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Kuwait parliament to tackle economic, oil reforms

KUWAIT: Kuwait's parliament reconvenes this week, determined to press ahead with government reforms to liberalise and jump start the struggling economy.

But opposition MPs predicted disagreement over a controversial government plan to open the Opec member's northern oil fields to foreign majors for the first time in two decades.

There was broad consensus in the opposition-dominated parliament, however, on proposals to cut the public sector wage bill and open the economy to foreign investment, deputies said.

"There are almost no differences on the content of the (reforms)," leading opposition Islamist MP Nasser al-Sanea told Reuters. "They could pass over the next two months, maybe with some cosmetic changes."

Parliament, elected in July, reconvenes on Tuesday after a one-month recess to mark a Muslim holiday.

The government's reform proposals include: subsidising employment in the private sector in order to cut state spending on wages; opening the economy to foreign investment; allowing foreigners to trade on the stock exchange; permitting full foreign ownership of firms; introducing tax holidays.

Thirty of the 50 elected MPs held informal talks last week to set priorities ahead of Tuesday's session and agreed on the need to push ahead with the reforms at a time when the country's stock market is at its lowest level in over four years.

The economy is showing no real movement although a recent doubling in the price of crude oil should help Kuwait wipe out a projected $7 billion budget deficit in 1999/2000 (July-June). The 1998/1999 deficit was $4 billion, $2 billion below forecast.

OIL REFORMS COULD POSE PROBLEMS

But some influential MPs are working hard to wrest legislative control from the government of a $7 billion project to allow foreign majors to operate northern oil fields to double output to 900,000 barrels per day. In the second phase, Kuwait could open oilfields in the west.

Most oil majors have expressed interest in the plan and held talks with the Gulf state, which sits on 10 percent of proven global crude reserves and has among the lowest production costs.

Some politicians argue that that the new policy violates the constitution, which bans foreign control of natural resources. Last December, 30 MPs tabled a request for a full debate and a government report on the steps taken so far and the discussions held with international oil firms.

Oil Minister Sheikh Saud Nasser al-Sabah has repeatedly said the oil opening was in full compliance with laws and that foreign oil firms would work under operating services agreements with no ownership of resources or production sharing.

Sanea, one of the MPs leading the campaign to gain parliamentary control of the project, said some politicians had put forward a request asking parliament to speed up the review of a bill designed to govern the policy switch.

"(There will be) no green light to go ahead with the project without a law ... No initial commitments at all (to majors) before a law is adopted," said Sanea of the aim of the bill.-Reuters