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Kuwait's road to recovery.

The International community was almost unanimous in its condemnation of the Iraqi invasion which devastated Kuwait. Until then Kuwait had enjoyed decades of relative peace and prosperity thanks to the successful marketing of its huge oil reserves and a high performance international investment portfolio that made the country a major player in world money markets.

The Iraqi invasion changed all aspects of life in Kuwait. The physical damage to buildings and services was fairly swiftly put right when the occupying forces moved out. Quelling the oil field fires ignited by fleeing Iraqi troops and tacking the enviromental damage caused by them was a top priority. No expense was spared as experts from around the world were flown into Kuwait to try and solve the problems and their efforts were successful.

The oil well fires were brought under control in record time and the thick, black greasy pall of smoke which had hung over Kuwait for months eventually lifted. The oily polluted waters of the Gulf were gradually cleaned up and, as a result, damage to bird and marine life was contained to a minimum. A visitor to Kuwait city today would see no trace of the bombed and burned out buildings left by the Iraqi soldiers, everything has been rebuilt, replaced or refurbished. A handful of major construction projects have yet to be completed but, for the most part, Kuwait looks much the same as they did before 2 August 1990. However, there remains in Kuwait other reparations which have yet to be achieved and some would say the effects of this negligence are proving to be much more damaging than the sight of any bomb-scarred building. "People are discontented because no economic progress is being made. We are not going forward as we should, and we ave in the doldrums," one local resident complained.

The discontent is heightened because although things look as if they should be back to normal, with roads, homes and offices put back in order, the life-force of Kuwait - its once thriving economy - remains stagnant and there are few who are optimistic for an early turnaround in the country's economic prosperity. "Economic recovery in Kuwait is proving to be a slow business," an expatriate with a long history of doing business in Kuwait told The Middle East this week. "Govenment ministries have seen their budgets slashed. The private sector - which has always been the most productive sector in Kuwait - has had the life squeezed out of it.

"The debt resettlement programme we were promised years ago has not yet been finalised, so nobody really knows where they stand. Added to that there appears to be a general lack of strategy in govenment planning.

The three year planning programme currently underway does not appear to have incorporated some vital points. Such as, for example, the fact that since liberation, Kuwait's demography has entirely changed. "The government has made clear that it will not tolerate the same situation that existed before the invasion where Kuwaitis made up only around 30% of the population. As a result many people have left the country, the population has halved since 1991 and currently stands at about 1.2m. Of this total, over 49% are Kuwaiti.

"So while the government's objective in securing a Kuwaiti majority has been achieved the effect on the local economy has been devastating. There are now only half the number of people living in the country there were before the invasion. One does not have to be a mathematician to realise the effects of that on local business. Half the people, half the business. Trade, real estate, construction, there isn't a single sector that has not been adversely affected". In real terms the private sector has suffered much more than a 50% fall off in business. Before the invasion, there were around 400,000 Palestinians in the country, many of whome were employed as skilled workers or managers. Kuwait was their home and they represented a considerable consumer market.

Like the Kuwaitis, they rented apartments, bought cars, food, furniture, stereo systems and other luxury goods. Since the departure of the Palestinian workforce, which has left a number of economic sectors facing severe labour shortages, expatriate labour has been brought in from other regions, particularly the Far East, Egypt and Syria. These immigrants have not taken over the work of the Palestinians. They are generally low-skilled, low-paid workers employed as manual labourers at a monthly salary of between KD40 and KD100. Their contribution to the economy is negligible.

Legislation prevents any expatriate worker who earns less than KD450 a month in the public sector or KD650 a month in the private sector bringing a spouse or children into Kuwait. Only a handful of expatriate workers command salaries of this size. Thus, the low paid workers live as cheaply as they can, often sharing accomodation in order to enable them to send their wages home to their country of origin to support families there.

The responsibility for paving the road to recovery lies chiefly with the government and the National Assembly, elected in October 1992 and operating for the first time since 1986 when it was dissolved by an emiri decree following criticism of the royal family.

In the period between 1986 and the elections last year the government alone, which has at its helm members of the ruling Al Sabah family, steered Kuwait's economic course. Now there is a feeling that despite its troubles Kuwait is entering a new era of democracy and openness. Too often in the past critical events such as the Souq al Manakh crash in 1981 were shrouded in secrecy. Information was not made available to the public and as a result chaos and confusion reigned.

The debt resettlement programme has been awarded top priority. Debts going back as far as the Souq al Mankah crisis are seen as a major stumbling block on the road to economic recovery. More recent financial issues, notably the estimated $4bn investment losses by the official Kuwait Investment Office (KIO) in Spain, will also be closely examined under the terms of the debt resettlement plan.

But sorting out a range of problems, some of which have been allowed to fester for more than a decade, is taking time. Appealing for patience, one member of parliament, Ayed Aloush, said recently that the National Assembly had been required to shoulder great responsibilities. "We ask the Kuwaiti people to give the Assembly more time and to be patient."

It would not, he added, be fair to judge the Assembly's performance at the current stage of developments because of the plethora of problems it has had to address simultaneously.

Reactivating the country's economy is linked to many factors, the politician noted but, he agreed, solving the bad debts issue and working towards providing the country with a sense of stability and security were priorities which, if achieved, would revive trust in the local market and, hopefully, eventually attract the return of that valuable Kuwaiti capital that is currently lodged abroad.
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Title Annotation:withdrawal of the Iraqi troops, Kuwait has several obstacles to overcome before returning to normal
Publication:The Middle East
Date:Sep 1, 1993
Previous Article:Mended fences.
Next Article:A different sort of damage.

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