THE MERCHANT FAMILIES LOSE GROUND TO

C O N F I D E N T I A L SECTION 01 OF 07 KUWAIT 03922

E.O. 12356: DECL:OADR
TAGS: KPRP SOCI ECON EFIN PGOV KU
SUBJECT: THE MERCHANT FAMILIES LOSE GROUND TO
- THE AL-SABAH

REF: (A) 83 KUWAIT A-7
- (B) 88 KUWAIT 6886
- (C) 88 KUWAIT 1481
- (D) KUWAIT 1948
- (E) KUWAIT 3814


1. CONFIDENTIAL -- ENTIRE TEXT.
-
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SUMMARY
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2. THE 1980'S HAVE WITNESSED A GRADUAL REALIGNMENT IN
THE BALANCE OF POWER AMONG KUWAIT'S FOUR MAJOR FAMILY
GROUPS: THE RULING AL-SABAH, THE SUNNI AND SHIA
MERCHANT ARISTOCRACIES, AND THE JENAAT (IRAQI-ORIGIN
SUNNI). THE AL-SABAH HAVE BEEN THE MAJOR BENEFICIARIES,
AS THEY HAVE SOLIDIFIED THEIR HOLD ON GOVERNMENT AND
EXPANDED THEIR PRESENCE IN FINANCE AND COMMERCE. THE
JENAAT WERE FORCED INTO CLOSER ALLIANCE WITH THE AL-SABAH
FOLLOWING THE 1982 STOCK MARKET CRASH, AS THE RULING
FAMILY HELPED EXTRACT THEM FROM THEIR FINANCIAL DIFFI-
CULTIES. THE SHIAS FOLLOWED A SIMILAR COURSE AS THEIR
COMMERCIAL TIES TO IRAN CRUMBLED DURING THE GULF WAR.
THE SUNNIS, WHILE STILL RETAINING GREAT WEALTH AND
PRESTIGE, HAVE BEEN HOBBLED BY INTRAMURAL SQUABBLING OVER
HOW TO DIVIDE THE STAGNANT ECONOMIC PIE AVAILABLE TO
THEM.


3. AS A RESULT OF THIS REALIGNMENT OF POWER, THERE ARE
FEWER CHECKS ON THE AL-SABAH ABILITY TO MAKE AND IMPLE-
MENT GOVERNMENT POLICIES. THIS SHOULD NOT CAUSE ANY
MAJOR SHIFTS IN FOREIGN POLICY, AS THE RULING FAMILY IS
BASICALLY PRO-WESTERN. ALTHOUGH RELATIVELY CONSERVATIVE,
IT IS NOT PRONE TO EXTREMISM OF ANY STRIPE AND MONOLITHIC
ONLY ON ISSUES OF SURVIVAL. DOMESTICALLY, WE MAY SEE A
GREATER PROCLIVITY FOR THE AL-SABAH TO ASSERT THEIR RULE
OVER THE OBJECTIONS OF OTHER SEGMENTS OF SOCIETY (THE
RECENT UNIVERSITY SHAKE-UP COULD BE AN INITIAL HARBINGER
OF THIS TREND). ALTHOUGH THE TRADITION OF PLURALISTIC
DECISION MAKING IS STILL STRONG AND KUWAIT IS NOT ABOUT TO
BECOME AN AUTARCHY, THE GREATER CONCENTRATION OF POWER
IN THE HANDS OF THE RULING FAMILY COULD SET THE STAGE FOR
FURTHER DEMOCRATIZATION OF KUWAITI SOCIETY. (THIS CABLE
FULFILLS PART OF POST REPORTING PLAN.) END SUMMARY.
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THE SUNNI ARISTOCRACY: PRAGMATISM THE WATCHWORD
-------------- ---

4. THE ORIGINS OF KUWAIT'S SOCIAL STRUCTURE DATE TO THE
FOUNDING OF THE STATE IN THE LATE EIGHTEENTH CENTURY.
TRADITION HAS IT THAT THE FOUNDING FAMILIES CHOSE ONE OF
THEIR NUMBER, AL-SABAH, TO HEAD THE GOVERNMENT AND
"MIND THE STORE" WHILE THE REMAINING FAMILIES PURSUED
BUSINESS INTERESTS. DEPENDING ON WHO IS TELLING THE
STORY, THIS WAS EITHER BECAUSE THE AL-SABAH HAD SHOWN A
FLAIR FOR MEDIATION, OR BECAUSE THEY WERE THE WEAKEST OF
THE FOUNDING FAMILIES AND SO WERE GIVEN THE SHORTEST
(I.E., MOST UNPROFITABLE) END OF THE STICK. EVEN TODAY
THE AL-SABAH REFER TO THEMSELVES AS THE "RULING", RATHER
THAN THE "ROYAL", FAMILY, REFLECTING THE TRADITION OF
BEING FIRST AMONG EQUALS. THE OTHER FOUNDING FAMILIES
FORM THE CORE OF THE SUNNI MERCHANT ARISTOCRACY.


