Kuwaiti trade vision 'may result in taxes'

The unprecedented shake-up in Kuwait’s ruling family should not effect the tiny, oil-rich country’s close ties to Washington, but analysts said tonight there could be significant changes in Kuwait, such as the imposition of taxes.

The emir-designate brings to power a liberal economic philosophy and a vision for turning Kuwait into a Gulf-region financial hub, returning to its pre-oil discovery heritage as a centre of trade.

But such a move was seen as impossible without changes in the country’s tax-free cradle-to-grave welfare system, a product of its huge earnings from oil.

The new leader also was seen as likely to face fresh demands for democratic reforms in a political landscape that was reshaped – however slightly – by the crisis that put him in office.

For the first time in the country’s history, parliament yesterday voted to oust the ailing emir, Sheikh Saad Al Abdullah Al Sabah, who had only ascended to the throne nine days earlier.

Within hours, the Cabinet replaced the ousted leader with Prime Minister Sheikh Sabah Al Ahmed Al Sabah. Parliament votes to sanction the appointment on Tuesday, and Sheikh Sabah is said to have unanimous support.

The Al Sabah family had been engaged in an increasingly public and embarrassing power struggle since long-serving emir Sheikh Jaber Al Ahmed Al Sabah died on January 15.

Once confirmed, US-educated economist Rola Dashti said the new emir would almost certainly push for introducing some taxes, a word foreign to Kuwaitis who are addicted to state welfare, funded by oil income.

Most Kuwaitis have government-created jobs in a public sector that has become bloated with civil servants. Even a gradual introduction of taxes would be expected to generate serious opposition in the parliament.

In a Kuwait television interview in June, Sheikh Sabah said: “We don’t have taxes. When a woman gives birth, she is provided with (free) medical care, gets baby formula for free ... and when a citizen dies, the government buries him.”

“Why,” the then-prime minister asked, “can’t we levy road taxes (for instance)?”

He was critical of politicians who propose wage increases or consumer debt forgiveness every time there was an increase in oil prices.

“(They) should think about the future of their children and grandchildren,” he said.

Sheikh Sabah’s liberal credentials got a boost last year when he named the first woman to Kuwait’s Cabinet after women were granted political rights.

Kuwaitis expressed relief today that the leadership crisis had been solved.

“We are relieved of the uncertainty,” said Ali Dashti, a vice president of an engineering firm. “It is good the matter ended in a constitutional way, and it is now clear who will be leader.”

Many people remember Sheikh Saad with affection for the way he rallied Kuwaitis in exile during the seven months of 1990-91 when the country was occupied by Iraqi troops. “You are the hero of liberation,” wrote Al-Watan in its editorial.

Kuwait remains a base for American forces and a major transit point for men and materiel heading to and from Iraq. Sheikh Sabah was a half brother to the deceased Sheikh Jaber who owed his restoration to power to American forces after the first Gulf War. He has been unwavering in his backing for ongoing US operations in Iraq.

Political parties are not allowed in Kuwait, where many politicians operate under the banners of various civic or religious organisations. Sheikh Sabah was expected to face pressure to lift that ban, especially from the self-proclaimed Al-Ummah organisation, which is not sanctioned by the government but calls itself a party.

Mansour al-Khozam, a senior member of the group, was already speaking out today for a new system whereby the person who eventually replaces Sheikh Sabah as prime minister be from outside the ruling family. Traditionally the premiership was held by the crown prince. Sheikh Sabah had broke that tradition, having served as prime minister while the ailing Sheikh Saad was crown prince.

“We want a Cabinet headed by a person from the people,” not a member of the family, he said. “The concentration of power in a certain place equals no democracy.”

Sheikh Sabah had run the day-to-day affairs of the country since the late emir and Sheikh Saad both fell ill. He, like the deposed emir, is in his mid-70s. He has a heart pacemaker, but is otherwise said to be in good health.