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Kuwait to forgive Iraqi debts 19, January 2010

Posted by thegulfblog.com in Iraq, Kuwait.
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The Kuwaiti Foreign Minister has announced that Kuwait will forgive the outstanding Iraqi debt stemming from their two decade old invasion. He stated that Kuwait did not want anything but ‘good relations and security’. Theoretically, Iraq still owes Kuwait some $36bn from old loans and war reparations.

How Kuwait, a fantastically rich country with a tiny population, high levels of literacy, 100% employment for its nationals, one of the most generous welfare states on earth, free utilities, frequent loan forgiveness for nationals who can’t resist the latest Hummer, a comprehensive healthcare system and scant security issues given the US guarantees and continued presence on its lands, could have waited until now is beyond me. Better late than never, I suppose.

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1. zaydoun - 19, January 2010

No matter how rich a country is, $36bn is no joke…. You forget the inevitable political fallout that will result from this, as the wounds of the invasion are still raw, even 2 decades later

But of course, we have to think of our strategic long term interests as well, and as a small vulnerable country we don’t have as much clout as we imagine. Lets hope our Iraqi neighbors fulfill their end of the bargain and maintain good neighborly relations

Oh and “frequent loan forgiveness” is a cheap shot, as it only happened once after the invasion for political reasons. It has not happened again since, despite never-ending calls for it

davidbroberts - 19, January 2010

Thanks for your thoughts, they’re always appreciated.

$36bn is indeed hardly a trivial amount of money. But consider a few statistics and I still think that it’s just immoral to be demanding such reparations. I realise that it’s a difficult decision to make and that there will be significant political fallout from this in Parliament but sometimes the right thing to do is the right thing to do regardless of domestic, partisan and hopelessly biased feelings.
You’re a small country with next to no clout but you have an enormous amount of oil. You’ll be fine. After all, the GCC just re-energised it’s Jazeera Shield with a rapid reaction force…(!)

It was undoubtedly a cheap shot. Are you sure that it only happened once? Parliament passed a motion for Kuwaiti debt forgiveness two weeks ago.

Either which way I get practically incensed by op-eds and members of Parliaments demanding debt forgiveness for Kuwaitis. Considering just how fortunate Kuwaitis are it just seems so wrong that they demand debt relief. For what exactly? There are no utility bills. There is no tax. There is no national insurance. There is free medical care. Every Kuwaiti is guaranteed a job – an exceedingly well paid job – from which it is impossible to be fired and for which you don’t even need to turn up. Get married and you are given a house/money/land and maintenance. Have some kids and you are given more money. Yet Kuwaitis still demand more money? Why? Because they have bought the latest Hummer or some other absurdly clichéd symbol of capitalistic greed. I do realise that this is a cheeky, flippant comment but at the same time I genuinely believe that there is significant truth to it.

Oh, and how does all this debt relief and the ‘Kuwaiti lifestyle’ mesh with frequently espoused notions of Islamic/brotherly solidarity with, for example, the Palestinians? It’s just the rankest of hypocrisies.

As much as this is just one of those random topics that really rankles with me, my protestations are also said with what’s best for Kuwait in mind (well, so far as I see it, that is). For the near and perhaps medium term, Kuwait can give all the debt forgiveness it wants. Yet, I just can’t escape the feeling that leaders today are just creating and exacerbating the mother of all problems for their grandchildren who will rule. Some day, unless Kuwait reinvents economics, they will have to start talking about the T-word (taxes – whisper it…). The more Kuwaitis are cosseted by their state, the more money is doled out to them for doing so little the harder it’ll be for a leader in the future to reign in this kind of absurd spending. The first leader that judiciously mentioned taxes will be harangued out the country and some yahoo with no understanding of economics, balancing a budget or the laws of consequences will say ‘no taxes: vote for me’ and people will vote(…) for such a populist, short-termist in a heartbeat.

2. hamish - 20, January 2010

David –

– debt appeasement is always a dangerous strategy as it is simply a way of buying time
– iraq still fires volleys towards Kuwait – verbally so far but it could turn violent. hardly a grateful aid recipient.
– while I don’t disagree with your points about how the Kuwaiti people are being immorally coddled by a welfare state, it is an internal matter that is irrelevant to an international debt discussion and one that would not be known to you or most others were it not for a free and outspoken press in contrast to surprise ‘news’ from the UAE and Saudi governments.

I’m glad zaydoun is here to invest his time and rebutt such inane attacks on a country’s rights and principles. I hope he’s done the same re. fisk’s piece as well.

cheers

3. adly - 20, January 2010

david – there are quite a few discrepencies to your theory. I copies some of your comments that I disagree with a commented next to them :

There are no utility bills. There are utility bills!

There is no national insurance. There is health insurance that most people have to pay. What is national insurance anyway?

There is free medical care. Yes,just like the crappy NHS in the UK. Most people go to private and very costly private hospitals and clinics.

