The political and economic system in Kuwait

Middle East strategic location(see appendix fig) at head of the Persian Gulf, between Saudi Arabia & Iraq.

Currency :- Kuwaiti Dinar It is the highest valued currency in the world with its valuation rate as that of

1 KWD = Rs. 161.18

1 KWD = $ 3.483

Area :-

17,820 sq km

It is a very small country in terms of area which is a bit more than the area of the Indian state of Nagaland’s area (16,700 sq km)

Population :-

35,00,000

Out of which about 20,00,000 to 25,00,000 are immigrants who are not Kuwaiti citizens but are here for work with the rest who are the original Kuwaiti inhabitants.

The Arabic is the national language but English is widely used. The south Asian languages like Urdu, Hindi, Bengali, Filipino are also widely spoken

The non Kuwaiti citizens mainly include immigrants from India, Pakistan, Saudi Arabia & Egypt.

Its net migration rate is third highest in the world (16.09 %).

Also the literacy is very high about 93.9%

The population is young with a large amount of people falling to the age group of 20 to 35(refer fig)

Important Cities:-

Kuwait City:- The capital and the largest city of Kuwait with the population of about 96,100 in the main city and about 2,38,000 in its suburbs.

The other important cities include Hawalli, Al Farwaniyah, Al Jahra.

About 96% of the total population lives in the urban areas.

Political Situation in Kuwait

Kuwait an emirate is a constitutional monarch which is the oldest directly elected parliament in the Arab countries of the Persian Gulf. The head of Kuwait is the Emir or Sheikh, which is a hereditary office belonging to Al-Sabah dynasty. A council of ministers(cabinet ministers) helps the Prime Minister to perform his task as the head of Kuwaiti Government which must contain minimum one elected member of the Kuwaiti parliament, the Majlis Al-Umma the Kuwaiti National Assembly. The National Assembly of Kuwait has the power to dismiss the Prime Minister or any member of cabinet through a series of legislative procedures. Cabinet ministers are answerable to the Prime Minister & The National Assembly.

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Emir is the supreme commander or the dictator of the State. The Emir has the right to appoint and dismiss diplomats & even the PM. Legislative power is shared by the Emir and the National Assembly as per the Constitution. The Emir of Kuwait cannot be punished by law. He has the power to dissolve the National Assembly and announce the elections, or in cases of national emergency has the power to dissolve the National Assembly assuming the supremacy over the country. The Emir is also the chief of Kuwait’s armed forces. The Emir has power to grant pardon from the death penalty or prison.

Political Instability

Several conflicts have been occurring between the Emir, the Prime minister and the National Assembly over various policies due to which National Assembly of Kuwait was dissolved in the following years: 1976-1981, 1986-1991 and again from May 1999- July 1999 due to serious conflicts between Cabinet Ministers and the National Assembly. Recently the Assembly was dissolved in May 2009 by the Emir forcing the resignation of Prime Minister Sheikh Nasser Mohammad al-Ahmad al-Sabah and his Cabinet causing the nationwide elections on May 16, 2009.

Elections

More than two-thirds of people living in Kuwait are devoid of Kuwaiti citizenship and thus don’t have the right to vote in parliamentary elections. The validity of elections is of 4 years. Prior to 2005, 15% of the Kuwaiti population were allowed to vote, with all citizens (i.e. including those of less than thirty years’ citizenship), and members of the Kuwaiti Armed Forces excluded. The decision to include them raised Kuwait’s eligible voter population by about 243% from 1,39,000 to about 3,39,000. In 2006, Kuwaiti citizens were estimated to be more than 9,60,000.

Women In politics

In 2005, the then Prime Minister Sheikh Sabah al-Ahmad al-Sabah appointed the first women as a cabinet minister, Massouma Mubarak offering her the post in his Cabinet as Planning Minister as well as Minister of State for Administrative Development Affairs. In 2008 parliamentary elections, about 27 of the 275 candidates were women i.e approximately 10 %. But all of them lost. In the recently concluded parliamentary elections on 16 May 2009, 16 female candidates contested for 50 seats for a four-year term. Four female candidates won their seats becoming Kuwait’s first female lawmakers.

