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Corruption in Kuwait 22, September 2011

Posted by thegulfblog.com in Kuwait.
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Seven of Kuwait’s MPs are currently under investigation for corruption. This most recent round of accusation and counter accusation began when the National Bank of Kuwait and Kuwait Finance House reported suspicious transfers amounting to $92million between two members of Parliament.

There has been precious little reaction from Kuwait’s elite on this matter, which has fueled public anger which, it seems, is simply filling in the missing details with lurid suppositions of mass-corruption and graft in the Parliament.

Not that such assumptions are necessarily wrong. Kuwait has a long and illustrious history of corruption in the elite. Over the years, this issue has come up again and again to the point where many Kuwaitis (I’d even say ‘most’) seem to be of the opinion that the elite/government are implacably and irreducibly corrupt.

Through demonstrations and the voting in of populist MPs whose sole mandate, it can appear, is to fight this corruption, three highly damaging corollaries then occur:

1) MPs block crucial pieces of legislation from passing Parliament for fear that by granting, say, $5billion worth of investment in a real estate project, they are effectively allowing if not aiding and abetting corruption to occur. Kuwait is in desperate need of investment and it was only recently that a multiyear, $104billion plan was pushed through Parliament: the first in decades.

2) MPs also do their best to block similarly necessary pieces of privatization. Kuwait’s public sector, like many in the region, is hopelessly inefficient, expensive, over-staffed and bloated in general. Around 77% of Kuwaitis work in the public sector and a chilling, psychotic and whopping 84% of oil revenue is spent on public sector salaries, according to the World Bank in 2010 .

Necessary privatization bills are frequently derided as the ‘sale of Kuwait’ or ‘the legalized robbery of Kuwait’ and other such sensationalist tripe-filled notions. Famously, one such bill took over 18 years to pass through the Parliament. This is all the more surprising given the huge success in some industries which have been privatized – see Zain and Wataniya.

3) People demand cash. And debt relief. And no bills. And salary increases. And they get them, in spades. The government acquiesces to these demands to keep the natives vaguely silent: they essentially buy off citizens in droves. But the demands of Kuwaitis in the face of what they see as mounting and pervasive corruption is insatiable, even though they are the best paid of any nationals in the Gulf (where there is, let’s not forget, rather a lot of competition): it’s almost like that feel that they need to get their share before the elite graft it all away.

Indeed, Kuwaitis look at their staggering oil revenues, the small size of their country and then actually look around Kuwait, especially in comparison to the more glamorous cities further down the Gulf, and wonder where all their money has gone: ‘clearly’ it’s not been spent on Kuwait itself, so the elite must have stolen it all. This logic forgets, of course, the fact that Parliament can barely spend the cash (on big budget packages, at least) so tightly do some MPs agitate against any such plans.

It is difficult to overemphasize just how damaging this cycle is for Kuwait’s long term future. Kuwait can afford this now. Yet this will not always be the case. And when Kuwait needs to rely on income that is not derived from rent (oil), not only will it lack the infrastructure to pursue a ‘normal’ economy, such are the difficulties of investing in Kuwait to any significant or regular degree, but there must be core concerns that there will simply not be the Kuwaitis to staff any kind of competitive economy: neither trained particularly well nor with the skills or the drive to work efficiently and productively in a truly competitive economy, Kuwait will find itself at a considerable disadvantage.

Where to go from here? There are no easy answers, as the New York Times eloquently sums up.

If the emir allows Parliament to remain in place while at least one-fifth of its members are investigated for graft, he risks the growth of ever larger street protests and an erosion of public trust. But if he dissolves Parliament and calls for new elections, public outrage could help usher in a legislature hostile to the monarchy and more assertive in demands for constitutional changes.

However difficult, the current Emir, Sabah Al Sabah, simply must sort this out in some way, shape or form. He has genuine popularity and legitimacy in Kuwait as a whole. His successor is guaranteed none of these things and will likely endure questioning the likes of which would never happen to Sabah. Somehow he needs to marshal this to his advantage.

Kuwait needs a proverbial ‘truth and reconciliation’ commission. An opportunity for everyone to sit down, discuss what has gone on, make amends and to move forward on a new footing. Yet the recriminations and bitterness that characterises much of these interactions, coupled with astounding levels of obstinacy in the Government and – arguably – with a cultural aversion to public acts of contrition (can you really see an important Kuwaiti MP or member of the Cabinet publicly admitting he was corrupt?), makes such a scenario seem unfortunately unlikely.

Before the Arab Spring, I’d have said that there’d be a good chance that the Emir would unconstitutionally dissolve Parliament (as has happened a few times before) to pass some laws, push through some projects and to take the relentless pressure off his Governmnet as a whole and his PM in particular. But in this popular and febrile atmosphere, I don’t think that even Sabah’s charisma and support could pull it off.

