies — including liquefied natural gas (LNG), renewables and new gas pipelines — and to invest in strengthening the existing supply network infrastructure.

But there were no immediate alternatives, they admitted.  US shale gas was not expected to aid Europe until at least the end of the decade, when it could be imported from tankers as LNG.

Both Italy and France restated their support for the South Stream pipeline project, which will bring gas from Russia into Europe bypassing Ukraine — while also declaring the need to build up alternative channels.

A third of the European Union’s (EU) gas imports is from Russia, with almost half of that passing through Ukraine, which is in another pricing dispute with Russian gas exporter Gazprom, its third in the past decade.

The final statement from the meeting concentrated on the need to diversify sources of energy and build up gas infrastructure and interconnectivity.

"We are committed to initiate a systemic and enduring step change to improve energy security at national, regional and global levels," the ministers said.

Sanctions

No decisions were taken on whether or not to toughen the targeted sanctions which have already been applied against members of the Russian elite.

That will be left to foreign ministers and heads of government.

However, US Energy Secretary Ernest Moniz said that if the situation in Ukraine continued to escalate, G-7 leaders could "move forward, as they have agreed, in terms of elevating sanctions, particularly, at some point, moving towards sectorial sanctions".

Tough rhetoric from Britain and the United States contrasted with a greater emphasis on diplomacy from Germany.

British Energy Minister Ed Davey said that Russian President Vladimir Putin had "crossed a line" and that the G-7 meeting had taken a "strategic decision that we will face up to the use by Russia of energy as a weapon".

Germany's Gabriel noted that any solution to the long-term problem of energy security in Europe would have to rely on dialogue.

"Pure technical changes in the energy market will not be enough. The process needs to be accompanied by diplomacy and politics and agreement on contracts between partners," he said.

With political action unlikely to produce any quick solution, countries like Italy, which relies almost completely on imported energy, are looking at widening its supply sources.

In addition to South Stream, Rome has been placing increasing importance on completing the Trans Adriatic Pipeline (TAP) to bring Azeri gas to Italy and is also looking at developing a gas link with the east Mediterranean area.

Italy is also looking to develop at least three more LNG terminals on top of the three it has to take shale gas from North America, but US export terminals will not be ready soon.

"A first project will be ready to start at the end of 2015 while another 6 terminals are planned but won't be ready till the end of the decade," Moniz said. "The process however does not determine where the shipments will go."

DUBAI — A move by Iran to recover bad debts on behalf of banks has shed light on possible corrupt lending under the previous president and also suggests a fresh spirit of cooperation among its various centres of power.

A reported big increase in underperforming bank loans during the eight years of Mahmoud Ahmadinejad's presidency is seen by some as evidence of loans made on the basis of political favouritism as well the impact on business of Western sanctions.

President Hassan Rouhani's administration, in power for nine months, says bad debt in the banking system has reached a "critical" level — 15.6 per cent according to the central bank — and has pointed the finger at cronyism under Ahmadinejad.

The authorities last week have handed the names of 575 of the biggest defaulters to the judiciary to try and recover some of the $33 billion owed. It has not released the names but some believe the bulk may have been borrowed by as few as 100 people and firms, suggesting some have debts in the many millions.

The extent of the difficulties for state and private banks is unclear but the bad debt hole may hamper Rouhani's plans to boost employment and raise living standards. That in turn is key to him building the popularity that may enable him to compromise with world powers which want to halt Iran's nuclear programme.

However, analysts also see positives in the new openness on the debt problem and moves to try and fix it.

Some say the fresh start may have been made possible by a more collaborative political climate cultivated by centrist cleric Rouhani — in marked contrast to the volatile, factionalised environment under the outspoken Ahmadinejad.

"There is a lot of determination between the government, parliament and judiciary to go after these people," said Tehran-based economist Rocky Ansari, who noted that the level of bad loans in Iran is four to five times the international norm.

