Kuwait's Emir dissolves parliament and suspends some constitutional articles


Ismaeel Naar
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Kuwait’s Emir Sheikh Meshal Al Ahmad Al Sabah has issued a decree dissolving parliament and suspending some of the articles of the constitution for “a period not exceeding four years”, after weeks of political tension following recent elections.

“We ordered the dissolution of the National Assembly and the suspension of some articles of the constitution for a period not exceeding four years,” the Emir said in a televised speech on Friday evening.

“The recent turmoil in the Kuwaiti political scene has reached a stage where we cannot remain silent, so we must take all necessary measures to achieve the best interest of country and its people.”

The Gulf country held its fourth elections in as many years last month, with 39 of the 46 members from the previous parliament retaining their seats.

During the period of suspension of the articles of the constitution, all aspects of the democratic process will be studied, the Emir said.

The powers of the National Assembly will be assumed by the Emir and the country's cabinet, state TV reported.

“Kuwait has been through some hard times lately … which leaves no room for hesitation or delay in making the difficult decision to save the country and secure its highest interests,” the Emir added.

Ministers, members of parliament and government officials attend the oath-taking ceremony for Emir Sheikh Meshal at the National Assembly in Kuwait City in December last year. EPA
Ministers, members of parliament and government officials attend the oath-taking ceremony for Emir Sheikh Meshal at the National Assembly in Kuwait City in December last year. EPA

Under Kuwait’s constitution, a new government must be formed within two weeks of an election. Since elections on April 4, tension between the elected parliament and appointed Prime Minister has stalled such a formation.

Sheikh Meshal appointed Sheikh Ahmad Abdullah Al Ahmad Al Sabah as Prime Minister on April 15 and asked him to form a new government.

Sheikh Meshal, who succeeded his half-brother in December, dissolved the last parliament after a legislator used language considered unconstitutional and parliament refused to censure him.

After the speech, Kuwaiti analyst Bader Al Saif described the step as historic.

“The Emir gave quite a detailed speech laying out his view of Kuwait’s ‘negative reality’ – unignorable reality given Kuwait’s chronic decline across various domains,” Mr Al Saif wrote on X.

“He laid blame on the legislative and executive authorities, listing in detail what he deems the violations of both.”

Kuwait has been gripped by domestic political disputes for years. The overhaul of the country's welfare system has been a major point of contention and has prevented the government from taking on debt.

That has left it with little to pay bloated public sector salaries, despite generating great wealth from its oil reserves.

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

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Updated: May 11, 2024, 7:04 AM