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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

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John Bambridge

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    Bahrain’s construction and infrastructure sector remains subdued, with project awards still depressed despite a modest uptick this year.

    Data from regional projects tracker MEED Projects shows that $737m-worth of construction and infrastructure contracts had been awarded in the kingdom by 29 October 2026. While this exceeds the $686m recorded across the whole of 2025, it confirms that the market remains in a prolonged downturn.

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    Major awards

    Activity this year has been supported by several housing and transport packages.

    The largest award was an estimated $400m contract secured by a joint venture of local developer Naseej and China Machinery Engineering Corporation for the Madinat Khalifa project. Procured under the Mega Government Land Development Programme, the scheme involves the design, financing, construction, marketing and sale of more than 2,500 housing units on two government-owned land parcels, alongside roads and electricity, water, sewage and drainage networks.

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    The package includes a signature bridge connecting Muharraq with the North Manama Causeway and Bahrain Bay, as well as road works between junctions four and five.

    Residential projects provided further volume. Mohammed Abdulmohsin Al-Kharafi & Sons secured a $112.4m contract to build 512 social apartment units on Madinat Salman’s Island 12. Binaa Al-Bahrain also appointed Kooheji Contractors to build Bayview in Manama, a development comprising four residential buildings and 489 apartments.

    Early-stage commitments included a BD5m ($13.5m) consultancy contract awarded to US-based Populous for the planned Sports City at Sakhir. The scope covers the masterplan, internal infrastructure, phase 1A design and tender documents. Lebanon’s Dar Al-Handasah won a QR28m ($7.7m) contract to conduct feasibility studies for the proposed 40-kilometre Qatar-Bahrain Causeway, also known as the Friendship Bridge.

    Transport links

    Transport is the most promising near-term outlet for the market, with a pipeline valued at about $15bn, according to MEED Projects data.

    Cross-border rail has re-emerged as a strategic focus. Bahrain has introduced legislation to establish a framework for constructing, operating, maintaining and regulating railway networks, including licensing, safety, cross-border services, and passenger and freight tariffs.

    The move comes as Gulf states prepare to advance the GCC railway network, which is expected to begin operating by the end of 2030. Bahrain’s proposed rail link to Saudi Arabia is expected to run via the planned King Hamad Causeway, a second fixed connection between the two countries alongside the King Fahd Causeway.

    Road expansion is also progressing. In September, the Bahrain Tender Board received bids from Nass Contracting, Haji Hassan Group, Almoayyed Contracting Group, Mohammed Abdulmohsen Al-Kharafi & Sons, Eastern Asphalt & Concrete Production, Cebarco Bahrain and Kingdom Asphalt for the upgrade of two kilometres of the Sheikh Jaber Al-Ahmed Al-Sabah Highway. The works involve a four-lane dual carriageway with service roads.

    Industrial and maritime infrastructure is advancing, too. The Ministry of Works received five bids for engineering and quantity surveying services linked to reclamation works at Salman Industrial City and Bahrain Logistics Zone.

    Dar SSH International Engineering Consultants submitted the lowest offer at BD778,580 ($2.1m), followed by Aecom at $2.2m, Ansari Engineering Services at $2.3m, Millet Engineering Bureau at $2.4m and Ayesa at $2.8m. The project involves reclaiming about 1.13 million square metres of land using 9.67 million cubic metres of fill near Khalifa Bin Salman Port.

    The government is also preparing the Bahrain Northern Link Road as a public-private partnership. The 29.5km highway will connect the North Manama Causeway with Suhaila Island and the King Hamad Causeway, creating a parallel east-west route to Sheikh Isa Bin Salman Highway and improving links between Khalifa Bin Salman Port and Saudi Arabia.

    Building pipeline

    Outside transport, Bahrain’s construction pipeline exceeds $6bn. The most prominent project is the Bahrain International Sports City development in Sakhir. In September, 21 local and Saudi Arabian contractors were prequalified for the first-phase construction contract, which is expected to include Bahrain’s largest sports stadium and a multipurpose indoor sports arena.

    The planned National Assembly Building in Manama is another significant civic project. Bids submitted earlier this year included three options from Cebarco Bahrain, ranging from $163.8m to $200.3m, alongside offers of $239.4m from Nass Contracting and $316.4m from Kooheji Contractors.

    The four-storey complex will be built on a reclaimed island and will include a main hall for joint sessions, separate debating chambers, administrative offices, an auditorium, library, museum, meeting rooms, public spaces, underground parking and supporting facilities.

    These projects provide a route out of Bahrain’s multi-year downturn. The market’s recovery, however, will depend on whether the government converts feasibility studies, advisory mandates and prequalification exercises into construction awards.

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  • Bahrain creaks under the strain of war

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    With a small economy and exports almost wholly reliant on passage through the Strait of Hormuz, Bahrain has been painfully exposed to the turmoil caused by the Iran war. The country’s social makeup – with a Shia majority ruled by a Sunni-dominated regime – is also showing signs of strain.

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    As a result, the government’s already weak financial position is under even more pressure. The Central Bank of Bahrain’s reserves have slumped sharply since the start of the war, falling from BD1.8bn ($4.8bn) as the war broke out, to a low of BD568m three months later. They recovered some of the ground lost in the following months, but remain well below the pre-war level. Reserves stood at BD887m by September, supported by drawing on a BD2bn ($5.4bn) currency swap line provided by the UAE in early April.

    Total public debt had reached BD20.3bn at the end of August, the most recent data available, up from BD18.2bn a year earlier. That is significantly larger than the country’s GDP, which stood at BD15.7bn in 2025 and is expected to end this year at just BD13.9bn.

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    Tunnel construction in the Al-Taawun area is also progressing under the scheme. The 500-metre-long tunnel will run beneath the Al-Taawun roundabout, providing three lanes in each direction to link Al-Taawun Street to Al-Nahda Bridge and onward to Dubai.

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