"What differs today from previous efforts is coordination," added Ansari, managing partner of financial and legal advisory firm Cyrus Omron International. "The environment is ripe for them to cooperate closely."

‘Situation critical’

Announcing the move to call time on big defaulters, Vice President Eshagh Jahangiri put bad debt in the banking system at 820 trillion riyals ($33 billion), the official IRNA news agency said. That is a twelve-fold increase in non-performing bank loans from 70 trillion riyals in 2005, when Ahmadinejad took office, according to official figures cited by the newspaper Hamshahri.

Central bank governor Valiollah Seif, quoted by the semi-official ISNA news agency, said last week that bad debt had reached 15.6 per cent of total bank loans. That is on a par with Italy and half that of Greece, according to World Bank data which puts non-performing bank loans at 4 per cent worldwide.

"The banking system is in a critical situation, bordering alarm," Vice President Jahangiri said, blaming the rise in bad debt on an "upsurge in rent-seeking" — a dig at those favoured by the previous administration to make easy money.

Prosecutors are looking into loans made in breach of banking rules and at borrowers who took credit and failed to invest it in the projects for which they had notionally been granted.

Bijan Khajehpour of the Vienna-based Atieh International consulting firm said the bulk of bad loans were owed by about 100 people who had obtained them during Ahmadinejad's term.

They "were given loans without due process and due collateral, so a lot of what will happen will be political," said Khajehpour, who works closely with businesses in Iran.

At the same time, he noted the fact so many had turned sour reflected wider troubles in the economy.

"It's an indication of how the economy is doing," he added. "The bad debt is a result of a chain effect. For example, one company goes bankrupt, suppliers' cheques bounce and they can't pay the creditors."

In most cases, barring the most corrupt cases of money lent with little prospect of redemption, banks have some sort of guarantee, Khajehpour continued. But going to court to obtain payment "takes time and puts finance pressure on the economy".

He stressed that levels of collateral were high enough, in his view, that bad loans should not force banks out of business.

Cooperation

The push to obtain repayment of the debts appears to be a rare joint effort by parliament, the executive and judiciary.

Calling for transparency, 15 members of parliament urged Rouhani to reveal the names of individuals owing more than 500 billion Iranian riyals ($20 million). He has yet to do so.

Prosecutor-General Gholam-Hossein Mohseni-Ejei was quoted by ISNA saying people who had complied with rules and were unable to service loans because of genuine business difficulties had nothing to fear. But those who secretly diverted credits or had broken banking regulations or other laws would be in trouble.

Of the last category, Mohseni-Ejei said: "In this case, both the banks and lenders are in violation of the law."

The head of a Tehran-based consultancy said that Mohseni-Ejei appeared to have his eye partly on people who had close ties to the Ahmadinejad administration and thus had been in a special position to receive government contracts.

Many obtained loans at low rates on the premise that they would invest in projects furthering government efforts to create jobs, he said. 

"They would do the initial work to get the contract," he added. "But the projects were rarely completed."

Khajehpour in Vienna said, however, that problems in the government finances — partly a result of Western sanctions that have hit oil revenues — also led to defaults by firms.

"The government contracted out projects but then couldn't pay the contractors", generating a cycle of bad debt, he explained.

State-owned Bank Melli, Iran's largest lender, held $12 billion or 35 per cent of all bad loans in 2013, Hamshahri newspaper said. Of that, more than half had been lent to public sector entities with the rest in private hands.

The state could look at backing some debt relief to prevent the problem further eroding confidence in the economy.

Ahmadinejad's administration belatedly tried to temper the problem by dipping into Iran's sovereign wealth fund to offer new credits to stimulate the economy. It hoped that would let debtors earn new income. But it backfired when more credit was taken under false pretences, exacerbating bad debt levels.

In contrast, some expect Rouhani to look to a deal with the West on easing nuclear-related sanctions to bolster the economy.

Khajehpour noted that more than $4 billion in frozen Iranian state assets is being returned to it under an interim accord — money the government is using to pay its own creditors and so pump cash back into the domestic economy.

