Kuwaiti MP Marzouq Al Ghanim celebrates with his supporters following the announcement of his re-election to the legislative assembly. AFP
Kuwaiti MP Marzouq Al Ghanim celebrates with his supporters following the announcement of his re-election to the legislative assembly. AFP
Kuwaiti MP Marzouq Al Ghanim celebrates with his supporters following the announcement of his re-election to the legislative assembly. AFP
Kuwaiti MP Marzouq Al Ghanim celebrates with his supporters following the announcement of his re-election to the legislative assembly. AFP


A gauntlet of elections may have left Kuwaitis fatigued, but the hard work has just begun


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June 13, 2023

For some in Kuwait, last week’s parliamentary election felt like Groundhog Day, but for many others, it may have felt more like Groundhog Year.

Voters in Kuwait went to the ballot box for the third time in three years – and the 12th time in a little more than a decade – amid widespread frustration with the ongoing political gridlock that has seen the country flit between two different sets of parliamentarians.

Results of last week’s election showed Kuwaitis returning most of their lawmakers to parliament and voting in 10 first-time MPs. Out of the two incumbent women who ran in this election cycle, only one – Jenan Boushehri – managed to retain her seat. With the make-up of the parliament having been left largely unchanged, some Kuwaitis fear that the paralysis that has characterised politics in the country will persist for the next several years unless the system can somehow be reformed.

Kuwait’s directly elected parliament has constitutionally mandated powers that are unique in the Gulf. For example, it has licence to question and impeach sitting ministers as well the prime minister – all of whom are appointed by the head of state, the Emir.

In recent years, political stalemate between the appointed cabinet and the elected parliamentarians has prevented the enactment of several basic reforms.

Last year, the parliament that had been elected in 2020 was dissolved by Emir Sheikh Nawaf, leading to a snap election. Kuwaitis used the opportunity to deliver a mandate for change, sending many incumbents home. In March, the country’s Constitutional Court annulled the Emir’s dissolution decree, restoring the parliament’s 2020 composition, only for the Emir to dissolve it a second time in April. That paved the way to last week’s vote.

Feuds between the legislative and executive branches of government have seen governments boycott sessions altogether

According to Kuwait’s voter register, 793,646 citizens were eligible to vote in this election. While the government has not given an official figure on how many of them actually turned out, results from each constituency point to just over 51 per cent. While there were concerns that voter fatigue might cause large numbers of people to stay home, turnout was just high enough to give this parliament the legitimacy it needs to push for the agenda it wants.

In a speech given in April shortly after parliament was dissolved, Crown Prince Sheikh Meshal pledged on behalf of the Emir that the next round of elections would be followed by "a set of political and legal reforms that will transfer the state to a new stage of discipline and legal reference in order to prevent disagreement and prevent all kinds of abuse in the use of power by the legislative and executive authorities”.

Kuwait’s political system has been based on the “one-man, one-vote” principle (though it should be said women also enjoy the right to vote) since 2012, when a decree abolished the previous system whereby voters could cast their ballots for up to four candidates in their constituencies.

Political associations – including parties, lists and blocs – are not allowed in Kuwait, so parliamentarians tend to form loose alliances that often vote along the same lines when it comes to controversial bills. But one challenge with parliamentarians fending largely for themselves is that they have often resorted to catering to populist demands.

A recent example is a controversial debt-forgiveness bill that would see the government buy up several billion Kuwaiti dinars worth of citizens' consumer and personal loans. The government has said the move would be too expensive, costing almost $46 billion in public funds. MPs say it would cost less than $6.5 billion – a contention that led to the latest gridlock between the two branches of government.

Kuwait’s constitution also stipulates that representatives of the cabinet – commonly interpreted to mean at least three ministers – must be present in parliamentary sessions. Past feuds between the legislative and executive branches of government have seen governments boycott sessions altogether, delaying debates on important and urgent bills.

Another challenge is that the text of Kuwait’s constitution – drafted in the 1960s – can often be rather vague. It is unclear whether it grants cabinet members the right to be absent from parliamentary sessions at all, or whether their absence prevents the parliament from reaching a quorum.

The Kuwait Investment Authority holds assets of $750 billion, making it the world’s fifth-largest such fund. But ongoing political quarrelling has contributed to a slowdown in investment in the private sector, while the country maintains an expansive welfare system and a public sector that employs about 80 per cent of citizens.

It has also prevented the parliament from passing an important debt law that would allow the state to tap international markets and help diversify Kuwait’s economy. Last week, the International Monetary Fund urged Kuwait to pass the law soon and enact "substantial fiscal consolidation".

In an unprecedented move, 47 out of the 50 elected MPs met informally on Sunday night, ahead of their inaugural session on June 20, to outline their agenda priorities, including discussions on amending the law surrounding the powers of the Constitutional Court. They also discussed changing the legislature’s bylaws regarding the requirements for cabinet representation during sessions.

In a strongly worded statement, MP Mohammed Hayef Al Mutairi said he and his colleagues “will not be satisfied with a weak government”.

It is still too early to tell whether the new parliament and government will work well with each other cohesively enough to address the country’s challenges. But the alternative would be to remain trapped in a cycle of elections without clear direction for the legislature.

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THE BIO

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Best advice you’ve ever been given: If you have a dream, you have to believe it, then you will see it.

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.”

Updated: June 13, 2023, 2:00 PM