Heads of Kuwait

Supreme Commander: Sabah Al-Ahmad Al-Jaber Al-Sabah

Executive Branch ie The Prime Minister: Nasser Mohammed Al-Ahmed Al-Sabah

Legislative Branch : Jassem Al-Kharafi

Judicial Branch ie The Chief Justice: Sabah Al-Ahmad Al-Jaber Al-Sabah

Economy Of Kuwait

Kuwait is a relatively free and open economy by its nature and is mainly dependent on the crude oil production. Kuwait has a GDP of US $157.9 billion and a per capita income of US $ 60,800. It is the 5th richest country in the world. Economy of Kuwait suffered tremendously due to the Gulf War, but it was re-established through a fast redevelopment process. Some of the important industries booming in Kuwait which are responsible for the prosperity of the Kuwait Economy other than petroleum are salt, construction, food processing, petroleum, desalination, fertilizers, cement, textiles, and petrochemicals.

Now the economy of all the countries in the world depends on the production factors namely

Land

Labour

Capital

All these factors are needed in a proper amount for a country to grow or to sustain its growth and are responsible for its overall economic development

LAND

Kuwait has a very less land area of about 17,200 kilometre2. The land over here is very sandy and is barren and sparsely settled. Agriculture is possible in only 0.84 % while land available for permanent crops is a mere 0.17%, while the rest of the land is barren which contains a large amount of oil-fields. About 10% of the oil reserves of the world are found in this country. The country is also rich in the natural gas production. During the retreat of the Iraqi army in The Gulf War they had set ablaze about 60 oil-wells of Kuwait which resulted in the contamination of the soil due to oil and soot accumulation in the eastern & south-eastern parts of the country making it uninhabitable. Also it resulted in the conversion of large parts of the country in to semi asphalt surfaces and deserts. Also the marine resources in the Persian gulf were affected greatly during the war.

LABOUR

The country has a very high HDI (human Development Index) of 0.916 and is ranking 31st world-wide showing a high life-expectancy, literacy rate & standard of living placing it in the category of the highly developed country. The population of Kuwait has reached 3.48 millions in 2009.Out of which 2.25 millions are in the age group between age group 20-49 which is the labour force of the company(refer the fig 3 in appendix). The availability of the labour is depicted in the table (in appendix figure 4) about the last ten years. The people of are mainly employed in the oil-fields and the oil refineries in Kuwait. KPC the Kuwaiti Petroleum Corporation is the largest company in Kuwait which is into the petroleum & Natural gas business. The labourer here are mostly the expatriates immigrated from the Middle-East & south Asia for the better future. They constitute about 66% of the total labour force in nature. Also there is a huge population of the illegal immigrants staying in Kuwait. The standard of living is very high with the professionals like engineers, managers earning about $ 4200 per month. But the condition of the illegal immigrants is very pitiable as they have to work for less than $ 180 per month and are deprived of the human rights by the native Arabs. Also the government to protect the rights of the native Kuwaitis is adamant in not granting the citizenship to the expatriates & the conditions are also very stringent to grant citizenship. The service industry employs 66% of the total labour force which includes the community social & personal services sector, which also includes the people working in the public sector. The second comes the wholesale & retail trade services & restaurant sector constituting about 15% followed by construction & industrial sector at 8% & 7% respectively. Crude oil production and manufacturing, along with refining employs 8% of nationals in the workforce. The electricity, water and gas (‘Utilities’) industries mainly employ Kuwaiti nationals representing 83% of the workforce in this sector.

