COUNTRY REPORT - iuj.ac.jp€¦ · COUNTRY REPORT Kuwait 2nd quarter 1997 The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom. The Economist Intelligence

COUNTRY REPORT

Kuwait

2nd quarter 1997

The Economist Intelligence Unit15 Regent Street, London SW1Y 4LRUnited Kingdom

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Contents

3 Summary

4 Political structure

5 Economic structure

6 Outlook for 1997-98

9 Review9 The political scene

16 Economic policy and the economy20 Oil and gas23 Industry24 Money and finance27 Foreign trade and payments

28 Quarterly indicators and trade data

List of tables9 Forecast summary

16 Gross domestic product by sector17 State budgets19 Labour market statistics, Jun 199622 Kuwaiti oil production26 Local bank net profits27 Position vis-à-vis BIS-reporting banks, 199628 Quarterly indicators of economic activity29 Foreign trade

List of figures9 Gross domestic product9 Kuwaiti dinar real exchange rate

22 Oil prices, Kuwait Export Blend23 Power consumption by sector, 1996

Kuwait 1

EIU Country Report 2nd quarter 1997 © The Economist Intelligence Unit Limited 1997

June 6, 1997 Summary

2nd quarter 1997

Outlook for 1997-98: The prime minister’s illness will bring succession issuesto the fore, while parliament will continue to press the government over fiscalpolicy and defence contracts. There will be no moves to renew relations withIraq. Economic reform plans will make slow progress, with labour issues assum-ing growing importance. Oil income will fall with output steady and pricesforecast to fall in 1997-98. A tight fiscal policy and lower oil revenue will resultin modest real GDP growth. Lower oil exports will lead to declining trade andcurrent-account surpluses.

The political scene: During the prime minister’s illness the foreign ministerhas been acting for him. The government has rejected an attempt by IslamistMPs to ban public entertainment, although it has been applying the rules inforce more carefully. The government has acted to solve the problem of thebidoon (residents without nationality) but little progress has been made onelectoral reform. Islamist MPs have urged a switch to a shura council. Securityissues have continued to cause concern, and resentment against Israel hasstrengthened. The UN Compensation Commission has made its first substantialpayment to Kuwait.

Economic policy and the economy: New growth figures have been pub-lished, but they may be revised downwards. The budget deficit for the 1996/97fiscal year has been reduced, but MPs are complaining about increases incharges in the budget for 1997/98. The IMF has praised some areas of Kuwait’seconomic performance, but has identified a growing need for some structuralchange. Disappointing labour statistics have highlighted the difficulty of get-ting Kuwaitis to work in the private sector.

Oil and gas: The Kuwait National Petroleum Company has announced that it isto raise its domestic refinery capacity, while the Kuwait Petroleum Company (KPC)is doing the same overseas. KPC has also said it will sell a subsidiary and focuson core areas. The oil minister has said that Kuwait will step up exploration.Oil prices have weakened recently, while crude output has remained steady.

Industry: The government has denied that there will be any power shortages.Stricter enforcement of intellectual property rights has brought complaintsfrom local retailers as the computer industry grows.

Money and finance: The Kuwait Investment Authority has sold part of itsstake in BP. A bill on Islamic banking may permit foreign banks to operate inKuwait. A government panel is to look at the country’s rules on foreign invest-ment. There are fears that the stock market may be overheating.

Foreign trade and payments: The trade surplus rose in 1996, but the im-provement was largely confined to the oil sector. Reserves for the first quarterof 1997 have increased despite lower oil prices.

Editor:All queries:

Angie BieglerTel: (44.171) 830 1007 Fax: (44.171) 830 1023

Kuwait 3


Political structure

Official name State of Kuwait

Form of state Emirate

Head of state The emir, chosen from the al-Sabah family. Currently Sheikh Jaber al-Ahmed al-Sabah,who acceded in 1977

Legal system Based on constitution of 1962, as amended or suspended by emiri decree

Legislature Unicameral National Assembly of 50 elected members plus appointed cabinetministers, with a limited franchise of Kuwaiti male citizens. The assembly has beendissolved twice by emiri decree, in 1976 and 1986

National elections October 1996; next elections scheduled for October 2000

Political groupings No political parties are allowed, although informal groupings exist. The main ones aretwo Sunni Islamist groupings (the Islamic Constitutional Movement and the IslamicPopular Grouping, also known as the salafi), and the Shia Islamists of the IslamicPatriotic Coalition. The Kuwait Democratic Forum is a secular political group withliberal and Arab nationalist tendencies. Most deputies sit as independents and manyare primarily loyal to their tribal interests

Executive Power is exercised by the emir through a Council of Ministers (last appointed October 15,1996), headed by a prime minister who is chosen by the emir

Council of Ministers Crown prince & prime minister Sheikh Saad Abdullah al-Salem al-SabahSpeaker of the National Assembly Ahmed al-Saadoun

Key ministers First deputy prime minister & foreign affairs Sabah al-Ahmed al-Jabr al-Sabah Deputy prime minister & defence Salem Sabah al-Salem al-SabahDeputy prime minister & finance Nasir Abdullah Mishari al-Roudhan

Cabinet affairs Abdel-Aziz Dakheel al-Abdullah al-DakheelCommerce & industry Jassim Abdullah al-MudafCommunications, electricity & water Jassim Mohammed al-OunEducation & higher education Abdullah Youssef al-GhunaimHealth vacantInformation Saud Nasir al-SabahInterior Mohammed Khaled al-Hamad al-SabahJustice, awqaf & Islamic affairs Mohammed Daifallah Sharar al-MutairiOil Isa Mohammed al-MazidiPlanning & administrative development Ali Fahd al-ZumaiPublic works & housing Abdullah Rashid al-HajeriSocial affairs & labour Ahmed Khalid al-Kulaib

Central Bank governor Sheikh Salem Abdel-Aziz Saud al-Sabah

4 Kuwait


Economic structure

Latest available figures

Economic indicators 1992 1993 1994 1995 1996a

GDP at current market prices KD bn 5.83 7.23 7.35 7.95 8.62

Real GDP growth % 75.0 40.3 –4.0a 5.5a 4.8

Consumer price inflation % –0.5 0.4 2.5 2.7 3.4

Population m (mid-year) 1.42 1.65 1.83 1.96 2.09

Exports fob $ bn 6.55 10.14 11.13 12.63 14.54b

Imports fob $ bn 7.24 6.95 6.67 7.15 7.58b

Current account $ bn –0.45 1.94 2.49 4.20 5.65b

Reserves excl gold $ bn 5.15 4.21 3.50 3.56 3.52

Total external debt $ bn 9.51 10.03 10.06 7.91a 6.21

Average oil productionc m b/d 1.06 1.87 2.04 2.06 2.05d

Exchange rate (av) KD:$ 0.293 0.302 0.298 0.298 0.299d

June 2, 1997 KD0.303:$1

Origins of gross domestic product 1994 % of total Components of GDP 1996b % of total

Hydrocarbons sector 43.4 Private consumption 42.1

Manufacturing 8.6 Government consumption 28.1

Transport & communications 3.5 Gross fixed investment 11.9

Wholesale & retail trade 4.8 Exports of goods & services 52.6

Real estate, financial & business services 11.1 Imports of goods & services –34.8

GDP at factor cost incl others 100.0 GDP at market prices 100.0

Principal exports 1996b $ m Principal imports 1996 $ m

Crude oil & refined products 13,788 Machinery & equipment 1,585

Total incl others 14,545 Cars & transport equipment 205

Total incl others 7,583

Main destinations of exports 1995 % of total Main origins of imports 1995 % of total

Japan 23.5 USA 16.6

USA 18.2 Japan 12.1

Netherlands 17.2 Germany 8.0

India 11.1 UK 7.1

South Korea 9.6 France 6.6

Singapore 8.8 Italy 5.6

Pakistan 6.0 Saudi Arabia 5.6

Philippines 4.3 UAE 2.8

a EIU estimates. b Provisional estimates. c Including Neutral Zone output. d Actual.

Kuwait 5


Outlook for 1997-98

The effects of the primeminister’s illness will

be limited—

Initial fears that the prime minister and crown prince, Sheikh Saad Abdullahal-Sabah, was suffering from cancer have evaporated, and he is expected toreturn to his position after a period of convalescence in Europe. According to hisadvisors, however, Sheikh Saad remains in touch with local political develop-ments. The prime minister is also notoriously incapable of delegating, and nowthat he appears to be making a good recovery, he may be more involved in thedecision-making process. However, there is a limit to how involved he can bewhile he is in London or Rome, and the foreign minister who is acting in hisstead, Sheikh Sabah al-Ahmed al-Sabah, will continue with the daily business ofrunning the country.

—but have increasedinterest in succession

issues

Sheikh Saad’s sudden illness did highlight the fact that, as elsewhere in theregion, there are still unresolved succession issues. There is no question thatthe crown prince will succeed the present emir (unless he predeceases him), butthe picture becomes less clear after that. There is no obvious next-in-line,although there are some strong candidates. Chief among them are the foreignminister, Sheikh Sabah, and the defence minister, Sheikh Salem Sabah al-Salemal-Sabah. While Sheikh Sabah has been in the powerful position of actingprime minister, Sheikh Salem has not been particularly visible, especially sincethe sudden death of his brother in April.

The emir must come from the ranks of the descendants of Mubarak the Great.In recent years the position has been filled from alternating branches of theal-Sabah family, although there is no constitutional reason for the arrange-ment. If Sheikh Sabah becomes the next crown prince, it will maintain thepattern of succession. However, there are other potential candidates from out-side the two main branches of the family, although none is likely to accedeuntil leaders from a new generation of the ruling family accede to power.

