Kuwait: political infighting delays economic development ...

As Kuwaitis went to the polls on Thursday, in the fourth parliamentary elections since 2006, they had little hope of an end to the political bickering which has persistently held back the economy of the oil-rich Gulf state.

While the opposition is set to gain seats, increasing the pressure on the government for change, the result isn?t expected to produce a breakthrough.? Kuwaitis face more of the same in economic terms ? a general failure to keep pace in GDP growth with other Gulf oil states or to modernise at the same pace.

The poll follows months of unprecedented anti-government protests triggered by Arab spring demonstrations in other Middle East countries and by corruption allegations against Sheikh Nasser Al-Mohammed Al-Sabah, who quit as prime minister in November.

Emir Sheikh Sabah Al-Ahmad Al-Jaber Al-Sabah, his uncle, dissolved parliament and called snap elections.

The election campaign has been dominated by tribal mudslinging and demands for a clampdown on corruption. Some of the campaigning even had an old-fashioned feel as one tribe pledged allegiance to another, while one tribesman said he?d stamp on one of his rivals.

The pre-election bullying got violent as one controversial candidate had his campaign tent burnt down and an interview on local television prompted a violent attack on the building of the channel.

Nothing major compared to what we?ve seen in the Arab spring, but certainly not encouraging for foreign investors in Kuwait or Kuwaiti corporate debt.

Only about 400,000 people are entitled to vote in a country where only a third of the population of 3.6m is Kuwaiti. The opposition is expected to win around 30 of the seats, up from around 20 in the previous parliament.

But that, on its own, won?t change the government which is appointed by a prime minister selected by the Emir.

Kuwait has the most active parliament in the Gulf and the most developed level of popular political participation. Parliament?s supporters say it forces accountability on managing the country?s wealth, though critics say it has merely stymied the potential of Kuwait?s economic development by delaying crucial bills.

Opposition campaigners have concentrated on corruption and have paid scant attention to economic development questions.

However, it?s clear that Kuwait is lagging behind its neighbours. And some Kuwaitis blame their semi-democratic system with its frequent elections and interminable political in-fighting.

As one economist put it: ?Frequent elections hamper progress and development and questions the style of democracy being followed. While it is indicative of freedom and rights, it is not yielding any result in terms of development and growth.?

Last year, Kuwait?s economic growth rate was less than a third of Qatar?s and well below that of Saudi Arabia, the largest Arab economy. Kuwait?s economy grew 5.7 per cent in 2011, after suffering the worst recession in the Gulf in 2009, according to International Monetary Fund data. Qatar grew 18.7 per cent and Saudi Arabia 6.5 per cent.

Kuwait income per head on a purchasing power parity basis was $40,700, according to the Fund. That?s way ahead of Saudi Arabia, a much bigger country, which is on $24,000 but well short of most other Gulf states: the figure is $48,600 for the UAE and a $102,800 for Qatar, which tops the IMF tables.

Kuwaitis can see that in the United Arab Emirates or Qatar, when a company is bailed out by the government, it can happen overnight ? certainly without consultation of the people. In Kuwait, bills are debated over months or even years, slowing down the process of supporting its ailing investment companies and kick-starting its economy.

High-profile debt restructurings such as that of Investment Dar, the Kuwaiti owner of Aston Martin, have further deterred foreign investors from Kuwait?s stock market, where volumes have plummeted.

Even, the national airline, where ashtrays can still be found, cannot compete with the ever-growing fleets of A380s bought by Qatar Airways, Emirates and Etihad. Kuwaitis worry even about its safety.

The economic prowess of the country is not due to declining wealth, the government received revenues of 28.2bn dinars ($100bn) last year, for a population of 3.7 million ? yes, that?s a lot of money.

But all this cash doesn?t have the same economic impact as elsewhere in the Gulf. That?s not been the issue in this election. But sooner or later it will.

Related?reading:
Voting begins in Kuwait election, FT
Corruption theme dominates Kuwait election, FT
Kuwaiti poll closely watched in Gulf, FT

Source: http://blogs.ft.com/beyond-brics/2012/02/02/kuwait-politics-delays-economic-development/

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