KUWAIT established its sovereign wealth fund in 1953, and was therefore expected to be the largest in the world today. However, the situation in reality is different. According to the report published by The Bloomberg agency quoting international rating institutions, this fund “has become paralyzed, and has lost many of its leaders, along with its professionalism.” This is a very dangerous indicator, because its decline, irrespective of the reasons, means a decline in global confidence in Kuwait. It is true that it is the third in the world in terms of assets, but that does not mean it is superior.
In fact, the Norwegian fund overtook it a long time ago, although it started operating in 1996, as well as other sovereign funds that started after it. The Norwegian fund acquired larger assets than the Kuwaiti fund, and has higher returns away from oil, on which Kuwait still relies on by about 93 percent. So where is the problem? In this regard, we quote from one of the specialized reports that stated, “Disappointed economic policies since liberation have pushed the state to consume its funds.” According to logic, it should have enhanced its assets and invested locally in development projects using at least one-third of the state’s sovereign money. It should have not been lost among ministers, as it was first under the Finance Minister, and in a second government, it came under the supervision of the Minister of Oil.
As we mentioned previously, it may come under the supervision of the Minister of Municipal Affairs, Social Affairs or Awqaf and Islamic Affairs! This improper situation reminded me of the story of a king who wanted to change his minister of Economy, who had failed in his mission. He announced that whoever trusts himself and believes that he has sufficient capabilities to win the position should apply. Ten people came forward, and the king gave each of them 1,000 gold pieces. He then told them, “Come back after a month to show what you have done with it.” After some time had passed, nine of them came with bags of money. The first said, “I brought back 15,000 gold coins.” The second one said, “I brought back 16,000.” They then began to compete, but the king did not listen to them and did not care about their numbers.
Finally, he looked at the tenth, and said to him: “Where is the money?” The young man hesitated after he saw the superiority of his opponents over him. This prompted the king to ask him, “What is wrong with you? The young man replied: “Nothing, sir. I bought a piece of agricultural land and appointed some workers on it who also suggested buying some livestock. Now I don’t have any money until the crop comes out and we sell it!” The king looked at the young man and said to him, “You are my minister!” The hall erupted because of the surprise met by the other men who traded and succeeded in reaping what this young man will not reap, even after three years, perhaps.
However, the king said, “Economics is the development of money. What you did is called trade. As for the economy, it is how you spend money so that it is always able to manage your life in the best way.” Indeed, other countries have preceded us, including Gulf countries, because they realized from the beginning that developing money and strengthening the economy is what is best for their people. That is why today the UAE, whose sovereign fund was established in 1976, does not depend on oil much.
Rather, it has auxiliary incomes estimated at about 65 percent of the national product. As for Saudi Arabia, Qatar, Bahrain and Oman, they have strengthened their sovereign funds and entered the stage of serious diversification of the economy, in contrast to Kuwait, which is still stagnant because it wasted its mojo due to the unprofessional interventions in its sovereign fund. For all of this, it is necessary for the supervision of sovereign money to come either directly from the leadership, or the presidency of the Council of Ministers, and to keep it away from local political rivalries and interference.
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By Ahmed Al-Jarallah Editor-in-Chief, the Arab Times