Kuwait will remainsteadfastly against Iraq

The government will continue to enjoy the full support of both the NationalAssembly and the Kuwaiti people with regard to policy towards Iraq. An inter-view in a Lebanese magazine (see The political scene) suggested that Kuwait wasready for some form of rapprochement with Iraq. However, recent comments bySheikh Sabah suggest that Kuwait remains commited to joint Arab positions,and there is no possibility of Kuwaiti political leaders meeting their Iraqicounterparts. Moreover, Kuwaitis remain strongly affected by the experience ofthe Iraqi invasion and subsequent war. Indeed, Kuwait will continue to try todissuade other Gulf Arab states from their current moves towards normalisingrelations with the government in Baghdad.

Agreement on the budgetwill be difficult—

The budget will remain a battleground between the government and theNational Assembly for some time, with rigorous parliamentary scrutiny of thegovernment’s spending plans. In particular, parliament will continue to insistthat the government cannot increase utility and other charges without rational-ising some areas of its own spending. When 1996 data are confirmed, they willundoubtedly show the 1995/96 budget deficit to be lower than originally fore-cast because the government reduced spending slightly and oil prices were

6 Kuwait


higher than expected. The 1996/97 and 1997/98 budget deficits are also likely tobe lower than projected, as the oil price used for budget planning is low($13/barrel) and oil revenue has been, and is likely to be, higher than projected.However, after a slight fall in budgeted spending in 1996/97, the 1997/98 budgetshows an expenditure increase of about 3%, indicating that the government hasfound spending cuts difficult and will rely instead on increases in revenue toreduce the deficit. Dependence on high world oil prices is not a sustainable basisfor reorienting government finances and, given political sensitivities, thegovernment is unlikely to make serious efforts at cutting spending, particularlyon public-sector wages, during 1997 and 1998.

—and parliament willcontinue to harry the

government

Parliamentary committees will consider the issue of defence contracts partic-ularly closely. A contract to buy British Sea Skua missiles has been delayed byparliamentary pressure, although the government has said it sticks by its choiceof missile. A forthcoming contract for self-propelled guns is widely expected tobe awarded to China for political reasons. The guns themselves are inferior tothose produced by competitors in the USA, UK and South Africa, but Kuwaitwants to reward China for its support, which was only passive, during the Gulfwar. Parliamentary questioning of such policies will cause more irritation ingovernment circles, particularly within the ruling family. Nevertheless, despitethe occasional rumour in the local press, the emir is unlikely to dissolve parlia-ment. That is now seen as too drastic a step, and too embarrassing for Kuwait’sWestern supporters: it would only be considered if parliament and the govern-ment reached a total deadlock.

Privatisation plans willprogress slowly—

The government and the National Assembly will also clash on the privatisationprogramme. During the first phase, the Kuwait Investment Authority (KIA)sold off its stakes in various companies, but these were mainly holdings whichit took in the 1980s to rescue those companies after a series of financial prob-lems. The second phase of the programme is supposed to see some moreadventurous privatisation, of utilities and the telecommunications sector, butparliamentary opposition will remain strong and will hold up any such sales.The National Assembly’s finance and economic committee has finally rejecteda 1992 government proposal that the communications ministry be privatised.The committee’s chairman, Nasser al-Sanae, says that nothing can be doneuntil a comprehensive privatisation law has been passed. Parliament is likelyto withhold approval until its concerns about the possible development ofprivate-sector monopolies and the impact of privatisation on unemploymentlevels are addressed.

—as will labour reform The labour issue will remain one of the toughest for Kuwait to face as it tries toreform its economy. Although unemployment is low, underemployment ofKuwaiti nationals is rife. The government is keen to replace expatriate labourwith locals, but many Kuwaitis are unwilling to take jobs that are not seen asprestigious. Expatriates are cheaper and generally willing to work harder forlonger hours. Although the authorities want to replace as many expatriates aspossible with local workers, they recognise the problems that this could bringand are unlikely to push for rapid change in some sectors.

Kuwait 7


Oil output will be steady— Kuwait will remain careful to keep oil production within, or close to, its OPECquota; in recent months output levels have slightly exceeded Kuwait’s limit of2m barrels/day (b/d), but they will not rise significantly. Kuwait continues tohope that increasing its production capacity will bring a higher quota fromOPEC, but changes are unlikely to be forthcoming at the June OPEC meeting.Moreover, with oil prices expected to fall in 1997, there is little prospect of areordering of quotas. Even though non-OPEC production may fall, there is stillconsiderable excess within the cartel, with Venezuela the most persistent of-fender. The EIU expects world oil consumption to rise by 2.7% in 1997, but thiswill not be sufficient to prevent substantial stock building. Oversupply isexpected to persist throughout 1997 and 1998, with perhaps some seasonalrecovery in the fourth quarter of both years, as winter conditions increasedemand. However, that will be insufficient to prevent average prices slippinglower, and cost of the International Energy Agency (IEA) imported barrel willfall by 10.3% in 1997 to reach an annual average of $18.5/barrel. That weaknesswill persist in 1998, with average prices falling slightly to $18.3/b.

—but growth will slow— Recently released government statistics suggest that current growth in 1996was over 16%. However, the figures probably reflect unrevised and inaccuratedata for 1995, and when the 1995 estimates are eventually amended upwards,nominal growth figures in 1996 will probably be revised downwards. On thisbasis, we have raised our estimate for real growth in 1996 from 3% to 4.8% andhave revised slightly upwards our growth forecasts for 1997 and 1998, to 3%and 2.5% respectively. Investment is expected to continue to grow at a modestpace during both years, as plans go forward to drill over 600 wells as part of anexpansion of petroleum production capacity. Moreover, the recently releasedgovernment budget suggests that, despite expectations of lower oil revenue in1997 and 1998, spending in the 1997/98 fiscal year is set to increase slightly innominal terms. While fiscal and monetary policy are expected to remain fairlydisciplined, the new budget signals that the government is having difficultycutting expenditure in the sensitive areas of wages and salaries. Growth inprivate consumption and in exports, which will continue to be dominated bycrude oil and petrochemicals, will be slow in 1997 and 1998. Imports areforecast to rise by 3% in 1997 and again in 1998, and this reflects reduceddomestic activity. Modest inflation rates are also forecast—4% in 1997 and3.5% in 1998.

—and the current-accountsurplus will fall

Provisional figures released by the government show that the trade surplusstood at just under $7bn in 1996; exports rose by almost $2bn to $14.5bn andimports grew by a more modest $429m to $7.58bn. In 1997 and 1998, however,the trade surplus is expected to narrow. Kuwait’s determination to maximise thevalue of its oil revenue by exporting refined products as well as crude willprovide some cushion from falling crude prices, but it will not be enough toprevent oil export revenue falling by over 8% in 1997. Oil exports will continueto make up more than 90% of total merchandise exports; the latter are expectedto fall to $13.33bn this year before a slight recovery to $13.39bn in 1998. Theslowdown in real GDP growth will also depress the growth of merchandiseimports. We have revised slightly downwards our forecast of import growth, inline with the 1996 figures: in 1997 imports are now expected to rise to about

8 Kuwait


$8bn and in 1998 to almost $8.3bn. Overall, the trade surplus is expected todecline to $5.4bn in 1997 and $5.1bn in 1998. The strong performance of worldequity markets so far in 1997 will boost Kuwait’s invisible earnings on its over-seas investments. Invisibles outflows will also grow as merchandise importsincrease, and net transfers will remain an important item owing to the impor-tance of expatriate labour. The net effect will be a drop in the current-accountsurplus from over $5.6bn in 1996 to just over $3.7bn by the end of 1998,representing a decline from 19.4% of GDP in 1996 to 11.2% in 1998.

Forecast summary($ bn unless otherwise indicated)

1995a 1996b 1997c 1998c

Real GDP growth (%) 5.5b 4.8 3.0 2.5

Consumer price inflation (%) 2.7 3.4 4.0 3.5

Average oil productiond (m b/d) 2.06 2.05a 2.07 2.11

Oil pricee ($/b) 17.2 20.6a 18.5 18.3

Kuwait Export Blend ($/b) 15.9 18.6a 17.0 16.8

Oil export revenue 12.24 13.79f 12.66 12.72

Merchandise exports fob 12.63 14.54f 13.33 13.39

Merchandise imports fob 7.15 7.58f 7.96 8.28

Current account 4.20 5.65f 4.06 3.71

a Actual. b EIU estimates. c EIU forecasts. d Including Neutral Zone output. e IEA average importprice. f Provisional estimate.

Review

The political scene

The prime minister isincapacitated—

The prime minister and crown prince, Sheikh Saad Abdullah al-Sabah, under-went emergency surgery on his colon in early March, raising doubts about hislong-term health and the Sabah succession. Doctors removed a piece of hiscolon but said that they were satisfied that it was not malignant. After surgeryin a local hospital, Sheikh Saad flew to London in a private air ambulance for

-6

-4

-2

0

2

4

6

1994(a) 95(a) 96(a) 97(b) 98(b)

Kuwait

Middle East & North Africa

Gross domestic product % change, year on year

(a) EIU estimates. (b) EIU forecasts. (c) Nominal exchange ratesadjusted for changes in relative consumer prices.Sources: EIU; IMF, International Financial Statistics.

