KUWAIT, (Reuters) – Kuwait’s ruler may have defused a political crisis in the OPEC exporter by dissolving parliament but some analysts say the next assembly and cabinet are no more likely to agree on much-needed economic reforms than the last.
Sheikh Sabah al-Ahmad al-Sabah, who has the last word in politics in Gulf Arab Kuwait, set elections for May 17 to end a protracted row between lawmakers and ministers that had stalled political life since the cabinet was sworn in last year.
The wrangling delayed reforms intended to set Kuwait on the same path as neighbours Dubai, Qatar and Bahrain, which have used their oil cash to diversify into finance and tourism.
Even the conservative kingdom of Saudi Arabia is opening up its economy, but Kuwait, siting on one tenth of global oil reserves, has yet to pass key laws needed to attract investment.
While the Arab world’s second largest bourse has rallied on hopes that a new assembly would endorse more business-friendly reforms, analysts said it would be hard to wean Kuwaitis off a nanny state that provides life-long jobs for 90 percent of them.
They say the government has proved too weak to push through key reforms in the face of a parliament focused on popular issues, like blocking plans to close diwanyas, makeshift cafes.
“I don’t think anything will change because the government is not serious about economic reforms. Parliament (also) has the wrong priorities,” said Naser al-Nafisi, General Manager of the Al-Joman Centre for Economic Consultancy in Kuwait.
“Oil may run out in 40 years. There will be a generation that could suffer from this carelessness.”
Parliament has a history of challenging the government — unusual in a region ruled by families — but spent much of the year questioning ministers accused of graft or misconduct, triggering several resignations. No oil minister has been named since Badr al-Humaidhi quit under pressure from deputies.
“I’m not very optimistic,” said former oil minister Ali al-Baghli. “There will be some new faces but deputies like to focus on supervision and grillings which are popular issues.”
On top of its economic concerns, Sunni-ruled Kuwait is deeply concerned about the prospect of war between its key ally, the United States, and its Shi’ite Muslim neighbour Iran.
SECTARIAN TENSION
Kuwait, whose own population is one third Shi’ite, has recently seen a spike in sectarian tension that has spread to parliament itself. The public prosecutor this month asked parliament to lift the immunity of two Shi’ite lawmakers who held a memorial for a slain member of Lebanon’s Hezbollah.
Kuwait accuses the Imad Mouhniyah of involvement in the hijacking of a Kuwait Airways plane in 1988 and the killing of two Kuwaitis. The MPs said they were accused of joining Hezbollah Kuwait despite the state’s ban on political parties.
The ruler said in his televised address on Wednesday that Kuwaiti loyalty should be to God and country rather than “sect, tribe or group”.
Some analysts say these are the teething pains of a budding democracy, but others believe Kuwait has no time to waste.
“We badly need the reforms because oil will not last for ever. We have to imitate the success of others such as Dubai and Abu Dhabi which rely less on oil,” said Baghli.
Kuwait relies on oil and gas for 40 percent of its GDP, versus 3 percent in Dubai, a member of the United Arab Emirates.
“If the (new) government is weak and without a majority in parliament, the same problems will come back,” said Ahmed Baqer, a key lawmaker and advocate of economic reform.
Parliament made progress in recent months, approving decade-old reform plans including a cut in tax on foreign firms and privatisation of the loss-making national airline. But a bill to set up a financial regulator has stalled in the house.
The conflict escalated this week when parliament, dominated by Islamists, moderate opposition and independent lawmakers, demanded another pay rise for public servants.
The government had already agreed a rise in state salaries in February in the face of rising inflation and bowed to demands that it buy back debts Kuwaitis had incurred in shopping sprees.
Annual inflation was a near-record 6.7 percent in November, though Kuwait dropped its peg to the weakening dollar last year, and the rising cost of living has become a political hot potato.
As political parties are banned, there is often a lack of coordination among lawmakers. Kuwaiti rulers have dissolved parliament five times since it was set up in 1963, twice suspending it for several years following political disputes.
Women won the right to vote and run in elections in 2005 but none won seats in the 2006 elections.
Analysts said the election result is unpredictable because a new system cuts the number of constituencies from 25 to five, with the aim of loosening the tribal grip on politics and discouraging vote-buying.