These are defining moments too for Kuwait, as it plans to scale new economic and political heights. The main reason behind the changes is the removal from power of Saddam Hussein – Iraq’s threats of a reinvasion have for 13 years stunted economic growth in its neighbour. ‘The nightmare is over and there is psychological relief,’ says Al-Refai. ‘The monster is gone and our [economic] future is now secure.’
His confidence is reflected in the soaring price of shares in the Kuwait Stock Exchange (KSE) and in the real estate sector. Since the end of hostilities, the KSE index has soared to almost 4,500 points – an 80 per cent jump on pre-war levels – while land prices have risen by 40 per cent to $232,400 for a 500-square-metre plot.
In a reflection of reduced internal security concerns, the government is weighing up the options of allowing Kuwaitis freehold ownership in real estate projects. A case in point is the proposed Pearl City at Al-Khiran – on the border with Saudi Arabia – which calls for the construction of more than 1,000 chalets. In addition, Kuwait Oil Company, which in February had shut down production at the two northern fields of Raqta and Abdali, close to the Iraqi border, has restarted operations.
Changes are also evident in the government’s capital expenditure programme. For fiscal 2003/04, an additional $2,000 million will be spent on new projects. Of this, the Ministry of Public Works has been allocated an additional $290 million for new buildings, including schools and hospitals. Investment is also planned in the hydrocarbons sector, which accounts for more than 90 per cent of the total revenues. Some $6,500 million is to be spent over the next three years on new projects (see pages 36 and 40).
Major investment is also planned in the private sector. A new organisation – the Executive Authority for the Development of Kuwaiti Islands, Divided Zones & Major Projects – was recently set up to garner over $10,000 million worth of investment in 25-year, build-operate-transfer (BOT) projects (see page 42).
The growing investor optimism in Kuwait has been preceded recently by major changes on the political front. They range from the election of new members to nearly half the seats in the National Assembly (parliament), to the formation of a new cabinet. Citing increased efficiency and better co-ordination, a new Energy Ministry has been set up with the merger of the oil and electricity & water ministries.
In another significant change, for the first time since 1961 the office of prime minister has been separated from the post of crown prince through a decree issued in July by the Emir Sheikh Jaber al-Ahmed al-Sabah.
Political commentators see logic behind the move. The deteriorating health of the Crown Prince and Prime Minister in the outgoing cabinet, Sheikh Saad al-Abdullah al-Salem al-Sabah, had got in the way of the government’s decision-making process. In effect, the mantle of governance rested with Sheikh Sabah al-Ahmed al-Sabah, his first deputy and the foreign affairs minister. ‘Due to his growing ill-health, it was fair to relieve [Sheikh Saad] of his responsibilities,’ says Yahya al-Sumait, a former housing minister. ‘There was no conflict over this in the ruling family. For the last few years, Sheikh Sabah was performing as prime minister.’
The appointment of Sheikh Sabah as the head of government has been widely acclaimed by progressives. ‘He is a firm believer in economic liberalisation,’ says a Western diplomat. Within a fortnight of his appointment, Sheikh Sabah issued a decree reorganising his office. The new departments he set up include a consultancy bureau, a technical office and an economic affairs unit. The aim was obvious: to vigorously pursue new economic policies.
In his opening address to the new session of parliament in mid-July, Sheikh Sabah laid out the ground rules. ‘We pledge to revitalise the national economy and activate the role of the private sector.’ Other long-standing issues – notably the granting of political rights to women, the approval of an enabling law for the northern oil fields project and a privatisation bill that would allow the state to divest its shares in the utilities sector – have been put back on the agenda.
In the previous parliament, opposition by members had often hindered the smooth functioning of the government. ‘We should face the challenges. there should be as much co-operation between the legislature and the executive as possible. This will make us go through this transition period towards reform and change,’ Sheikh Sabah said in late July.
What precise strategy the government will adopt when parliament reconvenes on 20 October after its summer recess remains to be seen. Equally unclear is the political stance of several new members.
The Islamists have traditionally opposed the government. Although their number has increased in the new assembly, some of them have yet to reveal where their loyalties lie. ‘The numbers game is deceptive. There are new unknown faces that are yet to show their sides,’ says the diplomat. There is another issue: Mubarak al-Duwailah, widely seen as the spokesman for the Muslim Brotherhood group (ICM), was not re-elected.
The future relationship between the legislature and the executive will be put to the test in late October, when a motion tabled by the Islamist bloc against the Information Minister, Mohammed Abulhassan, will come up for discussion. The debate will be over his decision to grant permission to a Lebanese group to stage a music concert in Kuwait City. ‘We wish to introduce a bill to ban [music] concerts in Kuwait,’ says Faisal al-Musallam, an Islamist MP.
The proceedings in parliament will be closely watched. With more than 200 questions already tabled by members against the government, dissolution of the recently-elected National Assembly is not being ruled out. ‘The first 30 days will be an indicator,’ says Al-Sumait.
Stability will be a key factor for Kuwait, not only for the future of the new parliament, but also for its abilities to draw maximum benefit from the multi-billion dollar reconstruction programme being implemented in Iraq.
Despite preparing itself as the launchpad for the reconstruction process, the reality for Kuwait has been different. A major stumbling block has been security concerns, which have held back local contractors from going into Iraq. ‘We continue to look at Iraq distantly,’ says the representative of a local contracting firm.
Meanwhile, steps are being taken to draw indirect benefits from the reconstruction process. The Kuwait Ports Authority has embarked on a programme to equip Shuaiba and Shuwaikh ports, in an effort to regain Kuwait’s position as the gateway to Iraq. The indications have so far been positive, with throughput at the twin ports doubling to 700,000 20-foot equivalent units (TEUs) since the start of the year (see page 39).
Along with normalisation of trade and commerce, attention will also focus on the legacy of the 1990-91 Gulf war: on further disbursements of UN compensation, the return of state documents removed from the archives; the settlement of border disputes between the two states; and the fate of at least 600 Kuwaiti prisoners of war (PoWs).
To date, corpses of 33 PoWs have been recovered. ‘Laboratory tests have proved that they were executed in 1991-92 by gunshots,’ Sheikh Sabah said while addressing the UN general assembly in late September.
For more than a decade, Iraq has dictated the course of events in Kuwait. The time is now ripe for the Gulf state to assert and regain its position. While Al-Refai has conquered Everest, Kuwait stands at the foothills with good prospects of scaling new heights.
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