70

80

90

100

110

120

1990 91 92 93 94 95 96 97(b) 98(b)

Kuwaiti dinar real exchange rate (c)1990=100

KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$KD:$

KD:¥

KD:$

KD:¥KD:¥

KD:DMKD:DMKD:DM

KD:$

KD:¥

KD:$

KD:¥KD:¥

KD:DMKD:DMKD:DM

KD:$

KD:¥

KD:$

KD:¥

KD:$

KD:¥

KD:$

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KD:$

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KD:$

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Kuwait 9


further treatment and tests. He is convalescing in Europe, and in May theKuwaiti press suggested that he might be away for several months. Decisionson the succession are taken by consensus within the ruling family. Sheikh Saadis next in line to the present emir, and were he too ill to carry out his dutiesthere could be a move to install someone else as the next emir. However, givenSheikh Saad’s present condition, such a move is unlikely.

—as the acting primeminister broadens his

power base—

In Sheikh Saad’s absence, however, Sheikh Sabah al-Ahmed al-Sabah has beenappointed acting prime minister. Sheikh Sabah is now in a powerful position,combining his role as acting prime minister and acting head of the HigherDefence Council with his usual foreign affairs portfolio and chairmanship ofthe Higher Petroleum Council. The crown prince’s absence has left his branchof the family without its main source of power and suggests that the Salembranch may find itself eclipsed by the stronger Jabr branch if the crown princewere to die before the emir. The Salem branch of the family suffered a furtherblow in April when the former interior minister, Sheikh Ali Sabah al-Sabah,died suddenly of a heart attack. He had been widely tipped to head a newlyformed security body, which will act as a secretariat to a new National SecurityCouncil headed by the prime minister. However, in the absence of the primeminister, who seems to have been the driving force behind the initiative, thenew council has yet to get off the ground.

—and parliamentstagnates

The prime minister’s absence from Kuwait has compounded tensions betweenthe government and parliament, which have been growing since the begin-ning of the year (1st quarter 1997, page 11). MPs have continued to complainthat ministers are absent from parliament too much, and are not paying suffi-cient attention to their portfolios. Ministers argue that MPs are spending toomuch time on constituency issues and are failing to address the real problemsof security and the economy.

Despite these difficulties, parliament and the government agreed to compro-mise over discussion of the government’s programme for the forthcomingparliamentary session: MPs have said that they will discuss policy issues as awhole, rather than insisting on discussions with each individual ministry. Inreturn, the government has agreed not to take its complaints against parliamentto the constitutional court. Nevertheless, stalemate continued until May, withparliament failing to reach a quorum in several sessions, while the Kuwaiti presscontinued to raise the spectre of dissolution.

The Islamists move to banpublic entertainment—

In May Islamist MPs took advantage of the moribund parliament to launch abill aimed at banning all forms of public entertainment, arguing that it contra-vened the sharia (Islamic law). Khalid Adwa, who supported the bill, claimed:“Kuwait is a conservative country. What we are after is to save young peoplefrom the negative affects of such parties.” On the first reading, the bill passedby 26 votes to two. Government ministers abstained even though the govern-ment admitted that it had severe reservations about the bill. Ministers said thatexisting licensing regulations were sufficient to control public entertainment.Some deputies also criticised the bill for being too broad. Sami Munayyis, aveteran liberal parliamentarian, said: “No punishments can be allowed withoutdefinite crimes and a clearly defined law, whereas the bill introduced now

10 Kuwait


includes undefined crimes and is based on fatwas [religious rulings] which statethat concerts in contravention with sharia should be banned, without explain-ing what these crimes are.”

—but the governmentstands firm—

The government surprised MPs by reaching a rapid decision to reject the bill atcabinet stage just one day after the bill passed its first reading in parliament. Inmid-1996 a bill on segregation of the sexes in education was stuck at cabinetlevel for months before the government hammered out a compromise withMPs. The cabinet’s rapid rejection this time caught the Islamists by surprise,and the bill failed its second reading after a drawn vote of 20 votes to 20, withall the members of government voting against.

The acting prime minister reinforced the decisive action by the government byspeaking out against the interference of imams (religious leaders). He also in-structed the awqaf (Islamic affairs) ministry, which appoints speakers to themosques, to warn them not to criticise the government or parliament. SheikhSabah pointed out that they are all ministry officials who could be dismissed bythe government if it chose to do so.

—as the rules in force areapplied strictly

The bill may not be presented to parliament again in the current session, whichlasts until July, but it has forced the government to enforce current legislationon public entertainment more rigorously. Religious sensitivities and the con-tinuing national remembrance of Kuwaitis believed missing in Iraq mean thatpublic entertainment is already extremely limited in Kuwait, although somediscreet entertainment is normally allowed in the major hotels. While the billwas being discussed, some local hotel owners felt that applications to holdpublic events or private parties were being more closely scrutinised. Neverthe-less, the outright and decisive rejection of the bill may signal a new phase forthe acting prime minister and the government.

A partial solution to thebidoon problem is

in sight—

Parliament has held two closed sessions on the vexed problem of the bidoonjinsiyya (residents without Kuwaiti nationality), and a solution may be in sight.Both government and parliament have agreed that bidoon who are relatives ofKuwaitis should be able to claim some degree of citizenship. Others who haveproved their loyalty by serving in the armed forces should be similarly recog-nised and those who admit their real nationality might be eligible for long-term residency or for financial assistance to gain nationality in third countrieswhich operate nationality facilitation programmes. By categorising the bidoonin this way, the interior ministry hopes to break down the problem into man-ageable chunks, but it will still eventually have to deal with individuals whomthe government does not recognise as stateless but who have no other nat-ionality documents.

The government has been under pressure locally and internationally to resolvethe problem of the considerable number of bidoon who have no nationalityand who have only limited rights of travel outside Kuwait. Some have lived inKuwait since the 1960s, when the ruling family brought them in from neigh-bouring Gulf states to fill the demand for casual labour. Some were naturalisedat the time, but others, who were present for the 1965 census or later censuses,either refused to be naturalised or did not complete the necessary steps for

Kuwait 11


citizenship. Many are now married, some to Kuwaitis, and their children havebeen brought up wholly in Kuwait, but they are disenfranchised by their state-less status. Attempts last year to get the bidoon to register for temporary identitydocuments has enabled the interior ministry to revise their number down from120,000 to 114,500 (including some 6,000 still in the army and another 1,700in the interior ministry).

—but the debate continues A member of parliament’s interior and defence committee, Hussein al-Dousari,argued recently that their real number is much smaller. He claimed that manycarry documentation from other countries (implying Iraq) but prefer to concealthat in the hope of eventual citizenship in Kuwait. However, he conceded thatboth the government and parliament were at fault for the persistence of thebidoon problem, saying that both had failed to come up with a radical solution.According to the local English-language daily, Kuwait Times, the speaker of theNational Assembly, Ahmed Saadoun, referred to the problem as a “ticking timebomb”.

Health charges forforeigners are mooted

MPs and health service officials have been scrutinising the health service tofind ways to make the “cradle-to-grave” service pay for itself. MPs are debatinglegislation to make health insurance compulsory for foreign residents: ascheme under discussion links payment of an annual health insurance chargeto residency permit renewals. Some health officials are also beginning to sug-gest that Kuwaitis and their employers might also have to contribute to healthinsurance schemes. At present 750,000 Kuwaitis receive state healthcare free ofcharge, while 1.25 million expatriates pay token fees for some state medicalservices. The service is costing the government $900m per year.

However, the health ministry has been effectively without a minister sinceFebruary, when Anwar al-Nouri resigned (1st quarter 1997, page 14), and, inthe absence of firm ministerial direction, parliament’s social and health affairscommittee has postponed further discussion of any schemes. The crownprince’s illness and absence soon after Mr Nouri took his decision mean that,although his resignation has been accepted, the minister remains in place untila replacement can be found. It is unlikely that the acting prime minister willattempt a reshuffle during the crown prince’s absence, so the minister mayhave to remain in his post for several months and health reforms will accord-ingly be delayed.

Little progress is made onelectoral reform—

The parliamentary legal and legislative committee has been looking at the issueof voting rights since the last election (4th quarter 1996, page 10). In May itapproved a bill to reduce the voting age to 18 but, although it passed its firsthurdle, it is unlikely to be approved by parliament. A similar bill introducedtwo years ago was rejected. Since 60% of all Kuwaitis are aged less than 20, MPsbalked at the prospect of such a radical increase to the voting base.

The committee has also approved a bill which will force members of the munici-pal council to stand down if they decide to run for parliament. There wereclaims before the last election that some members of the municipality used theirinfluence at a local level to serve their national campaigns. But the committeerejected a bill which called for the extension of voting rights to those serving in

12 Kuwait


the armed forces and the police. Unlike members of the national guard, theyhave no voting rights. The head of the committee, Ahmed Mulaifi, said that thecommittee still considered that servicemen must be kept away from politics toallow them to concentrate on their main role of defending the nation. A draftbill allowing Kuwaitis residing abroad, and those abroad on holiday or business,to vote was also rejected as the committee found it impractical. In addition, theissue of voting rights for women has moved down the committee’s agenda. Itsays that it will discuss a bill to grant women full political rights “when its turncomes” and there appears little political will to press the issue in the first session.

—and the constituencysystem is debated

The reform of the constituency system is, for some MPs, unfinished businessfrom the last parliament. The head of the interior and defence committee, Fahdal-Azemi, has called for a redrawing of constituency boundaries to redistributethe number of voters more fairly. Constituency boundaries were also an issuebefore the October 1996 election and the committee is to hold discussion nowso that the question of reform is not squeezed into the margins of parlia-mentary business as it was in the last parliament. Mr Azemi told the local ArabTimes that it was unfair for some candidates to get 2,500 votes and not beelected, while other candidates took their seats with only 700 votes.

