KUWAIT'S SUNNI MERCHANTS: UNHAPPY

C O N F I D E N T I A L SECTION 01 OF 04 KUWAIT 04025

LONDON FOR NANCY JOHNSON
NSC FOR BRUCE RIEDEL
CENTCOM FOR POLAD

E.O.12356 DECL: OADR
TAGS: PGOV KPRP EFIN PINR PREL KU

SUBJECT: KUWAIT'S SUNNI MERCHANTS: UNHAPPY
OPPOSITION ARISTOCRATS


1. CONFIDENTIAL -- ENTIRE TEXT.

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SUMMARY
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2. THE TRADITIONAL POLITICAL PREEMINENCE OF KUWAIT'S
LARGE ARISTOCRATIC SUNNI MERCHANT FAMILIES IS THREATENED
BY THE PACE AND DIRECTION OF POLITICAL CHANGE IN THE
EMIRATE. ALREADY EMBATTLED BY A DECADE OF FINANCIAL AND
POLITICAL SETBACKS, THE SUNNI MERCHANTS HAVE FAILED TO
SUCCESSFULLY NEGOTIATE ROADBLOCKS CREATED IN PART BY THE
RULING SABAH FAMILY, HAVE REFUSED TO ALLOW YOUNGER
MEMBERS OR NEW BLOOD INTO THEIR TIGHTLY CONTROLLED
LEADERSHIP STRUCTURE, AND MORE RECENTLY, APPEAR RAGGED
IN THEIR ORGANIZATION FOR SCHEDULED OCTOBER
PARLIAMENTARY ELECTIONS. BARRING ANY BOLD MOVE ON THE
PART OF THE AL-SABAH TO REINTRODUCE THE MERCHANT
FAMILIES INTO THE POLITICAL PROCESS, WE BELIEVE
TRADITIONAL MERCHANT POLITICAL AUTHORITY WILL CONTINUE
TO DECLINE AS THE PACE OF CHANGE INCREASES. END SUMMARY.

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THE POWER OF THE SUNNI ARISTOCRATS
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3. THE EMPOWERING MYTH (HISTORICALLY UNVERIFIABLE BUT
NOT NECESSARILY ILL-FOUNDED) OF KUWAITI SOCIETY HAS A
HANDFUL OF SEA-FARING FAMILIES FROM THE NOBLE AL-ANAIZA
TRIBAL CONFEDERATION ESTABLISHING A SETTLEMENT ON THE
OINT OF LAND JUTTING INTO THE BAY OF KUWAIT SOMETIME IN
THE EARLY TO MID-EIGHTEENTH CENTURY. ONE OF THE DOZEN
OR SO ORIGINAL FAMILIES, THE AL-SABAH, SOON EMERGED AS
PRIMUS INTER PARES, MEDIATING DISPUTES THAT AROSE AS THE
OTHER FAMILIES AVIDLY PURSUED BUSINESS INTERESTS.
TRADITION SAYS THIS DIVISION OF RESPONSIBILITY WAS A
PACT BETWEEN THE SABAHS AND THOSE WHO BECAME MERCHANTS.
THE REASONS FOR ALLOCATING THAT ROLE TO THE AL-SABAH ARE
LOST IN THE MISTS OF TIME, BUT THE FUNDAMENTAL
RELATIONSHIP REMAINS REMARKABLY THE SAME TODAY.
SOCIALLY, THE AL-SABAH STILL MANEUVER ON AN ESSENTIALLY
EQUAL BASIS WITH THOSE FAMILIES WHO, BASED ON THEIR ROLE
IN FOUNDING THE COUNTRY AND ESTABLISHING THE RULE OF THE
AL-SABAH, FORM THE CORE OF THE KUWAITI MERCHANT
ARISTOCRACY.


4. ELITE AND ECONOMICALLY POWERFUL, THE SUNNI MERCHANTS
HAVE SPREAD THEIR INFLUENCE THROUGHOUT THE SOCIETY AND
HAVE HISTORICALLY ACTED AS AN EFFECTIVE CHECK AGAINST
THE POLITICAL POWER OF THE AL-SABAH. THE CONSIDERABLE
EXECUTIVE TALENT OF THE MERCHANT CLANS, OFTEN THE
PRODUCT OF LEADING UNIVERSITIES IN THE WEST, HAS BEEN
PUT TO USE IN THE SERVICE OF THE STATE AS OFTEN AS IN
THE SERVICE OF THE FAMILY LEDGERBOOK. SCIONS OF THE
SUNNI PATRIARCHS HAVE LED KEY MINISTRIES AND MANAGED THE
INVESTMENT PORTFOLIOS AND OIL WEALTH OF KUWAIT WHILE
THEIR ELDERS HAVE BEEN KEY ADVISERS (AND PRIVATE
BANKERS) TO VARIOUS AMIRS. IN GENERAL, HOWEVER,
MERCHANT FAMILY INTEREST IN POLITICAL AFFAIRS HAS BEEN
TO MAINTAIN A BUSINESS AND INVESTMENT CLIMATE CONDUCIVE
TO PROFIT-MAKING. THIS FOCUS HAS LED THE MERCHANT
FAMILIES AT TIMES TO TAKE POSITIONS AMAZINGLY "LIBERAL"
IN REGIONAL TERMS ON SOME ISSUES. HOWEVER, WHEN IT HAS
SERVED THEIR INTERESTS, THE MERCHANT FAMILIES HAVE
OPPOSED LIBERALIZATION TO STAND FIRMLY ALONGSIDE THE
RULING AL-SABAH FAMILY. AT THE TIME, FOR EXAMPLE, MANY
IN THE MERCHANT FAMILIES ACQUIESCED IN THE 1976 AND 1986
GOVERNMENT DISSOLUTIONS OF THE NATIONAL ASSEMBLY SINCE
IN THEIR VIEW, PARLIAMENTARY MACHINATIONS APPEARED TO
THREATEN COMMERCIAL TRANQUILITY.


