Kuwait Cabinet Quits In Step Toward Ending Political Impasse

(Bloomberg) --

Kuwait’s government resigned on Monday after less than a year in office and the country’s ruler pardoned a number of opponents in an effort to break a political deadlock that has blocked fiscal reforms and hurt the economy.

The resignation, received by Emir Sheikh Nawaf Al-Ahmed Al-Sabah, had been expected after several rounds of talks between feuding government officials and opposition lawmakers. 

Led by Prime Minister Sheikh Sabah Al-Khaled Al-Sabah, it’s the third government to resign in a year. Finance Minister Khalifa Hamada, whose own resignation was rejected in August, is widely expected to be replaced. Appointed last January, Hamada became the fifth person to hold the portfolio in just under seven years.

The Gulf nation, home to about 6% of the world’s oil reserves and the fifth-largest producer in the Organization of Petroleum Exporting Countries, posted a record budget deficit in the last fiscal year due to a cash crisis exacerbated by a plunge in oil prices and the coronavirus pandemic.  Years of political tensions have stymied efforts to diversify the country’s oil-reliant economy and promote foreign investment, leaving Kuwait particularly vulnerable. 

Parliamentary sessions have been largely disrupted since opposition lawmakers gained ground in December’s National Assembly elections. The legislators, who have pushed for political reforms including the amnesty for political opponents and activists, had submitted multiple requests to question the premier. Today’s resignation means he avoids that scrutiny.

The pardon follows weeks of national dialog called by the Emir. The names have yet to be disclosed but it’s expected to include former opposition lawmakers and activists self-exiled in Turkey, who led protesters to storm the parliament building in 2011. Speaker Marzouq Alghanim said he hopes a new page has turned “so that we can start a new long-awaited stage of achievements.”

The reprieve is seen helping pave the way for the passage of much-delayed legislation, including a law that would allow the government to borrow on international markets and another allowing it to dip into Kuwait’s $700 billion sovereign wealth fund. Higher oil prices have helped ease a cashflow crisis for the government, which had seen liquid assets in the treasury almost entirely depleted last year. 

Kuwait has had 17 governments and eight elections since 2006.

It remains to be seen how the new government is formed, said Jassim Al-Saadoun, head of Kuwait-based Al-Shall Economic Consultants. “If it’s the same then everything will be even worse. Government members need to be younger, and they should be capable regardless of who they are, or what family or sectarian affiliation.”

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