Kuwait's Economy: The Rebuilding Begins
Kuwait's Economy: The Rebuilding Begins
Mar. 19, 1991
KUWAIT CITY (AP) _ Gasoline is free, but it's tough to find a chocolate bar at any price. Unskilled Filipino laborers have suddenly become the subject of bidding wars. In one of the world's richest countries, hardly anyone has money.
Kuwait's once prosperous economy is now distinguished by widespread shortages and quirks that are bewildering Kuwaitis as they try to recover from the Persian Gulf War.
''We don't know what the government is planning to do. We don't know how things are going to work,'' said Mohammed al-Yahya, general manager of the Commercial Bank of Kuwait, the emirate's second-largest bank.
Kuwait City's skyline of sleek glass-and-steel towers now looks like a ghost town that was hit by a tornado. At street level, row after row of shops sit empty after being looted or burned during the seven-month Iraqi occupation.
Insurance won't cover war losses. Banks say new loans are a distant prospect. Most consumer goods, from clothes to electronics to cars, are not expected to reappear soon.
Some merchants have goods, but won't offer them for sale until the government announces the Kuwaiti dinar-U.S. dollar exchange rate.
''I have $5 million of stock ready to go, but I'm not opening until I know the exchange rate,'' said Samid Samad Rahami, an Iranian who runs Seven Sea Ready-Made Garments. ''I have to buy everything in dollars.''
The government is importing gasoline from Saudi Arabia and pumping it free at filling stations that often have lines snaking for several blocks. It's a start, but businesses still lack electricity, telephones, labor and supplies, and only a few have reopened.
Restoring the banking system is essential for Kuwaitis, even wealthy ones, who are desperate for cash. Most banks have been closed since December, and Kuwaitis who have currency are likely to be holding Iraqi dinars they were forced to use during the occupation - money now considered largely worthless.
''Here, take this, it's only good for toilet paper,'' said one man, waving Iraqi currency.
But at an open air market, vendors were willing to take Iraqi money, betting the government will exchange it later.
''I need money. I'll take any brand,'' said Issam al-Najjar, a surveyor who has taken to selling dresses from the top of a wooden crate.
Michael Kano, an American banker working in Kuwait, said he offered $100 for a Toblerone chocolate bar. No one has come through.
For now, U.S. dollars, Iraqi dinars, old Kuwaiti dinars and Saudi Arabian riyals all are in use.
Abdul Rahman al-Awadi, minister of state for cabinet affairs, said Sunday that Kuwait would reissue its currency ''within a maximum of 10 days.''
He promised anyone who had a bank account in Kuwait on Aug. 1, 1990, the day before the invasion, would be entitled to the full amount once currency was reissued.
But the Kuwaiti dinar, worth $3.30 before the occupation, will now be much weaker, al-Yahya predicted.
In a country dependent on imports, that means higher prices. Food staples such as sugar, milk, chicken and sheep meat already cost much more than before - if they are available at all.
Kuwait has enough wealth - even with most of its oil fields in ruins - to help moderate the frustrations of ordinary citizens. The government has promised 500 dinars to every Kuwaiti, though distribution won't begin until the banks reopen.
A more difficult problem could be the shortage of labor - oil-rich Kuwaitis are not accustomed to working.
Before the occupation, foreigners accounted for more than half of Kuwait's about 2 million people, and an even greater percentage of the labor force. But many fled after the invasion.
Filipino and Indian laborers, who previously made $2 an hour, now are being offered $8 and up.
At the Commercial Bank of Kuwait, foreigners accounted for all but 18 of the bank's 1,300 employees, said al-Yahya, who is trying to track down branch managers who left when the Iraqis arrived.