Kuwait navigates unchartered political territory
29 August 2024
Kuwait’s political situation and its near-term prospects for governance continue to hinge on the dramatic suspension of the nation’s parliament by Emir Sheikh Meshal Al-Ahmad Al-Sabah.
This drastic measure by the country’s leader came in response to a deepening political stagnation in Kuwaiti politics that has seen successive formations of parliament and government deadlocked over the most fundamental of fiscal legislation: approving the budget and raising the debt ceiling.
Underlying these stumbling blocks are allegations of fiscal and budgetary malfeasance levelled by the elected lawmakers in parliament at the ruler-appointed and ruling family-led cabinet.
In recent years, the proceedings in parliament have become increasingly acrimonious, with lawmakers frequently demanding the right to question cabinet members – a demand that has instead often simply resulted in the dissolution of the government.
Kuwait’s political system has often been described as a “democratic experiment”, as it was a first in the GCC to devolve significant legislative authority to a chamber of fairly freely elected representatives.
On 10 May, however, after the fourth election in four years in pursuit of a functioning government resulted in the same rigmarole, the emir triggered the system’s inbuilt circuit breaker for the first time since its establishment and effectively placed the experiment on hold.
Two days later, the emir announced the formation of a new cabinet headed by Sheikh Ahmad Abdullah Al-Sabah as the returning prime minister. The country’s oil, finance and foreign ministers all retained their posts as well, making it a continuity cabinet, but in the absence of parliament.
Officially, the rules allow for the suspension of parliament for up to four years, enabling direct rule by the emir and his cabinet in the interim. Kuwait has thus returned, temporarily, to something of a default setting for the GCC. But it is a dramatic turn of events for Kuwait given the country’s well-worn electoral legacy – even as its other positively regarded attributes, such as a relatively free press, remain intact.
Project revitalisation
The emir’s decision is nevertheless being viewed in many quarters as a potentially positive development, not least in the projects sector. The political deadlock plaguing the country has been a salient problem for contractors in recent years due to the way parliamentary objections have impeded project spending.
Indeed, political disputes over capital expenditure have come close to scuttling Kuwait’s projects sector, which has seen its activity plummet over the past decade, with the country’s $16.5bn in contract awards in 2016 plunging to just $2.6bn in 2019 and averaging less than $4bn in the past five years. Given the parallel $100bn in project completions over the past 10 years, this fall in awards has resulted in a $50bn net decline in the value of projects under execution.
This loss of value from the projects sector has been detrimental to Kuwaiti contractors, who have been looking abroad in increasing numbers for alternative avenues of work. The drop-off in value in the project market has also been even more dramatic in certain industries, including the oil sector, where the total value of active projects fell from $65bn in early 2019 to just over $5bn by early 2023.
The reduction in oil sector projects, where constant work is required to maintain the performance of the infrastructure, is a threat to the main driver of the Kuwaiti economy and government revenues.
Given the country’s limited diversification and the accounting of the oil sector for 60% of Kuwait’s GDP and 90% of government revenue, the potential long-term consequences of the nation’s political dysfunction metastasising into dysfunction in the oil sector are considerable.
It is not surprising then that one of the first things on the agenda since the suspension of parliament has been the revival of oil sector projects – with the country’s Central Agency for Public Tenders now meeting three days a week since July to advance the tendering of major schemes.
Political correction
Political reform is also on the table. In his televised address to the nation on 10 May, the emir stated: “The recent turmoil in the Kuwaiti political scene has reached a stage where we cannot remain silent, so we must take all necessary measures to achieve the best interest of the country and its people.”
The presentation of the challenges facing the country in existential terms underlined the heightened perception that Kuwait was careening towards disaster amid political paralysis, falling oil infrastructure investment and snowballing expenses.
However, regardless of the “unimaginable, unbearable difficulties and impediments”, facing the country, the retaking of direct control by the emir and cabinet is no assurance that the trouble is over. The country still faces stark policy choices, including how to tackle its burgeoning public wage bill, which currently stands at about 30% of the country’s GDP and is only set to grow with rising pay and pensions.