Another bill before the committee calls for the abolition of the constituencysystem altogether and its replacement with a national selection procedurewhere voters would select five candidates from a national list. Candidates whowon more than 15% of the vote would be considered elected. If the first rounddid not succeed in selecting a full chamber (50 MPs), then a second roundwould be held, which would be open to candidates who won between 7% and15% of the vote in the first round. An explanatory note attached to the bill saidthe low number of voters means that corrupt voting practices are easier underthe current system. The bill is designed to iron out vote-buying and to eradicatetribal selection practices. The interior and defence committee is already look-ing at legislation to ban the tribal primaries which pre-select candidates insome of Kuwait’s outer constituencies (4th quarter 1996, page 14). However,the current system has ensured that there are a number of tribal MPs in parlia-ment who are unlikely to favour any such changes to the voting system.

A new political groupingmakes a hesitant debut

A group of academics, professionals and parliamentarians has formed a newpolitical grouping called the National Democratic Front (NDF), and the govern-ment has granted it a licence to publish a political and current affairs magazine,Renaissance. However, the information ministry, which is still carefully consid-ering licences for public gatherings in hotels, particularly those of a politicalnature, rejected the group’s application for a conference in May.

The group had attempted to make itself acceptable to the government byincluding, among its founding principles, pledges to abide by the constitutionand to promote national unity. The NDF, which prefers to be labelled moderaterather than liberal, seems to have tacit support from the government as itslaunch went ahead unhindered. Its secretary-general, Ahmed Bishara, said thatthe group was designed to be an umbrella to attract Kuwaitis who are nototherwise affiliated, but who took an active interest in the politics and policies

Kuwait 13


of Kuwait. The NDF says that it does not aim to confront the Islamist-tribalalliances, but wants to expand the base of political participation.

Islamists have suggested ashura system

A small group of Islamists have called for Kuwait to abandon its Western-styleparliament in favour of a more traditional Arab consultative council or shurasystem. The group, which calls itself the shura advocates group, condemnedWestern-style democracy for separating religion from the state. One of itsmembers, Ahmed Abdul-Aziz al-Muzaini, said that democracy applied man-made laws while Islam required sharia. The group has called for a boycott of theparliamentary election, next expected in 2000, and for the establishment of ashura council chosen by popular vote, tribal chiefs and clerics.

Security issues causeconcern

The authorities arrested 13 Bahrainis in March, accusing them of threateningthe security of Bahrain and other Gulf states. They were said to have links withIran and to have been distributing propaganda aimed at ousting the Bahrainiregime. After the arrests the parliamentary human rights committee accusedthe security forces of being heavy-handed. A minority of the committee mem-bers wanted to take the issue further. One Islamist, Adnan Abdul-Samad,accused the committee of not being severe enough in its criticism, and anotherhardline Shia MP, Hussein al-Qallaf, threatened to resign.

However, the chief editor of the local daily Siyassa, Ahmed Jarallah, reflectedlocal opinion more closely when he wrote that, although Kuwait was proud ofits tradition of democracy and freedom of expression, it could not allow otherGulf nationals to abuse that freedom by using it to incite political violence intheir own country. The authorities have played down claims that the men wereinvolved in a Hizbullah network in Kuwait. Seven of the Bahrainis have nowbeen released, some for lack of evidence, while a number of others are out onbail; there is still a possibility that some of them will face charges.

Resentment against Israelflares up—

Israel’s decision to extend its settlement programme to Jebel Abu Ghneim (HarHoma) has caused anger in Kuwait. In addition to condemnation by the cabinet,the start of construction brought predictable flag-burning protests from studentsat Kuwait university, and a statement by the student union urged Arabs to teachthe Israelis a lesson “in a language they understood”. One Islamist hardliner,Adnan Abdul-Samad, called for a jihad (holy war) against Israel. The governmentbanned a proposed demonstration outside parliament, but a lone protester,Amran Hassan, succeeded in entering parliament’s public gallery to waveplacards and shout slogans condemning Israeli settlements. Most Kuwaitissympathised with his sentiments, but were bewildered by his choice of locationfor the demonstration. An editorial in Siyassa commented that if Mr Hassanwanted to protest against Israel, he should go there to do so. There was alsoconcern about how a demonstrator had managed to enter the chamber with hisplacards, unchallenged by the guards posted outside.

—as Kuwait stands firmon Iraq—

Comments made by the acting prime minister in an April interview with aLebanese magazine, Al-Afkar, sparked international press speculation thatKuwait had slightly softened its position towards Iraq. The magazine reportedthat Sheikh Sabah had said Kuwait would attend any Arab summit, even ifSaddam Hussein attended. A spokesman from the foreign ministry said that the

14 Kuwait


remarks, which were intended to show Kuwaiti solidarity with Arab action, hadbeen taken out of context.

Sheikh Sabah also sought to put the record straight in an interview in May withanother Lebanese newspaper. He said that the emir would represent Kuwait atan Arab summit, but the government would need to know who would beattending and reserved the option of not sending a representative. He alsoclaimed that a problem was unlikely, as it would be impossible for SaddamHussein to leave Baghdad to attend a summit.

The speculation arose partly because Sheikh Sabah is seen as more in favour ofreconciliation with the so-called adversary states than Sheikh Saad. The twohave clashed repeatedly over the possibility of reconciliation with Jordan; onone occasion the foreign minister took what was described as a brief holiday inMorocco after walking out of a cabinet meeting. Although relations withJordan have improved somewhat, there is no chance of any rapprochementwith the present Iraqi regime. Most Kuwaitis view both Saddam Hussein andthe Palestine Liberation Organisation as beyond the pale.

—and criticises Gulfnormalisation

A former Gulf Cooperation Council (GCC) secretary-general, Abdullah Bishara,who is special adviser to the foreign minister, said in May that Kuwait remainsconcerned about efforts by some Arab countries to rehabilitate the Iraqi regime.He told a seminar on Gulf security organised by the official Kuwait News Agency(KUNA) that the international community could not afford to lift sanctions,saying that such a move would give Saddam Hussein a psychological boost.

A Gallup opinion poll published in the local Al-Qabas in May showed that only18% of Kuwaitis believe the GCC is still committed to a joint policy against Iraq.A further 58% thought that there was some degree of cooperation, while 24%said that the GCC no longer had a joint policy. In the same poll, 82% of thoseinterviewed believed that Kuwait should not be obliged to work with Iraq whileSaddam Hussein remained in power; 15% said that Kuwait might find itselfobliged to work with Iraq to some extent; and 3% said that it would have towork with an Iraq under Saddam. The poll suggests that, while public opinionremains strongly committed to Kuwait’s current position on Iraq, Kuwaitis arebeginning to discuss what the future holds for Kuwaiti-Iraqi relations.

Payments made toKuwaiti claimants

The UN Compensation Commission (UNCC) made its first substantial pay-ment to individual claimants in early March. Kuwait received $11.3m to coverpayment to 3,482 people who were forced to leave Kuwait and Iraq during theoccupation, and $8.7m for 1,061 claimants for losses of less than $100,000each. The director of the Kuwaiti public authority for compensation-UN liaisonoffice, Sabika Abdul-Rizq, said that the payment reinforced Kuwaiti faith in theUNCC. This initial settlement is, however, only a small proportion of the$120bn in total claims filed by Kuwait, which is far in excess of the resourcesavailable to the UNCC. Some 30% of receipts from the Iraqi oil-for-food salesunder UN Resolution 986 are designated for the fund. During the first half of1997 these sales should have generated $600m for the UNCC.

Kuwait 15


Still no end in sight intanker company

embezzlement case

The longrunning legal case against a former oil minister, Sheikh Ali al-Khalifaal-Sabah, may continue for years more after a ministerial court dismissed earlierrulings on a technicality. Sheikh Ali is one of five defendants in a case involv-ing charges of embezzlement of funds from the Kuwait Oil Tankers Company(KOTC). After years of haggling as to which court was competent to hear thecase against Sheikh Ali, the appeals court passed it on to the minister’s specialcourt. His case may now have to go through the whole system of lower courtsagain. In 1996 three of the other defendants, who were tried by the criminalcourt, were found guilty and given various sentences and a fourth was acquit-ted. However, in mid-March another court ruling annulled the decision of thecriminal court on a technicality, ordering a retrial.

Economic policy and the economy

Growth figures look faulty The planning ministry said in late May that GDP at current prices rose by16.8% in 1996 compared with 1995, to KD9.3bn ($30.7bn). Kuwait does notpublish timely data on real GDP or on the GDP deflator, but consumer priceinflation in 1996 was 3.4%, suggesting an extremely unlikely real growth rateof around 13.4%. The figures released by the ministry probably reflect unre-vised and inaccurate data for 1995, and local economists suggest that the 1995data will eventually be revised upwards, pushing nominal growth in 1996down, possibly to around 8%. Government officials said that 31.6% growth inthe oil sector was the main reason for the strong performance. However,Kuwaiti oil production remained steady, averaging 2.05m barrels/day (b/d) in1996 and the average price for Kuwaiti crude rose from $15.86/barrel in 1995 to$18.56/b in 1996, an increase of 17%.

