Kuwait

London property dispute draws in Kuwaiti sheikhas and UAE real estate giant

Published in Gulf States News, 12 November 2015

A complex legal dispute over a property deal in central London could be heading to mediation or a future trial.

Another complex dispute over property involving wellheeled Gulfis has come to the High Court of Justice in London, where Sheikha Hind Bint Salim Hamud Al- Jaber Al-Sabah and two other claimants are pursuing a legal action involving six defendants, including the Kuwaiti royal’s sister Sheikha Salem Hamud Al-Jaber Al-Sabah and Iraqi- Emirati businessman Hussain Sajwani, chairman of UAE-based developer Damac Properties.

The sheikhas’ father was Sheikh Salim Hamud Al-Sabah, described in court documents as a high-ranking professional soldier who was head of the Emiri Guard for 25 years. A grandson of Emir Sheikh Jaber I (who ruled from 1915 to 1917), Sheikh Salim died on 10 June 2003 without leaving a will; he left 15 heirs, including the two sisters. His estate included two adjoining flats, numbers 61 and 62, at 3-8 Porchester Gate, on the north side of Hyde Park in central London. The two flats had been converted into a single property and were registered in the names of two Gibraltar companies, Rosork Holdings and Fairlann Trading.

In June 2009, the combined property was bought for a documented price of £1.9m ($2.9m today) by British Virgin Islands-incorporated Gulf Heritage Properties Company Ltd, controlled by Sajwani. The transaction was arranged by agent Tareq Al Baho, a Kuwaiti national. At the centre of the disputeare Sheikha Hind’s claims that the property was undervalued at £1.9m and that a ‘bribe’ was paid to secure the property at a below-market rate. She contends that the property’s true value is £2.5m-3m.

In the particulars of a claim submitted to the High Court in July, Sheikha Hind said that, on top of the £1.9m, further payment of “not less than £600,000” was paid by or on behalf of Sajwani to Al Baho or Andrew Pinnell, a solicitor appointed under a power of attorney in 2008 to represent 12 of the 15 heirs and Sheikh Salim’s estate. The £600,000 figure is based in part on a claim that Al Baho told Foxtons estate agency that the property had been sold for £2.5m – in other words £0.6m above the £1.9m figure. The property had been marketed through Foxtons for a time, although the sale was agreed separately.

Two other claimants in the proceedings, property agents Asad Meerza and Mohsen Mehra, claim they are owed a £300,000 commission from Al Baho and Sheikha Salem for their role in introducing Sajwani to Al Baho.

In their defence, Sajwani and Gulf Heritage say they paid £2.2m, comprising £1.9m for the property and an agent’s fee of £300,000; these sums were paid to the benefit of Rosork Holdings and Fairlann Trading. The £300,000 was paid via two bankers drafts made out in UAE dirhams. Gulf Heritage and Sajwani say no payment was made to anyone other than the two vendor companies and deny that the £300,000 constituted a ‘bribe’. They also deny that a sum of “not less than £600,000” was paid in connection with the property purchase.

In a further twist, Sheikha Hind claims that Al Baho obtained the £300,000 by lodging the two bankers drafts in accounts held by two ‘clone companies’ that he had set up in the UK and which had identical names to the two Gibraltar companies, Rosork Holdings Ltd and Fairlann Trading Ltd.

In a two-day hearing in the High Court’s chancery division, Justice Peter Smith noted that Al Baho had not served a defence nor filed any evidence. On 3 November, he made judgements that Sheikha Hind could claim a number of interim payments from Al Baho and BC Penthouse Ltd, a company wholly- or partly-owned by Al Baho, for the benefit of the estate.

According to the defence, substantial sums have been spent on the Porchester Gate property since the transaction went through, including £1.89m to renovate and extend it. The property is used by Sajwani as his personal residence when in London.

A lawyer for the three claimants, Matthew Jenkins at Hughmans Solicitors, told GSN that mediation efforts have been proposed and are due to take place before Christmas. If they do not go ahead, or prove unsuccessful, the matter is expected to proceed to trial in early 2017. A spokesman at FTI for Sajwani declined to comment on the proceedings. Lawyer Richard Barca at Wilson Barca, for Al Baho, Pinnell and Sheikha Salem, did not respond to a request for comment.

Kuwait's Bitter Pill

Despite its significant fiscal reserves, falling oil prices highlight the need to reform the Gulf nation’s economy to achieve long-term sustainability.

Published in Bloomberg Businessweek, 17 February 2015

Low oil prices tend to make people in the Gulf rather nervous, given how central the black gold is to the health of its economies. With the price of crude falling by over 50 percent between June and January—below the threshold at which each of the region’s governments can balance their budgets—the spending plans of the Gulf states have been thrown into doubt. Luckily, Kuwait has less to fret about than its neighbours.

“Kuwait is the most oil-dependent economy in the GCC, but is likely to be one of the least affected [by the slump in oil prices]. This is because it has the lowest fiscal breakeven oil price in the region,” says Paul Gamble, director of the sovereign ratings group at Fitch Ratings.

Kuwait depends on oil for around 90 per cent of its income, the highest among GCC countries, but it can also balance its budget when oil is around $49 a barrel, far lower than most of its neighbours. It may seem counterintuitive that an economy so dominated by oil should be in a relatively strong position in the current environment; but that strength comes, at least in part, from a fundamental weakness. Governments have historically found it hard to spend oil revenues because uncooperative parliaments have so regularly blocked large projects.

According to National Bank of Kuwait (NBK), the government has on average spent less than 75 per cent of planned capital expenditure since 2006/07. In the most recent financial year, which ended in March 2014, capital spending was KD1.7 billion ($5.8 billion), 3.9 per cent less than the year before. This means Kuwait has had a budget surplus every year for the 15 years through 2013/14, and another is projected for the fiscal year ending 31 March.

While current spending is far higher— last year it was $58.2 billion, although that was also lower than budgeted because of reduced fuel costs—the persistent underspending means that Kuwait has accumulated an enviable investment portfolio. The country also has very low debt levels, with gross public debt at around 4.4 per cent of gross domestic product (GDP), according to the IMF.

“Since 2003, elevated oil prices have allowed GCC oil exporters in general and Kuwait in particular to generate significant trade surplus and accumulate robust reserves,” says Raghu Mandagolathur, head of research at local investment firm Kuwait Financial Centre (Markaz). “With current reserves totalling more than $580 billion, this should provide sufficient comfort and cushion to future government expenditure programmes.”

