THE TIMES KUWAIT REPORT
The decision by the Constitutional Court on 19 March to nullify the 2022 National Assembly, declare invalid the general elections held in September 2022, and reinstate the previous parliament elected in 2020, caught everyone by surprise. A week later, tremors from the pivotal verdict still continue to reverberate in political and social circles, as politicians, parliamentarians and the public deliberate on the court’s ruling and its political implications for the country.
The court’s decision came in the wake of several electoral appeals on the 2022 election results, as well as on the invalidity of the electoral process, discrepancies in the decrees calling for elections, and in the decree dissolving the 2020 National Assembly. In its hearing on the electoral challenges on 8 March, the Constitutional Court decided to postpone its decision to 19 March.
Pronouncing its verdict last Sunday, the court decreed that the election process, which took place last September, was null and void due to discrepancies in the decree dissolving the National Assembly of 2020. Following the court’s ruling, members of the National Assembly elected on 5 December 2020 will now return to office, including former Speaker Marzouq Al-Ghanem. The role of speaker is focal in Kuwait’s parliament, and contest for this seat has over the years been a bone of contention between government and opposition in the assembly.
The 2020 parliament was dissolved through an Amiri decree in June 2022 that was announced by His Highness the Crown Prince Sheikh Meshal Al-Ahmad Al-Jaber Al-Sabah. The dissolution followed persistent disputes between the executive and legislature in the National Assembly that made functioning of parliament all but impossible. In July last year, His Highness the Crown Prince on behalf of His Highness the Amir appointed Sheikh Ahmad Nawaf Al-Ahmad as the new premier.
Following an interim general election in September, and a reshuffle of an initial cabinet lineup, the 42nd government in Kuwait’s parliamentary history took office on 17 October.
The September election results, which saw the opposition make further headway in parliament, were an early indication of further political instability ahead. And, as expected, disagreements between the executive and legislative arms of parliament once again erupted, resulting in the government tendering its resignation in January 2023.
Acrimonious squabbles between members of the appointed executive and elected legislature in parliament have become a consistent feature of parliamentary life in the country. The opposition frequently charges the government of graft, mismanagement and misallocation of public funds, which then usually leads to an interpellation motion against the concerned ministers, followed by a vote of confidence by the 50-member assembly. Unless a majority of votes are in its favor, the government ends up either resigning or deciding to reshuffle the cabinet.
The political instability that has prevailed in Kuwait over the last decade or more has left the country trailing its peers in the six-nation Gulf Cooperation Council (GCC) bloc in most metrics on growth, development and progress. The parliamentary gridlock has also prevented the passing of urgently needed basic bills as well as economic and financial reforms, including a public debt law that has been pending in parliament since 2017. Absence of the debt law has hampered the government’s ability to borrow money on the international debt market, especially during periods when oil prices fall and the state treasury begins to run dry.
The latest political turbulence and accompanying uncertainty in the aftermath of the Constitutional Court’s verdict will no doubt eventually settle down, and in the coming weeks and months public attention will very likely turn to what could be the country’s third general election in as many years. While the political fallout from the court’s finding will mostly be transient, its ramification on the economy, as well as on growth and development of the country, could be far more consequential and long-term.
The ruling not only scraps all decisions passed by previous sessions of the parliament’s 17th legislative term, but also all laws and reforms placed on the National Assembly’s agenda for deliberation and voting. Equally important is that It will also slow down, if not shelve, progress and implementation of several vital construction projects that are ongoing or in the pipeline.
In this regard, it would be pertinent to look at some of the development plans and projects that could become collateral casualties of the current political impasse. Construction industry reports show a total of 128 development projects planned for the current fiscal year, of which 10 projects are in the delivery phase, 59 projects in the implementation phase, and 53 projects in the preparatory phase. The remaining six projects had yet to start their documentation phase.
Statistics from relevant government agencies also show a significant decline in spending on approved development projects by various public sector entities.. Reports on the status of these public projects show that, with less than two weeks to the end of the financial year 2022-23, total spending on projects amounted to KD338 million, or around 26 percent of the KD1.3 billion provisioned in the current budget for these projects.