Gross domestic product by sector(KD m; current prices)

Provisional 1995 1996 % change

Crude oil & natural gas 3,136.9 4,127.4 31.6

Agriculture & fishing 34.0 37.9 11.5

Other mining & quarrying 0.5 0.4 –20.0

Manufacturing (excl oil refining) 886.1 1,035.6 16.9

Construction 243.1 243.7 0.2

Trade, restaurants & hotels 610.1 627.0 2.8

Transport, storage & communications 386.9 397.1 2.6

Finance, insurance, real estate & business services 895.2 950.6 6.2

Community, social & personal services 1,878.1 1,953.1 4.0

Imputed bank service charges 165.0 190.9 15.7

Import duties 68.2 93.2 36.7

GDP incl other 7,942.3 9,277.1 16.8Source: Ministry of Planning.

The budget deficit willbe lower

Figures published by the Central Bank of Kuwait (CBK) suggest that the finalbudget deficit for the 1996/97 fiscal year (July-June) will be lower than the1995/96 deficit of KD653m. The CBK analysis indicates that the main reasonfor a lower deficit was that average oil prices were higher than forecast. Oilexports in the first nine months of 1996 almost matched the KD3bn forecast

16 Kuwait


for the whole of the 1996/97 budget. The CBK also cites initial data for non-oilrevenue, which indicate that this item will outperform expectations in1996/97: at the end of the first quarter of the fiscal year it stood at KD168m,some 38% of the total projected for the year. In addition, the CBK indicatesthat there has been no extraordinary expenditure on social services, labour orsecurity during the first quarter of the fiscal year, and, if such discipline con-tinues, it will help keep the deficit low in 1996/97.

The finance minister, Nasser al-Roudhan, has said that mid-year accounts for1996/97 show the government with a KD731m surplus. However, the oil min-ister, Isa al-Mazidi, warned in March that oil prices would suffer in the secondquarter of 1997 because of weaker demand and overproduction by OPEC andnon-OPEC producers.

The 1997/98 budgetis released—

The government’s draft budget for the 1997/98 fiscal year, which was passed bythe cabinet in April and sent to the National Assembly, shows an increase inspending from KD4.21bn this financial year to KD4.33bn in 1997/98. At thesame time, revenue is expected to increase from KD3bn to KD3.2bn, the resultof a projected increase in non-oil revenue. Oil revenue is projected on the basisof $13/barrel, the same figure used in the last two budgets. These projections ofrevenue and expenditure leave a projected net deficit of KD1.13bn, aroundKD80m lower than in last year’s budget. By law Kuwait also deducts 10% of totalgovernment revenue for deposit in the Reserve Fund for Future Generations(RFFG), which is earmarked for use when its oil reserves are exhausted. Thededuction is allowed for in calculating the country’s gross deficit, which isexpected to reach KD1.45bn in 1997/98.

State budgets(KD bn unless otherwise indicated)

1995/96 1996/97 1997/98

Revenue 2.91 3.00 3.20

Expenditure 4.23 4.21 4.33

Net deficit 1.32 1.21 1.13

RFFG allocation 0.29 0.30 0.32

Gross deficit 1.61 1.51 1.45

Net deficit (% of GDP) 20.3 17.7 12.6Source: Ministry of Finance.

A finance ministry statement accompanying the budget said that the deficit willbe eliminated by 2000. The ministry said that Kuwait would achieve this byincreasing savings while encouraging the private sector to play a more effectiverole in the economy. Since the 1991 Gulf war, Kuwait has been trying to diver-sify its main source of income away from oil profits, but both the budget and theeconomy as a whole remain at the mercy of oil price movements.

—but fails to gainparliamentary approval

In May the parliamentary finance and economic affairs committee postponedapproval of the draft budget for 1996/97 because it included a projected rise innon-oil revenue. The draft put non-oil income at KD203m, higher than thatforecast for the 1996/97 budget. The government hopes to raise this additionalrevenue from unspecified increases in fees and services charges, but the commit-tee argued that the Charges Freeze Law passed in 1995 prevents the government

Kuwait 17


from raising fees without parliamentary approval and it has asked the financeministry to deduct the unspecified charges from the budget.

In a parliamentary statement in May the finance minister argued for a reinvig-oration of non-oil revenue and a greater dependency on the private sector. Thegovernment needs to close the budget deficit with higher non-oil income if itis to meet its objective of a balanced budget by the year 2000. It is currentlysponsoring a bill which would amend the Charges Freeze Law to allow it toincrease existing charges for all services except electricity and water withoutrecourse to parliament. Although MPs agree that the government needs togenerate more non-oil reserves, they are not prepared to approve unpopular feeincreases or to agree to a large-scale privatisation process. The head of thefinance committee, Nasser al-Sanae, said in a statement that the committee wasnot prepared to allow any increase that might adversely affect standards ofliving. Moreover, even if the dispute about charges is solved, the finance com-mittee is unlikely to approve the budget before the government submits a moredetailed breakdown of its plans for different ministries and sectors.

The IMF is cautiouslyoptimistic—

An IMF occasional paper, Kuwait: From Reconstruction to Accumulation for FutureGenerations, published at the beginning of May said Kuwait had made animpressive recovery from the Gulf war. The report highlighted the rapid restor-ation of basic economic and social services, the recovery of the oil sector andthe revival of the infrastructure as key achievements. But it identified threesignificant structural challenges for Kuwait:

• reducing dependence on oil revenue and restricting current spending inorder to eliminate the budget deficit by 2000;

• resolving the problems of past non-performing loans; and

• increasing the role of the private sector in economic activity and jobcreation for Kuwaitis.

The report said that the Kuwaiti authorities were aware of the importance offiscal reform, but it pointed out that the government had yet to address in-creasing expenditure on salaries, subsidies and allowances. The IMF indicatedthat the government must reduce the state’s dependency on oil reserves,broaden the tax and non-tax base, restrict current spending and reduce the roleof government in the overall economy. In addition, the Fund encouragedderegulation of the economy and reforms of the financial sector and the labourmarket, which would boost investor confidence and create more job opportun-ities for Kuwaiti nationals in the private sector.

—but local labourstatistics are less

promising

The IMF report also focused on the need to encourage Kuwaitis to seek employ-ment in the private sector. The planning minister, Ali al-Zumai, said in lateMarch that there are 606,587 non-Kuwaitis in the private sector, including 44%with no qualifications or experience; by contrast, only 9,828 Kuwaitis, or 1.6%of the total, work in the private sector. According to the most recent estimatesby the Public Authority for Civil Information (PACI), Kuwait’s total labourforce rose by 9% in 1996, with no significant change compared with 1995 inthe proportion of Kuwaiti citizens in the total labour force.

18 Kuwait


At present some 92% of employed Kuwaitis work for the government, and thegeneral coordinator for restructuring the public sector, Walid al-Wohaib,warned in May that, on current trends, government salaries would absorbKuwait’s total oil income by 2003. He said that if current recruitment practicescontinued there would be 800,000 employees in the public sector by 2025. Thebulk of new employees are absorbed by the education and health ministries,which have also come in for most parliamentary criticism for failing to provideadequate services.

Labour market statistics, Jun 1996

Public sector 176,909 Kuwaitis 117,855 Non-Kuwaitis 59,054

Male workforce 113,330 Kuwaitis 69,612 Non-Kuwaitis 43,718

Female workforce 63,578 Kuwaitis 48,243 Non-Kuwaitis 15,335Source: Ministry of Planning.

Unemployment figuresare low

Unemployment figures produced by the civil service commission, which re-cruits for all public-sector positions, show that 3,232 Kuwaitis, or 1.75% of thenational workforce, were jobless in January 1997 (1st quarter 1997, page 18), butMr Wohaib suggests that these figures mask a large underemployment problemwithin the public sector. Mr Wohaib has suggested an accelerated Kuwaitisationprogramme aimed at replacing 10% of the expatriate workforce with Kuwaitiseach year, creating some 4,300 job opportunities for Kuwaitis each year. But hismain aim is to free private-sector posts for nationals by introducing salary incen-tives for Kuwaitis switching to the private sector. However, government officialssay that cutting the number of foreign workers in the public sector will take along time, and may have negative implications: many Kuwaitis may decide notto work in the less prestigious jobs currently done by foreign workers.

There are calls foraccelerated reform—

Reflecting views shared by a number of Kuwaiti businessmen, a member of theboard of the Kuwaiti chamber of commerce, Abdul-Wahab al-Wazzan, told thelocal Arab Times in mid-May that Kuwait should actively pursue privatisationof state services and assets. In particular, Mr Wazzan advocated the privatis-ation of health-care, transport, electricity, Kuwait Airways and some educ-ational services. Mr Wazzan added that the government needed “to reorganisethe public sector even if that means laying off Kuwaiti employees”. He termedthe welfare system as “ridiculous” and as something that Kuwait can no longerafford. Mr Wazzan called for a genuine free- market economy, but also theestablishment of unemployment benefits to cushion economic hardship. Healso called on the government to allow foreigners to hold majority stakes inlocal firms.

Mr Wazzan has also recommended changes in the labour market. He suggestedthat Kuwait should cut the number of unskilled foreigners are allowed into thecountry; allow foreign workers to bring in their families so that they becomelocal consumers; and gradually increase the charges for its subsidised services.

Kuwait 19


—as rules for privatisationare considered—

In mid-April the parliamentary finance and economic committee rejected agovernment decree which would have paved the way for privatising the com-munications ministry. The decree was issued in 1992, and calls for a company tobe established to buy the communications ministry’s assets. The committee saidthat the comprehensive privatisation law currently under discussion shouldgovern all privatisation moves. The draft law, which is at present with parlia-ment’s finance committee, would enable the privatisation of Kuwait’s subsi-dised utilities. But MPs have insisted that the law cannot be passed withoutguarantees that privatisation will not lead to private-sector monopolies. Theyalso want pledges to protect Kuwaiti employees, prices and standards of service.