These are costs that Kuwait cannot bear without robust oil sector development, and even that might not be enough. Economic projections have suggested public salaries could make up as much as 75% of the budget within five years, which could rapidly shrink the fiscal space for any other spending.
This is a burgeoning dilemma for the country that cannot be tackled overnight, but with four years of determined and unencumbered course correction, Kuwait could at least develop some more options.
Constitutional amendments could also be unveiled to prevent a return to political paralysis when a parliament re-forms. The ability of the house to override the emir’s veto with a simple majority, as well as to hold votes of no confidence for ministers, are two areas where changes could be made to smooth the political process – for example by requiring a super majority to overturn the emir’s veto or by making the conditions necessary to challenge the confidence in a minister more stringent.
Regardless, what is abundantly clear is that the existing system was not functioning as required – at the most fundamental level – in making basic legislative progress. Everything could now get back on track, but there are ample more “difficulties and impediments” to address, and Kuwait needs fresh solutions.
This month's special report on Kuwait includes:
> GOVERNMENT: Kuwait navigates unchartered political territory
> ECONOMY: Fiscal deficit pushes Kuwait towards reforms
> BANKING: Kuwaiti banks hunt for growth
> OIL & GAS: Kuwait oil project activity doubles
> POWER & WATER: Kuwait utilities battle uncertainty
> CONSTRUCTION: Kuwait construction sector turns corner
Register for MEED's guest program now to access this article.
Exclusive from Meed
All of this is only 1% of what MEED.com has to offer
Subscribe now and unlock all the 153,671 articles on MEED.com
- All the latest news, data, and market intelligence across MENA at your fingerprints
- First-hand updates and inside information on projects, clients and competitors that matter to you
- 20 years' archive of information, data, and news for you to access at your convenience
- Strategize to succeed and minimise risks with timely analysis of current and future market trends
Related Articles
-
Qatar seeks to establish new industrial area in Mesaieed16 July 2026
Qatar’s Ministry of Commerce & Industry and state enterprise QatarEnergy have signed an agreement to cooperate on evaluating and allocating hydrocarbon-derived resources to support the establishment of a new medium industries area in Mesaieed Industrial City.
Under the terms of reference signed between the parties, QatarEnergy will implement a governance mechanism for the allocation of hydrocarbon-derived feedstock to qualifying industrial investment opportunities for the proposed new medium industries area in Mesaieed Industrial City.
“The agreed terms of reference stipulate the evaluation and allocation of hydrocarbon-derived resources, natural gas, power and related natural resources to downstream derivative industrial investment opportunities,” QatarEnergy said in a statement.
“It will also ensure the optimal use of national resources and enhance the added value of the industrial sector by establishing a joint governance framework to evaluate and allocate resources required by qualified industrial investment opportunities,” it added.
QatarEnergy currently operates crude oil refining facilities, including natural gas liquids units, as well as petrochemical production complexes and other units in the hydrocarbon value chain, in Mesaieed Industrial City, situated around 45 kilometres south of Doha.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17688383/main.jpg -
Bahri signs deal for two offshore vessels with Dubai shipyard16 July 2026
Bahri Logistics, a division of Saudi Arabia’s national shipping company Bahri, has placed an order for the construction of two advanced offshore support vessels with Dubai-based Grandweld Shipyard.
Grandweld will custom-build the two vessels to meet Bahri’s operational requirements for offshore activities at Ras Tanura port in Saudi Arabia, one of the world’s busiest oil and gas bunkering and export hubs.
The vessels will be built at Grandweld’s shipyard in Dubai Maritime City and are expected to be delivered in August, following a 12-month building period.
The vessels will feature the latest navigation and safety technologies. They are designed to perform multiple offshore support functions, including vessel clearance, crew changes and emergency response, while adhering to international maritime standards.
The newbuild agreement with Grandweld aligns with Bahri’s broader strategy “to modernise its fleet, enhance technical capabilities, and adopt more energy-efficient and environmentally responsible designs”.