Despite its fiscal strength, the low oil price environment is a concern for an economy in which the state relies so heavily on oil income and in which private sector activity is so limited. The oil sector accounts for 64 per cent of overall GDP, around 92.4 per cent of government revenues and 95 per cent of exports, according to Saudi investment bank Al-Khabeer Capital.

The need to diversify government income and the economy as a whole has long been recognised and low oil prices may just stiffen the resolve of the authorities to do so. They will be helped by a more constructive domestic political environment. Many opposition politicians boycotted the most recent parliamentary elections, held in July 2013, which meant a more conciliatory chamber was returned. While tensions remain, there is now a less confrontational relationship between the executive and legislature. “Kuwait’s government has taken several attempts to diversify and develop the economy, but implementation of economic plans was often hampered by parliamentary interference,” says Steffen Dyck, a senior analyst at ratings agency Moody’s Investor Services. “With a more supportive parliament in place, the implementation of projects is likely to improve.”

That means the prospects for the new five-year development plan, which runs from April 2015 to March 2020 and which was approved by a parliamentary committee in February, are relatively promising. The plan includes $115 billion worth of spending on 521 projects across a wide range of sectors including water, power, transport, education and the oil industry. “The prospects for capital spending are the best they have been for some time given the improved relations between the government and parliament,” says Gamble.

Higher levels of government spending, particularly on capital projects, should help boost economic growth. The IMF is predicting overall GDP growth of 1.7 per cent this year, followed by 1.8 per cent next year. Most of that will come from the non-oil sector, which is expected to grow by 3.5 per cent in 2015 and 5 per cent next year.

However, things could yet get blown off course. “Although a number of projects have been announced in the 2015-2020 plan, it would be interesting to see if how many go ahead,” says Mandagolathur. “A sustained drop in the oil prices might result in delays or even cancellations.”

Alongside changes to government spending patterns, the economy would also benefit from some other reforms. Global league tables tend to show Kuwait in a rather poor light in terms of its business environment. According to the World Economic Forum’s Global Competitiveness Report, for example, Kuwait ranks worst in the GCC in terms of its infrastructure. Meanwhile, the World Bank’s Doing Business report places Kuwait at 150 out of 189 countries when it comes to the ease of starting a business.

Clearly reforms are badly needed. As well as cutting back on red tape to make it easier to set up a business, observers suggest that the country would benefit from improvements to the education system and labour market reforms to incentivise locals to take private sector jobs.

Economic reforms have proved as hard to push through parliament in the past as project spending, but some significant moves have been made recently, including a cut in subsidies for diesel and kerosene on 1 January, which pushed up the cost from 55 fils a litre to 170 fils a litre (there are 1,000 fils in a dinar).

Such measures are not easy to introduce in a country where the government and the head of state are unelected and so lack a clear popular mandate. Further change is likely to take time. “Subsidy reforms are generally done in a very gradual way, especially in somewhere like Kuwait,” says Giyas Gokkent, senior economist at the Institute of International Finance in Washington DC. “The hike in diesel prices is, I think, the correct approach to rationalising spending. If they can tilt the balance of spending away from current spending and towards capital spending that would be positive for the economy.”

What is certain is that the need to do something will not go away. Wages and salaries alone made up half of all spending in the 2014/15 budget, says the IMF, and the cost of providing subsidies will inevitably keep on rising as the population grows. Despite the sensitive nature of subsidy reforms, the government is expected to review water and electricity tariffs, and the public sector wage bill.

Low oil prices highlight the need to put the country’s economy on a sustainable long-term footing. Whether the government has the will or the ability to take advantage of the current climate to address the issue, remains to be seen.

Public sector in Kuwait holds back enterprise

The overwhelming influence of the government sector is stunting Kuwait’s private industry. The only way for the economy to diversify is to attract investors with new ideas. Published in MEED, 16 October 2013

In five months’ time, Kuwait will have reached the end of its four-year Development Plan, part of the wider Vision 2035 strategy to propel the economy forward and transform the country into a regional trade and finance hub. But even now, it is clear the government will miss its targets.

The plan, approved by the National Assembly (parliament) in February 2010, envisaged KD30.8bn ($108bn) being spent on infrastructure projects, of which half was to come from the private sector.

The aim was to decrease the state’s dependence on oil revenues and increase the role of the private sector in the economy. In the process, it was hoped that more locals would be enticed into working for private companies. At the time, the private sector accounted for 37 per cent of total economic activity, according to local investment firm Markaz, and the plan was to increase this to 44 per cent by 2014.

Disappointing progress

Up-to-date figures on the size of the private sector are not available, but developments over the past few years have not been encouraging. As the Washington-based IMF noted on 23 September, after concluding its annual review of the Kuwaiti economy, the investment programme has lagged behind schedule and large hikes in public sector wages in April 2012 have undermined efforts to boost private sector jobs.

The missed targets will not be a surprise to anyone in Kuwait. Despite the failure to move ahead with major state-backed projects, it is clear the economy still relies heavily on government spending.

“Kuwait spends very little on projects, which is something the private sector benefits from a lot in the other GCC countries,” says Steffen Hertog, an associate professor in the department of government at the London School of Economics.

“But the Kuwaiti private sector is still indirectly dependent on the government. Very little consumer demand emerges from within the private sector because the volume of salaries paid is not very large and most of it is remitted abroad. Most of the households that can engage in serious consumer spending get their salaries from the government.”

The fact that the targets are all but certain to be missed is due to a mixture of factors. When it comes to employment, private companies struggle to match the wages being paid by government departments and agencies – a problem that is getting worse rather than better, as the IMF points out. According to recent official figures, four out of five Kuwaiti nationals who have a job work for the state.

In 2011, the last year for which there are comprehensive figures, some 230,000 nationals had public sector jobs, while 61,000 worked for private firms, according to Kuwait’s Central Statistical Bureau. In contrast, there were 1.1 million expatriates working in private sector jobs that year and most of them were low-paid and unskilled. About 72 per cent of foreign workers had not completed secondary school education and 49 per cent were earning KD60 ($212) a month or less.

Oil prices

In addition, soaring oil prices distort the country’s gross domestic product (GDP) figures, as it is hard for the private sector to gain ground against the public sector when government revenues are so high. That will become even harder if Kuwait increases its crude output from 3 million barrels a day in 2012 to 3.5 million by 2015, as US ratings agency Standard & Poor’s suggests it might.

In any case, the government has struggled to get parliament to agree to major spending plans and economic reforms, which could help diversify the economy and ensure major schemes move ahead.

“The high oil price highlights the challenges of trying to specify what percentage of GDP the private sector should ideally account for,” says Daniel Kaye, head of macroeconomic research at National Bank of Kuwait. “The metric is sensitive to what is happening to crude prices, particularly in a country such as Kuwait, where oil production is so large when compared to the economy.