5. MEMBERSHIP IN THE SUNNI ARISTOCRACY HAS BEEN FAR FROM
STATIC, AS SUNNI FAMILIES WHO MIGRATED TO KUWAIT OVER THE
YEARS HAVE BEEN INTEGRATED INTO IT. FINANCIAL ACUMEN,
WEALTH AND GULF SUNNI BACKGROUND HAVE BEEN THE TICKETS OF
ADMISSION. ONE OF THE MEMBERS OF THE SUNNI ARISTOCRACY,
KUWAIT INVESTMENT AUTHORITY (KIA) MANAGING DIRECTOR DR.
FAHAD AL-RASHED, RECENTLY REMINDED THE AMBASSADOR AND
EMBOFF THAT HIS GRANDFATHER HAD WALKED BAREFOOT OUT OF A
POOR NEJDI VILLAGE IN SAUDI ARABIA (ZILFI) IN THE EARLY
TWENTIETH CENTURY SEEKING HIS FORTUNE IN THE CITY-STATE
TO THE NORTHEAST. THE FOUNDERS OF THE AL-HAMAD,
AL-KHORAFI, AL-SHAYA, AL-OSAIMI, AND AL-SAAD
ARISTOCRATIC FAMILIES DID LIKEWISE. EVEN SOME LONGER
ESTABLISHED FAMILIES LIKE THE AL-ABDULRAZZAKS GAINED
WEALTH AND POWER ONLY RECENTLY. THE CURRENT PATRIARCH
OF THE FAMILY TOLD EMBOFF DURING A DIWANIYA CALL THAT AS
A YOUTH HE WORKED AS A WELL-DIGGER, WHEREAS TODAY HE
COUNTS THE FAMILY WEALTH IN THE TENS OF MILLIONS OF
DOLLARS.
-

6. THE SUNNI ARISTOCRACY SPREADS ITS INFLUENCE THROUGHOUT
THE BUSINESS COMMUNITY THROUGH A SERIES OF INTERLOCKING
DIRECTORATES CENTERED ON THE NATIONAL BANK OF KUWAIT
(NBK),THE SUNNI FLAGSHIP. ITS MANAGERS MAINTAIN THAT
NBK IS THE MOST PROFITABLE OF THE ARAB BANKS AND HOPE IT
WILL SOMEDAY OVERTAKE ITS CLOSEST RIVALS, NCB OF SAUDI
ARABIA AND ABC OF BAHRAIN, TO BECOME THE BIGGEST ARAB
BANK IN TERMS OF ASSETS. THE ARISTOCRACY'S EXECUTIVE
TALENT HAS ALSO LONG BEEN PUT TO USE IN HIGH-LEVEL
GOVERNMENT POSITIONS. TWO EXAMPLES WILL SUFFICE TO
INDICATE THE BREADTH OF THE ARISTOCRACY'S INFLUENCE:

-- THE BILLIONAIRE NBK CHAIRMAN, MOHAMMED ABDULMOHSEN
AL-KHORAFI, HAS A SON WHO IS MINISTER OF FINANCE, A
COUSIN WHO IS UNDERSECRETARY OF THE INTERIOR, AND CLOSE
RELATIVES WHO CONTROL THE SUCCESSFUL KUWAITI SAFEWAYS.

-- THE THREE SONS OF THE NBK DEPUTY CHAIRMAN MOHAMED
ABDUL RAHMAN AL-BAHAR ARE THE CHAIRMEN OF KUWAIT INTER-
NATIONAL INVESTMENT COMPANY, THE LARGEST PRIVATE
INVESTMENT COMPANY IN THE COUNTRY; THE KUWAIT INVESTMENT
COMPANY, THE SECOND LARGEST GOK-OWNED INVESTMENT COMPANY;
AND THE MANAGER OF A MAJOR IMPORT COMPANY WHICH, AMONG
OTHER THINGS, HAS THE LOCAL CATERPILLAR CONCESSION. ONE
OF THE ELDER AL-BAHAR'S BROTHERS IS THE OFFICE DIRECTOR
FOR THE CROWN PRINCE, A NEPHEW IS ON THE BOARD OF GULF
BANK, AND A COUSIN IS ON THE BOARD OF COMMERCIAL BANK.
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7. THE SUNNI ARISTOCRACY HISTORICALLY WAS CONSIDERED A
LIBERALIZING COUNTERWEIGHT TO THE MORE CONSERVATIVE
AL-SABAH. FOR EXAMPLE, IN THE 1920'S AND 1930'S, THE
MERCHANTS PRESSED (UNSUCCESSFULLY) FOR A MEANINGFUL
LEGISLATIVE COUNCIL TO CHECK THE EXECUTIVE POWER OF THE
AL-SABAH. AT LEAST IN RECENT DECADES, THEIR MOTIVATION
FOR INVOLVEMENT IN POLITICAL AFFAIRS HAS NOT BEEN BORN OF
IDEOLOGY, BUT RATHER OF A DESIRE TO MAINTAIN A POLITICAL
AND BUSINESS CLIMATE CONDUCIVE TO CONTINUED PROFIT-
MAKING. THUS, THE DISSOLUTION OF THE NATIONAL ASSEMBLY
IN 1976 WAS NOT OPPOSED BY THE ARISTOCRACY, SINCE THE
ASSEMBLY'S POLITICAL ACTIVITIES WERE, IF ANYTHING,
HARMING THE COMMERCIAL CLIMATE. TODAY, THE MEMBERS OF
THE ARISTOCRACY REPRESENT A MULTIPLICITY OF VIEWS ON
PURELY POLITICAL QUESTIONS. THE ONE POLICY GOAL THEY
SHARE IS AVOIDANCE OF ANY POLITICAL, ECONOMIC, OR SE-
CURITY PROBLEM WHICH COULD HURT THEIR ABILITY TO MAKE
MONEY; FOR THE SUNNI ARISTOCRACY, PRAGMATISM IS THE
WATCHWORD.