Reinforcing these sentiments, the finance minister, Nasser al-Roudhan, said inApril that the privatisation of public utilities had been suspended. Mr Roudhansaid that the process would not begin before there were steps in place to protectKuwaiti employment and to prevent the establishment of private monopolies.

—but the government’smotivations are

questioned

In a lively debate in early May, the speaker of the National Assembly, Ahmedal-Saadoun, said that the government’s privatisation plans will benefit a smallnumber of wealthy and influential people. Mr Saadoun complained that thegovernment was selling state assets without proper controls, and that thiswould result in the concentration of economic power in the hands of a smallgroup. Another MP, Hussein al-Qallaf, called privatisation “legalised theft”.Kuwait’s total privatisation plans will see sales of assets worth some $12bn,according to a local newspaper. To date, the government has sold off 22 firmsworth about $2.5bn.

More expatriates maybring in their families

The head of the National Assembly’s interior and defence committee, Fahadal-Azemi, has called for the scrapping of salary conditions that must be fulfilledif expatriates are to bring in their families, and the interior ministry has saidthat it is considering changes to the rules on family visas. At present, expatri-ates working in the government must earn more than KD450 ($1,500) permonth and those in the private sector KD650 per month before they are al-lowed to bring their families to Kuwait. The interior ministry has not yetpublished the changes it is considering.

The interior and defence committee has also approved a draft law which wouldimpose stronger penalties on foreigners who arrive illegally in Kuwait or whoreturn after being deported. If the draft law is passed in its present form, anillegal immigrant would face a fine of KD1,000-5,000 and a possible jail sen-tence of between six months and five years.

Oil and gas

The national oil companyis adding more refinery

capacity—

Work is under way to upgrade refinery units in Kuwait, in particular at theShuaiba refinery where a unit for producing aviation fuel should become oper-ational in July, according to the deputy managing director for manufacturingof Kuwait National Petroleum Company (KNPC), Mohammed Abdul-Rahmanal-Taweel. The work should increase total capacity from the current level of895,000 barrels/day (b/d) to 900,000 b/d by 1998. KNPC is a 100%-owned

20 Kuwait


subsidiary of the Kuwait Petroleum Corporation (KPC) and operates thecountry’s three refineries. It also owns and operates Kuwait’s 82 petrol stations.

—while the umbrella oilbody is also investing in

capacity—

In addition to the expansion of refinery capacity within the country, KuwaitPetroleum Corporation (KPC), the umbrella organisation for all Kuwait’s oilinterests, is adding more offshore refining capacity. The company had earlierannounced the closure on April 1 of its Stigsnaes refinery in Denmark, whichhad produced 59,900 b/d. However, KPC’s managing director for marketingsaid in May that its Netherlands refinery may be expanded: capacity at theRotterdam refinery is currently 80,000 b/d, but KPC says it is considering anexpansion to 150,000 b/d. At present, Kuwait has 250,000 b/d of refiningcapacity in Europe, on top of its 895,000 b/d domestic capacity.

—and considering afurther sale—

KPC has said that it wants to concentrate on expanding its crude productionand refinery capacity, and on developing its petrochemical industry (1st quarter1997, page 23). As part of this restructuring, KPC is divesting its holding in SantaFe, and has announced plans for an initial public offering of 30 million shares inSanta Fe Drilling, which are to be sold on June 30 for around $760m. Thecompany is expected to sell off a further tranche of Santa Fe shares once pricesstabilise after the initial offering. Reports from Kuwait suggest that KPC willgradually sell off most of its holdings in Santa Fe, which is a wholly ownedsubsidiary with more than 4,500 employees. It operates drilling rigs in morethan 15 countries, with assets of KD607m.

—amid financial concerns The National Assembly’s public funds protection panel said in mid-May that ithad begun an investigation into KPC’s investment decisions since 1982. It wantsparliament to request Kuwait’s audit bureau to investigate KPC losses in severalinvestments made since the early 1980s. The panel’s head, Adnan Abdul-Samad,claims that KPC paid twice the market price for Santa Fe and lost more than$262m from other investments in KPC’s holding company, which operatesKuwait’s foreign downstream operations and sells its petrol stations in Europeand Asia under the Q8 brand. Mr Abdul-Samad argues that these investmentswere not in line with the national strategy of diversifying sources of income.

The oil ministerannounces more

exploration efforts

The oil minister, Isa al-Mazidi, said in early May that Kuwait is to drill 649 newwells as part of its plans to raise its crude production capacity. Some of the wellswill be for production, and others will be for reinjection of gas or water to boostrecovery rates. Kuwait’s production capacity currently stands at around2.5m b/d, and current production levels are in line with its OPEC quota of2m b/d. In January Mr Mazidi had announced plans to increase productioncapacity to 3.5m b/d by 2005 (1st quarter 1997, page 23).

Mr Mazidi has also informed the parliament that production will increase inline with a higher OPEC quota. The minister hopes that Kuwait’s quota willincrease from the current level of 2m b/d to 2.4m b/d in 2000, rising to 3m b/dat an unspecified later date. Kuwaiti officials have insisted since Kuwait re-joined the OPEC quota system after the Gulf war that it should have a higherquota. They draw a parallel with the United Arab Emirates, which has similarreserves and used to produce a similar amount of crude, but which now has aquota of 2.16m b/d. Data from the International Energy Agency (IEA) show

Kuwait 21


production in the first quarter of 1997 averaging 2,105,000 b/d, 5.25% aboveKuwait’s quota of 2m b/d. It has subsequently eased back to 2.07m b/d in Apriland the authorities insist that they will keep to Kuwait’s OPEC ceiling, despitetheir continuing calls for an increase in the quota.

Kuwaiti oil production(m b/d)

1996 1997 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr Feb Mar Apr

Kuwaiti production 1.84 1.79 1.80 1.81 1.84 1.84 1.83 1.80

Kuwait’s share of Neutral Zone 0.23 0.24 0.24 0.26 0.27 0.27 0.27 0.27

Total production 2.07 2.03 2.04 2.07 2.11 2.11 2.10 2.07Source: IEA, Monthly Oil Market Statistics.

Oil workers havethreatened to go on strike

Oil workers at the state-owned Kuwait Oil Company (KOC) have threatenedstrike action over a dispute about promotions. The dispute centres around a1995 agreement on employment grades, which union officials say has not beenfully implemented. The union chairman, Mohammed al-Sarhan, has said thatthe working conditions of some 750 employees in export, maintenance and gasoperations must be negotiated. The KOC position is that those departmentswere not included in the original agreement. The company had proposed amerger between the gas and production departments, which would bring thegas workers into the agreement. KOC says that the union rejected the proposal.The 1995 agreement was reached after a strike by KOC workers.

Tanker company makesrecord profits

The Kuwait Oil Tanker Company (KOTC) has announced that it expects netprofit in the financial year ending June 30 1997 to be around KD18m. Thedeputy managing director for administration and finance said in May that netprofits for the first nine months reached KD14m, compared with total profitsof KD7.4m in 1995/96. Company officials said that the improved performancewas partly a result of better management, including a drop in insurancecharges. KOTC also said that profits from shipping operations had risen, andthe sale of three ships and shares in a local shipyard had helped boost receipts.

Kuwait says no marketslost as prices weaken—

The managing director for marketing at KPC said in April that Kuwait had notlost market share when oil prices dipped in 1995. He claimed that the mainreason was KPC’s concentration on long-term sales contracts which account for95% of total sales. KPC also said that it has new marketing plans which willhelp it to minimise losses if prices slide again; these include entering into jointrefinery projects and building new storage tanks.

International oil prices drifted downward during the first quarter of 1997, asadditional Iraqi supplies coupled with higher non-OPEC production placedpressure on the market. The fall was exacerbated by increased Iraqi crudeexports, which, under UN Security Council Resolution 986, are limited in termsof value rather than of volume. Thus as prices fell Iraq increased its volume ofexports in order to reach its value target of $1bn per quarter. In May, however,prices picked up as the annual refinery maintenance round started. Prices forKuwait Export Blend have followed the market. During the first quarter of thisyear prices averaged $19.42/barrel, falling from a high of $21.35/b in January

0

2

4

6

8

10

12

14

16

18

20

22

Q1 Q2 Q3 Q4 Q1

Oil prices: Kuwait Export Blend$/b

Source: Bloomberg.

199619961996199619961996199619961996199619961996199619961996199619961996199619961996199619961996 97971996 971996 97971996 971996 971996 971996 971996 971996 971996 971996 971996 9719961996 971996 97

22 Kuwait


to $18.15/b in March. In April the decline in prices continued to $16.73/b, butin May prices rose again to average $18.22/b.

Industry

Power crisis is debated A former electricity and water minister, Hamoud al-Ruqoba, has warned thatKuwait faces a summer power shortage. Writing in a local newspaper, Al-Anba,Mr Ruqoba said that current generating capacity is 6,900 mw, but that 369 mwof that is used to operate the country’s power stations and another 980 mw isreserve capacity. Mr Ruqoba said that left just 5,550 mw, and peak demand isexpected to reach 5,500 mw The former minister said that Kuwait urgentlyneeds another power plant if it is not to face repeated summer shortages. Heclaimed that consumption is rising at 7% per year, so that Kuwait would needa new power station every five to six years on current trends.

