US embassy cable - 03KUWAIT99

C O N F I D E N T I A L KUWAIT 000099 
 
SIPDIS 
 
DEPT FOR NEA/ARP, INR/NESA 
 
E.O. 12958: DECL: 01/13/2013 
TAGS: PGOV, PREL, PINR, KU 
SUBJECT: (U) POLITICAL BATTLE HIGHLIGHTS CORRUPTION, STIRS 
DISSOLUTION RUMORS 
 
Classified By: Ambassador Richard H. Jones for reasons 1.5 (b) and (d) 
 
1. (U) Summary: In yet another round of anti-government 
political fighting, MP Abdullah Mohammed Al-Naibari has 
submitted a request to conduct a parliamentary investigation, 
or "grilling," into the activities of a government minister. 
The threat of a grilling has fueled rumors that the Amir may 
be considering the dissolution of the National Assembly. End 
Summary. 
 
2. (U) Less than three weeks after Minister of Electricity, 
Water, Social Affairs and Labor, Talal al-Ayyar successfully 
defended himself against accusations of widespread but 
ill-defined corruption, MP Abdullah Mohammed al-Naibari has 
accused Deputy Prime Minister and Minister of State for 
Cabinet and National Assembly Affairs Mohammed Sharar of 
being partially responsible for the illegal sale of 64 square 
kilometers of government land, popularly known as the Khairan 
Pearls Project, and has submitted a formal request to "grill" 
him in the National Assembly. 
 
The Pearls Project 
 
3. (U) The Al-Khairan city project, or Pearls Project, is an 
initiative to develop three planned cities on public lands on 
Kuwait,s southern coast.  Originally conceived in 1987 by 
Kuwaiti entrepreneur Mr. Khaled Marzouk, the project was 
approved by the Council of Ministers without the input and 
review of government agencies on January 15, 1989.  In 1993, 
the Council of Ministers concluded a sales agreement with Mr. 
Marzouk's company, the Kuwait Pearls Real Estate Company, 
agreeing to sell it 600 million square meters of property for 
Kuwaiti Dinars (KD) 400,000 (USD 1.32 million, at today,s 
exchange rate, or approximately $3.3 to KD 1).  After drawing 
criticism when the agreement was publicized, the government 
revised the terms.  Finally, on August 13, 2002, the Council 
of Ministers approved the sale to Kuwait Pearls Real Estate 
Company of 64 million square meters of public lands at a 
price, depending on the source, of between KD 0.002 and 0.007 
(0.6 - 2.3 cents) per square meter. 
 
4. (U) On January 11, al-Naibari submitted his three-part 
formal grilling request to the National Assembly.  Although 
the request includes other corruption charges, the Pearls 
Project charges are the most substantial.  In the request, 
al-Naibari accuses the GOK of violating the constitution 
through the sale of public lands, and attacks it for not 
having opened the proposed sale to competitors, as required 
by law.  According to Naibari, the Kuwait Pearls Real Estate 
Company is charging KD 70,000 for a plot of land that cost 
them KD 10.  He estimates the company will have earned KD 4 
billion (USD 13.2 billion) from the al-Khairan project by the 
year 2019. 
 
5. (C) This request for a grilling has sparked widespread 
speculation among Kuwaitis that the Amir may dissolve the 
National Assembly, though First Deputy Prime Minister and 
Minister of Foreign Affairs Shaykh Sabah al-Ahmed al-Sabah 
denies the rumors.  If the grilling occurs, it will be the 
fourth time for the current government. (Comment: In the 
current political climate, in which many are calling for 
national unity in the face of a possible war with Iraq, a 
dissolution would be an easy way for the government to gain 
short-term freedom of action.  However, the repercussions 
could be severe.  The Amir has dissolved the Assembly before, 
most notably in 1986, when it remained dissolved until after 
the liberation of Kuwait in 1991.  Dissolution would be 
widely interprested as a sign the regime is not committed to 
democracy.  Given the large and growing U.S. military 
presence in Kuwait, if the Assembly were dissolved it would 
be widely assumed that the USG had given at least a tacit 
greenlight.  This would be sure to generate accusations of 
U.S. interference and failure to adhere to our own professed 
ideals.  End Comment.) 
 
6. (U) The National Assembly is currently scheduled to take 
up action on al-Naibari,s request on January 13; an 
automatic two-week postponement is the most likely outcome. 
Post will continue to monitor the situation and report on 
further developments. 
JONES