Kuwaitis Plan Rebuilding Critics of Kuwait's Royal Family Want Both More Democracy and More Money Used for Restoring Their Gulf State Than Put into Accumulating Wealth Abroad

Article excerpt

`BUSINESS as usual" is a phrase commonly used by managers of Kuwait's enormous financial and commercial interests, now forced to operate offshore while the war in the Gulf goes on.

In an apparent sign of confidence and determination, plans are being laid to rebuild Kuwait and put it back in business as one of the world's largest oil producers. The Kuwait authorities are reported to have printed fresh dinar banknotes, ready for issue as soon as the Iraqis leave.

But behind the scenes, as the battle-damaged emirate's huge wealth continues to be administered in other world capitals, notably London, a political struggle is developing. It is pitting members of the ruling al-Sabah family against powerful indigenous democratic groups determined that once Kuwait is liberated, the kingdom will cease to be an autocracy.

The "constitutionalists" differ also with the al-Sabahs over how Kuwait's accumulated wealth should be invested. The royal family, led by Sheikh Jaber al-Ahmed, the emir, want heavy investment in Western companies to continue. Their critics say the emphasis should switch as quickly as possible to funding the reconstruction of Kuwait itself.

Internationally, there are fears among bankers that if the emirate's wealth is liquidated too rapidly, many foreign companies in which Kuwait has a stake will be adversely affected.

Since Iraq's seizure of Kuwait last August there have been accumulating signs of a tug-of-war between the al-Sabahs and a technocratic elite for future control of the country and the wealth it possesses.

The London-based Kuwait Investment Office (KIO) is the main battle ground. It administers a large chunk of the country's estimated $100 billion foreign assets. For years before the Iraqi invasion, Kuwait salted away 10 percent of its petroleum earnings against the day when oil ran out. The money was placed in a "Reserve Fund for Future Generations." The KIO handles the RFFG.

Over the last decade, earnings from Kuwait's overseas investments were higher than from oil revenue.

Difficulties at the KIO began to develop soon after Iraq's Aug. 2 invasion. Members of the ruling family began arriving in London and made it clear that they wanted to play a more hands-on part in running the KIO. Early in January, 12 mid-level executives resigned in protest.

A British banker who does regular business with the KIO described the atmosphere in its cramped London office as "still simmering."

John Roberts, of the magazine Energy Compass, considers that the technocrats see themselves as Kuwaiti nationalists who must take account of democratic forces.

"They view the recovery of Kuwait as their top priority, and they want the immense wealth that has been piled up down the years plowed into reconstruction. …