“The Development Plan laid out all sorts of targets and metrics, but I interpreted them more as guidelines than strict targets. What we can say for sure is that until recently none of the plan’s big, signature schemes was under way. Now, at last, we look like we are inching closer to the start of a couple of them, as well as many smaller ones.”

Among the projects that are slowly moving forwards is the Al-Zour North independent water and power project (IWPP). This was awarded to a consortium led by France’s GDF Suez and Japan’s Sumitomo in January, although reaching financial close on the $2.5bn scheme since then has proved to be a lengthy process.

Inadequate investment

“There will be challenges in the implementation of projects, but there are enough in the pipeline to engender optimism,” says Kaye. “A lack of investment – both public and private – has been one of the economy’s key weak spots for years. Even a moderate improvement in project execution could go a long way to boost confidence and improve the supply side of the economy.”

For now, the limited progress means Kuwait remains more heavily dependent on crude revenues than most of its GCC peers. In 2012, hydrocarbons production accounted for an estimated 64 per cent of the country’s GDP, compared to an average of 48 per cent across the GCC as a whole, according to Qatar National Bank (QNB).

The chances of there being more private sector activity received a boost in December 2012, when opposition groups boycotted the general election and a more pro-government parliament was voted in. The hiatus between parliaments while the poll took place had also opened the way for some long-awaited reforms to be introduced by emiri decree, including a new Companies Law in November. Once parliament was in place, other reforms were passed, including approval for the privatisation of flag carrier Kuwait Airways.

However, it did not take long for the country’s political problems to reassert themselves. As the months passed, the new parliament became more combative in its dealings with the government and in June, the Constitutional Court ruled that the December election was invalid.

Another poll was duly held in July. After briefly convening in early August, the new parliament took a long summer break, which is due to end in mid-October. Whether the latest members of parliament are more open to cooperating with the government remains to be seen, but history suggests the relationship is likely to be characterised by opposition and intransigence. As a result, meaningful economic reforms that might benefit project spending or the private sector seem unlikely to move ahead quickly.

“Parliament shoots down pretty much all the schemes the private sector is interested in,” says Hertog. “It is rational populism. Voters don’t really benefit from policies that further business development and if there is a choice between increasing public sector salaries or making cash grants to families on the one hand, and spending on infrastructure that would benefit the private sector on the other, then I think the private sector will always lose out.”

Shifting tactics

“There could only be a change in the long run if private firms completely shifted position and started employing more nationals and perhaps started paying taxes,” he continues. “Then they would become a serious negotiating partner. But right now, they don’t do anything that’s essential for society or for the survival of the regime.”

Despite the tough climate, there are some bright spots. According to MEED’s annual ranking of the 100 largest listed corporates in the region, 12 are from Kuwait, which is a strong showing given the size of the country. The banking sector is the clear leader within the group, accounting for eight of the 12 companies, along with two telecoms firms, a real estate business and a food company.

Developing domestic champions is one thing, but for the economy to really diversify, it needs to attract international skills and investors with new ideas. However, the relatively unwelcome environment for private capital means Kuwait has received less than 1 per cent of total foreign direct investment into the GCC over the past decade, according to QNB.

With the current Development Plan nearing its end, the challenge facing the Kuwaiti authorities is to draw up a successor plan to start in the new financial year, which begins in April. A more realistic set of targets would probably be wise, but the structural issues in the economy and the political system mean any change will be very difficult to push through.

Shiites lose seats as Kuwait votes yet again

Kuwaitis turned out in searing heat to elect yet another parliament on 27 July. Turnout was higher than December, and a half-hearted opposition boycott saw some liberals return to the assembly. Three days later, the emir announced a Ramadan pardon of all those convicted of offending him. Published in Gulf States News, 1 August 2013

In the heat of a Ramadan summer, Kuwaitis went to the polls on 27 July for the third time in less than two years. The turnout of around 52% – higher than the record low 40% of the last poll in December – only just topped the temperature, which climbed close to 50 degrees Fahrenheit during the day.

The election results – most notable for significant Shia losses – are difficult to read; the elected assembly seems to be slightly more balanced than in recent years, but the chances of it leading to any profound improvement in Kuwait’s prospects nonetheless seem slim. The new parliament is a loose collection of competing interest groups: one of the few things on which they can probably agree is a desire for parliament to have greater power.

The ruling Al-Sabah family, meanwhile, shows no sign of willingness to cede influence, even on relatively minor matters such as appointing more than one elected MP to the government. As a result, the debilitating power struggle between elected MPs and the appointed government which has characterised Kuwaiti politics is likely to continue, hobbling the economy in the process.

The main losers in this latest election were Kuwait’s Shia minority, who are thought to account for around a third of the population. They won just eight of the 50 seats in parliament, mostly in the first constituency, compared to 17 seats in the annulled parliament elected in December. Although they had been expected to lose ground, it was a heavier loss than some had predicted.

The turnaround in Shia fortunes was a result of the opposition boycott, so widely observed last year, crumbling. In December, a wide variety of Islamists, liberals and some of the country’s largest tribes shunned the poll, providing room for minorities to win seats. This time, the liberal National Democratic Alliance and some tribes that had ignored the last election, including the Awazem, did participate. Emir Sheikh Sabah Al-Ahmed Al- Sabah’s careful courting of tribal leaders in the months before the poll appears to have paid off.

Others continued with the boycott, however, their main grievance the continued use of the ‘one person, one vote’ system that the Constitutional Court approved on 16 June,when it also declared the December election invalid. “The failure of the opposition to agree a common platform has caused it to splinter while the ruling family has cleverly split the tribal bloc by reaching out to key tribal leaders and getting them back into the political process,” said one political analyst in the build-up to the poll.

Women also lost ground, with just two of eight candidates – Maasouma Al-Mubarak in the first constituency and Safa Al- Hashem in the third – returning to parliament, down from three women elected in December. Liberal candidates won at least three seats, and Sunni Islamists won seven, two more than last time.

Subdued campaign

The election campaign itself was uninspiring. Turnout may have been higher than December, but it remained significantly below the Kuwaiti average of around 60%. A combination of voter fatigue, scepticism about the ability of parliament to hold the powerful executive to account, and the decision to hold the election during Ramadan meant there was none of the drama that was seen in the run-up to the December poll, which saw large protests and fiery speeches by the likes of Musallam Al-Barrak – who ended up in court for his criticism of the emir.

