Investors in Kuwait’s security markets were nervously following developments in a leadership showdown that has gripped the emirate for several weeks already. A crisis point was reached on January 29, when the cabinet headed by Crown Prince Sheikh Saad Abdullah Al-Sabah handed in his resignation to the Emir of Kuwait, Sheikh Jaber Al-Ahmad Al-Sabah.
On Sunday, February 4, the emir issued a decree re-appointing Sheikh Saad as prime minister and entrusting him with the job of nominating a new cabinet, which will remain subject to the emir’s approval. It would be the 20th government since the Gulf state achieved independence in 1961, and the 11th one chaired by Sheikh Saad. However, the issues that originally had instigated this latest crisis were, for the most part, left unresolved.
When the government tended its resignation last week, it explained its actions with a vague statement, which noted that "obstacles and circumstances hampered serious efforts of the government for realizing its aspirations.” Members of the old cabinet were reluctant to be more specific, but commentators spoke of tension between the government and the country’s parliament, over alleged cases of corruption and impropriety, and questions about the competence of Sheikh Saad himself.
Speaking to the Al-Rai Al-Aam newspaper, Foreign Minister Sheikh Sabah Al-Ahmad Al-Sabah said that cabinet's resignation was not linked to a recent request by Hussein Al-Gallaf, an Islamist parliamentary deputy to submit Justice Minister Saad Al-Hashel to questioning over irregularities. This contention was echoed by Jassem Al-Kharafi, the speaker of the 50-member legislature, but the commentators were skeptical.
The commentators note that in the past three years, four governments have resigned or been reshuffled. Each time, they claim, it was to preempt parliamentary investigations of ministerial performance or avoid criticism following a probe. This created a growing alienation between the appointed government and the elected parliament, and in particular angered Islamists and progressive deputies, who together hold more than half the seats in the legislature. And, to the degree that the parliament reflects the will of the people, the readiness of non-elected officials to flout the will of the elected politicians raises the specter of public disenchantment with the country’s leadership.
Opposition members of parliament have openly called for political reform within the ruling al-Sabah family. The liberal Al-Qabas newspaper quoted unnamed sources as saying the government resigned because of "the inability of leading personalities in the ruling establishment and the government to agree over delegated responsibilities." It seemed to point a finger at Sheikh Saad, the 71-year-old price who has headed every government for the past 22 years.
Many feel that Sheikh Saad does not have the physical strength to the fill both the roles of crown prince and prime minister. After undergoing colon surgery in early 1997, he fell ill in July 1999 with a low blood-sugar count. For several months, he delegated some of his responsibilities to the foreign minister.
Traditionally, Sheikh Saad has been beyond public criticism, but last week Abdullah Al-Naibari, a liberal parliamentary deputy told the BBC it was time that the posts of prime minister and crown prince were split. It appears as if the reformers are hoping that this crisis can be used as catalysts for political change.
Most local sources have ruled out the possibility of radical changes in the structure of the Kuwaiti regime. Still, even talk of change has sent shockwaves through this conservative country.
Unsurprisingly, the country’s financial sector has not been isolated from the political uncertainty. In mid-January, the Kuwait Stock Exchange (KSE) dropped to a five-year low—in reaction to “psychological factors,” according to analysts. On January 14, the KSE closed at 1,318.2—its lowest level since November 1995. The index has already shed 2.2 percent since the beginning of the year, and remains 53.5 percent below its all-time high reached in November 1997.
The emirate’s bourse had ended 2000 down 6.5 percent, with investor confidence hitting rock bottom because of a lack of economic reforms and the parliament and government’s wrangling. But Kuwait’s other economic indicators remain relatively healthy, due largely to high oil prices, which are anticipated to earn the country revenues of 3.26 billion Kuwaiti dinars ($10.68 billion) in the coming financial year.
For its part, the government plans to increase expenditures by 10 percent to KD 5.65 billion ($18.51 billion) during the coming year, versus projected aggregate earnings of KD 3.83 billion ($12.54 billion). But the deficit could be much lower or eradicated completely. This is because the budgetary calculations were based on a crude oil price of just $15 per barrel, and the projected deficit would be erased if oil prices remain above $21 per barrel. In 2000, they averaged slightly under $26 per barrel.
As a small country sitting above 10 percent of the world’s proven oil reserves, Kuwait’s inherent economic strength has enabled its government to extricate itself from numerous political crises. But it is unclear whether, in the better informed and more enfranchised Kuwaiti society of the early 21 century, the government will be able to carry on brushing criticism under the rug. Furthermore, in the new, global economy, political turmoil and calls of rampant corruption cause regional and international investors to develop cold feet. — (Albawaba-MEBG)
© 2001 Mena Report (www.menareport.com)