Some kind of half-way-house would presumably involve the public flagellation of a couple of corrupt MPs. Give the mob some blood, show that the courts and the Parliament has teeth and scruples and follow this with exorbitantly punitive new anti-corruption laws and some kind of new independent body to pursue corruption with teeth. On the other side, scurrilously populist MPs would have to  – against their shameful temporary interests – agree to hold their fire and resist the so far irresistible lure of the lowest common denominator elite bashing with the stick of assumed corruption.

Many would fear that this would give the mob the taste of blood while most would surely be loathe to cast out one of their own, perhaps knowing that it could have been them, yet the impasse is growing in size and acrimony. Something needs to give on one side and it hardly seems likely that the populist MPs or the Kuwaiti public will spontaneously forgive and forget.

Out of this morass is the opportunity for an MP to make his name; to mark himself (or herself) out as a whiter than white, judicious negotiator. Perhaps such a prize will convince a suitably powerful MP to stick his/her neck out, eschew the trends and to embody the would-be new politics of Kuwait.

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Gaddafi forces capture 17 UK, French and Qatari ‘advisers’ 19, September 2011

Posted by thegulfblog.com in North Africa, Qatar.
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Reuters is reporting that Gaddafi loyalists have captured 17 mercenaries, as they describe them. Most are French but there are also some from the UK, Qatar and an unspecified Asian country, the initial report notes.

These ‘mercenaries’ are in fact ‘technical experts and consultative officers’ aiding the rebels in their advance on the last pockets of Gaddafi’s troops.

If it is subsequently confirmed, this will mark a potentially significant boost for pro-Gaddafi forces and a commensurate setback for Libya’s new government and its allies, not to mention causing consternation for the UK, France and Qatar.

It could prove to be rather embarrassing and difficult for Qatar, should the reports prove to be correct. It would confirm what has been long suspected and reported on – that Qatar has boots on the ground. And a Qatari getting directly caught up in these troubles many thousands of miles away may contribute to concerns in Qatar as to the significant level of Qatari involvement in Libya.

If some accommodation can be reached, Gaddafi would surely demand a high price given his deranged mental state and his recent toppling from power. This or a rescue operation by UK or French special forces is surely the most likely (positive) outcome.

Best headline ever… 14, September 2011

Posted by thegulfblog.com in Saudi Arabia.
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You know the world is coming to an end when:

 

 

Hat tip: Umm…someone or other. Cheers

 

Perfect storm of a problematic article for Qatar 11, September 2011

Posted by thegulfblog.com in Qatar.
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As I’ve noted before, I was taken-aback when Qatar won the rights to host the 2022 World Cup and the question of homosexuality still being illegal in Qatar was dredged up, mostly, I think, by the angry British press. In many years of studying Qatar and reading everything written on the topic, this issue had quite simply never come up. Of course, had I given it any thought I’d have concluded that Qatar, as a conservative Muslim nation, would likely ban homosexuality and that they may well have some draconian punishment on their statute books from yonks ago, but I hardly spend my days pondering the legalities of homosexuality.

This topic, then, is something of a sensitive one for Qatar. Particularly when the full glare of the world’s press stares microscopically down on Qatar whenever some event linked to 2022 rears its head. It is a simple encapsulation of the dichotomy between liberal modernity (for want of a better description) and conservative, highly religious, transitioning countries such as Qatar.

Indeed, the whole issue of liberal and conservative politics in Doha is the third rail.

For while the elite are, I feel, pulling Qatar forward in many areas, there is a distinct pull back from society too. In education, for example, in a brazen and remarkable attempt to catapult Qatar’s education system from the 1960s to the 2010s, RAND came in and jiggled things around, changing curricula, the language of instruction and all manner of things that really rather annoyed what seems to be the majority of Qataris. Similarly in Education City boys and girls share classrooms and converse in freedom, something that is frowned upon by a far from an insignificant section of society.

In health matters, Sheikha Moza pushed for the mandatory introduction of DNA tests before marriage to stop the…umm…unfortunate custom of intermarriage in Gulf societies. To this too the age old riposte of “but we didn’t have that in our day and things worked out just fine” is just impossible for many to resist.

Indeed, in many ways Sheikha Moza is at the very forefront of this battle. Her very visible presence alongside the Emir and countless events over the years is, itself, a significant statement. I’ve spoken to many young girls in Qatar that idolize the Sheikha for this; for showing them that they can aspire and achieve what they want, yet equally I’ve spoken to many (not only gents) who see the visibility of the Sheikha as, as it has always been gently put, ‘undesirable or problematic’ for a country as traditional as Qatar.

It is a matter of potential significance if and when these kinds of issues collide, especially when they may catch the lens of the international spotlight.

