Kuwaitis jib at cost of phoney war - petrol at 24p a litre: In Kuwait City, Robert Fisk finds 'burden sharing' as big a problem as Saddam
Wednesday 19 October 1994
There was an astonished silence over the table of spiced chicken and roast lamb, flat bread and salad, broken only by the man's wife. 'I'll not pay a single fil,' she muttered angrily. 'Why should I when the government won't even demand the millions of dollars they are owed from the 1982 stock exchange crash?'.
Saddam Hussein would like to have been at the luncheon table. Just over a week after his Republican Guard arrived in southern Iraq, the untaxed citizens of Kuwait were being asked to pay for their old friends, the armed forces of the United States and Britain.
The price increases are still rumours, but Nasser al- Roudhan, the Kuwaiti Finance Minister, is already talking frankly about what the Foreign Secretary, Douglas Hurd, was discreet enough to call 'burden sharing'.
There were plans, Mr al- Roudhan said, to 'enable the citizens to shoulder part of the burden required for the present military preparations to face the threats and provocations of the Iraqi regime'. No one knows, of course, just what this 'burden' will turn out to be; dollars 1bn seems to be the likeliest guess, with Kuwait paying the bulk of it.
But every day the US and British forces stay, the price soars higher. In 1990, when 10 times the number of American troops were in the Gulf, Saudi Arabia was paying an estimated dollars 50m ( pounds 32.2m) a day - and that was only half the total cost of the US forces.
The 1991 war cost Kuwait around dollars 25bn, with a further dollars 50bn in reconstruction. With up to dollars 21bn in pre-war loans to Iraq - clearly unrecoverable - it's little surprise that the authorities here would like their citizens to share the cost of their defence.
Dr Ismail al-Shatti, the chairman of the Kuwaiti assembly's finance committee, sees no reason to criticise the plans. 'If Kuwaitis could willingly offer their children to die for their country (under occupation)) . . . then money is much cheaper than all this,' he announced.
Besides, had not Kuwaitis voluntarily contributed part of their salaries to the Liberation Front's war of independence in Algeria in the 1950s, he asked, and again - this without any irony - to the Palestinian cause in the 1970s?
But the message from Iraq is beginning to sink in. If the Kuwaitis want to support the UN's sanctions against Iraq, they will be made to pay in kind, along with the financial anxiety that every crisis brings. On the first Saturday after the Iraqi troop movements (8 October), it now transpires, the Kuwaiti Central Bank was forced to intervene to enable local banks to supply massive cash withdrawals of US dollars and Kuwaiti dinars: the Central Bank injected dollars 93m into the system within a period of three days.
In the same period, the government had to provide almost dollars 54m in bank notes to meet withdrawals, according to Sheikh Salem Abdullah Abdulaziz al-Sabah, the governor of the Central Bank. The authorities met their financial responsibilities, but confidence was not restored to the markets until the first US troops arrived in Kuwait - which may be one indication why the Kuwaiti government so swiftly called upon its allies to honour their military commitments. Only when the first US troops were visible on the ground were the banks able to re-deposit cash with the Central Bank.
According to one Kuwaiti financial analyst, the country's assets have fallen from dollars 150bn before the invasion to between dollars 60bn and dollars 70bn today, about dollars 35bn of which may be held in the Future Generation Fund, the investment account which is to protect Kuwait's population after the country's oil reserves run dry. But a government inquiry is trying to discover if dollars 5bn of this was stolen by officials during the last Gulf war and many Kuwaitis believe that emergency withdrawals to meet future military crises could effectively empty the fund. The government denies this, and there is much confidential talk of a new demand for crude oil from the Far East which would send a Kuwaiti barrel of oil from its present price of about dollars 14 to between dollars 18 and dollars 21 - even if sanctions were lifted on Iraq and the price of oil fell briefly to dollars 10 a barrel.
But the future of sanctions casts uncertainty across the market. Their continuation - thanks to Saddam - turns uncertainty into crisis. Which is why the Americans and the Arab monarchies whom they have chosen to protect are so anxious to prevent any more military manoeuvres in southern Iraq.
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