"Iran is using those funds to open letters of credit and pay debts," he said. "It's a bit of a cushion.”

KUWAIT CITY — The energy-rich Gulf states agreed Wednesday to resolve hurdles obstructing implementation of a long-delayed customs union, particularly revenue sharing, Kuwait’s finance minister said.

Leaders of the six-nation Gulf Cooperation Council (GCC) have set January 1 to implement the customs union, first launched in 2003 and delayed on several occasions to resolve hurdles.

Anas Al Saleh said after a day-long meeting of finance ministers that there had been agreements on all points of the agenda, including on the mechanism for distributing customs revenues, which has been the biggest hurdle.

He told reporters the GCC secretariat has been asked to “conduct studies to make the mechanism clearer”.

Those studies and related issues will be reviewed by the ministers at a meeting in Kuwait City in September, added Saleh, whose country currently holds the GCC’s rotating presidency.

The Gulf states unified their customs tariff at 5.0 per cent over a decade ago, but their steps toward union have been very slow.

Ministers also discussed completing requirements for their common market and monetary union, both of which have been rescheduled a number of times.

At the meeting’s opening, Saleh called on members to make concessions “in order to reach an agreed formula that guarantees the rights of all [Gulf] states”.

He urged the completion of requirements for the customs union, “particularly... distribution of customs revenues, protection of local agents and protectionism for some goods”.

For his part, GCC Secretary General Abdullatif Al Zayani urged members to facilitate free movement of national and foreign goods to allow the January deadline to be met.

The calls come at a time when GCC states are locked in a political dispute that could hurt economic integration projects.

But Saleh insisted that these disputes did not affect the meeting.

When the customs union was launched at the start of 2003, full implementation was envisaged within three years. But questions over revenues, dumping and protectionism have caused repeated delays.

A 2010 deadline came and went when the energy-rich bloc failed to agree on the sharing of tariff revenues and experienced difficulties in meeting World Trade Organisation rules.

The GCC groups Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

AMMAN — Jordanian policy makers must promote the Kingdom as a base for regional business to attract investments, an expert said Thursday.

Speaking at a conference titled “Investing in the Levant: New Opportunities” Mercury Vice Chairman Adam Ereli told around 150 executives from Jordan, Iraq, Lebanon, Egypt and Turkey attending the economic conference that investors want to put money in large markets where they can sell and generate good returns.

“As such, Jordan’s strategy to attract investment should be one that encompasses the Middle East including the Palestinian Territories,” he said.

According to Ereli, also a former US ambassador to Bahrain, Jordan has the potential to be a regional business hub because it enjoys the stability and security that is lacking at present in the Middle East besides the competitive economic environment.

He noted that Iraq will not be able to sell for the next ten years and Jordan has an opportunity to capitalise on that by inviting investors to take advantage of a large market.

He also pointed to legal protection as a big plus for the Kingdom noting that a foreign-owned cement company in Egypt was rattled in the past years with a court decision to annul the privatisation deal under which the foreign investment was made.

Carol Malouf, chief executive officer of Macarlea Advisory Group, proposed that Jordanian decision-makers go on a wide-ranging global marketing offensive to highlight the Kingdom’s political, legislative, economic and financial strengths. 

The conference, organised by Financial Times Live and Macarlea Advisory Group, was opened by Prime Minister Abdullah Ensour, deputising for His Majesty King Abdullah.

Ensour said the regional developments gave room to investment opportunities and generated interest among foreign investors in the Middle East.      

The prime minister stressed that the government is determined to maintain macroeconomic stability that guarantees sustainable growth despite the challenges arising from the flow of Syrian refugees who are placing an increasing pressure on infrastructure services, health, education, energy, waste management, financial resources and labour market.

“Jordan deserves the good reputation it has acquired as a stable country, particularly in these troubled times, and also the trust of investors who still view it as a business destination and a possible gateway to larger markets,” he said.