In response to Mr Ruqoba’s article, the electricity and water ministry has de-nied that there will be any electricity shortages. It claims that the formerminister’s data are exaggerated and contradictory, and says that reserve capac-ity is sufficient to meet peak demand. The ministry added that the first phaseof a new power plant at Sabiya will be operational in early 1998, and a furthereight units will be operational by 2000. Mr Ruqoba believes that this increasein capacity will be insufficient to meet rising demand.

Complaints overintellectual property

rights

In an effort to protect intellectual property rights (IPR), the information min-istry has seized more than 1,200 compact disks from two shopping complexesand an exhibition, according to the Kuwait Times. Some shop owners said thatministry officials had no right to seize legally imported goods and that theministry had no jurisdiction over their shops. Merchants also complained thatthey did not know about new IPR regulations, which date back to August 1995.Kuwait has no copyright law but the government has said that it will abide byinternational regulations. Despite some efforts to crack down on pirated videoand CD sales, piracy remains rampant in Kuwait: there is extensive and overtmarketing of pirated software, cassettes, videotapes and unauthorised Arabictranslations of foreign-language books. The USA claims that Kuwait wasresponsible for $78m in lost profits to US firms in 1995, mostly in the softwaresector. The Business Software Alliance (BSA), an industry body which groupssome of the world’s biggest names in software, including Microsoft, Novell andLotus, estimates that 89% of software in use in Kuwait is pirated.

The local computermarket is growing—

Notwithstanding these IPR concerns, the Kuwait computer society says that60% of all computers sold in Kuwait are locally assembled. A member of thesociety’s board, Abdel-Aziz al-Duaij, told the local press that there is fiercecompetition among suppliers, which has forced down prices. Another industrysource said that the local market is worth some KD35m-40m per year.

—and industries haveannounced profits

The National Industries Company (NIC) said in early May that it made profits ofKD24m in the year ending December 31, 1996, a 20.6% increase on 1995 profitsof KD19.9m. The NIC chairman, Saud al-Ossaimi, said that the increase wasmainly the result of increased demand from the government for cement and

p 53.3

ps 10.1 c 13.1

g 20.4

a 1.1

i 1.9

Total: 625,170 kwh

Power consumption by sector, 1996% of total

Source: Hamoud al-Ruqoba in Al-Anba.

Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9Industrial1.9

Agriculture1.1

Industrial1.9

Agriculture1.1Agriculture1.1

Government20.4Government20.4Government20.4

Industrial1.9

Agriculture1.1

Industrial1.9

Agriculture1.1Agriculture1.1

Government20.4Government20.4Government20.4

Commercial 13.1

Industrial1.9

Agriculture1.1

Industrial1.9

Agriculture1.1

Industrial1.9

Agriculture1.1

Industrial1.9

Agriculture1.1

Industrial1.9

Agriculture1.1

Industrial1.9

Agriculture1.1

Industrial1.9

Agriculture1.1

Industrial1.9

Agriculture1.1

Industrial1.9

Agriculture1.1

Industrial1.9Industrial1.9

Agriculture1.1

Government20.4

Commercial 13.1Public sector10.1

Private sector53.3

Total: 625,170 kwh

Kuwait 23


construction materials. Total sales for the company, which is 51% government-owned, grew by 4.2% to KD17.2m.

In addition, the General Industrial Investment Company (GIIC), a privateKuwaiti firm, said its sales had reached $127m in 1996, and its managingdirector, Isa al-Oun, says that he expects them to double this year. However,GIIC did not announce 1996 profit details, saying that it has made a total of$77m in profits in the last four years. GIIC’s main business line is the prod-uction of iron oxide pellets.

The trade minister revealsthe extent of government

support

The trade and industry minister, Jassim Mohammed al-Oun, said in late Maythat Kuwaiti industries have benefited from customs exemptions worthKD22.9m since 1993. In answer to a series of parliamentary questions, Mr Ounemphasised that all Kuwaiti industries benefit from protection and incentives.He said that customs exemptions apply to raw materials, semi-manufacturedgoods and machinery. He also pointed out that local products are given prior-ity for government procurement contracts as long as they conform to necessarystandards, and that protection rates are to rise, with an increase in customs feeson foreign goods which compete with Kuwaiti industries.

The mobile telecomsprovider is under fire—

The Mobile Telecommunication Systems Company (MTSC) has come undercriticism for poor service and high charges. A local daily, Al-Anba, reported anumber of complaints about the standard of service compared with other Gulfcountries. It also found a sceptical reaction to plans for competition in mobiletelephone services in Kuwait. The paper said that MTSC has increased peak ratecharges, whereas other Gulf countries have fixed charges at all times.

—as the ministryannounces its

international takings

The communications ministry said at the end of May that it had receivedKD90.3m from international phone calls in 1996, compared with KD82m in1995 and KD67m in 1994. International call charges are relatively high inKuwait, while local calls are free. Re-establishing communications with the restof the world was a major priority after the Gulf war, and Kuwait has directphone links with most countries. However, it is still not possible to phoneIsrael, although calls can be made from Israel to Kuwait.

Money and finance

The investment authorityhas sold BP shares—

In May the Kuwait Investment Authority (KIA) sold 170 shares in British Petro-leum (BP), cutting its stake in the company to around 6.3%. The sale amountedto about 3% of BP’s share capital and earned KIA about $2bn. The KIA empha-sised that it had decided to sell a part of its holdings because its BP stake wasdisproportionately high in relation to its other international holdings, and thatthe sale was not a result of the change in government in the UK. The KIA saidthat most of the proceeds of the sale would be reinvested in UK shares becausethe BP shares were part of its UK weighting and because of the strength of theUK capital market.

—and has set up a fundfor small businesses

In March the KIA launched a fund to assist small businesses. The small projectsinvestment fund has capital of KD50m ($165m) and will offer new businesses

24 Kuwait


loans of up to KD250,000. It will operate in a similar way to the UK’s Prince’sTrust, established by Prince Charles, who visited Kuwait in February. TheKuwaiti press also reported that the KIA is considering establishing a new fundthat will be listed abroad, giving foreign investors access to the Kuwaitistock market.

Progress has been madeon a draft Islamic

banking law—

A draft law on Islamic banking is currently working its way through the legis-lative system. If passed, the bill would amend the 1968 commercial bankinglaw presently in effect and would set out the regulatory environment for partiesinterested in setting up and operating Islamic banks. The stated aim of theproposal is to open the market to both Western and Islamic styles of bankingand thereby give Kuwaitis a choice of systems. The Kuwaiti authorities havesaid that they will not pressure banks to use Islamic finance techniques. How-ever, while an earlier draft had proposed that conventional banks could set upindependent Islamic entities, the bill would now bar any conventional com-mercial banks from offering facilities on Islamic principles. The committee forthe completion of the application of the sharia (Islamic law) drew up theoriginal draft, which was subsequently amended by the Central Bank.

The new law would also end an 18-year monopoly on the Islamic bankingmarket by the Kuwait Finance House (KFH), which has irritated other institu-tions and prevented them from cashing in on the growing Islamic financialmarket. In addition, it would bring that institution under the supervision ofthe Central Bank, which has been keen to rein in KFH since its recent aggres-sive entry into a broad range of commercial activity, especially real estateacquisition. KFH was established under a special decree and is currently regu-lated by the commerce ministry. The draft law would have important implic-ations for KFH operations, as it stipulates that Kuwaiti Islamic banks should notparticipate in non-banking commercial or industrial activities such as transportor real estate dealing, both areas in which KFH is active.

—and a committee is tolook at foreign

investment rules

In addition, the Islamic banking bill proposes to allow foreign Islamic banksinto Kuwait, even though, at present, no foreign banks are licensed in Kuwait.The government is also considering allowing foreigners to participate in thestock market and to establish new companies. In March the commerce andindustry ministry said that it had formed a committee to draft new legislationcontrolling foreign investment. The commerce minister, Jassim al-Mudaf, saidthat the committee will work out regulations allowing foreign investors to ownequity and companies in Kuwait. Press reports have suggested that this mayinvolve looser restrictions on ownership and taxation.

Burgan Bank board is split A longrunning row within the board of the local Burgan Bank has split theboard between representatives of the private sector and the government.Private-sector representatives, including the bank’s vice-chairman, SheikhHamad Sabah al-Ahmed al-Sabah, claim that the government side does notattach sufficient importance to what it calls “deteriorating conditions” at thebank. Sheikh Hamad said in May that the private-sector board members wanta reorganisation of the bank, a review of its local and foreign investments anda re-evaluation of policies concerning government loans. A statement by the

Kuwait 25


private-sector contingent complained that the ceilings on credit and loans aretoo high.

Money supply has risen— The Central Bank says that broad money supply rose by 2.8% during thefirst quarter of 1997. The rise comes after a slight fall in broad money levels in1996: figures for the end of 1996 show that M2 fell by under 1% compared with1995. The fall was due to a decline in quasi-money over the year, as M1 levelsincreased during 1996. However, according to analysis by the Central Bank, thesystem still had sufficient liquidity so that the fall in M2 should not haveaffected lending by local banks. Claims on the government fell steadily during1996 as the government retired Debt Purchase Bonds. Claims on the privatesector, which are concentrated in trade, personal facilities and real estate,increased by 25% in 1996 compared with 1995.

