meed-logo

line1 line2 line3
SIGN IN / REGISTER

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

https://image.digitalinsightresearch.in/uploads/NewsArticle/12426397/main.gif
John Bambridge

Register for MEED's guest program now to access this article.

Click here to register
Exclusive from Meed
Related Articles
  • Accor expects Dubai hotel recovery by mid-2027

    17 July 2026

     

    Paris-headquartered hotel operator Accor expects Dubai’s hotel market to return to pre-conflict occupancy levels by the end of the first quarter or early second quarter of 2027, with room rates lagging the volume recovery by several months.

    Duncan O’Rourke, chief executive for the Middle East, Africa and Asia Pacific at the hotel operator (pictured right), said the group had maintained profitability across its Dubai portfolio during the conflict period through cost control and revenue management, but acknowledged that rates and occupancy had fallen materially from January and February levels.

    “There is no question that this crisis affected Dubai,” O’Rourke said at a media briefing in Dubai on 26 June. “As for occupancy in Dubai, we managed – through profit protection and cost control – to keep the hotels in a positive position, so we weren’t losing money.”

    He said the arrival of the summer low season provided a degree of relief. “If there is a time to slowly slide out of this crisis, it is the right time, which is now. What I see going forward is that volumes will come back. You will not have the rates immediately that you had in January and February. By the end of Q1 or Q2 next year, I think you will get close to where we were.”

    Luxury first

    O’Rourke said the luxury and upper-upscale segment was likely to lead the recovery, consistent with the pattern observed after previous crises.

    “Generally, when you have a crisis, the first segment to click back quicker is the high-end luxury. People then think: it is not about whether I should go – it is, let’s go. We saw that in Covid. Fairmont is well positioned to do that, and the Sofitel and Maison brands are in the stage of recovery going forward.”

    Jean-Jacques Morin, group deputy chief executive at Accor (pictured right), said the UAE’s underperformance had been contained within Accor’s broader international portfolio that continued to grow.

    “The Middle East is about 10% of the network,” he said. “That also explains why my tone on the capability of the results is so positive – not only do you have the hedging across geographies, but it is also, in the end, only one part of the business.”

    Rate outlook

    Morin dismissed concerns that the conflict had structurally weakened Dubai’s pricing power, drawing a parallel with the period following Covid-19.

    “When we came out of Covid, everybody said those prices would never hold. The question at every analyst call was always the same: your pricing strategy is unsustainable. Guess what? Nothing changed. The prices now, three or four years later, are still the same.”

    He argued that consumers consistently prioritise travel expenditure when reallocating budgets. “What you see when the economy goes sideways is that people reallocate disposable income differently. People are basically redirecting the way they do things and keeping the same amount they want to spend, but spending it differently.”

    Morin also said Dubai has a track record of outpacing expectations after previous disruptions. “The first part of the world, post-Covid, that came back to positive RevPAR was the Middle East – it was Dubai. People forget that. The capacity of this part of the world to rebound, and the capacity of the industry to rebound in general, is always misunderstood.”

    No pullback

    Accor said it had not paused or cancelled any development commitments in the region as a result of the conflict. “We did not change anything from a strategic perspective,” Morin said. “The last thing you want is to pull back, because this is going to rebound.”

    The group has also used the period to accelerate planned refurbishments and redeploy staff across the region rather than reduce headcount.

    “We have 380 hotels here – we are the largest player in the Middle East. Where we accelerated refurbishments, we were able to take key employees and move them to larger hotels elsewhere in the region. What people learned during Covid was the cost of layoffs afterwards – bringing people back and retraining them. There was a massive learning curve. This time, discussions with partners about layoffs were less challenging; it was more about accommodating staffing needs during that period,” O’Rourke said.

    READ THE JULY 2026 MEED BUSINESS REVIEW – click here to view PDF

    Stress test for Gulf aviation; Mixed performance as country outlooks diverge in the Levant; GCC tourism sector pivots from crisis to recovery mode.

    Distributed to senior decision-makers in the region and around the world, the July 2026 edition of MEED Business Review includes:
    To see previous issues of MEED Business Review, please click here
    https://image.digitalinsightresearch.in/uploads/NewsArticle/17695301/main.gif
    Colin Foreman
  • CCC selected for $600m Damascus Financial Centre

    17 July 2026

    Register for MEED’s 14-day trial access 

    Syrian developer Souria Holding has selected Consolidated Contractors Company (CCC) as the exclusive design-and-build contractor for the $600m Damascus Financial Centre (DFC) in Syria.

    The two parties signed a memorandum of understanding on 6 July. The agreement covers design management, engineering, procurement, construction, testing and commissioning, handover and defects liability services. Souria Holding chairman Haytham Joud and CCC chairman Samer Khoury signed the agreement.

    Souria Holding is developing the project in partnership with the Governorate of Damascus. The developer says the scheme is intended to support the city's long-term economic revitalisation and urban development.

    The mixed-use development sits on Plot 47 in the Western Hejaz regulatory area of Damascus' Baramkeh district. The site covers about 32,000 square metres (sq m) and the development will have about 380,000 sq m of built-up area, making it one of the largest mixed-use schemes planned in Syria.

    The DFC comprises a five-star hotel, including furnished apartments and serviced apartments; two residential towers; three grade-A office towers on a core-and-shell basis; retail and commercial space at ground and underground levels; and four basement levels for parking and supporting infrastructure.

    The first phase of construction involves the delivery of three office buildings with a total above-ground built-up area of 72,000 sq m. The completion deadline is the fourth quarter of 2028.

    Lebanon’s Dar Al-Handasah is the frontrunner for the design consultancy role, working for CCC as the design-and-build contractor.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17695284/main5621.jpeg
    Colin Foreman
  • GCC downstream operators urged to seek used European equipment

    17 July 2026

     

    The operators of downstream oil and gas facilities in the GCC that are rebuilding after attacks during the regional war are being advised by the insurance industry to procure used equipment from Europe, where a large number of petrochemical facilities have closed down over recent years.

    A wide range of refineries and petrochemical plants in the region are currently undertaking repairs and replacing damaged equipment after attacks by Iran.

    The attacks started after the US and Israel launched attacks on sites in Iran on 28 February.

    Nick Holland, the head of engineering for India, the Middle East and Africa at the US-based insurance broker Marsh, says that many downstream facilities carrying out repairs in the GCC could cut costs and reduce the time it takes to rebuild by making deals with companies in Europe.

    “Many plants have shut down in Europe over the past five years,” he says. “These refinery and chemical-plant closures may create an opportunity for Gulf operators to acquire high-quality used equipment.

    “We have some incredible demand in the Middle East to recover as quickly as possible, and I would certainly be encouraging operators to take the opportunity to procure second-hand equipment from facilities that have closed down in Europe.”

    Earlier this month, Jim Ratcliffe, the chairman of the London-headquartered chemicals company Ineos, wrote an open letter to Ursula Von Der Leyen, the president of the European Commission, saying that the chemical industry in Europe is “highly stressed” and in the midst of a “closure phase”.

    He said that nearly 200 European chemical plants had closed down during the past five years.

    Holland says that companies in the GCC looking to minimise business disruption and rebuild as quickly as possible should reach out to companies in Europe to obtain equipment that would normally take a long time to procure from equipment manufacturers.

    “A new large high-pressure reactor could have a lead time of approximately 110 weeks, so adapting an existing reactor could significantly accelerate recovery,” he says.

    “Other possible items include pumps, compressors, rotating equipment and boilers.

    “Reusing equipment is unusual but not unprecedented. Used equipment would require inspection, remaining-life assessment, re-engineering and confirmation that it is fit for the new operating conditions.”

    Over recent months, there have been reports of downstream oil facilities being hit by Iranian attacks in Saudi Arabia, Kuwait, the UAE and Bahrain.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17692930/main.jpg
    Wil Crisp
  • Medina tenders Quba Mosque expansion

    17 July 2026

     

    Register for MEED’s 14-day trial access 

    Madinah Region Development Authority (MRDA) has tendered a contract to expand Quba Mosque in the Medina region of Saudi Arabia.

    The tender was issued earlier this month, with a bid submission deadline of 31 August.

    MRDA has appointed local consulting firm Jasara as the project management consultant.

    Jasara, in turn, has appointed London-based firm HKA to provide specialist procurement and delivery-model advice and to support the selection of a suitable contracting partner for the project.

    Dar Al-Omran has prepared the design for the expansion.

    Quba Mosque is located about five kilometres south of the Prophet’s Mosque in Medina.

    Project background

    Quba Mosque is considered the first mosque established in Islam, in 622 AD. The proposed expansion will increase the mosque’s area from 5,035 square metres (sq m) to 53,000 sq m and raise capacity to 66,000 worshippers, from 12,000.

    The expansion will also include the restoration of 57 historical sites and the creation of three pathways to enhance Medina’s spiritual and cultural landscape.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17691327/main.jpg
    Yasir Iqbal
  • Bahrain taps consultants for studying use of nuclear power

    17 July 2026

     

    Register for MEED’s 14-day trial access 

    Bahrain is exploring the use of nuclear power for domestic consumption as well as for potential export of surplus, with state energy conglomerate Bapco Energies tasked with studying the prospect of building a modular nuclear power plant.

    According to sources, the proposed project is being led by BeVentures, the venture capital arm of Bapco Energies, which was launched in July 2024.

    Under the plan being studied, power to be produced by the nuclear facility will be supplied mainly to major industrial complexes in the kingdom, such as Aluminium Bahrain (Alba) and Bapco Refining, for clean production of aluminium and refined products, respectively, in line with Bahrain’s ambition of achieving net-zero emissions by 2060.

    BeVentures has, in turn, approached global consultancy firms such as Bechtel, Fluor, Kent, Technip Energies and Wood to assist with concept study and early-stage planning and assessment of the modular or small nuclear power project.

    Bapco Energies and BeVentures are also considering tapping into private financing and/or equity partnerships, in part or in full, for the proposed project, sources told MEED.

    Bapco Energies did not respond to MEED’s request for comment and additional information on the proposed modular nuclear project.

    Mark Thomas, the group CEO of Bapco Energies, told MEED in an interview in April last year that BeVentures was considering investments in “ … new technologies that can both help existing business, as well as prepare … for the future, for the energy transition”. 

    “We’re looking at opportunities principally within our existing businesses around oil and gas production, refining and petrochemicals. But we’re also looking at elements that will prepare us for the future, more into renewables,” Thomas said, without explicitly mentioning nuclear power.

    Case for nuclear power

    Bahrain’s interest in exploring nuclear power has been driven primarily by the limitations of its hydrocarbon endowment. Given its small territorial size – about 786 square kilometres – Bahrain holds relatively modest hydrocarbon reserves compared with its Gulf peers.

    The kingdom produces about 200,000 barrels a day (b/d) of oil, of which the Awali Field, also known as the Bahrain Field, contributes approximately 42,400 b/d.

    Most of Bahrain’s crude production – about 145,000 b/d – comes from the offshore Abu Safah field, located in Gulf waters between Bahrain and Saudi Arabia and shared between Bapco Energies’ subsidiary Bapco Upstream and Saudi Aramco.

    Bapco Energies has long pursued additional resources to boost oil and gas output. However, the discovery of the Khalij Al-Bahrain basin in 2018 – its biggest find in decades – has yet to live up to its promise. Initially estimated to hold 80 billion barrels of oil and 10-20 trillion cubic feet of gas, the find has not translated into production at the anticipated scale. Other, smaller exploration efforts with foreign players have also yet to yield the desired results.

    The kingdom therefore remains heavily reliant on its larger neighbour, Saudi Arabia, for oil and gas supplies, importing about 350,000 b/d from Aramco via the AB-4 pipeline.

    At the same time, given its environmental sustainability targets, other forms of renewable energy – mainly solar – are unlikely on their own to enable Bahrain to reach net zero by 2060.

    Bapco Energies published emissions-reduction targets in July 2023, in one of the most detailed disclosures by any state energy enterprise in the GCC. It has also engaged advisers including Boston Consulting Group to help devise a strategy to meet its environmental goals, and Standard Chartered to support financing requirements.

    Using 2017 as a baseline year, Bapco Energies has committed to reducing absolute Scope 3 emissions in Bahrain by 30% by 2035, and to reaching net-zero Scope 3 emissions by 2060.

    In addition, Bapco Energies sets out net emissions-intensity reduction targets for Scope 1 and 2 – also using 2017 as a baseline – of 15% by 2025, 25% by 2030, 30% by 2035, 50% by 2040 and 75% by 2050, with the aim of achieving net-zero Scope 1 and 2 emissions by 2060.

    Bahrain has been laying the groundwork to enable it to tap nuclear power for household and industrial needs in the future.

    The kingdom is already operating under a Country Programme Framework (2024–29) with the International Atomic Energy Agency (IAEA), which establishes regulatory and safety benchmarks that must be in place before any commercial reactor construction begins.

    In July last year, Manama also signed a civilian nuclear cooperation memorandum of understanding with the US. Financed under the US Foundational Infrastructure for Responsible Use of Small Modular Reactor Technology (FIRST) programme, the partnership provides Bahrain with technical support to develop secure, weaponisation-free civil nuclear infrastructure.

    Small modular reactor (SMR) technology could be the most viable pathway forward for Bapco Energies in its quest to develop domestic nuclear power. Unlike conventional large-scale, capital-intensive gigawatt reactors, SMR units – typically under 300MW – require only a fraction of the land area needed for solar capacity of an equivalent output.

    https://image.digitalinsightresearch.in/uploads/NewsArticle/17689719/main0822.jpg
    Indrajit Sen