The Kuwait Petroleum Corporation and the Economics of the New World Order

By Seznec, Jean-Francois | The Middle East Journal, Winter 1996 | Go to article overview

The Kuwait Petroleum Corporation and the Economics of the New World Order


Seznec, Jean-Francois, The Middle East Journal


"Economics of the New World Order" is a catchy phrase in the title of this case study of the Kuwait Petroleum Corporation (KPC). However, it refers only to a vague concept, which here seems to equate the "new order" with the privatization of KPC. Tetreault points out that privatization is a poor substitute for democratization, and she would prefer for KPC to remain state owned but supervised by Parliament in a more democratic system.

Tetreault's choice of KPC as an important actor in the struggle for democratization is important. The Kuwait Petroleum Corporation controls the oil industry, which is still the major money earner for the state. The control of KPC is vital to political power. Hence, chances for KPC to be truly privatized are nil. At this time in Kuwait, no credible group questions the control of the state by the al-Sabah family. The privatization of KPC would give joint control of the oil assets to all the major families of Kuwait, thus eliminating the control of the al-Sabah family over the country's most important asset. This would cancel the royal family's ability to direct the flow of money to the large trading families that control Kuwait's socioeconomic structures. A flattened political pyramid is not sought by the oligarchy as it could result in destructive confrontations for access to the economic resources.

In discussing the privatization issue, Tetreault sees the extensive criticism leveled in Parliament and in the press against 'Ali al-Khalifa al-Sabah, the former head of KPC and the Kuwait Investment Office (KIO), as an effort within KPC and the Kuwaiti parliament to run state institutions "transparently." It was, however, well known in Kuwait before the Gulf war that 'Ali al-Khalifa controlled KIO and KPC on behalf of the amir, Shaykh Jabir al-Ahmad al-Sabah. In reality, alKhalifa's problems stem from a power struggle within the royal family. The investigation of al-Khalifa by Parliament was requested by the prime minister, who then used the investigation to wrestle control of KIO and KPC investments away from the amir. …

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