Hard-liners' win in Kuwait puts reformers' goals in doubt

Economic development was key for many Kuwaitis, but Saturday's parliamentary poll seated tribal leaders and Islamists, signaling more political stagnation ahead. While women won the right to vote in 2005, no female candidates were elected.

from the May 19, 2008 edition

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More than half of Kuwait's population is under the age of 25. During the run-up to the 2006 parliamentary polls, Kuwait's young people engaged enthusiastically in the campaigns – backing candidates, writing blogs, and attending opposition protests. This time around, however, voters said that they felt more cynicism than optimism about the outcome of the elections and a new parliament.

"In order for faster economic reforms to take place the notion of waiting for the parliament to take place is a joke," opines a young Kuwaiti, Osama al-Sadi.

Privatization and economic reform, however, are controversial issues in Kuwait. Parliamentary intransigence has stalled legislation on critical development projects like the $20 Project Kuwait, intended to expand Kuwait's oil exports from the current 2.6 million barrels per day (b.p.d) to 4 million b.p.d by 2020 by opening northern oil fields to foreign investment through specialized service contracts.

Fifteen-year old plans for the sell-off of state-owned industries have languished in parliament, with opposition coming mostly from tribal and Islamist MPs, who derive their main support from citizens who work in the public sector.

Indeed, the only substantive legislation the parliament and government have been able to agree upon was a much-delayed law to lower the flat tax on foreign firms operating in Kuwait. In December 2007, the government finally won parliament approval to lower the tax from 55 percent to 15 percent. In January, the parliament finally agreed after five years of discussion to privatize the profit-losing state airline, Kuwait Airways.

Even so, privatization is expected to take years to accomplish and employees unions and parliamentary committees have both come out in opposition to the plan.

Inflation has further stoked frustration among the country's 1.4 million citizens. Housing costs have jumped 12.6 percent and food costs are up more than 6 percent. Higher government spending and a raise for public service sector employees – 90 percent of which are Kuwaiti nationals – have failed to satisfy growing dissatisfaction with the country's state of economic affairs.

"Kuwait's medium-term outlook is highly favorable, driven by strong growth in the non-oil economy due to high oil prices and infrastructure spending. It is important that structural reforms to support private investment continue," says a spokesperson in the Middle East and Central Asia Department of the International Monetary Fund.

But already rumors and speculation are circulating that this parliament won't last two years. The emir has the power to dissolve it at any time.

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