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THE SHIA ARISTOCRACY: COUNTERWEIGHT TO THE SUNNI
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8. THE SHIA ARISTOCRACY IS COMPOSED OF THREE FAMILIES
WHO MIGRATED TO KUWAIT FROM IRAN AND IRAQ BETWEEN 1850
AND 1900: THE BEHBEHANIS (INCLUDING THE AL-ABULHASSANS
AND THE AL-MAARAFIS); THE AL-KAZEMIS; AND THE QABAZARDS.
THE BEHBEHANIS AND THE AL-KAZEMI CLAIM ARABIC ANCESTRY,
BUT MOST KUWAITIS CONSIDER ALL OF THE SHIA ARISTOCRATS
TO BE OF PERSIAN STOCK. LIKE THE SUNNI ARISTOCRATS,
THEY HAVE ACHIEVED THEIR STATUS BY VIRTUE OF ACCUMULATED
WEALTH AND FINANCIAL ACUMEN, AND HAVE EMPLOYED THEIR
EXECUTIVE TALENT IN GOK POSITIONS. THEIR BUSINESS
ACTIVITY IS CENTERED AROUND THE AL-AHLI BANK, WHICH THEY
CONTROL, AND THEIR GOVERNMENT INVOLVEMENT AROUND THE
OIL INDUSTRY, HIGHER EDUCATION, AND THE MEDIA.
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9. THE SHIA ARISTOCRACY HAS LONG BEEN USED BY THE AL-
SABAH AS A COUNTERWEIGHT TO SUNNI DOMINANCE OF COMMERCE
AND FINANCE AND AS A CONNECTION TO IRAN. THE SHIA
ABDULMUTALIB AL-KAZEMI, OIL MINISTER FROM 1975 TO 1978,
PRESIDED OVER THE NATIONALIZATION OF KUWAIT'S OIL INDUS-
TRY, WHICH CREATED A NEW SOURCE OF WEALTH AND POWER FOR
THE AL-SABAH INDEPENDENT OF THE SUNNI ARISTOCRATS. SHIA
ARISTOCRATS HAVE CONTINUED TO FILL MANAGEMENT POSITIONS
IN THE OIL INDUSTRY. THE AMIR ALSO REPORTEDLY USED
AL-AHLI BANK AS HIS CONDUIT FOR FINANCIAL RELATIONS
WITH IRAN DURING THE REIGN OF THE SHAH. BY THE START OF
THE 1980'S, THE SHIA ARISTOCRATS AND THE AL-SABAH ENJOYED
A SYMBIOTIC WORKING RELATIONSHIP IN WHICH EACH SIDE
HELPED THE OTHER REMAIN INDEPENDENT OF THE SUNNI
MERCHANTS.

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THE JENAAT: WESTERN-ORIENTED NOUVEAU-RICHE
--------------

10. THE JENAAT ARE A GROUP OF SUNNI FAMILIES, MORE
PROPERLY A CLAN, WHICH MIGRATED TO KUWAIT FROM NORTHERN
IRAQ IN THE EARLY 19TH CENTURY. THE CLAN INCLUDES THE
AL-MUTAWA, AL-SALEH, AL-SURI, AL-SULTAN, AL-ISSA,
AL-BADR, AL-MUSALLEM, AL-NAJI, AL-JASSEM, AND THE
AL-YASSEEN FAMILIES. THE JENAAT NUMBER WELL OVER 10,000
AND ARE KUWAIT'S LARGEST FAMILY GROUP. WHILE MOST WEAR
TRADITIONAL KUWAITI DRESS, THEIR FAIR COMPLEXION,
INCLUDING SOME BLONDS, GIVES THEM A DISTINCTLY EUROPEAN
APPEARANCE. THEY MARRY ALMOST EXCLUSIVELY WITHIN THE
FAMILY (WHEN MARRYING KUWAITIS),AND HAVE KEPT THEIR
DISTANCE FROM THE OTHER SUNNI FAMILIES.
-