The campaign was enlivened slightly by arrests over allegations of vote buying. There were also claims by some opposition leaders that the authorities were rather selective in which vote-buyers they went after. In comments carried by the local Arab Times, Ali Al-Rashid, a candidate in the second constituency and speaker of the outgoing parliament, attacked interior minister Sheikh Ahmad Al-Humoud for disregarding violations committed by some candidates. The emir’s decision to give a $4bn package of aid to Egypt, announced on 10 July, also provoked some criticism, notably from Nawaf Al-Fuzai, a member of the dissolved parliament.

One question now – presuming no technical irregularities are found in this latest election – will be the extent of opposition appetite for continued protest against the leadership. On 30 July, Emir Sheikh Sabah issued a pardon to all those convicted of insulting him, something which may, in the short term, assuage dissent. How the authorities react to future criticism will be more significant however; should a crackdown on free speech resume, the amnesty will have meant little.

While parliament’s away…

The month-long absence of a parliament gave the government the chance to release the year’s budget via an Emiri decree on 17 July. The deficit for the fiscal year 2013-14 is projected at KD7.43bn ($26.1 bn), although, as it is based on a relatively conservative oil price of $70/bbl, the government is all but certain to post another substantial budget surplus.

Total expenditure is estimated at KD21bn, including KD5.2bn on salaries, KD4.9bn on subsidised commodities and services, and KD2.2bn on construction projects, maintenance and related items. Oil revenues, at KD16.9bn, are projected to account for 93% of total state revenues.

Those figures highlight both the strength and weakness of the Kuwaiti economy. High oil revenues mean there is little urgency to reform and develop the economy, but such initiatives are desperately needed for its longer-term health. However, the standoff between parliament and the executive means that few reforms ever make it on to the statute book. The last parliament – largely seen as more pro-government, because of the opposition boycott – did manage to bring in some reform measures before it was dissolved, including the privatisation of Kuwait Airways, but the new parliament may well return to a less co-operative mood.

The assembly is due to convene on 6August, led in its first session by the oldest MP, Hamad Seif Al-Hershani. Prime minister Sheikh Jaber Al-Mubarak Al-Sabah submitted his resignation to the emir on 28 July, as per the constitution, which states that a new government must be appointed when a new parliament is elected. On 29 July, he was reappointed, as he often has been amid the comings and goings of Kuwait’s volatile assembly. At the time of writing, he had yet to form a new cabinet.

For the long-term health of the economy, the prime minister and parliament will need to find a modus vivendi, however difficult that might be to achieve. For the credibility of the country’s political system, it is equally vital that this election result is allowed to stand, and is not dismissed by the Constitutional Court like the two previous parliaments have been.

Kuwaiti emir courts tribal leaders as parliament dissolved – again

Yet another bout of political uncertainty lies ahead in Kuwait, after two constitutional court rulings that will force another election. The emir has been courting tribal leaders, apparently in the hope of staving off another significant boycott. Published in Gulf States News, 20 June 2013

On 16 June, Kuwait’s constitutional court made two key rulings that have once again set the election process in motion. The first was that the emiri decree which set up the National Election Commission in October was unconstitutional, and that parliament must be dissolved. The next parliamentary election will be the third in less than two years, following votes in February and December 2012.

The second ruling was more contentious. The court decided the emiri decree that introduced a new voting system before the last election was legitimate. It was that ‘one person, one vote’ system which led to the election boycott by Islamists, liberals and some of the country’s largest tribes, including the Awazem, Mutairi and Ajman. Their chief complaint was that the system discriminates against them, as they can no longer form the sort of voting blocs common under the old system, in which voters each had four votes and could spread their support between their own and allied groups.

Opposition politicians – many of whom have said they will again boycott an election held under the new law – immediately denounced the court’s decision. The Kuwait Times quoted a number of former MPs, including Waleed Al-Tabtabaei, who described the confirmation of the voting system as “the worst decision”, and Mubarak Al-Walan, who said the only way to avoid political stalemate was for the decree to be withdrawn. Emir Sheikh Sabah Al-Ahmed Al-Sabah called for national unity. “The ruling proves that Kuwait is a state of institutions ruled by the constitution and law. I call upon all Kuwaitis to respect and abide by the verdict,” he said in a televised speech.“ We have to put this issue behind us… it was a bitter experience.”

Courting tribal leaders

The court’s ruling was not altogether a surprise. As GSN wrote last issue, parliament had extended its working hours to try to get as much done as possible before a potential dissolution. MPs will have been relieved that the court ruled all legislation passed by the now-dissolved assembly would stand.

There were also signs that the emir has been anticipating a repeat election. In the weeks preceding the ruling, he publicly courted tribal leaders, in what seemed like a concerted effort to encourage them to drop their boycotts. On 27 May, the emir and Crown Prince Sheikh Nawaf Al-AhmedAl-Sabah attended a banquet held in their honour by the Awazem tribe, at which leaders expressed their loyalty to the ruling family. One senior figure, Falah Bin Eid Bin Jame, said his tribe “has always stood behind [the] Al-Sabah family since the rule of Sabah the First and continued until [the] present day”, in remarks reported by the state-run Kuna news agency. The emir said “this meeting shows clearly the close and candid relations between Kuwaiti people and ruler”.

Six days later, on 2 June, the emir was at a lunch hosted in his honour by Sultan Bin Salman Bin Hethlain on behalf of the Ajman and Yam tribes. At that event, Bin Hethlain spoke of a commitment to national unity but also set out a number of issues he said needed to be addressed, ranging from education to healthcare, housing and the status of the stateless Bidoon. The implicit criticism was leavened by praise for the emir’s openness and transparency.

“It seems the emir is on some sort of reconciliation track,” one Kuwait-based political analyst told GSN. “The tribal leaders are sucking up to the emir and the emir is flirting right back.” The process has continued since the court ruling. On 17 June, the emir and crown prince attended a banquet hosted by Adwan Bin Tawaleh of the Shammar tribe, where the host and guest spoke of the importance of national unity and safeguarding the constitution.

Such expressions of loyalty do not guarantee participation in any election, however. Before the last poll, Falah Faisal Al-Deweish of the Mutairi tribe said it was up to individuals to decide whether to vote or not. “Let those who wish to take part participate and those who want to boycott do so,” he said at a meeting between the emir and tribal elders in October, before adding: “We should remain around his highness the emir, the father of all.” It is worth noting that it is a member of the Mutairi who has become one of the establishment’s most prominent critics: former MP Musallam Al-Barrak,who faces a retrial in the case against him for insulting the emir.

