US embassy cable - 03KUWAIT15

C O N F I D E N T I A L KUWAIT 000015 
 
SIPDIS 
 
STATE FOR NEA/ARP 
 
E.O. 12958: DECL: 01/04/2013 
TAGS: PGOV, EFIN, SOCI, KU 
SUBJECT: (U) GOK WINS SOCIAL SECURITY AND PENSION BATTLE, 
BUT NOT THE WAR 
 
REF: 02 KUWAIT 5179 
 
Classified By: DCM Frank C. Urbancic for reason 1.5 (d) 
 
1. (SBU) Summary and Comment:  On December 30, the National 
Assembly defeated budget-busting amendments to Kuwait,s 
social security and pension law, and approved GOK-sponsored 
ones instead, temporarily allaying fears that Kuwait,s 
Social Security fund would be bankrupt by 2026.  While the 
victory shows the Kuwaiti government can still overcome 
significant, populist opposition, it has not solved the 
problem of how to keep Kuwait,s Social Security fund 
solvent; it has only postponed it.  End Summary and Comment. 
 
2. (U) During its 2001 session, Kuwait,s National Assembly 
passed amendments to the current Social Securities law (Law 
25) which would have had the following budget-busting 
implications:(a) remove the minimum retirement age 
requirement for men engaged in hazardous work, (b) slow the 
rate at which the age of eligibility advances to make it 55 
by 2020, (c) increase the pension by 50 dinars per month for 
anyone receiving less than 700 dinars per month, and (d) 
remove the minimum retirement age requirement for women 
(reftel). 
 
3. (U) Citing concerns over the strain such proposals would 
have on Kuwait,s budget, the Amir returned the bill to the 
Assembly, which was unable to muster the necessary two-thirds 
vote to overcome the veto.  The law was consequently held 
over until 2002 session, and led to a shouting match during 
the opening session, with legislators demanding it be the 
first agenda item.  To resolve the issue, the assembly agreed 
to hold a December 30 special session . 
 
4. (U) During December 30,s special session, the National 
Assembly voted down the bill 28-31, approving the 
government,s counterproposal in its place.  The new 
amendments also strain the budget, but to a lesser extent. 
They: (a) remove the minimum retirement age requirement for 
men engaged in hazardous work who have been enrolled in the 
Social Security program for 20 years, (b) slow the rate at 
which the age of eligibility advances to make it 55 by 2020, 
(c) increase the pension to between 50 and 200 dinars for 
families with five children or more who receive less than 650 
dinars per month, and (d) set the minimum retirement age for 
women with 15 years of enrollment in the Social Security 
program at 40, sliding to 50 by 2017. 
 
5. (SBU) After the session, de facto Prime Minister Shaykh 
Sabah al-Ahmed al-Sabah told the press that his concerns over 
the future of the social security budget had been assuaged, 
but admitted the changes were small.  The law passed was &85 
percent8 in conformity with the defeated amendments, he said. 
 
6. (C) In a January 5 meeting with Poloffs, Deputy Speaker 
Meshari al-Anjari confirmed the government had made 
concessions in exchange for the votes necessary to pass its 
version of the amendments. 
 
7. (SBU) Comment: Coming before an election season, the vote 
was a victory for the government, which has been damaged by 
two rancorous investigations, or &grillings,8 of its 
ministers by the National Assembly.  However, the vote does 
not solve the larger problem of social security fund 
solvency; with larger numbers of women and younger citizens 
entering an increasingly tight job market, the GOK still 
needs to rein in its generosity in order to ensure the 
long-term viability of the Social Security fund.  End 
Comment. 
JONES