11. THE JENAAT RISE TO PROMINENCE DATES FROM THE EARLY
PART OF THIS CENTURY WHEN THE AL-SABAH ADOPTED THE JENAAT
ORPHAN YUSIF AL-ISSA. YUSIF GREW UP IN THE AL-SABAH
HOUSEHOLD AND SOLIDIFIED HIS TIES WITH THE RULING FAMILY
WHEN HE SERVED ON THE LEGISLATIVE COUNCIL IN THE 1930'S
AND DEFENDED THE AMIR AGAINST ITS ATTEMPTS TO DILUTE HIS
AUTHORITY. YUSIF INSISTED THAT EACH OF HIS TWELVE SONS
RECEIVE A FIRST-RATE EDUCATION IN THE U.S. OR UK, AND A
CONTINUING FAMILY EMPHASIS ON QUALITY EDUCATION HAS
CAUSED A HIGHER PROPORTION OF JENAAT THAN OTHER KUWAITIS
TO HAVE WESTERN BUSINESS DEGREES (AND WESTERN WIVES). IT
HAS ALSO LED THE JENAAT TO SUPPLY MANY OF THE PROFESSIONAL
AND TECHNICAL EXPERTS NEEDED BY KUWAITI PRIVATE COMPANIES
AND THE GOK-OWNED OIL CONCERNS, ALTHOUGH IN THE 1960'S
CLAN MEMBERS BEGAN TO MOVE INTO OWNERSHIP POSITIONS WITH
THE HELP OF THE JENAAT-CONTROLLED GULF BANK. REFLECTIVE
OF THE RANGE OF JENAAT EXPERIENCE AND OPINION IS THE
PROMINENCE OF SOME CLAN MEMBERS AMONG KUWAITIS COMMITTED
TO "PAN-ARAB" CAUSES.


12. THERE IS NO LOVE LOST BETWEEN THE SUNNI ARISTOCRACY
AND THE JENAAT. THE SUNNI MERCHANTS CONSIDER THE JENAAT
"NOUVEAU RICHE" WHO TRADED ON YUSIF'S CONNECTION WITH THE
AL-SABAH TO MAKE INROADS INTO COMMERCE AND FINANCE. THE
JENAAT, IN TURN, ARE GENERALLY CONSIDERED THE MOST ANTI-
SHIA KUWAITIS, PROBABLY BECAUSE THE SHIA ARE SEEN AS
RIVALS FOR THE FAVOR OF THE AL-SABAH AND FOR MANAGEMENT
POSITIONS WITHIN THE OIL INDUSTRY. THE JENAAT DO HAVE A
STRONG POSITION WITHIN THE OIL INDUSTRY -- OIL MINISTER
SHAIKH ALI-KHALIFA AL-SABAH IS SOMETIMES REFERRED TO AS
THE "JENAAT SHAIKH" BECAUSE OF HIS RELIANCE ON THEIR
TALENTS -- BUT THERE HAS NEVER BEEN AN INDICATION THAT THE
AL-SABAH WOULD FOREGO THEIR CONNECTION TO THE SHIA
ARISTOCRACY AT THE BEHEST OF THE JENAAT. ALTHOUGH THE
JENAAT HAVE CARVED OUT AN IMPORTANT POSITION AS A
WESTERN-ORIENTED TECHNOCRATIC ELITE, THEY HAVE NEVER
REACHED A POSITION WHERE THEY COULD INDEPENDENTLY
CHALLENGE THE SUNNI OR SHIA ESTABLISHMENTS.
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SOUK AL-MANAKH CRASH: A WATERSHED FOR THE JENAAT
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13. BY 1980, THE FOUR MAJOR FAMILY GROUPS HAD ACHIEVED
A CAREFUL BALANCE OF POWER. THIS BALANCE WAS SOON TO BE
UPSET. THE FIRST SHOCK TO THE SYSTEM WAS THE 1982 SOUK
AL-MANAKH STOCK MARKET CRASH, IN WHICH THE JENAAT LOST A
LOT OF MONEY AND A GREAT DEAL OF PRESTIGE. JENAAT
MEMBERS, PARTICULARLY THE AL-MUTAWA, WERE INVOLVED IN
SOME OF THE BIGGEST FAILED DEALS WHICH SPARKED THE CRASH,
AND THE SUNNI ARISTOCRACY TRIED TO BLAME THE CRASH ON THE
UNBRIDLED GREED OF THE JENAAT. THERE WERE ALSO
ACCUSATIONS THAT THE HEAD OF THE CLAN, MUSTAFA AL-SULTAN,
USED HIS POSITION AS HEAD OF GULF BANK TO PROTECT THE
CLAN'S WEALTH BY BLOCKING ACCOUNTS OF MANAKH PLAYERS
WHO WERE IN DEBT TO IT.