—and fears have emergedof an overheating stock

market

The seemingly relentless rise of the Kuwait Stock Exchange (KSE) has broughtworries of a future crash and has raised the spectre of the collapse of the unoffi-cial Souq al-Manakh in 1982, which was a major cause of Kuwait’s bad debtproblems. The market dipped in early May after hitting record levels, but hassubsequently moved up, with the KSE index reaching 2,429.9 for the weekending May 28. In April the finance minister denied any suggestion that themarket was heading for a crash; he said that the Souq al-Manakh had been anunofficial and unregulated market, and that the present stock market is tightlyregulated. However, in an effort to avoid problems, in early June the CentralBank told local banks to limit the amount of lending made for securities trading.

The director of the KSE technical bureau said that one reason for the recentstrong rise in the market was that the new computerised trading system oper-ated more efficiently and allowed more contracts to be fulfilled. Although thetrading floor is only open for a couple of hours each afternoon and only GCCcitizens are allowed to deal on the exchange, the trading volume for the lastfull week in May reached 1,430 million shares, up over 100% from volumes theprevious week. There are worries that groups of investors are secretly cooper-ating to drive up prices.

Local banks announceprofits

Several local banks have announced increased profits for 1996 compared with1995, and two, the Commercial Bank of Kuwait and the Bank of Kuwait andthe Middle East, have increased net profits by more than 100%. The KuwaitReal Estate Bank, one of two wholly state-owned specialised banks, announcedan increase in net profits of 50% for the year ending December 31, 1996.

Local bank net profits(KD ’000)

1995 1996

Al-Ahli Bank 4,342 6,334

Bank of Kuwait and the Middle East 2,828 2,023

Commercial Bank of Kuwait 8,001 17,349

Kuwait Real Estate 4,195 6,319Source: Press reports.

26 Kuwait


Foreign trade and payments

Trade surplus rises— Planning ministry data published by the Central Bank show that the tradesurplus grew substantially in 1996. Full-year figures indicate that total exportsrose by 16.7%, to KD4.4bn ($14.5bn). Import growth in the same period wasmore restrained, with the Central Bank estimating growth of only 5.5%. How-ever, the improved export performance was largely confined to the oil sector,where total exports increased by 17.3% to KD4.2bn. The average price of Kuwaiticrude was $18.37/barrel in 1996, compared with $15.90/b in 1995. Non-oilexports for 1996 were only KD228.4m, up just 5.1% on 1995. Re-exports, mainlyof machinery and transport equipment, accounted for 33% of this total, andartificial fertilisers 19.3%. Imports of machinery and equipment soared fromKD249m to KD479.5m, but imports of cars and transport equipment were downfrom KD275.2m to KD62m. Imports of intermediate goods rose by 8.7% toKD919.1m, and of consumer goods by 2.7% to KD969.2m. The trade surplusrose from KD1.6bn to KD2.1bn. Provisional figures also indicate that workers’remittances have increased slightly and that the current account has registereda surplus of KD2.03bn.

—as reserves rise Despite the steady fall in oil prices in 1997, Kuwait’s reserves (excluding gold)increased slightly during the first quarter of 1997. After falling to $3.43bn inJanuary, they recovered to $3.54bn in February and rose further to $3.57bn inMarch. Final payment of almost $1.6bn on a sovereign loan meant that in 1996reserves failed to rise substantially despite higher oil prices.

External liquiditycontinues to improve

Net assets with BIS-reporting banks ended the year at $9bn, considerablyhigher than the level reported at the end of the first quarter of 1996. Theimprovement in Kuwait’s financial position is largely due to higher oil revenue,which resulted from high world oil prices during the year. Total assets declinedfrom $15.9bn in March to $14.9bn in December, but liabilities fell moresharply, from $7.2bn to $5.9bn.

Position vis-à-vis BIS-reporting banks, 1996($ bn)

Mar Jun Sep Dec

Assets 15.9 16.3 15.6 14.9

Liabilities 7.2 7.4 6.9 5.9

Net assets 8.7 8.9 8.7 9.0Source: Bank for International Settlements, International Banking and Financial Marketing Developments.

Kuwait 27


Quarterly indicators and trade data

Quarterly indicators of economic activity

1995 1996 1997

1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr

Production: industry Prodn/day

Crude petroleuma m barrels 2.04 2.05 2.06 2.06 2.07 2.03 2.04 2.07 2.11b 2.32c

Prices Monthly av

Consumer prices: 1990=100 114.2 114.0 115.0 115.5 117.7 118.9 n/a n/a n/a n/a

change year on year % 3.3 3.1 3.1 1.5 3.1 4.3 n/a n/a n/a n/a

Money End-Qtr

M1, seasonally adj: KD m 1,063 1,407 1,107 1,164 1,178 1,138 1,198 1,219 1,334d n/a

change year on year % –2.7 27.2 3.7 5.0 10.8 –19.1 8.3 4.8 n/a n/a

Foreign trade Qtrly totals

Exports fob KD 960 994 917 955 1,026 1,051 1,098 1,238 n/a n/a

petroleum “ 913 947 856 894 968 990 1,046 1,217 n/a n/a

Imports cif ” 518 640 489 587 596 617 608 218 n/a n/a

Exchange holdings End-Qtr

Central Bank:

golde $ m 722 739 732 734 762 743 733 716 669 656f

foreign exchange “ 3,120 3,581 2,903 3,263 3,264 3,457 3,287 3,221 3,291 3,237f

Commercial banks’ assets ” 6,925 6,653 7,081 7,128 7,002 6,777 6,802 7,230 7,377d n/a

Exchange rate

Official rate KD:$ 0.294 0.299 0.299 0.299 0.299 0.300 0.300 0.300 0.303 0.304f

Note. Annual figures of most of the series shown above will be found in the Country Profile.a Excluding partly refined petroleum. Including half share of Neutral Zone production. b Estimate. c Forecast for April-May. d End-February.e End-quarter holdings at quarter’s average of London daily price less 25%. f End-April.

Sources: IEA, Monthly Oil Market Report; IMF, International Financial Statistics.

28 Kuwait


Foreign trade($ m)

Total USA Japan Germany UK

Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec

Imports cif 1994 1995 1994 1995 1994 1995 1994 1995 1994 1995

Food, drink & tobacco 1,100.6 1,157.5 101.3 125.6 1.3 1.5 47.1 49.9 68.6 79.3

of which:

tobacco & manufactures 75.5 65.1 50.0 40.7 0.3 0.4 0.8 1.3 17.4 14.9

Chemicals 505.2 569.1 68.3 59.9 16.0 12.2 54.6 62.7 86.8 95.2

Paper & manufactures 142.9 171.6 6.9 10.2 2.8 2.0 15.4 19.6 4.8 8.0

Textile yarn, cloth & mnfrs 243.7 262.3 35.4 34.3 27.3 31.5 5.0 3.9 11.0 11.7

Non-metallic mineral mnfrs 250.8 345.6 9.6 10.8 23.5 23.2 4.9 4.9 4.3 4.7

Iron & steel 246.5 299.1 8.8 14.0 37.0 40.5 7.9 9.3 7.5 9.0

Non-ferrous metals 79.5 99.4 8.4 7.3 1.9 1.4 2.3 2.1 8.2 5.5

Metal manufactures 196.3 215.2 14.1 17.3 9.2 8.3 22.0 18.2 20.2 22.6

Machinery & transport eqpt 2,548.0 3,212.5 594.7 830.5 585.3 526.0 323.7 331.0 177.4 156.1

of which:

road vehicles 916.2 1,007.6 294.2 352.0 336.8 309.6 165.6 167.7 14.8 21.3

aircraft 212.6a 809.2a 25.8 210.3 0.0 0.7 3.0 7.2 2.5 2.1

ships 89.1 51.9 10.8 9.8 2.9 2.3 0.6 0.2 2.0 1.2

Furniture 117.2 128.7 27.1 32.9 0.6 0.8 4.8 6.0 6.4 7.6

Clothing 291.4 319.0 14.4 14.4 0.7 0.6 11.2 11.3 16.0 19.5

Scientific instruments etc 158.2 146.0 29.4 26.4 34.0 35.1 16.7 11.3 15.7 13.3

Total incl others 6,680.4 7,789.8 971.2 1,255.2 783.1 728.7 549.5 564.7 463.5 466.9

Total India Saudi Arabia China UAE

Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec Jan-Dec

Exports fob 1994 1995 1994 1995 1994 1995 1994 1995 1994 1995

Crude petroleum 0.0 12,216.0b 0.0 n/a 0.0 n/a 0.0 n/a 0.0 n/a

Petroleum products 33.9 39.1b 3.2 n/a 0.5 n/a n/a n/a 0.6 n/a

Chemicals 151.3 260.7 64.2 82.7 9.0 9.0 24.6 86.5 3.4 4.9

Manufactured goods 113.5 133.4 3.8 4.3 54.0 60.8 0.0 0.1 21.5 24.6

of which:

paper & manufactures 31.1 33.1 2.5 2.4 19.6 21.8 0.0 0.0 3.6 1.9

non-metallic mineral mnfrs 32.5 41.4 0.1 0.2 16.5 22.1 0.0 0.0 7.0 9.4

Machinery & transport eqpt 343.7 182.3 1.8 0.9 23.5 17.9 0.0 0.0 64.4 34.2

Total incl others 767.5 12,944.4 103.4 119.3 111.4 113.0 25.1 87.0 105.7 75.8

a Imports from France, $179.8m and $586.3m. b Country breakdown is not available.

Source: UN, External Trade Statistics, series D.

Kuwait 29


COUNTRY REPORT - iuj.ac.jp€¦ · COUNTRY REPORT Kuwait 2nd quarter 1997 The Economist Intelligence Unit 15 Regent Street, London SW1Y 4LR United Kingdom. The Economist Intelligence

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