The opposition returns in Kuwait

27 November 2016

Kuwait has entered a new period of political and economic uncertainty

A revived opposition seeking to abolish austerity measures for citizens swept most of the votes at Saturday’s parliamentary election in Kuwait. The polls, which were called after an emiri decree dissolved the National Assembly in October, saw opposition candidates win almost half of the 50 parliamentary seats and marked an end to their four-year boycott of the political process. 

Islamist, nationalist and liberal opposition won at least 15 seats, according to the local daily Kuwait Times. Only 20 former members of the assembly were re-elected.

Kuwait’s seventh general election in a decade saw a high turnout, with some polling stations reporting a showing of up to 80 per cent.

Parliament’s dissolution came amid opposition to the government increasing the prices of gasoline by as much as 73 per cent. While the government partially rolled back its plan and announced it would subsidise 75 litres of fuel a month for citizens, the decree to dissolve the parliament was issued within days, citing “regional circumstances” and “security challenges”

“All of this has been affecting the mood, so people want change. They will be critical, there is no clear road so far… no clear map,” says Shafeeq Ghabra, professor of political science at Kuwait University. “Opposition will come to the parliament, but they will not form the majority. They will also be suffering from fragmentation as a result of party lines.”

Ahead of the election, analysts suggested that the dissolution of the parliament was mainly to catch the opposition by surprise and make them more amenable to the government’s subsidy reform.

“I think the government’s expectation is that a new parliament may be more amenable to its economic reform plans, including the new Kuwait Direct Investment Promotion Authority (KDIPA), which is encouraging direct foreign ownership of businesses and ventures in Kuwait,” says Karen Young, senior resident scholar at Washington-based Arab Gulf States Institute.

“It’s not clear though that a new parliament will be better, that is, more accommodating to the emir’s agenda, than the one just dismissed on these issues. In fact, there could be a motivation of opposition, given the popular resistance to subsidy reform.”

The parliament that was dismissed had been the most business friendly in recent years, sanctioning a spending programme of KD9bn ($30bn) between 2014 and 2015 as other Gulf states trimmed their funding for infrastructure projects as a result of the fall in oil prices.

With a parliament opposed to austerity measures now expected, it is uncertain whether the government’s projects and infrastructure agenda is likely to be scaled down.

“Kuwait’s delays in infrastructure projects go far beyond this moment of parliamentary politics,” says Young. “This has been a pattern of negotiation and fits and starts of development planning for more than 20 years.”

Ghabra says that the election outcome and high-turnout was more than a reaction to subsidy reform and was part of larger discontent within Kuwaiti society.

“There was no reform in the last two years, the only thing that took place as far as society was concerned was the subsidy reform,” he says. “There was nothing else that was clear, that was deliverable, that was quantitative. It was all qualitative”

“People are thirsty for institutional change - better institutions, better medical care and opening up of private institutions that will create meaningful jobs - jobs in the private sector. People look around them at the GCC and they think look at the institutions that they would also like to see in Kuwait,” says Young.

The big concern for investors at this juncture in Kuwaiti politics is whether the country is set to return to its old pace of doing business, namely an increase in project delays, deferrals and cancellations.

Kuwait, which has the most vociferous parliament and vibrant political scene in the region, has traditionally underspent its budget and been slow to enact reform, in contrast to its less politically diverse but more business-friendly neighbours such as the UAE.

This level of open debate is, however, what should pique investors’ interests, says Ghabra.

“Kuwait is one of the few countries in the region that has elections and has freedom of expression and has an amount of participation in the grassroots level,” he says. “At least you can read the people and trends, which is much more than any other place in the region.

“Kuwait is in the middle of a debate. It is a solid country with strong foundations, has a vivid society and dynamic politics. But everybody in the region is stuck, with very few exceptions,” says Ghabra.

A MEED Subscription...

Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications