MS Risk Blog

What Are the Main Sources of Instability in Kuwait, and How Will They Be Addressed?

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The State of Kuwait is a tiny, oil rich country located at the top of the plentiful Gulf region. The tiny emirate is known for its very stable, commode way of life, and its liberal political system. However, in more recent times the small emirate has trended in the direction of instability. The most notable area Kuwaiti instability is the volatility of its politics. Kuwait is infamous for changing governments and politicians as regularly as one changes t-shirts. However, the past couple of months have been especially unstable. Firstly, two thirds of the National Assembly got replaced overnight in an election – a normal, routine part of any functioning democracy – or in Kuwait’s case, semi-democracy. The real problems however started once the Emir appointed the Prime Minister, who went on to appoint his government, the Council of Ministers.

The new parliamentarians disliked the Prime Minister for his actions and for his ministerial choices – the latter which they saw as not being representative of those elected by the people. This led to 60 percent of them backing a vote of no-confidence to question the Prime Minister on a number of issues and decisions. It should be noted the senior government positions in Kuwait are generally occupied by members of Kuwait’s ruling family. Many of the new parliamentarians are not fans of this system, and are seeking political reform of what they perceive to be corruption. This in itself is a risk – even if it might have positive consequence for Kuwaiti democracy – as the ruling family is well entrenched in Kuwaiti society.

However to make matters worse, last month the Council of Ministers collectively submitted their resignation to the Emir, and in response the Emir accepted them and acted to dissolve the government. Meanwhile a caretaker government led by the Deputy Prime Minster was in place, and in late February the Emir suspended the National Assembly for one month – a testament to the power of the Emir and the limitations of parliament. However, in the first few days of March the Emir has reappointed the Prime Minister (again), and the latter is now sanctioned to pick his cabinet – which he has done. That is where Kuwait is today.

As it stands, with the new government the Prime Minister has in part picked safe, popular appointments to the cabinet, appeasing parliamentarians. This should go some of the way towards repairing the rift between the executive and legislative branches of Kuwaiti politics, but is seemingly a temporary fix. This is evident in the presence of some former cabinet members in the new government – call it a dash of nepotism in the new government’s ranks. With the latter, parliamentarians are likely not thrilled with the lacklustre changes to government. Therefore the challenge of the Prime Minister is to keep his cabinet together first and foremost, and then he has to work on maintaining a working relationship with parliamentarians by being professional and as transparent as can be, attending to their concerns as representatives of the people…So as to ensure the same situation does not play out.

Another manifestation of instability is the debt situation and liquidity crisis. The state has experienced serious economic problems due to both the oil crisis and the impact on the global Coronavirus pandemic. Lower oil prices in the region have meant Kuwait’s oil revenue has significantly decreased. Kuwait’s economy is dependent on oil, and uses such revenue to do such things as pay the salaries of working Kuwaitis and as long-term assets. Additionally, the global pandemic has negatively affected oil production and exports – mainly due to the virus’s impact on global supply chains, as well as the labour markets. Other oil economies in the Gulf region have chosen to borrow money in order to boost economy, as opposed to be reliant on the sector.


Meanwhile, Kuwait has been looking for a way to plug its deficit. The National Assembly has sought to pass legislation to allow the government to borrow money from its Future Generations Fund to offset the deficit. However, the legislation has stalled due to the rift between legislative and executive – leaving this option off the table, whilst the general reserve fund to pay the deficit grows smaller. It is possible though that should Kuwait be allowed to borrow, this would only buy Kuwait’s economy time – not permanently fix Kuwait’s long-term problems – and at worse, it will happen too late, once a financial crisis hits. Therefore, Kuwait might have to consider implementing structural reforms for the long-term health of the economy.

Meanwhile, if the crisis deepens past the point of no return, Kuwaitis would see their lifestyles drastically change overnight – with lower salaries for the foreseeable future, and their once assets secure now disposable. As with the liberal-democratic character of Kuwait’s parliament, Kuwaitis would likely take a stand to express their discontent with living under such conditions – with civil unrest on the cards, in protest against the government. This would neither be good for Kuwaiti society, nor the ruling family. The latter’s position would be insecure, and they would likely seek to enforce stability and secure their rule through greater authoritarianism.

Kuwait’s other options are: to transition to non-oil sectors; reduce government spending, and as a last resort to tap into the Future fund – should the deficit still stand, which it likely will. Of these options, altering government spending seems most achievable in the short term – albeit at the expense of wages and lavish lifestyles. However, transitioning to non-oil sectors would be more beneficial in the long-term and has great potential during the pandemic. Innovation in the global economy has been widespread across the world, as people seek to find new ways consuming and maximising their economic gains. As the oil sector wanes, Kuwaitis might seek to venture into newer sectors. The government would need to contribute to such endeavours through funding research and development – so as to drive innovation and make it more lucrative. Other GCC partners have invested in e-commerce, and therefore Kuwait might want to focus on acquiring or developing such assets in order to generate revenue and stabilise its economy.

There has also been some instability in the Kuwaiti ruling family. Kuwait last year experienced the loss of its ruling emir, Sabah al-Ahmad al-Jaber al-Sabah – who had been suffering from long-term health issues. The late emir had been flown to the United States to receive treatment from the Mayo Clinic, before he eventually passed away. He was then replaced by his brother, the Crown Prince of Kuwait Nawaf al-Ahmad al-Jaber al-Sabah. The new emir has been ruling the country since September 2020, and thus is 5 months into his emirate. The transition of power has seemingly been smooth, however it is unclear how his rule will be if crises deepen. How the Emir handles himself will likely impact the national sentiment of Kuwaitis. The Emir has to lead by example and champion stability, otherwise his nation will grow more unstable. For this reason, it seems likely the Emir will continue to have dialogue with the executive and legislative branches, and will encourage them to work together – so as to steer Kuwait through difficult times.

One interesting development with the Emir though, is his recent trip to the United States for medical treatment. The 86-year-old is not a young man, and therefore there is a worry that the he is flying to the United States for health reasons, and no less at such a precarious time. However, Kuwait has insisted the Emir is merely travelling to the U.S. for “the usual check-ups,” without providing any more details on the matter. It could very well be the case that he is merely receiving a check-up, as over the years many Kuwaiti rulers have routinely flown there for treatment. The Emir himself has in the past reportedly been abroad for treatment before – once in Germany in 2013 for back surgery, and on at least one other occasion to the U.S. for medical tests.

But, the secretiveness of the matter could very well indicate Kuwait is trying to censor the real reason for seeking treatment in the U.S.: that the Emir has a pressing health concern best warrants an investigation, and at worst requires special treatment unavailable in his home country. It would also make sense why Kuwait would be reluctant to reveal if the Emir was ill, as the health of Kuwaiti rulers is a sensitive subject – especially considering the circumstances surrounding the death of the last emir.  Therefore, if the Emir is ill expect Kuwait to control how much information it will give about this issue over time, or perhaps they will categorically deny it is the case. However, if the Emir is not ill, expect more transparency from the ruling family – so as to overtly reassure the public that his health is fine.