(U) GOK WINS SOCIAL SECURITY AND PENSION BATTLE,

1. (SBU) Summary and Comment: On December 30, the National
Assembly defeated budget-busting amendments to Kuwait,s
social security and pension law, and approved GOK-sponsored
ones instead, temporarily allaying fears that Kuwait,s
Social Security fund would be bankrupt by 2026. While the
victory shows the Kuwaiti government can still overcome
significant, populist opposition, it has not solved the
problem of how to keep Kuwait,s Social Security fund
solvent; it has only postponed it. End Summary and Comment.



2. (U) During its 2001 session, Kuwait,s National Assembly
passed amendments to the current Social Securities law (Law
25) which would have had the following budget-busting
implications:(a) remove the minimum retirement age
requirement for men engaged in hazardous work, (b) slow the
rate at which the age of eligibility advances to make it 55
by 2020, (c) increase the pension by 50 dinars per month for
anyone receiving less than 700 dinars per month, and (d)
remove the minimum retirement age requirement for women
(reftel).



3. (U) Citing concerns over the strain such proposals would
have on Kuwait,s budget, the Amir returned the bill to the
Assembly, which was unable to muster the necessary two-thirds
vote to overcome the veto. The law was consequently held
over until 2002 session, and led to a shouting match during
the opening session, with legislators demanding it be the
first agenda item. To resolve the issue, the assembly agreed
to hold a December 30 special session .



4. (U) During December 30,s special session, the National
Assembly voted down the bill 28-31, approving the
government,s counterproposal in its place. The new
amendments also strain the budget, but to a lesser extent.
They: (a) remove the minimum retirement age requirement for
men engaged in hazardous work who have been enrolled in the
Social Security program for 20 years, (b) slow the rate at
which the age of eligibility advances to make it 55 by 2020,
(c) increase the pension to between 50 and 200 dinars for
families with five children or more who receive less than 650
dinars per month, and (d) set the minimum retirement age for
women with 15 years of enrollment in the Social Security
program at 40, sliding to 50 by 2017.



5. (SBU) After the session, de facto Prime Minister Shaykh
Sabah al-Ahmed al-Sabah told the press that his concerns over
the future of the social security budget had been assuaged,
but admitted the changes were small. The law passed was &85
percent8 in conformity with the defeated amendments, he said.



6. (C) In a January 5 meeting with Poloffs, Deputy Speaker
Meshari al-Anjari confirmed the government had made
concessions in exchange for the votes necessary to pass its
version of the amendments.



7. (SBU) Comment: Coming before an election season, the vote
was a victory for the government, which has been damaged by
two rancorous investigations, or &grillings,8 of its
ministers by the National Assembly. However, the vote does
not solve the larger problem of social security fund
solvency; with larger numbers of women and younger citizens
entering an increasingly tight job market, the GOK still
needs to rein in its generosity in order to ensure the
long-term viability of the Social Security fund. End
Comment.
JONES