US embassy cable - 03KUWAIT239

C O N F I D E N T I A L KUWAIT 000239 
 
SIPDIS 
 
STATE FOR NEA/ARP AND EB 
TREASURY FOR OASIA 
USDOC FOR 4520/MAC/AME/DGUGLIEMI 
USDOE FOR IE - L.COBURN 
 
E.O. 12958: DECL: 01/21/2013 
TAGS: EFIN, PGOV, ECON, KU 
SUBJECT: KUWAIT: FINANCE MINISTER SUBMITS RESIGNATION 
 
REF: A. KUWAIT 99 
     B. 02 KUWAIT 3042 
     C. 02 KUWAIT 3067 
 
Classified By: Ambassador Richard H. Jones for reasons 1.5 (B) and (D). 
 
1. (U) Dr. Yousef Hamad Al-Ibrahim has submitted his 
resignation from his current posts as Minister of Finance, 
Minister of Planning, and Minister of State for 
Administrative Development.  While some papers claim that the 
resignation has been accepted, Minister of Information Shaykh 
Ahmed Fahed Al-Sabah is quoted as saying that the resignation 
letter is before the Crown Prince and Prime Minister Shaykh 
Saad Al-Abdullah Al-Salem Al-Sabah and that no decision has 
yet been taken.  Al-Ibrahim survived a legislative 'grilling' 
in June 2002 and a subsequent no-confidence vote (refs B and 
C). 
 
2.(C) According to Press reports and Embassy contacts the 
Finance portfolio will be handed temporarily to Minister of 
State for Foreign Affairs Shaykh Dr. Mohammed Sabah Al-Salem 
Al-Sabah, a Harvard Ph.D. in Economics and former Ambassador 
to the United States.  Other reports indicate the Planning 
and possibly the Administrative Development portfolios will 
go to Minister of Education Dr. Musaed Al-Haroun, a Ph.D. 
from Indiana University.  The Assignments are likely to 
remain in effect until a new government is formed after 
mid-year Parliamentary elections. 
 
3.(C) Dr. Al-Ibrahim has been  widely regarded as one of the 
most positive voices for economic reform in the current 
government; Embassy contacts in the Finance Ministry and its 
affiliated agencies (such as the Kuwait Investment Authority 
and the Higher Committee for Economic Development and Reform) 
regularly praised Al-Ibrahim as honest, talented, and 
committed to a vision of a sound economic infrastructure. 
While sources tell us that they believe Shaykh Dr. Mohammed 
is an excellent choice for the position, they believe that 
his double portfolio will significantly impair his 
effectiveness. 
 
4.(C) Dr. Al-Ibrahim's resignation came shortly after he was 
threatened with another parliamentary 'grilling' over the 
Finance Ministry's role in a housing-development scandal 
known as the Kheiran Pearl (ref A) which predates his tenure. 
 A grilling on that scandal is scheduled for next week, but 
the primary target for want of a better choice is Deputy 
Prime Minister and Minister of State for Cabinet and National 
Assembly Affairs Mohammed Sharar.  The Kheiran case could 
severely tarnish the Al-Sabah's image, as the deal appears on 
its face to indicate very poor stewardship of public lands. 
The beneficiary of State largesse in the case is a close 
friend of the Amir. 
 
5.(C) Comment:  The Cabinet has begun gradually to 
disintegrate.  This process is likely to accelerate as 
elections approach.  For example, Ministers Talal Al-Ayyar 
(Electricity and Water/Social Affairs and Labor), Salah 
Khorshid (Commerce and Industry), Fahd al-Lumaei (Public 
Works/State Minister for Housing Affairs) and Ahmad Al-Baqer 
(Justice/Awqaf and Islamic Affairs), all elected members of 
the National Assembly, are expected to resign at least two to 
three months prior to the next parliamentary elections in 
mid-2003.  With another grilling scheduled to commence 
shortly, we expect the Government will go even deeper into 
its holding pattern until after the elections and the 
formation of a new Cabinet.  End Comment. 
JONES