He added that the government is still pressing ahead with administrative and legislative reforms to facilitate procedures, and make the investment environment more attractive, emphasising that the objective is to enhance the role of the private sector and boost economic competitiveness.

The prime minister mentioned information technology, telecommunications, pharmaceutical industry, medical tourism and energy as promising sectors for investments.

He said that a special priority now is supporting the small and medium-size enterprises within a drive to lower a 12 per cent unemployment rate.

DETROIT — Fiat Chrysler is launching a breakneck global growth effort built around its upmarket Alfa Romeo, Jeep and Maserati brands, and Chief Executive Officer Sergio Marchionne pledged to stay five years — two more than previously disclosed — to see the plan through.

In a 10-hour, marathon presentation to financial analysts on Tuesday, Marchionne outlined a long-awaited business plan aimed at reviving the company's historic car-making names and persuading investors it can overcome high debt, an uncertain market and past missteps to close in on industry leaders such as Volkswagen AG and Toyota Motor Corp.

"Today is much more than a new chapter. We are writing an entire new book," Marchionne said in his opening remarks.

Amid sometimes skeptical questioning about the goal of boosting sales by 60 per cent and increasing net profit five-fold by 2018, Marchionne shifted between quoting philosopher Friedrich Nietzsche and spouting financial ratios at the company's US regional headquarters.

Besides an aggressive, belated push into Asia, Marchionne promised to increase North American sales by half as Chrysler broadens its lineup and the embattled Dodge brand digs in.

The carmaker kept its options open to finance the plan, but ruled out a share issue or divestments. One of the options was a mandatory convertible bond, but no decision has been made.

Fiat Chrysler said it would invest billions of dollars to build new models and ramp up output, predicting sales would surge to almost 7 million vehicles by 2018 from 4.4 million last year — a target some analysts thought highly ambitious.

"It's definitely a tall order, but I don't think we ever expected anything less from Marchionne in terms of the ambition," said Exane-BNP Paribas analyst Stuart Pearson.

"Even getting half or two-thirds of the way to those business plan targets would be a positive achievement industrially — it's then a question of what investors are expecting and what's already priced into the shares," he added.

The group, preparing to move its main listing from Milan, Italy, to New York as soon as October 1, hopes its combined clout and profitable US business can overcome European losses, and propel it into the major league.

At stake are thousands of jobs, particularly in Italy where Fiat Chrysler plans to make all of the new Alfa Romeo models.

Marchionne said the five key planks of the plan are: Expanding in the premium-car market, refocusing the Fiat brand outside of Europe, specifically in Latin America and China, Nearly a three-fold expansion of Jeep sales, economies of scale via three key vehicle architectures and Virtually eliminating its 9.7-billion-euro net debt.

Marchionne is seeking to emulate rivals such as Volkswagen by building global brands and a strong position in the rapidly expanding and high-margin market for premium cars, particularly in Asia, where the group lags behind its main rivals.

The automaker expects its net profit to surge fivefold by 2018 to about 5 billion euros ($7 billion), while net industrial debt is projected to fall to 1 billion euros or less after peaking at about 11 billion euros next year.

The company forecast Alfa Romeo would multiply sales more than fivefold to 400,000 vehicles in 2018 as it invested 5 billion euros to add eight new models and ramp up production.

Maserati sales would rise at a similar rate to 75,000 on the back of more than 2 billion euros of capital spending, while Jeep would double output to 1.9 million vehicles in 2018, almost half assembled at six new sites outside the United States.

Challenges

With sales of the mass-market Fiat brand expected to remain flat in a struggling European market over the coming years, analysts said the strategy made sense, though some were skeptical of the sales targets.

"The opportunity is clearly there, but 1.9 million Jeep units is a stretch," ISI Group analyst George Galliers said. The brokerage has forecast Jeep sales of 1.2 million in 2018.

