The Sands Are Shifting under the Gulf States

Young people are restless, militant Islam is on the rise. Can the sheikhs manage change?

The September 11 attacks in New York and Washington have come as an unpleasant shock for Kuwait, the oil-rich Persian Gulf emirate. While Kuwaitis are a long way from panicking, the attacks have brought back memories of Iraq's surprise 1990 invasion. Kuwaitis worry that the impending war against Afghanistan and possibly neighbors such as Iraq could have serious consequences for them. The Kuwait stock exchange is down 10% since the attacks in the U.S. and the usually bustling streets of Kuwait City lack their nighttime buzz. "Business is dying in Kuwait," says Bassam Abu Nabut, who manages five shops selling electronic equipment in Kuwait City.

The crisis is spurring Kuwaitis, who are famed for their outspokenness, to debate what they see as shortcomings on the part of their government. In the decade since a U.S.-led coalition liberated Kuwait from the Iraqis, the al-Sabah ruling family has done little to secure the emirate's future--beyond giving carte blanche to U.S. forces to use local military installations. "Without American troops in Kuwait, there would be no stability in Kuwaiti society," says Ahmad al-Baghdadi, a political science professor at Kuwait University.

SHARED PROBLEMS. While Kuwait is a unique case because of the Iraqi occupation, other gulf countries share similar weaknesses. Ailing, aging leaders. Oil-dependent economies in desperate need of restructuring and investment to provide jobs for a fast-growing, youthful population. And pressure for greater personal freedoms that the ruling class often wants to ignore.

Compared with the tightly controlled society of neighboring Saudi Arabia, Kuwait is a more democratic country, with an elected Parliament and a largely uncensored press. But Islamic political groups are gaining strength in Kuwait, too. They have used their relative freedom of expression to build support across a broad range of society, from university students to government employees to disaffected expatriate Arab workers. While the Kuwaiti Islamic groups eschew violence, they make no secret about wanting to transform the country into a puritanical society more like Saudi Arabia.

The Islamic groups could eventually clash with the royal family over its close ties to the U.S. Waleed Al Tabtabai, a leading Kuwaiti Islamist and Parliament member, concedes that U.S. troops are needed in Kuwait now. But he warns that the gulf region could turn against the U.S. if there's an American attack on an Islamic country, including Afghanistan. "It will be difficult for us to defend the presence of Americans [in Kuwait]," he says. "An attack on Afghanistan will lead to more hatred of U.S. policy."

The Islamic political forces have wasted no time in taking advantage of the weak leadership of the al-Sabah clan. For several years, the ruling family has allowed the Islamic groups to construct networks of companies and charities. Liberal Kuwaiti politicians say these operations fund Kuwaiti Islamic parliamentary candidates, and possibly violent groups abroad. Now, the al-Sabah family is coming under pressure from the U.S. to rein in these activities. On Sept. 30, Deputy Prime Minister Sabah al-Ahmad al-Sabah ordered the Foreign Ministry and the Ministry of Religious Endowments to tighten control of the Islamic charities. "We must put a stop to this nonsense called Islamic fundamentalism," says a senior royal family member, Sheikh Nasser Sabah al-Ahmad, referring to extremist acts such as the terrorist attack in the U.S.

Analysts wonder how tough the family will be. The ruler, Jaber al-Ahmad al-Sabah, 73, is ailing in a London hospital, while his designated successor, Crown Prince Saad Abdullah al-Sabah, 71, is said to suffer from progressive memory loss. Deputy Prime Minister Sabah al-Ahmad, who is running the country, is 72 years old. Three elderly men sharing power is a recipe for paralysis, observers say.

Moreover, like the House of Saud, the royal family in Saudi Arabia, the al-Sabahs haven't decided how to pass top positions down to the younger generation. Younger members of the family have been given middling jobs such as Information Minister, but no strong figure has emerged. Kuwaiti analysts say family members jockeying for power will be reluctant to take on the Islamists, whose tough parliamentary tactics have driven more than one al-Sabah from office. "If they had the stomach," they could shut down the Islamists, says Ahmed Bishara, head of the National Democratic Movement, a liberal opposition group. "But they are timid and playing politics with the issue."

FRUSTRATION. Meanwhile, the few reform-minded members of the royal family voice frustration at the stagnation in the country. Sheikh Nasser, an adviser to the Crown Prince, wants to prune the welfare state, unleash private business, and transform Kuwait into a regional business hub. "There have been some changes, but not what we are looking for," he says, speaking at the Emir's marble palace outside Kuwait City. Nevertheless, he insists that "ministers and some senior members of the royal family want to see Kuwait restructured."

Such changes, it seems, will take a long time. As in Saudi Arabia, Kuwait's aging leaders are fearful of alienating vested interests. This perpetuates the welfare state extraordinaire created in the 1970s' oil boom. Only about 5% of the 217,000 working Kuwaiti nationals have private-sector jobs. The rest are on the government payroll. About 870,000 expatriates, many of them from Asia, hold private-sector jobs--often low-paid. The private sector represents just 25% of gross domestic product. Last year, economic growth outside the oil sector was 3.8%--the lowest since the Iraqis were driven out.

Western experts say Kuwait's oil industry is 20 years out of date, in need of capital and technical expertise to modernize its aging fields. For more than two years, the Parliament has blocked a key project to bring in foreign companies to boost production. Even so, Ibrahim S. Dabdoub, CEO of National Bank of Kuwait, predicts the deal will eventually be approved. "It is a crucial project, and we need it," he says.

Thanks to recent high oil prices, the al-Sabah clan can afford a downturn for now. Kuwait has a cushion of $80 billion in foreign reserves. But optimists hope the global crisis will be a wake-up call for the royal family to get on with the long-delayed modernization of Kuwait. Much depends on what happens in the coming weeks and months. A quick U.S. success against Osama bin Laden probably wouldn't hurt the royal family. The al-Sabah also would love to see the U.S. neatly take out their old nemesis Saddam Hussein. But a messy conflict that drags on for months or years risks widening the divide between rulers and people--not only in Kuwait but across the region.

By Stanley Reed in Kuwait City

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