14. THE JENAAT'S PROBLEMS AFTER THE MANAKH DISASTER GAVE
THE AL-SABAH AN OPENING TO AUGMENT THEIR RELATIONSHIP
WITH THE CLAN, AS THE FINANCIAL COMMUNITY TURNED TO THE
GOK TO RESCUE KUWAIT'S FINANCIAL SYSTEM. THE RULING
FAMILY MADE THE MOST OF THIS OPPORTUNITY. ALTHOUGH THE
FINANCE MINISTER AT THE TIME WAS A SUNNI ARISTOCRAT WHO
FAVORED LETTING THE MANAKH CHIPS FALL WHERE THEY MAY,
THE GOK DECIDED TO IMPLEMENT A BAIL-OUT OF THE BANKS AND
DEBTORS MOST AFFECTED BY THE CRASH. THERE WERE EVEN
CHARGES THAT THE AL-SABAH AND JENAAT HAD CONSPIRED TO
SETTLE UNFAIRLY A NUMBER OF THE CLAIMS RESULTING FROM
THE CRASH.
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15. WHATEVER THE PROPRIETY OF THEIR ACTIONS, THE AL-
SABAH MANAGED TO PUT MANY OF THE JENAAT IN THEIR DEBT,
BOTH FIGURATIVELY AND LITERALLY, AND EXTEND THEIR PRE-
VIOUSLY LIMITED PARTICIPATION IN JENAAT BUSINESS
ACTIVITIES. FOR EXAMPLE, FOR THE FIRST TIME, AN AL-SABAH
WAS NAMED TO THE BOARD OF THE GULF BANK AFTER THE BANK'S
SOLVENCY WAS RESTORED BY THE GOK. THE JENAAT ARE
WIDELY SEEN AS HAVING SURVIVED THE MARKET COLLAPSE DUE
IN LARGE PART TO AL-SABAH PATRONAGE, AND TO HAVE BEEN
FORCED INTO CLOSER ALLIANCE WITH THE RULING FAMILY AS A
RESULT. THE AL-SABAH, MEANWHILE, MANAGED TO SURVIVE THE
POLITICAL CRISIS CAUSED BY THE NATIONAL ASSEMBLY'S
CRITICISM OF THE BAIL-OUT PROGRAM AND ITS SUBSEQUENT
DISSOLUTION, LARGELY BECAUSE THE PRAGMATIC SUNNI
ARISTOCRACY CAME TO SEE POLITICAL STABILITY AS ESSENTIAL
TO BUSINESS CONFIDENCE.

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THE GULF WAR AND THE SHIA ARISTOCRACY
--------------

16. WHILE THE JENAAT WERE SWIFTLY WOUNDED BY THE SOUK
AL-MANAKH CRASH, THE SHIA ARISTOCRACY WERE SLOWLY BLED
BY THE IRAN-IRAQ WAR. THEY SUFFERED SERIOUS ECONOMIC
SETBACKS AS LUCRATIVE FINANCIAL LINKS WITH IRAN WERE
BROKEN AND THE CENTER OF THE TRADING RELATIONSHIP WITH
IRAN WAS DIVERTED TO DUBAI. THE SHIA-CONTROLLED AL-AHLI
BANK FACED SERIOUS FINANCIAL PROBLEMS AND HAD TO RECEIVE
GOK FINANCIAL ASSISTANCE TO SURVIVE. AS WAS THE CASE
WITH GULF BANK, THE AL-SABAH DEMANDED AND RECEIVED A
SEAT ON THE AL-AHLI BOARD IN RETURN FOR THE GOK BAIL-OUT
AND AS A SYMBOL OF THE SHIA'S INCREASED DEPENDENCE ON
THE RULING FAMILY'S PATRONAGE.
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17. MORE SERIOUS FOR THE SHIA ARISTOCRACY THAN THEIR
FINANCIAL PROBLEMS WAS THE QUESTIONING OF THEIR LOYALTY.
THIS REACHED A PEAK WHEN SHIA WORKERS WERE IMPLICATED IN
THE SABOTAGE OF THE KPC REFINERY AT AHMADI AND THE
JENAAT HEAD OF KOTC, ABDULFATAH AL-BADER, BEGAN ARGUING
THAT KPC SHOULD SACK ALL OF ITS SHIA EMPLOYEES. OIL
MINISTER SHAIKH ALI-KHALIFA AL-SABAH AND KPC MARKETING
DIRECTOR SHAIKH ALI JABER AL-SABAH, THE AMIR'S SON-IN-
LAW, BLOCKED ANY PRECIPITATE AXING OF SHIA MANAGERS,
KEEPING, FOR EXAMPLE, A QABAZARD AS DEPUTY MANAGING
DIRECTOR OF KOTC. NEVERTHELESS, THE SHIA ARISTOCRATS
FELT CONSTRAINED TO KEEP LOW PUBLIC PROFILES AND TO
PROFESS THEIR LOYALTY TO THE STATE WITH GREAT OSTENTATION
ON THE DIWANIYA CIRCUIT. NOW THAT THE WAR HAS WOUND
DOWN, THE SHIA ARISTOCRATS ARE LEFT WITH MUCH LESS
FINANCIAL POWER AND A GREATER SENSE OF DEBT TO THE
AL-SABAH FOR THE PROTECTION AFFORDED DURING THE WAR
YEARS.