“Through continued investments in technology, infrastructure and fleet diversification, Bahri Logistics aims to deliver smarter, more sustainable logistics solutions that contribute to the Saudi Green Initiative and the kingdom’s long-term economic diversification goals,” the Saudi Stock Exchange-listed (Tadawul) company said in a statement.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17687877/main.jpg -
Egypt intensifies efforts to create petroleum stockpile16 July 2026
Egypt is intensifying its efforts to secure and maintain a sufficient strategic stockpile of petroleum products, according to a statement from the country’s cabinet and its Ministry of Petroleum & Mineral Resources.
The Egyptian government is closely monitoring regional developments and their potential repercussions on the energy sector, according to the statement.
Egyptian Prime Minister Mostafa Madbouly said that the government is implementing flexible plans and looking at alternative scenarios so that it can respond quickly to emergencies while ensuring the uninterrupted supply of fuel to citizens and key industrial sectors.
Egypt is intensifying its efforts to build up strategic stockpiles amid heightened uncertainty about future global oil and gas supplies.
Since the US and Israel attacked Iran on 28 February, there has been significant disruption to shipping through the Strait of Hormuz, which is a key transit route for oil and gas exports from the Middle East.
On top of this, the regional war has involved multiple direct attacks on refineries in the GCC, increasing uncertainty about the future availability of refined products.
Aside from Motafa Madbouly, the meeting was also attended by Hassan Abdullah, who is governor of the Central Bank, Minister of Finance Ahmed Koguk and Minister of Petroleum and Minerals Karim Badawi.
During the meeting, Badawi gave a presentation on the available quantities of different petroleum products and explained the details of the procedures currently being implemented to increase the strategic stock of petroleum products.
A review of the coordination framework and joint work between the Ministry of Finance and the Central Bank also took place during the meeting.
This was in order to ensure the management of financial tools needed to strengthen the country’s strategic inventory, according to the statement.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17685719/main.jpg -
Tunisia orders $86m of trainsets from Chinese supplier16 July 2026
Tunisian public transport operator Transtu has finalised an $86m agreement with China’s CRRC Nanjing Puzhen.
CRRC will supply 18 new electric trainsets for the capital’s northern suburban rail network, which links Tunis to La Goulette and La Marsa.
Each new trainset will be air-conditioned and capable of carrying up to 400 passengers, including 90 seated riders, with a top speed of 100 km/h. Once operational, the trains are expected to run at six-minute intervals during rush hour and every 12 minutes during off-peak hours.
The deal forms part of a broader fleet renewal effort by Transtu, which has struggled in recent years with operational setbacks that have taken a toll on the quality of public transport across Greater Tunis.
The acquisition is designed to boost capacity on the heavily used line as ridership continues to grow, while also enhancing safety standards and overall service quality.
Funding for the project comes jointly from the European Bank for Reconstruction & Development and the European Investment Bank.
Beyond the trainsets, the contract includes five years of maintenance coverage, a supply of spare parts and maintenance equipment, and an underfloor wheel lathe aimed at improving long-term fleet reliability.
This latest investment fits into Tunisia’s larger railway modernisation strategy, under which the government plans to invest $12bn by 2040 to expand and upgrade the country’s rail infrastructure.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17683957/main.jpg -
PIF developer tenders 365-metre Mecca residential tower16 July 2026
Rua Al-Haram Al-Makki has tendered the main construction package for the Ajyad residential tower, a 365-metre high-rise development in Mecca’s central area, close to the grand mosque.
The bid submission deadline is 30 September.
Rua Al-Haram Al-Makki Company was established in October 2017 and is a wholly owned subsidiary of Saudi Arabia’s Public Investment Fund.
The project team includes US-based Marriott International as residential operator, Hanmi Global Saudi as project management consultant, Saudi Diyar Consultants as construction supervision consultant, and PLP Architecture as lead design consultant and construction-stage design guardian.
The tower rises 84 floors with four basement levels. It comprises a total of 212 units, including 82 three-bedroom apartments, 85 four-bedroom units, 29 penthouses and 16 duplex villas.
The scheme has a gross floor area of 209,231 square metres (sq m) and a built-up area of 242,976 sq m.
The site is currently being cleared by a demolition contractor, with the existing mat foundation and retaining walls to be handed over to the main contractor, who will build the new superstructure on the retained raft.
https://image.digitalinsightresearch.in/uploads/NewsArticle/17683664/main.jpg