US embassy cable - 04KUWAIT3682

C O N F I D E N T I A L KUWAIT 003682 
 
SIPDIS 
 
STATE FOR NEA/ARP 
 
E.O. 12958: DECL: 10/26/2014 
TAGS: PREL, ETRD, EPET, KU 
SUBJECT: PRIME MINISTER REITERATES ECONOMY IS TOP PRIORITY 
 
REF: KUWAIT 3657 
 
Classified By: Ambassador Richard LeBaron for reason 1.4 (b) and (d) 
 
1. (U) Prime Minister Shaykh Sabah al-Ahmed al-Sabah summoned 
cabinet members, their deputies and key economic figures to 
Bayan Palace on October 23 to impress upon them his intent to 
move forward with economic reforms during the current 
legislative session, which was inaugurated on October 26. 
Local dailies and Embassy contacts confirmed the Prime 
Minister aims to see Kuwait regain its status -- enjoyed in 
the 1960s and 1970s -- as a regional financial hub for Gulf 
countries. 
 
2. (U) Noting that an era of focus on security concerns had 
now passed (Note: Presumably with the elimination of Saddam 
Hussein as a direct threat to Kuwait.  End Note), Shaykh 
Sabah said Kuwait should now focus on diversifying its 
economy, attracting foreign investment and creating new jobs 
for Kuwaiti nationals in the private sector.  To this end, he 
said, the GOK has already taken initiatives to ease business 
and tourist travel procedures, will be expanding its airport 
to serve as a regional cargo hub and will develop its ports 
(including Bubiyan Island) to take advantage of Kuwait's 
political stability and advantageous geographic location. 
(Note:  The PM cited Singapore as a model for airport and 
port management in an October 25 meeting with the Ambassador 
(reftel).  End Note.) 
 
3. (C) Comment:  While post has no reason to doubt the 
seriousness of the Prime Minister's intent to reform Kuwait's 
economy and restore its position in Gulf financial circles, 
we estimate that real reform is not likely any time soon.  In 
failing to invest in economic reform during the past decade, 
Kuwait has effectively ceded its role as a financial hub to 
states such as the U.A.E., and is unlikely to ever catch up. 
Furthermore, high oil prices and a relatively activist and 
populist National Assembly will combine to ensure that 
difficult reforms are pushed into the future.  Although the 
Prime Minister deserves credit for recognizing the problems 
that will emerge when Kuwait's rising population and 
corresponding financial subsidies outstrip oil revenues, he 
will have a difficult time pushing reform while oil prices 
hover at $50-60 per barrel. 
LeBaron