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THE SUNNI: DAMAGED FROM WITHOUT AND WITHIN
--------------

18. THE SUNNI ARISTOCRATS WHO HAD BEEN MIDDLEMEN IN
TRADE WITH IRAN AND IRAQ SAW THEIR PROFITS DECLINE DURING
THE GULF WAR, AS THE NORMAL TRADE AND FINANCIAL
ACTIVITIES OF THE COMBATANTS SHRANK OR WERE DIVERTED
ELSEWHERE. THE ARISTOCRACY MANAGED TO SURVIVE BECAUSE
OF THE SIZE AND DIVERSITY OF THEIR FINANCIAL INTERESTS,
NBK REMAINS THE ONLY KUWAITI PRIVATE BANK WHICH HAS
NOT HAD TO TURN TO THE GOK FOR FINANCIAL ASSISTANCE; IT
STILL HAS NO AL-SABAH ON ITS BOARD. NEVERTHELESS, THE
WAR PUT A DAMPER ON THE GROWTH OF SUNNI ECONOMIC POWER.
THE PICTURE IS NOT A GREAT DEAL BRIGHTER NOW THAT THE
SHOOTING HAS CEASED. IRAQ'S LACK OF HARD CURRENCY AND
APPETITE FOR ADDITIONAL CREDIT AND THE GOK'S REFUSAL TO
ADVANCE THE CAPITAL WHICH KUWAITI CONTRACTORS NEED TO
COMPETE FOR MAJOR PROJECTS HAS DASHED THE SUNNI
ARISTOCRATS HOPES FOR PROFITING QUICKLY FROM POST-WAR
RECONSTRUCTION IN IRAQ. THE SUNNI MERCHANTS ARE FAR
FROM PAUPERS, BUT THEIR WEALTH IS NOT GROWING AT THE
PACE IT ONCE DID.
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19. THE SUNNI ARISTOCRACY'S PROBLEMS HAVE BEEN
EXACERBATED BY INTRAMURAL SQUABBLING. THE ELDEST SON OF
MULTI-BILLIONAIRE YUSIF AHMED AL-GHANIM, ARGUABLY THE
RICHEST SUNNI MERCHANT, HAS SPENT MOST OF THE DECADE
IN THE U.S. DUE TO DIFFERENCES WITH HIS FATHER. OTHER
SENIOR MEMBERS OF THE FAMILY ARE FEUDING FOR VARIOUS
REASONS. TWO SUNNI FAMILIES, THE AL-KHALEDS AND AL-
GHARABALLYS, ARE FIGHTING OVER POTENTIALLY PROFITABLE
SPONSORSHIP OF THE LOCAL FRENCH SCHOOL. SIMILAR DISPUTES
OVER CONTROL OF OTHER PROFITABLE VENTURES HAVE SPRUNG
UP AS MEMBERS OF THE SUNNI ARISTOCRACY MANEUVER TO
SECURE SLICES OF A STAGNANT ECONOMIC PIE. THESE FAMILY
DIFFERENCES HAMSTRING THE SUNNI AND MEAN THEY CANNOT
EASILY MOUNT A UNIFIED CAMPAIGN TO RE-ASSERT THEMSELVES
VIS-A-VIS THE AL-SABAH. THEY ARE THUS ENDING THE DECADE
WEAKER THAN THEY ENTERED IT, BOTH FINANCIALLY AND
POLITICALLY.

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THE AL-SABAH INCREASE THEIR FINANCIAL CLOUT ...
-------------- --

20. WHILE KUWAIT'S OTHER THREE FAMILY POWER BLOCS
SUFFERED ECONOMIC SETBACKS DURING THE 1980'S, THE
AL-SABAH WERE AUGMENTING THEIR POWER. THEY TIED GOK
FINANCIAL FORTUNES TO OIL REVENUES AND INVESTMENT IN THE
DEVELOPED WORLD, THEREBY INSULATING THEM FROM THE EFFECTS
OF THE GULF WAR (WITH NO SMALL HELP FROM THE UNITED
STATES NAVY). GOK, AND BY IMPLICATION AL-SABAH,
FINANCIAL CLOUT THUS WAS STRENGTHENED RELATIVE TO PRIVATE
KUWAITI INTERESTS.
-

21. AL-SABAH FAMILY MEMBERS HAVE ALSO BEEN ABLE TO
INCREASE THEIR PERSONAL FORTUNES IN THE 1980'S DUE IN
PART TO THEIR GOK CONNECTIONS. THE RICHEST AL-SABAH
OF ALL MAY BE SHAIKH SALEM AL-ALI AL-SABAH, WHO HEADS
THE NATIONAL GUARD AND HAS REPORTEDLY AMASSED A FORTUNE
BY BROKERING ARMS DEALS WITH KUWAIT OR NEIGHBORING ARAB
STATES. A QUIET MAN, HIS HUGE, WELL-FURNISHED DIWANIYA
HAS ALWAYS BEEN EERILY EMPTY EXCEPT FOR FAMILY RETAINERS
WHENEVER EMBOFFS HAVE DROPPED IN ON EID CALLS. HIS
BANK ACCOUNTS, HOWEVER, ARE FAR FROM EMPTY; A LOCAL
BANKER RECENTLY TOLD EMBOFF THAT SHAIKH SALEM AL-ALI
HAD ALMOST TWO BILLION RPT BILLION DOLLARS ON DEPOSIT
IN LOCAL BANKS ALONE, WHICH WOULD MAKE HIM ONE OF THE
THREE OR FOUR RICHEST KUWAITIS.


