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Tuesday, 27 February, 2001, 15:29 GMT
Kuwait's pampered economy
The retreating Iraqis set fire to the oil wells
The retreating Iraqis set fire to the oil wells
By Gerry Northam in Kuwait

As we left the gleaming office towers of Kuwait City and took the highway south to Al-Ahmadi, the home of the oil bonanza, we arrived in something which reminded me of a neatly planned new town in southern England.

Al-Ahmadi is an urban model in the desert, laid out by the British in the 1930s. Near the oil company headquarters, we passed a well-watered golf course and the cricket ground. More recently, someone has added a baseball diamond.


They have jobs which don't require any work

Dr Yusuf al-Ibrahim
Kuwait may be celebrating 40 years of formal independence, but it remains far from self-reliant.

Within a mile, the road out to the main oilfield, Burgan, took us through sparse, flat desert landscape with only a haze of arid vegetation. At the checkpoint, one of the soldiers drinking tea round a metal table gruffly checked our passes and waved us and our escort through with his automatic rifle.

Raging fires

Then, without warning, we entered Kuwait's archaeology of hell. By the side of the road, a charred scrapyard of twisted pipes and half-collapsed oil tanks lay caked in the thick black fallout of incineration - scorched wealth.

Kuwaitis celebrate liberation after the Gulf War
Kuwaitis celebrate liberation after the Gulf War
The site marks one of 700 raging fires the Iraqis started as they fled 10 years ago. These ashes have been preserved untouched as a monument for visitors.

Close by, a huge lake of oil still slowly seeps into the ground from one of the wells that was left gushing.

At the heart of the oilfield, in a huddle of drab offices, we found the team that rescued and rebuilt Kuwait's oil production.

Its leader, Marzouq Bu-Arki, was fresh out of college at the time of the invasion. Like many in Kuwait's professional elite, he was educated abroad - in this case petroleum engineering at the University of Southern California.

Full production

When he returned to work after the war, the desert sky was dark from billowing smoke.

It took seven months, he explains, to put out the last of the fires.

But Kuwait needed revenue. In just three months, by early June 1991, he and his colleagues got a trickle of oil flowing again - some 40,000 barrels a day.

At the end of a year, they were back to full production. Marzouq blushes slightly as he boasts of this achievement, and says the plan for the next five years is to take total Kuwaiti production to three million barrels a day.

Kuwait city skyline
Kuwaiti residents pay no income tax
He has little doubt they will do it, which will make Kuwait's recovery even more remarkable than it already is.

As you tour the affluent business district and palatial suburbs of Kuwait City, there is not a trace of battle. No battered buildings, not even a bullet scar.

Whatever the emotional and psychological toll of the invasion, life on the surface has been reconstructed just as it was before. And that is the problem.

Parliament restored

While Iraqi tanks controlled their streets, the people and their ruling family, the al-Sabahs, found common cause in adversity. They shared a sense of promise. After liberation, they would build a new Kuwait together - more democratic, more enterprising.

The parliament has been restored - but functions by the grace of the royals and with a strictly limited democracy.

Notoriously, the women who make up a third of the national workforce, among them many at the very top of business and academic life, still cannot vote or stand for election.

The state still owns most of the economy and employs some 96% of the Kuwaiti workforce, who are guaranteed jobs for life.

No income tax

It's an irony of the Gulf War that the coalition led by Republican America and Conservative Britain should have ensured the survival of a vast nationalised industry in one of the world's richest welfare states.

Education and healthcare are free, housing and food are subsidised. And there is no income tax - not a single dinar.

It's hard to identify what Kuwaitis do other than work for the government or the government's oil.

Manufacturing? Everywhere you turn goods are imported. Commerce, service industries, manual work? The place is teeming with ex-patriate workers, who number twice as many as Kuwaitis themselves.

The hundreds of thousands of Palestinians who left at the time of the invasion have been replaced by Egyptians, Syrians, Indians and others.

There is a constant flow of domestic servants, with hundreds of agencies importing maids and drivers from Indonesia, the Philippines, Bangladesh and Sri Lanka.

When we were granted an interview with a senior member of the Kuwaiti Government, Dr Yusuf al-Ibrahim, I challenged him about his country's economic performance.

Over-employment

"You know what people say," I began. "Your economy is flabby, bloated, too much of it in the public sector - and Kuwaitis don't work hard enough, they're pampered by a welfare system that discourages effort and you bring in foreigners to do all the hard work. Is all that true?"

He thought for a moment and said, disarmingly: "Yes, I completely agree."

The minister was formerly Professor of Public Administration at the university, and trained as an economist.

"'There is over-employment," he explained "and it is a basic law of economics that when you add an extra labour unit to any production line, productivity will decline".

Did this mean, I asked, that that far too many Kuwaitis have jobs which don't require much work?

"Not quite, he said. "They have jobs which don't require any work."

Dr Yusuf's view is that this cannot continue, and that Kuwaitis will have to learn to work like anyone else, and even start paying income tax.

But this is a tiny country, where just three-quarters of a million nationals are sitting on 10% of the world's known oil reserves, which at current rates will last them another 100 years.

It might be hard for them to conjure up any sense of urgency.

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