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Kuwait Dissolves Parliament, Delaying Important Economic Reform
03/20/2008

Source: www.dartmouth.edu

Kuwait's ruler dissolved parliament days after a political crisis forced the government to resign. The crisis had paralyzed political life and delayed important economic reform in the country.

Kuwait would like to diversify its economy away from oil to emulate the success of its Dubai and Bahrain neighbors, which have become regional financial centers.

The parliament was nevertheless able to approve long-awaited reforms such as tax reduction on foreign companies and privatization of the national airlines that had incurred losses.

But tensions flared again on Sunday when the deputies asked for a further increase in wages for workers in the public sector who represent more than 90% of the Kuwaiti work force. These demands placed parliament on a collision path with the government, which has already raised public sector wages in February to address the high inflation.

A bill to set up a financial regulator and open up the stock market to more foreign investment has been stalled in parliament.

Deputies have also forced the government to set up a fund to buy back debts -- whose repayments are doubtful and are owed by Kuwaiti citizens. If approved, the measure would be a blow to plans to reduce dependence on the state.

Kuwait has not yet named an oil minister to replace Badr al-Humaidhi, who resigned days after his appointment in November under pressure from deputies.

al-Quds, East Jerusalem, March 19, 2008

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