First Published: 2003-06-02

 
Kuwaiti firms snap up contracts in Iraq
 

Private sector seizing business opportunities in Iraq thanks to Kuwait's support for war opposed by fellow Arab states.

 

Middle East Online

By Fiona MacDonald - KUWAIT CITY

Kuwait is reaping what it has sowed

Kuwait's private sector is reaping the benefits of strong support for the war in Iraq and snapping up business opportunities that economists believe will become increasingly lucrative.

Some Kuwaiti companies had already gained from the war, landing contracts to provide food, water and other services to about 170,000 US and British troops stationed here in the run-up to the March 20 invasion.

The prospects of possible gains in the process of rebuilding Iraq have rallied the Kuwait Stock Exchange (KSE) for months, taking it to new records.

It closed Sunday at its highest level yet, 3791.2 points, and saw capitalisation top 45 billion dollars for the first time ever in May.

The emirate's support for the war - it served as the main launchpad - has given Kuwaiti companies an edge over their rivals in a country now providing a main gateway into Baghdad.

"Kuwait's position is different to others in the region, it opened its gates to the British and Americans," said Kuwaiti economist Ali al-Nimesh.

Though this came at a cost to its political standing in the region, where fellow Arab states were opposed to the war, Kuwait is now profiting.

"And it's the private sector getting this benefit, with a lot more potential to get more contracts," Nimesh said.

American and British companies are to be awarded the main contracts, but Kuwaiti firms will profit as sub-contractors, and in telecommunications, public warehousing, storage and catering services, Nimesh said.

Retailers also stand to gain, particularly those providing mobile phones, cars and clothes, while the emirate will continue to profit from being a main transit point to Iraq.

Kuwait's Public Warehouses Co., listed on the KSE, on Saturday landed a five-year contract to execute logistics and purchase products, locally and from abroad, to provide US forces in Kuwait, Iraq and Qatar with food and other goods.

The contract is estimated to be worth an annual minimum of 23 million dollars but economic sources said it is expected to increase to 300 million dollars per year.

The Sultan Centre, Kuwait's largest privately-owned supermarket, also listed on the KSE, has signed up and is expected to be in charge of the locally supplied products.

"Many Kuwaiti companies have an advantage because of their proximity to Iraq and the capability of the private sector," said Faisal Ali al-Mutawa, a leading member of the Kuwait Chamber of Commerce and Industry.

"Kuwaitis already have property ownership in Iraq, and up to four Kuwaiti companies now have contracts in Iraq," said the prominent businessman.

"Iraq is opening up a great opportunity for the private sector, which has been limited in Kuwait because of government control," he said.

However economist Jassim al-Saadun took a different view saying business in Iraq itself will really pick up in three years and that in the meantime, "Kuwait will lose on so much ground."

The emirate has at least 15 billion dollars in loans to Iraq and is owed about 25 billion dollars in compensation from Saddam Hussein's 1990 invasion of Kuwait, Saadun said.

The initial demand will be on the construction, transportation, telecommunications and hotel services, he said. "Even wholesale trade will gain because some of the Iraqis' needs will come via Kuwait. Yet it won't be that huge."

Total gains by the private sector will ultimately be offset by the public sector, which has already seen increased expenditures as a result of the war, he said.

In March, parliament approved a government request to allocate an additional 500 million dinars (1.7 billion dollars) in emergency funds to cover security and other war expenses.

Saadun said the "real business" would primarily go to American and British companies, and the leftovers to the others, in part because the pressing reconstruction projects in Iraq are beyond the expertise of any Kuwaiti company.

"Things haven't really started yet, but the telecom companies and construction companies are very active," Saadun said.

"After three years there will be a huge gain to the Kuwaiti economy because Iraq will be in a position to trade with Kuwait," provided the United States reconstructs and secures Iraq politically and generates investor confidence.

Once Iraq increases oil production, creates new jobs, goods and services, "the owed loans and compensation may be part of a new project," Saadun said. "A stable, growing Iraq will be much more beneficial to Kuwait."

 

Iraq protesters quit Green Zone after unprecedented breach

Yemen government suspends 'direct' talks with rebels

Russia, US in bids to freeze fighting in Syria's Aleppo

Deadly car bomb hits Turkey refugee hub near Syria border

Tight security marks world rallies to celebrate Labour Day

Up to 100 people missing in two Mediterranean shipwrecks

Aden police chief survives new assassination attempt

ISIS claims rare deadly bombings in southern Iraq

Iraq PM calls for punishment of protesters involved in violence

Yemen government forces seize Qaeda training camp

Rouhani allies win second round of Iran parliament elections

War continues in Aleppo, with US-Russia agreement

Angry protesters storm Iraq Green Zone

UN council votes to bring back full Western Sahara mission

Air strike hits clinic in rebel-held Aleppo

US, Russia 'agree freeze' on two Syrian fronts

Aleppo mourns paediatrician killed in air strike

Libya unity government vows to end jihadist 'scourge'

Turkey demands 5 years jail for UK academic over 'terror propaganda'

UK pair accused of giving money to Brussels, Paris attacks suspect

Turkey says Bursa bomber linked to PKK

UN rights chief calls Syrian crisis 'shameful realpolitik'

Kuwait steps up deportations of expat workers

South Sudan unveils unity government

Iranians vote in second round of parliamentary elections

Palestinians support, Israel opposes French peace initiative

Biden in surprise Iraq visit to support embattled government

MSF condemns strike on Aleppo hospital

Lifeline to millions in Syria 'may be broken' as violence intensifies

Turkish journalists get two years for publishing Charlie Hebdo cartoon

Greece making 'incredible effort' to tackle migration issue

Iraq shuts Al-Jazeera bureau for 'instigating violence and sectarianism'

Syria regime readies for major Aleppo offensive

Israel nuclear reactor defects spark secrecy dilemma

Suicide bomber targets Aden police chief

Death toll in Syria's Aleppo rises despite UN truce plea

Italy to introduce migrant fingerprinting at sea

UN envoy plans to hold another round of Syria peace talks

US proposes full restoration of Western Sahara mission

27 Yemeni soldiers dead in key offensive

Global press freedom drops to lowest level in 12 years

Constitutional amendment grants Jordan king more powers

Suicide bomber blows herself up in Turkey northwestern city

Austria adopts one of EU's toughest asylum laws

Netherlands warns no safety 'guarantees' for visitors to Turkey