Jeep, whose globally recognised products trace their roots to the iconic World War II vehicle, is seen as Fiat Chrysler's biggest opportunity to tap fast-growing demand for SUVs in Asia.

While Marchionne has a track record of deal-making in 10 years at Fiat's helm, he has been less successful at delivering a string of ambitious turnaround plans, with Fiat losing market share in its main European market amid delayed investments and some bad design choices.

There are other challenges too. Fiat Chrysler said it would spend 48 billion euros over the five years on the revamp — a big burden for a group with 9.7 billion euros of net debt.

The company said on Tuesday it ended the first quarter with a net loss of 319 million euros, hit by one-off charges and by currency fluctuations, but reaffirmed its forecast for the year.

Then there is the market backdrop. Europe's car industry is battling to recover from a six-year slump in sales, while demand is faltering in some of Fiat Chrysler's most important emerging markets, such as Brazil.

The US market is more buoyant, but Chrysler and Dodge have suffered lately from a lack of investment in new models.

Independent analyst Maryann Keller said the profits in North America, a recovering Europe and the strong Jeep brand make the plan achievable for Marchionne. "I think he can pull it off because he has Chrysler, and we're in a decent economy."

AMMAN — The Central Bank of Jordan (CBJ) on Wednesday tabled new banking corporate governance instructions and requested feedback from all concerned parties.

Communicated to the Association of Banks to consider its reaction before they go into effect, the CBJ indicated in a press statement on Wednesday that the instructions meet one of the recommendations proposed by the National Integrity Committee to enhance governance at the banks’ board of directors.

“The instructions aim at ensuring that board members possess experience and competency besides guaranteeing that there is no conflict of interest,” the statement said. 

The CBJ noted that the new instructions were in line with the principles of the Basel Committee on Banking Supervision, the Organisation for Economic Cooperation and Development, and the Financial Stability Board to address loopholes exposed by the global financial crisis in financial institutions' governance.

Under the new instructions, boards of directors are fully responsible for the financial safety and soundness of the banks as well as their smooth and trouble-free operations.

According to the statement, the boards also carry full responsibility over reliability and  accountability to safeguard the rights of all stakeholders.

Key instructions prevent chairmen from doubling also as general managers, organise the ownership-management relationship, and inscribe the terms and standards needed for board members and senior executives to qualify.

Another obligation requires that financial remunerations be designed so as not to affect the reputation and soundness of banks, be linked to  risks and performance levels, and to be thoroughly disclosed.

Moreover, boards are held responsible to adopt an acceptable level of risk, consistent with the bank’s' strategy in this regard. 

In its statement, the CBJ stressed the role and independence of internal and external auditors, and underlined the importance of independent board members noting that their roles enrich discussions and deliberations during meetings, and help upgrade the performance  of  boards in general.

The central bank affirmed that the new instructions complement its efforts to advance the banking sector in Jordan noting that in 2004 it issued a guideline booklet to board members of banks, and that in 2007 it prepared a corporate governance guidebook that required banks to disclose their own guidelines and the extent of adherence to them.

AMMAN — The wholesale trade price index increased by 2.8 per cent during the first quarter (Q1) of this year compared with the same period of 2013. According to the Department of Statistics, the increase was due to the rise in prices of motor vehicles and parts, raw materials, food, drinks,  tobacco, cosmetics and machineries.

AMMAN — A business delegation from the Federation of Indian Export Organisations (FIEO) will explore trade opportunities in Jordan and best ways to maximise commercial ties during a visit to the Kingdom between May 26 and 28, according to an embassy statement. Information technology, pharmaceuticals, textiles, fertilisers, automobiles and spare parts are among the main areas of interest to the delegation besides electrical machinery, frozen meat, organic and inorganic chemicals and agricultural products. FIEO, in association with the Amman Chamber of Commerce and the Indian Embassy in Amman, will be organising B2B (business to business) meetings to connect entrepreneurs with potential customers, strategic partners and other like-minded entrepreneurs, according to the embassy statement. India, one of the Kingdom’s main commercial partners, represents one of the biggest markets for Jordan’s fertiliser industry and it is a main importer of its phosphate and potash exports. In 2013, the joint Jordanian-Indian commercial exchange totalled $1.61 billion, according to the embassy website.