The student newspaper of Cornell, one of the US universities with a campus in Qatar’s Education City, is currently kicking up a righteous fuss over the Sheikha’s patronage of a clinic that, among numerous noble pursuits, also seeks to ‘treat‘ homosexuality.

In such an instance, the Sheikha is in a bind.

I have no idea whatsoever as to her views on homosexuality, but the situation is highly delicate. Standing by the clinic could incite further protest from Cornell and add to charges laid against Qatar by the international press (those paragons of justice). Distancing herself from the clinic would likely incite further ire here in Qatar.

Though this example is only a minor story currently (wait until someone is arrested for homosexuality) it is symptomatic of some of the key difficulties that Qatar is facing: the clash of the old and the new. Not that Qatar is, of course, alone in this struggle. Indeed, the Gulf is beset with countries wrestling to join the enlightened twenty-first century (do I really need to give an example of the key country in question here?) but with Qatar so single-mindedly grabbing the full-beam attention of the world with their 2022 gambit, the pressure on them is greatest. And I repeat what I said on the day that they won the prize: they don’t have a clue what they’ve let themselves in for.

Hat tip: Doha News

Kuwait arrests Iraqi spy 8, September 2011

Posted by thegulfblog.com in Iraq, Kuwait.
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The fun and games between Kuwait and Iraq continue apace.

Latest developments include the arrest of a man ‘of Iraqi origin’ for some kind of intelligence links with Iraq. The chap apparently liven in Hawalli, my old area of Kuwait (aaah…Abou Khodor…you are missed…) and worked for a communications company.

It’ll not before long such a spy is found in Iraq, I am sure, secreting secret stuff back to Kuwait. The tit for tat nature of this saga continues.

Muslim Denomination Map 8, September 2011

Posted by thegulfblog.com in Islam.
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I always like a good map.

Hat tip: MS

Qatar wage hikes: Et tu, Qatar? 7, September 2011

Posted by thegulfblog.com in Qatar, Random.
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Qatar has raised the basic salary for Government employees by 60% and for Armed Forces employees by 120%. Pensions and social allowances have also been hiked up. Qataris have the Crown Prince, Tamim bin Hamad Al Thani to thank for this.

It is disappointing to see Qatar follow the terrified GCC crowd on this topic. The Qatari leaders have nothing to fear from their citizens. Unlike some government in the region that need to buy them off, the Qatari elite are, generally, a popular bunch.

So why have they done this given that it will:

  • Hike up inflation, which is already showing signs of being a problem.
  • Arguably create the expectation in the future of similar rises as part of the basic ruled-ruler bargain, which, at some point, Qatar will not be able to afford.
  • Decimate any notion of succeeding with Qatarization. Private companies will have a nightmare  – more of a nightmare – in attracting well qualified Qataris if they have stratospheric pay in the public sector to compete with. Either Qataris will simply work for the public sector, that notorious bastion of efficiency, or private companies will have to hike their pay, slashing their margins and further bumping up inflation.

So why then?

  • Reward for the armed forces for their involvement in the Libyan crisis. And the public sector have been rewarded with half as much because it’s difficult to give to one and not the other.
  • To kill off grumblings in Qatar? Sure, some people have not been wildly happy about Qatar’s involvement in Libya while others bitterly complain about the state of roads in Doha or that Education City is a waste of money or that there’s not enough fruit in the local supermarket…of course there are grumblings, there always are. But these are – unless I’m missing something huge – not serious at all.
  • The Crown Prince wants some gratitude. He gave out the cash, he will receive the plaudits. But again, he’s not an unpopular fellow and it is a potentially dangerous path to follow to link one’s popularity with wage hikes or something of this nature.

The key problem with these hikes is that they reinforce the rentier nature of Qatar. All Gulf countries are fighting the difficult battle whereby productivity and work more generally is just not related to wages. The link between the labor and the fruits thereof is bust.

Encouraging the private sector is meant to help alleviate the worst of this rentier problem. Why Qatar is so catastrophically undercutting this goal is a mystery. Methinks it is partly due to the nature of decision making in Qatar and the Gulf – at the elite level, perhaps with not that much consultation – and partly because there are no real consequences to ponder right now. The difficulty with this whole rentier question comes as oil and gas rents pare down, which is not for some time yet.

Thinking of home from abroad 7, September 2011

Posted by thegulfblog.com in UK.
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One of my key peeves in this part of the world is moaning ex-pats. Don’t misunderstand me, there is plenty to be angry, exasperated or get fed up about in this part of the world, and I indulge in long tirades at times with my friends and family. But, I realise perfectly well that the UK, home, in my case, is not a bed of roses. I feel that many ex-pats forget this.

To them, ye olde England is a place of lush, green meadows, where children frolic, fish for tadpoles in streams, eat marmalade and say ‘blimey’ a lot. Such an England, I hardly need to note, has never existed.