37% of the expatriate labour force works in the community, social and personal services sector. These total over 6,49,000 non-Kuwaitis and include household workers, drivers, and unskilled domestic labour. More than 3,08,000 expatriates are employed in trade and hospitality sector, down 1% from 2008. The number of expatriates employed in the financial and business services sector is 89,000 non-Kuwaitis. Almost 113,000 non-Kuwaitis work in the manufacturing industry, including refining. There is permission for the development of the unions but only 5% of the working population is there as the member of the unions

CAPITAL

GDP (official exchange rate, 2008 est.):- $157.9 billion.

GDP per capita:- $ 60,800 (2008)

Real GDP growth rate (2010 est.):- 8.1%.

Natural resources:- Oil, natural gas, fish.

Exports:- $ 95.46 Billion (2008)

Main export products are Oil and refined products, fertilizers

Main export partners are Japan, South Korea, Taiwan, Singapore, US, China & Netherlands

Imports:- $ 26.54 Billion (2008)

Main import products are food, construction materials, vehicles and parts, clothing

Main import partners are US, Japan, Germany, China, South Korea, Saudi Arabia, Italy, UK

Inflation:- 11.7% (2008)

The Kuwait Stock Exchange better known as KSE, having about 200 firms listed in the second-largest stock exchange in the Arab world with a total market capital of US$235 billion. The country has the large amount of reserves which are mainly divided into two parts Fund for future Generation & General reserves both of which are managed by the Kuwait Investment Authority (KIA).It was this reserves which made the reconstruction of the Kuwait from the war-ravaged country (Gulf War 1991-2) to the developed country in a very less time span. During the war Kuwait had the reserves of about $ 100 million which were deprive to about $ 40 million after the post war reconstruction.

CONCLUSION & FINDINGS

Kuwait is the fifth richest country in the world. Its economy is mainly dependent on the oil. So the oil prices are the back-bone of the Kuwaiti economy. Crude oil and its products contribute about 95 % of the country’s GDP. As a result of it, it’s like Kuwaiti economy has all eggs in one basket i.e. oil. Oil prices keep on fluctuating and as a result of it too much dependence on the oil can be harmful to the country’s economy thus the government should try to diversify and explore the new avenues in the country. Also the oil will last about 85 years at the current consumption rate. The Kuwaiti economy saw a deficit in the year 2009 because of the oil prices falling from $ 92.91 in the year 2008 to about $ 54.24 in the year 2009. In 2009, the Central Bank of Kuwait sanctioned a US$5.15 billion stimulus package to help the economy to overcome the crisis. This served as a warning to the Kuwaiti government and they are finding a way out to stabilise the economy on the short term by giving the economic aid to the companies. The KIA is a rich institution but it has to invest the wealth in the right place like in developing the infrastructure of the country. The population of the country is also increasing and about 80% of the present population is in public services with 44% of the country’s expense being used as the salary to the Kuwaiti people. So if the population grows to about 5.4 million in 2029(according to present growth rate) the government won’t be able to provide the jobs to the people. The Emir should think about privatisation & liberalisation of the country. The government has planned for the privatisation of its national carrier Kuwait Airways Company along with 24 projects worth $21 billion. The KIA and the finance ministry are having the funds right now, they should be properly utilised in developing the infrastructure, making Kuwait as the financial hub in the region of Persian Gulf. They can look up to Dubai of UAE as a role model and work on it. Also better airports and ports would add up to the development of Kuwait. 90% of the Kuwaiti land is owned by the government and it is this land which can be leased to the private players for development and thus the development can become speedy & efficient. Also the stability and the sustainability also depend on how the situation is prevailing in the Arab world and their relations with the West. As seen earlier the main exports of the oil are to Japan, South Korea & USA, it is good to hope that their economy also does well, because due to financial crisis the oil receipts would also become less and also the buying capacity of the oil decreases forcing to keep the oil prices down which in turn decreases the profits. Also there are huge possibilities to harness solar energy as it is available almost throughout the year. The country can thus sell the energy to its neighbouring countries like Iraq, Iran, Saudi Arabia who are developing nations and are amidst dire need of energy.