22. THE NET RESULT OF THE CHANGES IN THE 1980'S HAS
BEEN A SIGNIFICANT SHIFT IN THE ROLE PLAYED BY THE
AL-SABAH IN THE LOCAL ECONOMY. IN THE LATE 1970'S, THE
MERCHANTS WERE ABLE TO PUT A MEMBER OF THE AL-SABAH
OUT OF THE IMPORT BUSINESS BY QUIETLY PASSING THE WORD
TO THE CROWN PRINCE THAT THE MAN WAS TRESPASSING ONTO
TERRITORY RESERVED FOR OTHERS, AND THE RULING FAMILY
HAD LITTLE INFLUENCE IN THE PRIVATE BANKING ESTABLISH-
MENT. NOW, THE MERCHANTS WORRY THAT THEY WILL BE
FORCED TO FIND ROOM IN THEIR BUSINESSES FOR YOUNG
UNDER-EMPLOYED AL-SABAH, AND THE FAMILY HAS SEATS ON
THE BOARDS OF THREE OF THE FOUR LARGEST PRIVATE BANKS
(AL-AHLI, COMMERCIAL, AND GULF). THE OLD TABOOS HAVE
BEEN BROKEN, AND THE AL-SABAH ARE CLEARLY FREE TO
COMPETE WITH THE OTHER FAMILY POWER BLOCS ON THEIR
OWN TURF.
-
--------------
...AND CONSOLIDATE AL-SABAH POLITICAL POWER
--------------

23. BEFORE IT WAS SUSPENDED IN 1986, THE NATIONAL
ASSEMBLY HAD BEEN A BRAKE ON AL-SABAH POWER AND A
VEHICLE BY WHICH THE OTHER FAMILIES COULD PUT THEM
ON NOTICE WHEN THEIR GRASP EXTENDED TOO FAR. ONE THING
THE MAJORITY IN THE NATIONAL ASSEMBLY HAD IN COMMON
WAS THAT IT WAS NON-AL-SABAH AND COULD CALL THE RULING
FAMILY TO ACCOUNT. ALTHOUGH THE AMIR IS STILL CAREFUL
TO OBSERVE FORM AND CONSULT WITH THE MERCHANT
PATRIARCHS WHEN CONSIDERING MAJOR POLITICAL MOVES LIKE A
CABINET CHANGE, THERE IS NO LONGER ANY VEHICLE EXCEPT
THE INFORMAL DIWANIYA SYSTEM BY WHICH THE FAMILIES CAN
DEMAND AN ACCOUNTING FROM THE AL-SABAH. HOWEVER, THEY
ARE IN A WEAKENED POSITION TO MAKE DEMANDS THROUGH THIS
INFORMAL SYSTEM, NOW THAT THE JENAAT AND SHIA
ARISTOCRACY ARE BEHOLDEN TO THE AL-SABAH TO A GREATER
DEGREE, AND THE SUNNI ARISTOCRATS ARE LESS ABLE TO BACK
THEIR POLITICAL INTERESTS WITH FINANCIAL MUSCLE.


24. THIS IS NOT TO SAY THERE HAS BEEN ANY OBVIOUS OR
DRAMATIC SHIFT IN OVERT POLITICAL POWER. THE CABINET
REMAINS CAREFULLY BALANCED BETWEEN THE AL-SABAH AND
OTHER FAMILIES, ALTHOUGH, WITH THE EXCEPTION OF FINANCE,
THE NON-AL-SABAH PORTFOLIOS ARE NOT KEY ONES. THERE HAS
BEEN A GROWING AWARENESS, HOWEVER, THAT THE AL-SABAH
MAY BE ABLE TO MAKE POLITICAL MOVES WITH LESS RESTRAINT
THAN IN THE PAST. THE RECENT CONTROVERSIAL SHAKE-UP OF
UNIVERSITY ADMINISTRATION APPARENTLY INDUCED BY THE
RULING FAMILY (REF E) IS ONE INDICATOR OF THIS TREND.
A SIGN TO WATCH FOR IN THE FUTURE IS THE FATE OF FINANCE
MINISTER JASSIM AL-KHARAFI, A MEMBER OF THE SUNNI
ARISTOCRACY. SHOULD HE BE REPLACED BY AN AL-SABAH,
THIS, ALONG WITH RETENTION OF AN AL-SABAH AS HEAD OF
THE CENTRAL BANK, WOULD GIVE THE RULING FAMILY MANAGERIAL
CONTROL OVER FISCAL AND MONETARY POLICY AND FURTHER
AUGMENT THEIR HOLD ON GOVERNMENT INSTITUTIONS.
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-------------- --------------
IMPLICATIONS FOR FOREIGN AND DOMESTIC POLICY -- MORE
AUTHORITARIANISM ON THE WAY?
-------------- --------------

