Kuwait in the 1960s and 1970s set the pace for the region. It was the first in Arabia to have a written constitution and a directly elected parliament. The Kuwait Investment Authority (KIA) was the Gulf’s first sovereign wealth fund. Kuwait Petroleum Company (KPC) was the first GCC national oil company to buy foreign oil businesses. The Kuwait Fund for Arab Economic Development was the first Middle East aid agency.
Kuwait’s advance was derailed by the start of the eight year Iran-Iraq war which started in September 1980 and placed Kuwait close to the front-line. It was brought to a halt in 1990 by Iraq’s invasion. The psychological effects of the occupation and the division between those who stayed and those that left still linger.
It explains at least some of parliament’s persistent criticisms of Kuwait’s council of ministers, a body appointed by the ruler Sheikh Sabah al-Sabah.
Kuwait, nevertheless, is one of the principal beneficiaries of the oil boom that has raised prices by more than 100 per cent since the start of 2004. Kuwait enjoyed a current account surplus of at least $40,000 million in 2007 and should record a figure at least as big this year. The economy is being additionally lifted by earnings from foreign savings including at least $250,000 million held by the KIA itself.
The closest economic parallel to Kuwait is Abu Dhabi, which also has almost 10 per cent of proven oil reserves, produces more than 2 million barrels a day (b/d) of crude oil and has an enviable portfolio of savings. But Kuwaiti business people invariably compare their country unfavourably with what is happening in the UAE and elsewhere in the region.
But the mood is beginning to change, as delegates at MEED’s The Kuwait Conference 2008 on 4-5 February may have discerned. KPC announced more than $50,000 million would be invested in the oil and gas industry in the next five years and that gas shortages will be addressed by importing up to 700 million cubic feet a day (cf/d) from 2009. Its non-associated gas programme is bearing fruit and is expected to lead to production of 600 million cf/d in 2012.
The conference was told that government approval was being sought for railway lines involving private and public investment totaling $8,000 million. They include a north-south line that will run from Saudi Arabia to the Iraq border and an integrated light rail system in Kuwait city itself.
Some of the region’s most striking megaprojects may finally proceed by the end of the year. They include the Subiya Causeway road link across Kuwait Bay from Kuwait city to the Subiya peninsula and Madinat Al Hareer, The City of Silk, the most ambitious urban project Kuwait has ever seen. The capacity of the airport may be expanded to 20 million passengers.
New approaches to completing projects have been approved. A revised build-own-transfer model to be applied in future infrastructure projects has been blessed by the national assembly. It has also given the green light to the Madinat Al Hareer.
The sceptics are still doubtful. But the sheer weight of private and public money is beginning to break down the political and bureaucratic obstacles that have held Kuwait back for so long. The country may be on the move, at last. If that proves to be the case, there is no reason why Kuwait should not, in due course, recover its proper place at the vanguard of the new Gulf vision it did so much to inspire.