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FRUSTRATION engulfs the people of this country whenever they hear the news about the financial crisis, which has destroyed many dreams of young people who are seeking to take initiative in the national economy through small and medium enterprises.
However, all this seems to have become a mirage in light of the government’s inability and parliamentary interference, which led to almost a tragic scene of what has become of the situation in the country.
Unfortunately, leniency in confronting electoral greed has led to controlling everything, even the Sovereign Wealth Fund, which was the first fund of its kind to be established in the world 68 years ago, and the Future Generation Fund, which was established in 1976 through an Amiri decree issued at that time.
Expectations of this huge financial base were for it to become the main source of economic advancement in the country. However, after the Iraqi invasion, it turned into what looks like the “Adventures of Ali Baba” where the eccentrics entered it from all sides to devour its flesh alive.
Unfortunately, there are some officials who took advantage of the Iraqi invasion of Kuwait to loot hundreds of millions from the two funds, and disappeared. The state was unable to recover those funds, or arrest any of them. This is what led to Kuwait incurring one of the worst financial crises that it did not experience even during the brutal invasion.
The people of this country and the current situation is depicted in a poem that dates back to 1,450 years by the poet Turfa bin Al-Abd. He said, “Like a camel in the desert dying of thirst while carrying water in his back”.
They see their sovereign wealth declining as a result of nepotism in the management of sovereign wealth funds, and the imposition of tribal and sectarian quotas that Kuwait never experienced before. Conflict of interests became a normal thing.
It is worth mentioning that Norway established a sovereign fund 20 years after Kuwait established its own. It now has the largest sovereign fund in the world with a wealth estimated at $1.3 trillion, while Kuwait’s sovereign wealth fund does not exceed $ 693 billion.
This difference indicates the extent of decline in performance, even if there are profits achieved annually, but according to reliable reports, these profits do not reach even two-thirds of the returns achieved by the Norwegian fund.
There is no doubt that prudence in managing the sovereign fund plays a major role in strengthening it.
For example, I remember after the invasion, Kuwait needed cash for reconstruction. Some suggested to the then Amir of Kuwait, the late Sheikh Jaber Al-Ahmad, to sell Kuwait’s shares in Daimler Benz Company. However, he refused, and instead borrowed from domestic and international markets in order to borrow with lesser interest than that would have been obtained from the company’s shares.
This step rendered Kuwait to maintain its strategic shares in the German company, and it managed to overcome the liquidity crisis and even made profits.
During the COVID-19 pandemic, especially after March 2020, Gulf funds resorted to enhancing their investments in real estate and shares, the prices of which had fallen by a large percentage. When the global markets began to recover, these funds had raised their balances, and strengthened their financial strength. At the same time, they overcame the negative economic consequences of the pandemic, and injected part of those profits into its local markets.
We do not want to say that Kuwait is unable to get out of the financial impasse, but this requires effort and work to prevent interference – either parliamentary or otherwise – in the two funds, and to reconnect them to the head of state, as was the case before the Iraqi invasion. Otherwise, the crisis will intensify, and people will continue to cry over the milk they spilled out of their carelessness, condoning the greed of their MPs and the lack of proper management of their government.
By Ahmed Al-Jarallah
Editor-in-Chief, the Arab Times