25. AN INCREASED CONCENTRATION OF POWER IN THE RULING
FAMILY SHOULD NOT HAVE ANY IMMEDIATE IMPLICATIONS FOR
KUWAITI FOREIGN POLICY, WHICH HAS TRADITIONALLY BEEN THE
PRESERVE OF THE AL-SABAH IN ANY CASE. THE CONSERVATIVE
AL-SABAH ARE PRAGMATIC, CAREFUL RULERS FAVORABLY
DISPOSED TOWARD SOLID TIES WITH THE WEST, AS WAS AMPLY
DEMONSTRATED BY IMPLEMENTATION OF THE MARITIME PRO-
TECTION REGIME. THEY SHOW NO DISPOSITION TOWARD
EXTREMIST VIEWS WHICH COULD DEVELOP INTO ANTI-WESTERN
POLICIES. THE DECLINING INFLUENCE OF OTHER FAMILY
GROUPS COULD EVENTUALLY ALLOW THE AL-SABAH TO ACT WITH
LESS RESTRAINT ON FOREIGN POLICY ISSUES, BUT WE DO NOT
ENVISION THIS HAVING ANY SIGNIFICANT IMPACT ON U.S.
INTERESTS.


26. DOMESTICALLY, REDUCED CHECKS ON AL-SABAH EXECUTIVE
POWER DECREASE THE PROSPECTS FOR ACCELERATED DEMOCRATI-
ZATION AND COULD LEAD TO A MORE AUTHORITARIAN SOCIETY.
IT IS HARD TO IMAGINE ANY OF THE OTHER FAMILY POWER
BLOCS, IN THEIR WEAKENED STATES, LEADING THE CHARGE FOR
RESTORATION OF A NATIONAL ASSEMBLY WITH TEETH. ON THE
OTHER HAND, THE STRONG KUWAITI TRADITION OF PLURALISTIC
DECISION-MAKING WILL PROBABLY PRECLUDE ANY RASH POWER
GRABS BY THE RULING FAMILY. MORE LIKELY, THE AL-SABAH
WILL WORK TOWARD ACCRETION OF POWER SLOWLY AND
DELIBERATELY, WHILE BEING CAREFUL TO PRESERVE THE
APPEARANCE OF CONSULTATION WITH THE OTHER FAMILY BLOCS
AND CONTINUING TO PLAY THOSE BLOCS OFF AGAINST EACH
OTHER. THE OTHER FAMILIES WILL NO DOUBT GRUMBLE ABOUT
THIS DEVELOPMENT. HOWEVER, GIVEN THEIR WEAKENED
POSITIONS AND PROBABLE AL-SABAH CAUTION ABOUT GOING TOO
FAR TOO FAST, THE RULING FAMILY SHOULD BE ABLE TO EFFECT
A GREATER CENTRALIZATION OF AUTHORITY IN KUWAIT WITHOUT
BEING CHALLENGED BY ANY SERIOUS DOMESTIC DISSENT.
-

27. THE MOST AVAILABLE CHECK ON AL-SABAH POWER MAY BE
THE DIVERSITY OF THE RULING FAMILY ITSELF. EXCEPT IN
THE CASE OF SURVIVAL ISSUES, THE AL-SABAH ARE NOT
MONOLITHIC. A LIVELY MANEUVERING FOR POWER AND
INFLUENCE BETWEEN THE JABER AND SALEM BRANCHES (REF D)
IS ALMOST ASSURED BY THE ORGANIZATION AND SUCCESSION
PATTERNS DEVELOPED OVER DECADES. IT HAS BEEN REPORTED,
FOR EXAMPLE, THAT THE RECENT UNIVERSITY SHAKE-UP AROSE
NOT FROM A CONCERTED AL-SABAH DECISION BUT FROM THE
PLAYING OUT OF THESE INTER-RIVALRIES. TO PLAY THE GAME,
AL-SABAH FACTIONS CAN AND DO SEEK OUT ALLIES AMONG THE
MERCHANTS, TRIBES OR OTHER ELEMENTS ON SPECIFIC ISSUES.
THUS, WHILE THE RELATIVE ACCRETION OF AL-SABAH POWER
ALTERS THE WEIGHTS OF SOME ELEMENTS IN THE KUWAITI
EQUATION, THE RESILIENCY AND DYNAMISM OF THE KUWAITI
SYSTEM WILL CONTINUE TO MAKE IT ONE OF THE MORE
INTERESTING AND DURABLE IN THE REGION.

HOWELL