Jury still out

The evidence so far is that the Al-Sabah charm offensive has been only partly successful. One liberal group, the National Democratic Alliance, has said it will compete in the next election, but the Progressive Movement, a larger group which contains Islamists, liberals and nationalists, says it will not.

Which way the tribal groups will go is less clear. Not all tribes are opposed to the electoral law: smaller ones have benefited from it, as they are now less likely to be squeezed out by larger groups. But without another change to the voting system, the larger tribes face the prospect of having their presence in parliament scaled back on a more permanent basis. If a deal cannot be struck behind closed doors, they may see a boycott as being in their best interests.

It seems inevitable that holding another election under the ‘one vote’ system will provoke a renewal of opposition rallies and protests, and the authorities have been trying to set out clear boundaries for any such action. The interior ministry has said it will not allow protests outside Erada Square, opposite the National Assembly building, and in his 16 June television address, the emir warned against sectarianism “which might trigger extremism and spark destructive discord”.

The date of the election also needs to be resolved. According to Article 107 of the constitution, it must be held within two months but, with Ramadan falling from early July until early August, some have suggested a postponement until after the summer. The constitution also says the old parliament must be reinstated if an election is not held in time. It is not clear which parliament would be recalled, however, given that the last two have been declared unconstitutional.

Another political false dawn in Kuwait

Kuwait’s Constitutional Court has ruled that parliament must be dissolved and fresh elections be held. However, its much-criticised new voting system has been left in place. Published in MEED, 19 June 2013

Kuwait is preparing for yet another parliamentary election and more political turmoil, after two critical rulings by its Constitutional Court on 16 June. It will be the third national vote in Kuwait in less than two years, following elections in February and December last year, both of which have now been nullified.

The first of the court’s rulings was that the current National Assembly (parliament) should be dissolved because an emiri decree to set up the National Election Commission in October last year was unconstitutional. The decision both forces new elections in Kuwait and sets the scene for what is likely to be an impassioned debate about the court’s second ruling: to leave in place a new voting system introduced by another emiri decree ahead of the last election.

Many opposition politicians had objected to the voting system and boycotted the December election as a result. Large protests became a common sight on the streets of Kuwait City ahead of polling day, but the election itself went ahead without incident.

Royal backing

Emir Sheikh Sabah al-Ahmad al-Jaber al-Sabah immediately tried to head off any renewed bout of public protests, delivering a speech on national television on the evening of 16 June, just hours after the court issued its rulings.

“I repeat what I have said before: that I accept … the ruling of the Constitutional Court regardless of its content, and I call upon all citizens to respect it and abide by it,” he said. “Now, we have to leave this issue … behind us and continue the march of reform and development.”

Even before the court had issued its ruling, the Interior Ministry issued a statement warning that it would not tolerate any protests other than in Erada Square, the area in front of the parliament building that has become the focal point for opposition rallies.

At the time of writing, it was not clear when a new election would be held. According to Article 107 of the constitution, it should happen within two months of any dissolution, but the holding of any election campaign will be made more difficult by the fact Ramadan is due to run from early July until early August this year.

In the meantime, Islamist politicians and tribal groups who boycotted the last election face the critical question of whether to take part in the next one. Given the repeated avowals of some opposition figures that they will refuse to take part in any election under the current voting system, it will be difficult for them to get involved.

Their objection to the voting system is based on the claim it artificially boosts the election result in favour of pro-government MPs at their expense.

Kuwait had previously used a system in which each voter had four votes to share between the candidates. That created fertile ground for voting pacts to emerge between different opposition groups. Their supporters would vote for their own candidates as well as allied ones from other groups, creating a formidable block of MPs in parliament. The system of one vote per person that was introduced for the last election made such deals all but impossible.

It is difficult to judge how well or badly the opposition groups would have fared if they had thrown themselves into the last election campaign. Their boycott, however, meant the country has seen a rare period in which parliament and the government have managed to work together to pass some long-awaited reforms.

Kuwait’s political scene has traditionally been defined by a pattern of confrontation between the legislature and the unelected executive, which has in turn often led to policy paralysis. With far fewer opposition MPs in the last parliament, the chamber proved more conciliatory and was able to strike deals with the government.

Political cooperation

For example, in the early months of the new parliament, MPs agreed to the privatisation of Kuwait Airways. There was also progress with some major infrastructure projects and a compensation deal with Iraq was approved. All these issues had been hanging over previous parliaments, but they had proved unable to pass the necessary legislation.

“There is no doubt that this parliament has been a bit more cooperative than previous parliaments,” said one analyst in Kuwait early in the year. “There have been some laws passed. The level of cooperation [with the government] has been a bit higher. It’s not perfect, but it’s better than it was.”

However, as time passed the optimism slowly faded, to be replaced by a more familiar sense of inertia and conflict between the legislature and the executive. One member of the cabinet, Oil Minister Hani Hussein, resigned rather than face potentially uncomfortable questioning by MPs and it had looked like others could follow, before the Constitutional Court rulings made such issues moot.

Hussein’s decision to step down on 27 May followed a familiar pattern in Kuwait. Previous parliaments have regularly called government ministers to appear before them in what are known in Kuwait as ‘grillings’. In turn, many of those ministers have decided to resign rather than face public scrutiny and a possible no confidence vote against them.

In Hussein’s case, MPs had wanted to question him over the $2.2bn the country is paying US firm Dow Chemicals as compensation for the collapse of the K-Dow petrochemicals joint venture in late 2008.

MPs had also called for grillings of Interior Minister Sheikh Ahmad al-Humoud al-Sabah on several issues ranging from a perceived failure to cooperate with parliament to national security concerns, and Health Minister Mohammad al-Haifi over water contamination.

Outreach strategy

The weeks leading up to the court rulings offered some indications that the regime was expecting new elections to be held before long. In particular, the emir and his half-brother, Crown Prince Sheikh Nawaf al-Ahmad al-Jaber al-Sabah, had been reaching out to the tribal leaders, who had refused to take part in the last election. This appeared to be an attempt to lay the groundwork for tribe leaders to take part in any new election. They attended a series of banquets held in their honour in late May and early June, at which a succession of tribal leaders voiced their loyalty to the Al-Sabah family and the regime.

“Animosity and tension are detrimental to the wholeness of the society,” said Fehhad Matir Mubarak al-Milabi, an Azmi tribesman, after one such banquet held on 27 May, according to remarks reported by the official Kuna news agency. “Therefore, these unwanted acts should be avoided to keep the cohesiveness of national unity.”