Every Kuwaiti is guaranteed a job – an exceedingly well paid job – from which it is impossible to be fired and for which you don’t even need to turn up. Absolute rubbish. No guarantees,and most government jobs are seriously underpaid and miserable. Kuwaitis in the private sector are paid the same as any expat here and they have to be qualified to get the job in the first place.

Get married and you are given a house/money/land and maintenance. Absolute rubbish once again. You can apply for government housing but probably have to wait 20 years to get a substandard house out in the middle of nowhere. If you want to buy your own house,it is incredibly expensive.

Oh, and how does all this debt relief and the ‘Kuwaiti lifestyle’ mesh with frequently espoused notions of Islamic/brotherly solidarity with, for example, the Palestinians? It’s just the rankest of hypocrisies.

What does the palestinian problem have to do with the kuwaities and a certain segment of the population wanting debt relief and another segment not wanting to cancel the iraqi debt to kuwait? I dont see the relevence.

By the way, I noticed you didnt mention the fact that the germans still pay reparations for what happened to the jews over 60 years ago in Germany and all over europe. The Israelies have plenty of money(handouts from the USA) and dont need these payments but still insist on them. Sometimes its more about the principle than the actual number involved.

I agree with some things you mentioned above. But facts are facts and you need to get yours straight. The fact that kuwait doesnt have income tax yet is due to a unique set of circumstances. It will happen sooner or later just like how changes happen in any country. Dont forget that Kuwait went through a period of very rapid growth and that it sailed through very unchartered waters for a very long time and now it has to wrestle with a growing population, islamic fundamentalism as well as the normal problems that all countries face. All of that in less than 60 years since they started pumping oil out of the ground commercially.

davidbroberts - 20, January 2010

Thanks.

Shock horror: Iraq dislikes paying billions to Kuwait for an invasion 2 decades ago by a now hanged former Dictator when they are in the midst of a bloody, entrenched civil war and chronic suffering.

It is, of course, an internal matter. But this is a blog on Gulfy things (and others besides) and is well within its purview. I 100% agree that this matter is 100% a Kuwaiti internal matter for Kuwaitis to discuss. If they want to make Kuwaiti houses out of $100 bills and burn them down each year then build them again, that is their decision. Yet why does this mean that I can’t discuss it or criticize it?

And yes, Kuwait is served well by a relatively good press, your point being…

davidbroberts - 20, January 2010

Hi. Thanks for taking the time to write out such a detailed riposte. It’s much appreciated.

Utility bills – really? How often and how much are they? I know that companies pay them (on an exceedingly irregular basis) but believed that Kuwaits didn’t.

National insurance is just another form of tax.

Whilst the free medical care may not be that good, there is free and comprehensive medical care.

Guaranteed job thing: I’ve can’t find my copy of the Kuwaiti constitution that I picked up when I was at the Parliament last July but I’m fairly sure that in it Kuwaitis are in fact guaranteed a job. I don’t doubt that most government jobs are miserable for there is often little or no work for the worker to do. Badly paid? Hmm. From what I’ve been told on countless occasions they’re very well paid, that’s about the best I can say. I say again that I believe it is next to impossible for a Kuwaiti to be fired. Kuwaitis in the private sector of course need to have qualifications. But with Kuwaitisation programmes kicking in across sectors, private companies are forced to hire Kuwaitis who, on the whole, quite simply do not work as much, as hard or as long as expats. There are, of course I am sure, exceptions to this, but this is what I’ve heard from countless managers from countless different sectors. It’s rentierism 101.

Marriage+house: Can you not be given x thousand Dinar for a plot of land or to build your own house? Thanks for the note about the waiting list.

Palestinian bit: I think that the wanton excesses in Kuwaiti society and calls for more debt relief clash with commonly espoused notions of ‘brotherhood’ and other such notions in support of Palestinians. I.e. decrying the situation, blaming someone else (Israelis etc) and doing nothing about it. Given that Kuwait is an obviously and overtly Islamic country it seems wrong to ignore/do so little about such suffering (or the epic suffering right next door!) in this manner.
Though I take your point that it’s a slightly random aside.

German reparations: Good example. That too is, I think, disgraceful of the Israelis to demand money to this day.

So it appears that a few of my facts went askew. For that I apologise and am grateful for being corrected. But I 100% believe that my intrinsic point stands. Given the levels/indicators of development in Kuwait versus the levels/indicators of development in Iraq, I think that it is morally reprehensible and unconscionable for Kuwait’s Parliament to give yet more debt relief for Kuwaitis. This is condoning, encouraging and enabling greed against the backdrop of extreme suffering of a purported Muslim/Arab/Gulfy ‘brother’.

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7. Omar - 29, March 2010

its shocking, what the kuwaitis should know is that the debt that is they are asking to pay is being paid by the iraqi victims of saddam, saddam threatened his army to go and kill or he will kill their families. what choice do they have? the iraqi people have paid a price with their blood? is that not enough for kuwait?

trully sad and dissapointing.


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