But it is difficult, as one must not go too far the other way: castigating sunny England as some kind of ‘gone to the dogs’ slum, which comes with the obligatory sentiment that

It were never the same in ma’y day

Such sentiments really quite annoy me. People have been making these comments, that the ‘youth of today’ are a disgrace, since Roman times. Specifically in an English context, I think it was a monk in Jarrow well over a thousand years ago who  jotted these sentiments down.

Certainly, when one reads horrific stories such as this one, where a student who asked a group of youths to stop throwing conkers at him was stabbed and killed, everyone surely has a natural impulse to hail the return of the death penalty as the simple, swift and sensible answer (or is that just me?) or one sees this bunch of rabid, unrepresentative misfits in the ‘English Defence League’, it is all too easy to admonish England as ‘gone to the dogs’ but, as they say in these parts, shway shway.

Yes, England has its issues. But name me a country on earth that doesn’t. True, right now with belts-a-tightening and all that, things are looking grim, but Blighty will survive, as she always has.

So, to reach an earth shatteringly dull and obvious conclusion the answer, as ever, lies in moderation and in, dare I say it for fear of appearing grey and dull, in the middle.

 

 

On Kuwait Airways privatisation 6, September 2011

Posted by thegulfblog.com in Kuwait.
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There’s a jolly interesting article written about Kuwait Airways and its privatisation, which begins with the line

After 18 years of political wrangling, the Kuwaiti parliament passed a privatisation law in May 2010 which proponents said would reinvigorate the country’s bureaucratic, public-sector dominated economy.

Now, I’ve written this line more or less exactly myself (including in here) and said it at various conferences and other talks on numerous occasions, but it bears a moment’s reflection. Nearly two decades for one law on privatization. We’re not talking about droit du seigneur or something here, but privatisation…it boggles the mind…but I digress (and must not harp on…).

Despite those maintaining that such privatisation will lead to

the robbery of the wealth of Kuwait and a plan to destroy the country

Kuwait Airways is raring to be sold. A horrible airline by regional standards (or even those of BA), it has been atrociously ran for decades.

The flag carrier posted losses in 20 of the last 21 years, hemorrhaging more than $3 billion including $556 million last year alone – a time when most airlines were rebounding from the global recession…the airline is bogged down by maintenance costs for its fleet, which has an average aircraft age of 18 years. A $3 billion order for 19 replacement jets had been touted as a landmark solution, but the deal was axed in 2007 after ministers voiced growing unease about pouring yet more money into the failing carrier.

Demographics in Kuwait could hardly be more favourable, with almost half the population under 30 years of age and disposable income among the highest anywhere in the world (GDP per capita is around $38,000, according to the International Monetary Fund). While tourism is virtually non-existent, the country’s large expatriate presence, coupled with its geographical location spells clear potential for establishing Kuwait City as an intercontinental hub.

Only last month…drum roll please…Kuwait began to move to become the first privatised flag carrier in the Gulf.

Given that their staffing costs are astronomically high, according to the article, staff were given a wonderfully Gulfy option.

Its 2,600 employees were recently asked to choose between joining the new operating company, transferring to another government entity, or taking retirement if eligible. Though the survey’s results have yet to be published, it is believed that most staff opted to retire or switch to another public body. “It cannot be implemented until the privatisation has occurred, but in terms of the cost element you’ll see a dramatic reduction from day one,” the source predicted. “They’ve rationalised the staff.”

Oh how BA and Virgin look on with undisguised contempt and envy.

This excellent article continues:

Perhaps the biggest worry for investors, though, is the sign that Kuwait Airways may not have learned the lessons of its troubled past. Buried in the teaser document for prospective bidders are several indications that the airline will continue to rely on state support, rather than free-market competitiveness.

On top of the ten per cent fuel discount afforded to all airlines at Kuwait International Airport, the flag carrier will benefit from an additional ten per cent markdown. It will also retain exclusive rights to transport government personnel, as well as enjoying subsidies on airport space rental and exemption from custom duty on aircraft parts used within the Gulf Cooperation Council. Critics say these privileges will do little to foster a culture of efficiency.

Oh how BA and Virgin are spluttering into their Cornflakes at reading this.

Hat tip: Kristian Coates Ulrichesn

The famous French work ethic 5, September 2011

Posted by thegulfblog.com in French IR.
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Far be it from me, but a slothly ros bif from across the Channel, I mean, La manche, to criticise my chums en France, after all they have given us the baguette, ham, etorki cheese, red wine, revolution and the world’s most beautiful city, but I venture that these pictures have something deleterious to say about the French work ethic.

As lovely as these post-it note designs are, I fear that had this been done in London, the admittedly artistic culprits would have been sacked immediately for wasting time at the office. Zut alors, and all that.