In addition, Musallam al-Barrak, one of the country’s most prominent opposition politicians, had his five-year prison sentence for insulting the emir quashed by an appeals court in late May, although he is now due to be retried. That case had started after Al-Barrak appeared to question the authority of the emir, telling an election rally on 15 October: “We will not let you, your highness, rule this country on your own.”

In recent months, the wind has appeared to be going out of the opposition’s sails too, despite their promises after the last election to maintain their street protests even after the new parliament had convened. The sort of public demonstrations that became commonplace in late 2012 have all but disappeared from the streets of Kuwait. The recent combination of public avowals of loyalty and a quietening of activity by opposition groups has led some to think there must be some deal-making taking place behind the scenes.

“You don’t see any protests anymore in Kuwait,” says Alanoud al-Sharekh, the Kuwait-based corresponding senior fellow for regional politics at the UK’s International Institute of Strategic Studies. “The fight has gone out of the opposition and they seem to have lost their focus recently. That tends to mean there are some serious negotiations going on.”

If the opposition groups do decide to contest the next election, the outcome is likely to be a parliament similar in character to most of the ones of recent years, although the confirmation of the new voting system means they could take up a smaller proportion of the chamber than in the past.

Another scenario is that opposition groups will step up their activities once more. The Constitutional Court may have issued its verdict on the current voting system, which cannot be challenged, but that does not mean another new voting system could not be brought in. In addition, there are a number of other issues that could be used as rallying cries, ranging from a shortage of housing to graduate unemployment.

Full circle

In any case, it looks as if Kuwait could be facing a period in which parliament and the government regularly clash once again. A time when ministers – even the entire cabinet – are forced to resign, rather than face the public scrutiny MPs demand.

In essence, that would mean the past few months will have represented little more than a brief diversion from the norm of Kuwaiti politics, and the progress with some critical reforms could grind to a halt.

“You can’t change the nature of the beast,” says one observer in the city. “The parliament passed all the legislation that was hanging around, but that doesn’t stop the unions from striking, it doesn’t stop people demanding wage increases, and it doesn’t stop the flow of corruption. All these things are continuing in spite of the fact that this [has been] a more cooperative parliament than before.”

If nothing else, Kuwait is living up to its reputation as an unpredictable and turbulent quasi-democracy.

Economic growth in Kuwait continues to disappoint

Persistent government under-spending on capital projects is holding back growth and the diversification of the economy. Published in MEED, 18 June 2013

The story of Kuwait’s economy continues to be a frustrating tale of heavy reliance on public sector spending and a government that consistently misses its targets, particularly when it comes to capital expenditure. With oil prices high, it means there is no great urgency to change course at the moment, but in the longer term, the pressure is likely to increase.

When the most recent elections were held for the National Assembly (parliament) in December 2012, there were hopes that it might at last lead to some progress being made with much-needed economic reforms. Since then, there have been some positive signs. In January, MPs gave the go-ahead for the privatisation of Kuwait Airways and several major projects, such as the $2.6bn Subiya Causeway across Kuwait Bay and the $2bn Al-Zour North independent water and power project, are also gradually moving forward.

Government spending

Coupled with the introduction by emiri decree of a new Companies Law in November last year, it suggests a better environment for the private sector. But the reality is that almost everything in Kuwait ultimately depends on government spending. According to the Washington-based IMF, some 80 per cent of Kuwaitis work in the public sector, while private sector activity is largely dependent on government spending and expatriate labour. Unfortunately for Kuwait, there are a number of problems with the way the government chooses to spend its money.

Full-year figures for the fiscal year 2012/13, which ended in March, are not yet available, but the evidence from the first 11 months is not encouraging. While revenues have come in at more than twice the full-year budget projections, mainly because of the conservative oil price of $65 a barrel set in the budget, the amount of spending has lagged well behind.

In the 11 months to the end of February, total spending was running at just half the full-year budget projections, with capital expenditure even worse at just 35 per cent of the planned full-year total. Even allowing for a late surge in spending in the final month of the fiscal year, it is clear the government will not reach its target.

“The government has spent 93 per cent of its budget on average in the past five years,” says Elias Bikhazi, chief economist at National Bank of Kuwait (NBK), the country’s largest bank. “This past year, spending could have come somewhat below that level, at 90 per cent or even lower.”

As a result of the high revenues and limited spending, NBK is projecting a budget surplus of around KD15bn ($52.5bn) for 2012/13. But it is not just a question of how much is spent. Where the money goes is equally important and here too there are long-running problems.

One of the biggest areas of spending is on wages and salaries for public sector employees, which accounted for KD3.1bn of the KD10.6bn spent in the 11 months to February. Subsidies and debt relief for Kuwaiti nationals is also significant. In early April, parliament passed a law requiring the government to buy KD744m-worth of citizens’ bank loans taken out before March 2008. While such measures help consumer spending, the money also tends to lead to higher imports, reducing the impact on gross domestic product (GDP).

“The economy is dependent on what the government does in terms of its spending programme,” says another economist based in Kuwait. “The government needs to stimulate the economy, which implies spending more money, but it needs to spend it on the right things. Kuwait could do with a boost to its infrastructure and the balance of spending should shift more towards implementing sizeable projects. Current spending doesn’t have the same effect.”

Slower growth

As a result, GDP forecasts for the coming years do not make particularly happy reading. London-based Capital Economics says it expects Kuwait’s GDP to grow by an average of 2 per cent this year and next, compared with 3.3 per cent for the GCC as a whole.

The IMF takes a similar line, projecting 1.1 per cent growth this year and 3.1 per cent next year, compared with an average for the region’s oil exporting countries of 3.2 per cent in 2013 and 3.7 per cent in 2014.

The lower growth means Kuwait will continue to lose ground to its regional rivals, which have proved better able to diversify away from a reliance on oil and gas revenues.

In the short term, this is not necessarily a huge problem for Kuwait – it has plentiful financial reserves and almost no debt so it could easily cope with a period of lower oil prices.

In the longer term, this will need to change. Capital Economics estimates that if the government continues to increase spending at its current pace, its break-even oil price could rise to $120 a barrel by the end of the decade.

Kuwait: Moving Forward

Published in The Middle East, January 2013 From his window seat on a British Airways plane that had just landed at Kuwait International Airport, Abdul could see a Kuwait Airways jet parked on the tarmac. A student in the US, Abdul makes the long journey home several times a year but he always avoids travelling with the national carrier. “I never fly with Kuwait Airways. They’re terrible. The service, the aircraft, everything,” he says.

He is not alone. Confidence in the national airline is low, following a number of well-publicised technical problems with its planes, and at least one major local company has told its employees to use other airlines when travelling for work.

