Peddlers and Rich Thrive, But Economic Activity Limited
KUWAIT CITY (AP) _ Riza Behbehani’s auto business is booming, and Iranians sailing across the northern Persian Gulf in their wooden sailboats are making a killing with cargoes of watermelons, fish and other produce.
But while large retailers and curbside peddlers are making money as Kuwait struggles back to its feet, many businesses that were virtually bankrupted by the Iraqi invasion last August are in the doldrums.
They’re waiting for the government to announce a budget and start pumping some cash into the economy. A shortage of workers and limited port facilities for imports are also big problems. Banks can’t clear checks, and many stores haven’t reopened because they can’t get money to stock their shelves.
There are a few signs of life. The emir, Sheik Jaber al-Ahmed al-Sabah, this week authorized the Ministry of Finance to borrow up to $30 billion through foreign loans or the sale of treasury bonds.
On Thursday, a Kuwaiti newspaper said a group of foreign banks has nearly completed arrangements for raising $10 billion for Kuwait on international money markets. Al-Qabas quoted unidentified sources as saying the deal has not received formal approval from the government.
Oil exports aren’t expected until January, and the Central Bank has to rely on the earnings of its estimated $100 billion in overseas investments. Those investments accounted for half its pre-war income.
Restrictions on bank transfers are scheduled to be lifted Aug. 3, the day after the anniversary of Iraq’s invasion. Fiscal planners apparently have been worried that nervous Kuwaitis would rush to convert dinars to dollars and move the money abroad.
Banks are now crammed with customers at the start of each month, drawing out the maximum 6,000 Kuwaiti dinars ($18,000) they are allowed. Many admit to squirreling it away at home.
The largest traders in a virtual nation of merchants are not bothered by such limits.
General Motors and Chrysler extended businessman Riza Behbehani’s family companies $150 million in credit so they could start importing the 7,000 cars and trucks they expect to sell this year. Japanese and German automakers balked at the idea.
The Behbehanis are doing a booming business off the back lot - their showroom was damaged before the Iraqis fled in the Gulf War.
″The customers don’t care about the showroom. Even without advertising I’ve sold 400 units,″ said Riza Behbehani.
His real problem is workers. Only about 800,000 of Kuwait’s pre-war population of 2 million are now in the emirate.
Behbehani goes down to the docks himself to drive trucks off the ships, ″something I haven’t done in 20 years.″
His auto sales company is operating with 50 of its previous 250 workers. The family’s 7-Up bottling plant has just 60 out of 600.
Two outdoor markets are thriving. The Iranians sell their fish and produce right off the beach, and the Friday flea market, stocked mostly by Saudi truckers, is always jammed.
Iranians started making the 22-hour trip across the Persian Gulf two weeks after the Iraqi invasion to sell fish, lemon juice, watermelons and other products.
The Iranians’ commercial forays underline how much has changed in the gulf. In 1988, the Iranians were firing missiles at Kuwait and sponsoring terrorist attacks because the emirate was supporting Iraq in the 1980-88 Iran-Iraq war.
Ships are coming into Kuwait’s Shuweiba port now, and cargo planes fly in daily. Kuwait’s other port, at Shuweikh, is due to open by the end of July. But self-loading ships are still required because container cranes will not be replaced for months.
Most banks cannot operate. Many of the 180 branch offices were heavily damaged, and the Central Bank is expected to allow only about a third to reopen.
Merchants are waiting for the banks to start clearing checks and issuing large letters of credit.
″We’re stuck like the majority of businesses,″ said Sohair al-Mahmoud, ae Minnesota-trained financial planner working in his family’s firm, which imports cosmetics, clothing and furniture and operates a printing press.
The business lost at least $325,000 in looted inventory and outstanding bills during the Iraqi occupation.
Al-Mahmoud said his family plans to put future revenue into their Carlo di Roma cosmetics line in Europe.
″We’re discouraged,″ he said. ″We still don’t know what Kuwait will be like in the future ... It’s better to invest outside the country.″