AMMAN –– Abdali Boulevard, a JD300-million-project, is scheduled to open for business on June 11, developers said Tuesday. 

The Boulevard is part of the $5 billion Abdali project, the largest mixed-use urban development scheme in Amman.

The entire mega- project, Abdali, is expected to be ready within six to seven years, George Amireh, chief executive officer of Abdali Investment and Development Company, told journalists on Tuesday during a media tour at the site.

Amireh indicated that the project, which developers call the New Downtown of Amman, spans over 384,000 square metres with a built-up area of 1,800,000 square metres that comprises residential, commercial, hospitality, retail outlets, entertainment facilities and serviced apartments.

Asked about the delays, as the scheme was supposed to open in 2010, he mentioned financial troubles faced by some investors after the global financial crisis. 

"The entire project will be ready in six to seven years, but, gradually, some big projects such as five-star hotels and the shopping mall will open next year and the year after," Amireh said. 

“Abdali will play a major role in shaping Amman’s new identity as a modern and vibrant city for years to come,” he added, noting that the investment will attract many regional and international businesses that consider the Kingdom as a suitable place for their investments.

The developing company, Abdali Investment and Development is a public-private partnership between the government-owned estate developer National Resources and Development Corporation (MAWARED) and Horizon, an international construction conglomerate owned by Lebanese businessman Baha Hariri. 

Taher Jaghbir, chief executive officer of Abdali Boulevard Company, said the Boulevard  includes high-end retail outlets, in addition to 30,000 square metres of modern office spaces and approximately 400 luxurious serviced hotel apartments, operated and managed by the Rotana Hotel Management Corporation, one of the region’s leading hotel management companies. 

Jaghbir explained that the Boulevard consists of a pedestrian spine bordered by 12 buildings that offer 22,000 square metres of retail space to house 120 stores.

The Boulevard rooftop, sized 18,000 square metres, will consist of outdoor swimming pools, sports clubs, spas, lounges and restaurants, he added.

DUBAI — Qatar Airways has become 100 per cent state-owned after the government bought out private investors, including a former prime minister, its chief executive Akbar Al Baker said Monday.

Al Baker said the acquisition took place last year, shortly after a political shake-up in which Sheikh Hamad Bin Jassem was removed from the post of prime minister.

The airline became “100 per cent government-owned at the end of July” when 50 per cent of the company was purchased from the investors including Sheikh Hamad, Al Baker told reporters in Dubai.

“It was not only Hamad Bin Jassem; there were other shareholders,” he said at the Arabian Travel Market.

He declined to comment on the motives for the buyout and said he did not know how much the ex-premier had received for his stake.

Qatar Airways, he remarked, would start revealing its results now that the carrier was government owned.

Qatar Airways, along with Dubai’s Emirates and Abu Dhabi’s Etihad, have snatched a sizeable share of the long-haul travel sector, turning their home cities into major hub on the routes to Asia and Australasia.

The three are major clients of aircraft manufacturers, with extensive lists of orders from Boeing and Airbus.

Baker said the recent soft opening of Doha’s new airport should allow the carrier to expand unhindered, noting “growth was blocked by the capacity of the current airport” in Doha.

He added the much-delayed Hamad International Airport, which opened last week, has an annual capacity to handle 30 million passengers which can be pushed to 45 million passengers if needed.

The new international airport, built at a cost of $15.5 billion, welcomed its first commercial flight on Wednesday.

Initially, the facility will only be open to 10 airlines with other carriers, including Qatar Airways, expected to use it from May 27.

Baker also complained of airspace congestion in the Gulf region, saying limiting space for commercial carriers in favour of military use is “not conducive” to the aviation sector.