In many ways, the national airline is like the country it serves. It has a workforce far larger than it needs and a lack of investment means that its fleet now has an average age of 19 years. The wider economy also has a bloated public sector, suffers from continual delays to major infrastructure projects and has one of the lowest levels of foreign direct investment in the region.

The evidence of all this is obvious to anyone wandering around central Kuwait City. Despite the country’s massive oil wealth, there are numerous dilapidated buildings and a noxious smell from the drains can confront you close to even the tallest and shiniest of new skyscrapers.

There are plans to turn around the airline through a privatisation process led by the Kuwait Investment Authority and other plans have been formulated to reinvigorate the wider economy. Such plans have been on the drawing board for many years, but there is now a sense of optimism that something might be achieved. The main reason for that is the general election on 1 December. The poll was boycotted by the main opposition groups and, as a result, the new National Assembly (parliament) is expected to have a far more constructive relationship with the government than its recent predecessors. “There’s a chance now for the government to get it’s act together. We need strong ministers and a strong government with a willingness to push things through and then we have a chance to get things back on track,” says Abdul Aziz Al Yaqout, the Kuwait-based regional managing partner at international law firm DLA Piper.

“The government doesn’t have any excuses any more.” Even before the election there had been some signs of progress. The Emir Sheikh Sabah Al Ahmad Al Jaber Al Sabah had made a number of televised speeches, which gave observers hope that the economic inertia that has gripped the country might be coming to an end.

“The emir has started to get more involved and there are some signs of progress on projects like Silk City, the Subiya Causeway and the Al Zour power plant,” says Daniel Kaye, a senior manager in the economic research division of National Bank of Kuwait (NBK). “Given how little investment there has been in the non-oil sector in the past this is very welcome. But we won’t get carried away. There have been a number of false dawns when it comes to the project market.”

As a result of the new sense of purpose from the authorities, NBK upgraded its estimates for growth in the non-oil economy next year from 4%to 5%. “It’s not a huge upgrade, but it reflects what we believe should be a slightly more active project environment,” adds Kaye.

Other signs of progress include the improving relations with Iraq and the long-term opportunity that offers to Kuwait to tap into a fast-growing economy on its doorstep. Some of Iraq’s largest oil fields are in the south of the country and there is the potential for trade and logistics services to flourish on both sides of the border.

In recent weeks the Iraqi and Kuwaiti governments have agreed a deal for Baghdad to compensate Kuwait Airways for losses caused during the 1990 invasion. There is still around $13bn in compensation outstanding owed to Kuwait, but both sides now appear keen to settle their differences.

Parts of Kuwait’s legal framework are also getting a much-needed revamp. A new Companies Law was published by decree on 29 November and now needs parliamentary approval. Among its measures are provisions to give greater rights for minority shareholders as well as creating a separation between a company’s executive management team and its board.

“I think this will radically change things, although a lot of people don’t realise it yet,” says Al Yaqout, who was involved in drafting the law. “It brings Kuwait up to date with other countries. We’re confident that we’re now on a par with other countries in the region. We have been waiting for this law for the past 23 years, but better late than never.”

More legal reforms are coming, including a new insolvency law and a new foreign direct investment law. Such measures should help to make Kuwait more attractive to international companies and the expertise they can offer is something that Kuwait sorely needs.

The overarching vision of the emir is to turn the country into a financial and trading hub for the region by 2035, with the private sector the leading force in the economy. As many in Kuwait acknowledge, it will be extremely difficult for the economy to diversify effectively when oil is so plentiful and crude prices so high. But there is also little incentive for locals to seek more risky, challenging work in the private sector when public sector jobs and other benefits are so easily available.

Abdul, the student on the plane, is studying entrepreneurship in the US. The past two generations of his family have built up sizeable trading businesses, making themselves very wealthy in the process, but as he acknowledges, his family is an exception. Most Kuwaitis show little interest in the business world. “There is very little entrepreneurship in Kuwait, but it is slowly changing,” he says.

Most Kuwaitis prefer a job working for the government, where the balance between working conditions and pay is more to their liking. The ratio has changed over the past decade, but most Kuwaitis who want a private sector job now probably have one and the rest don’t see the point. “The number of Kuwaitis in employment who are in the private sector is now around 20% ,” says Kaye. “It used to be around 5% 10 years ago. This is encouraging, but a lot of the ‘low hanging fruit’ has now been picked. Further progress may be more challenging.”

Against this backdrop, the country’s politicians continue to argue and their differences could yet undermine the hopes for meaningful economic progress in the years ahead. Having boycotted the December election, the opposition groups now find themselves shut out of the corridors of power but they have vowed to carry on questioning the legitimacy of the new parliament and to continue their protests on the street.

In the short term, there are many in the country who argue that it is worth giving those in power another chance to get things right. But if the government and new parliament cannot work together effectively, then the situation is liable to get more tense and polarised.

“This is never going to be a utopia. We’ll always have corruption and cronyism and some people with better access to the state coffers than others,” says one local analyst. “But the last parliament was the worst we’ve ever had. There was a lot of frustration and disillusionment. It was like being in a dark tunnel without light. Without the parliament, the government has stepped up its game. It is privatising Kuwait Airways, resolving the Iraqi debt.”

One Kuwait Oil Company employee says he expects the latest election to have little or no impact on the day- to-day life of the country’s most important corporation. In the oil town of Ahmedi there is a sense of detachment from the traffic jams and political manoeuvring of the capital to the north.

Kuwait’s huge oil reserves are both its main strength and its biggest weakness. The revenues it earns from oil sales mean that it can afford to invest in almost any- thing, but it has also been able to afford to sit back and do almost nothing.

“The credit ratings agencies come here and they always ask what is Kuwait’s niche? Well maybe it doesn’t need one. It has oil and that will always be the dominant element in its economy for years to come,” says one financial analyst.

But there are many in Kuwait who now feel that it must do something, that the years of inertia must come to a close at some point and that the gap between Kuwait and more vibrant nearby economies like Qatar and Abu Dhabi should not be allowed to grow any wider.

“Our problem is not money. We have more than enough money. We need know-how and diversification,” adds Al Yaqout. “We have to work on our infrastructure. It begins with transport, it continues with oil and with education, healthcare, housing, everything.”

With the fresh parliament in place, it looks like Kuwait has the best opportunity in years for that work to at least start.

Kuwait poll reinforces political uncertainty

While the recent polls held in Kuwait were peaceful, the government would do well to compromise with opponents to reduce the risk of growing dissent among nationals. Published in MEED, 6 December 2012

Kuwait’s latest election campaign for the National Assembly (parliament) came to an end on 1 December with a whimper rather than a bang. Turnout was low but the day passed off peacefully and there was probably enough in the outcome for government and opposition groups to both claim a victory of sorts.

