KUWAIT: FINANCE MINISTER SUBMITS RESIGNATION

1. (U) Dr. Yousef Hamad Al-Ibrahim has submitted his
resignation from his current posts as Minister of Finance,
Minister of Planning, and Minister of State for
Administrative Development. While some papers claim that the
resignation has been accepted, Minister of Information Shaykh
Ahmed Fahed Al-Sabah is quoted as saying that the resignation
letter is before the Crown Prince and Prime Minister Shaykh
Saad Al-Abdullah Al-Salem Al-Sabah and that no decision has
yet been taken. Al-Ibrahim survived a legislative 'grilling'
in June 2002 and a subsequent no-confidence vote (refs B and
C).

2.(C) According to Press reports and Embassy contacts the
Finance portfolio will be handed temporarily to Minister of
State for Foreign Affairs Shaykh Dr. Mohammed Sabah Al-Salem
Al-Sabah, a Harvard Ph.D. in Economics and former Ambassador
to the United States. Other reports indicate the Planning
and possibly the Administrative Development portfolios will
go to Minister of Education Dr. Musaed Al-Haroun, a Ph.D.
from Indiana University. The Assignments are likely to
remain in effect until a new government is formed after
mid-year Parliamentary elections.

3.(C) Dr. Al-Ibrahim has been widely regarded as one of the
most positive voices for economic reform in the current
government; Embassy contacts in the Finance Ministry and its
affiliated agencies (such as the Kuwait Investment Authority
and the Higher Committee for Economic Development and Reform)
regularly praised Al-Ibrahim as honest, talented, and
committed to a vision of a sound economic infrastructure.
While sources tell us that they believe Shaykh Dr. Mohammed
is an excellent choice for the position, they believe that
his double portfolio will significantly impair his
effectiveness.

4.(C) Dr. Al-Ibrahim's resignation came shortly after he was
threatened with another parliamentary 'grilling' over the
Finance Ministry's role in a housing-development scandal
known as the Kheiran Pearl (ref A) which predates his tenure.
A grilling on that scandal is scheduled for next week, but
the primary target for want of a better choice is Deputy
Prime Minister and Minister of State for Cabinet and National
Assembly Affairs Mohammed Sharar. The Kheiran case could
severely tarnish the Al-Sabah's image, as the deal appears on
its face to indicate very poor stewardship of public lands.
The beneficiary of State largesse in the case is a close
friend of the Amir.

5.(C) Comment: The Cabinet has begun gradually to
disintegrate. This process is likely to accelerate as
elections approach. For example, Ministers Talal Al-Ayyar
(Electricity and Water/Social Affairs and Labor), Salah
Khorshid (Commerce and Industry), Fahd al-Lumaei (Public
Works/State Minister for Housing Affairs) and Ahmad Al-Baqer
(Justice/Awqaf and Islamic Affairs), all elected members of
the National Assembly, are expected to resign at least two to
three months prior to the next parliamentary elections in
mid-2003. With another grilling scheduled to commence
shortly, we expect the Government will go even deeper into
its holding pattern until after the elections and the
formation of a new Cabinet. End Comment.
JONES