It is noteworthy that in the current budget, both the number of projects planned for implementation and the financial resources allocated for them, were lower than in previous years. The fact that the concerned public sector agencies were unable to fully utilize more than 26 percent of the allotted sums, and move less than 8 percent of planned projects to delivery phase is certainly disquieting, and points to something besides financial resources for tardy implementation of projects.
A previous study commissioned by the government that monitored the main indicators of development projects found that frequent changes and lack of leadership in several government agencies was among the main obstacles to implementing development projects in a time bound manner. Decline in the implementation rate of public projects are likely to be further exacerbated in the coming months, as decision-makers remain reluctant to make spending decisions.
Additionally, the report cited persistent friction between executive and legislative arms of government, as well as administrative and financial challenges as among causes for hampering development plan projects. Among the administrative challenges holding up project implementation were delays in awarding tenders on time, bureaucratic blocks in obtaining necessary licenses and approvals from the relevant government agencies, as well as hurdles in receiving electricity or water connections from the Ministry of Electricity, Water and Renewable Energy (MEW).
Financial constraints that hindered projects included the lack of a budget, or insufficient budget for a project, or delays in requesting a budget increase for the project by the agency charged with the project. But, as the recent project monitoring study made clear, even in the absence of financial challenges, projects were not being implemented as scheduled. This could be indicative that the causes for project delays were deeper and institutional.
In January of this year, a report on Kuwait’s project market performance, by analysts at the National Bank of Kuwait (NBK), found that legislative delays, supply-chain disruptions, and higher material and labor costs led to the project market flattening in 2022. Supply chain bottlenecks and international price increases on construction material, as well as a dearth of qualified manpower and higher wages also raised project costs last year.
Also, in late February, the cabinet’s committee formed to follow-up on progress and performance of Development Plan Projects reportedly sent a letter to the Central Agency for Public Tenders (CAPT) questioning the delays in bidding processes for public tenders and in awarding projects. It urged the agency to speed up the procedures involved in public tenders, tackle decision delays in announcing tenders and hasten the evaluation of submitted bids.
But, more than anything, it is probably the ongoing tensions between government and parliament that have impacted project delays the most. Political turmoil and ensuing uncertainty has hampered the introduction of institutional reforms needed to unlock additional funding for Kuwait’s pipeline of construction and development projects. Even in the critical oil sector that props up the country’s economy, there were delays in project implementation.
In January this year, reports emerged that Kuwait Oil Company’s (KOC) project to build oil pipelines needed to feed the economically vital Al-Zour refinery remained incomplete. The report noted that the delay came in spite of the lapse of two years since the initial timeline for completion of the project passed in 2020. While KOC explained that the contractor responsible for the delay had been fined and the deadline had been extended to May 2022, the project still remained unrealized in January despite the passage of six months since the new deadline.
It should be remembered that the greenfield Al-Zour Refinery is an essential component in the New Kuwait Development Plan and the KD282 million pipeline project of KOC is crucial in supplying the refinery with the oil it needs to refine. Located to the south of Kuwait City, the refinery is considered the largest in the Middle East with an eventual refining capacity of 615,000 barrels per day of environmentally friendly fuels.
Notwithstanding its primacy to the country’s sustainable future, the refinery project itself was the victim of repeated delays in implementation and completion. Kuwait National Petroleum Company (KNPC), responsible for refining activities in Kuwait, announced plans for the new refinery project in 2007 at a cost of KD4 billion, and a timeline of making it fully operational by 2012. However, political opposition and economic hurdles delayed implementation of the plan until 2011 when it was once again revived, and a new completion target was set for 2019 with the refinery to be fully operational by 2020.
It is emblematic of project delays in Kuwait that the refinery project, deemed critical to the national economy, finally came online only in November 2022. Challenges and delays in the construction projects market are nothing new in Kuwait, the only difference being that this time around the caretaker government in office appeared keen to increase the pace of development project activity.
In the short time since taking office, and in its caretaker capacity since its resignation in January, the government was reportedly looking at ramping up spending on development projects. And, following approval by ministers of the mid term 2022-26 development plan, several large projects were prioritized, including expansion of new residential cities, and developing the northern area of Kuwait into a mega economic zone.
But with the caretaker status of the government now in limbo, what comes next is anyone’s guess, but one certain casualty of the political turmoil is likely to be further delays in project implementations.