Just how many people turned up to vote is still a matter of debate. Official figures from the Ministry of Information indicated that, by the time polling stations closed at 8pm, just 39 per cent of eligible voters had taken part (see table). Opposition groups who had called for a boycott claimed the real figure was less than 30 per cent. Both figures are far below the 60 per cent turnout that is usual for elections in the country.

With the vote behind it, the focus of Kuwaiti politics should now turn to the newly elected chamber. In reality, however, important political battles are likely to be fought in court and on the streets of Kuwait.

Opposition undeterred in Kuwait

For the main opposition groups, the low turnout was an affirmation that their calls for a boycott had been heeded and they have vowed to continue their public protests. The focus of their anger is directed at the ‘one person, one vote’ system that the emir, Sheikh Sabah al-Ahmad al-Jaber al-Sabah, introduced by decree in September. This replaced a system that had given four votes to each person and the change, they claimed, unfairly penalised them and favoured pro-government candidates.

The number of people that shunned the poll was boosted by the fact that many disliked the way the emir had pushed the change through by decree, rather than having any particular problem with the new voting system itself. “People are genuinely unhappy with the emir passing the law under a decree,” said one local analyst, speaking in the days leading up to the election.

Almost 423,000 Kuwaitis were entitled to vote – 53 per cent of them women – but in the end just 163,000 made it to the polls, according to official figures. The lowest turnout was in the two largest constituencies where the tribal and Islamist groups that called for a boycott have traditionally been strongest. In the fourth constituency, turnout was 29 per cent, while in the fifth constituency it was just 21 per cent. One candidate – Nasser al-Shammari – managed to secure a parliamentary seat with just 520 votes.

For the country’s ruling elite, however, the number of votes that a candidate received is far less important than how they will act once they assume their seats. With far fewer Sunni Islamist and tribal MPs than before, there is now the prospect of a parliament that might be willing to work with the government, rather than against it. The country has been hamstrung for years by the repeated stand-offs between the elected parliament and the appointed cabinet, and a breakthrough is desperately needed for the sake of its future economic health.

Minority representation

For minority groups there was also success. Smaller tribes managed to pick up more seats than usual and Shiites, who make up about 30 per cent of the population, won 15 seats in the 50-member chamber. It was their highest ever return and also marked the first time they had gained seats in all five constituencies. Three women also won seats: Maasouma al-Mubarak in the first constituency, Safa al-Hashem in the third and Thekra al-Rasheedi in the fourth.

Perhaps the biggest achievement was that the elections remained peaceful, particularly given the mood in which they were staged. At one stage in the campaign, Kuwaitis were becoming dangerously polarised and violence appeared to be close to the surface of society. Illegal demonstrations were gathering momentum and in October, the police deployed stun grenades and tear gas to disperse protesters.

“For a while things looked very shaky,” says the local analyst. “People got excited thinking something was going to happen. But I think the majority of Kuwaitis support the government.”

However, a few weeks before polling day, the country’s politicians seemed to take a step back from the brink. The unauthorised gatherings ceased and opposition leaders contented themselves with the weekly gathering near the parliament building that the authorities had sanctioned. In addition, the government had ordered candidates to remove many of their campaign posters from roadside billboards and the mood was so subdued that a casual observer in Kuwait might not have even realised an election was taking place at all.

An opposition rally on the eve of polling day was well attended, with some observers putting the number at about 250,000 people. The demonstrators walked the short distance along the dual carriageway of the Arabian Gulf Road from the Safir hotel to the iconic Kuwait Towers, waving flags and banners and releasing orange balloons – the colour that has come to symbolise Kuwait’s protest movement. But after a few hours they dispersed peacefully.

But if many groups came away from the election with reasons to be happy, there is also much that remains to be fought over. A cloud of uncertainty still looms over the political scene.

Voting unconstitutional

The most immediate issue is the ongoing legal efforts by some groups to declare the new voting system unconstitutional. An administrative court decided on 26 November that it could not hear the case and referred it up to the constitutional court. If the higher court sides with the opposition groups, another election will be needed, this time presumably under the previous system of four votes for a person.

The courts have not shied away from such decisions in the past. Kuwait held an election in February this year but the results were declared invalid by the constitutional court because of the way the emir had dissolved the previous parliament; a decision that paved the way for the poll this month.

If the new parliament is able to carry on and find common ground with the government to move the economy and major projects forward, this could lead some Kuwaitis to conclude that the obstructionism of the past should be left in the past. In that scenario, the opposition risk being frozen out of the decision-making process.

“For me, the opposition groups are playing a risky game,” says one banker in Kuwait City. “It looks like the new parliament will be less anti-government than the last one and if the new parliament starts to get things done then people might lose patience with the opposition.”

At the same time, there might now need to be more compromise shown by the government towards their opponents. Some things have clearly changed in Kuwait as a result of this election campaign, not least in the evolving relationship between the ruling elite and the public. In the past, Kuwaitis have been happy to criticise the decisions that the emir makes but not the man himself. During the recent campaign, that prohibition was broken and some opposition leaders targeted the emir far more directly than usual. Former MP Musallam al-Barrak, for example, told a rally on 15 October that “we will not let you, your highness, rule this country on your own”.

Al-Barrak and many others were arrested, including some for postings they had made on Twitter, but it will be easier for others to criticise the emir too in the future.

Unpopular leader

“The emir is very unpopular in Kuwait,” says another Kuwait analyst. “He has been the most unpopular emir they have had and clearly criticising the emir is not the taboo it used to be. As we saw last year in North Africa, once taboos are broken you can’t change that; once the genie is out of the bottle, it is impossible to get it back in.”

Kuwaitis do not share the same revolutionary zeal as citizens in some other countries in the region that have experienced full-scale revolt against their rulers. In large part this is because of the way they have benefited from the oil wealth that has flowed into the country since the first discovery of crude in the 1930s. But locals are also aware, and proud, of the relative political freedoms they enjoy when compared to the other Gulf monarchies and there seems little appetite for overthrowing the entire system.

That is not to say they cannot see the weaknesses of some of those in power. “The government is corrupt and corruptive,” says a local source. “They’ve mismanaged the country in terms of the economy and the relationship between the executive and the legislature.”

Having endured two elections already this year, there will be many in Kuwait hoping for a period of stability, in which some progress can be made on the significant economic challenges the country is facing. Unfortunately for them, it is not yet clear whether that can or will happen.