5. THE CORE FAMILIES OF THE SUNNI MERCHANT ELITE REMAIN
THE OLD FOUNDING FAMILIES: THE AL-BAHAR, AL-NISIF,
AL-SAGER, AL-GHANIM, AL-ABDELRAZZAQ, AL-RASHED,
AL-ROUMI, AL-NOURI, AL-HAMAD, AL-ABDULHADI,
AL-ABDULGHAFOUR AND OTHERS WHO RECALL THE DISTINCT AREAS
OF THE OLD WALLED CITY OF KUWAIT WHERE THEIR ANCESTORS
SETTLED. HOWEVER, STATUS AMONG THE SUNNI ELITE IS BY NO
MEANS STATIC. OTHER SUNNI FAMILIES WITH ANAIZA ROOTS OR
FROM THE NAJD REGION OF SAUDI ARABIA MIGRATED TO KUWAIT
OVER THE PAST 150 YEARS AND BY VIRTUE OF THEIR NOBLE
ARAB STOCK, HARD WORK, AND BUSINESS ACUMEN, WERE READILY
INTEGRATED INTO THE RANKS OF THE MERCHANT ELITE. AMONG
THESE FAMILIES ARE THE AL-DUAIJ, AL-SHAYA, AL-GHANNAM,
AL-KHORAFI, AL-OTHMAN, AL-GHARABALLY, AL-MARZOUK,
AL-WAZZAN (SUNNI),AL-FAWZAN, AND AL-BABTAIN. MANY OF
THE GRANDEST DIWANIYA HALLS OF KUWAIT TODAY FEATURE A
PORTRAIT OF A FATHER OR GRANDFATHER WHO WORKED AS A
DECKHAND, WATER SELLER IN THE SOUQ, OR DITCHDIGGER
BEFORE ACCUMULATING THE FAMILY FORTUNE.

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THE EIGHTIES: A DECADE OF DISAPPOINTMENT
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6. SINCE KUWAIT'S INDEPENDENCE IN 1961, RAPID
POPULATION GROWTH, THE ACCESS OF ALL KUWAITIS TO A GOOD
EDUCATION, AND THE SPREAD OF OIL WEALTH LED TO A NATURAL
DECLINE IN THE TRADITIONAL POWER OF THE WEALTHY MERCHANT
ELITE. GENERALLY, IN MODERN KUWAIT, INFLUENCE LOST BY
THE MERCHANT FAMILIES DEVOLVED TO THE GOVERNMENT I.E.
THE AL-SABAH. (MERCHANT POWER FIRST BEGAN TO DECLINE
WHEN THE GOVERNMENT GAINED ACCESS TO AN INDEPENDENT
SOURCE OF INCOME VIA OIL REVENUES. NO LONGER WERE THE
IMPOVERISHED AMIRS DEPENDENT ON THE WEALTHY BUSINESS
FAMILIES. IN FACT, AS OIL WEALTH CAME TO DOMINATE THE
ECONOMY, THE GOVERNMENT COULD INFLUENCE WHICH FAMILIES
PROSPERED FINANCIALLY AND WHICH DID NOT.) ACCORDING TO
LOCAL OBSERVERS, THE DECLINE OF MERCHANT POWER
ACCELERATED CONSIDERABLY DURING THE LAST DECADE. A
IMPORTANT FACTOR WAS THE SABAH FAMILIES ENTRY INTO THE
COMMERCIAL FIELD WHICH GREATLY ANTAGONIZED THE SUNNI
MERCHANTS AND CALLED INTO QUESTION THE PACT BETWEEN THE
TWO PARTIES. THERE WERE, HOWEVER, OTHER CONTRIBUTING
FACTORS INCLUDING THE LOSS OF TRADITIONAL MERCHANT
TRADING PARTNERS DUE TO THE IRAN-IRAQ WAR, ECONOMIC
STAGNATION SPILLING OVER FROM THE COLLAPSE OF THE SUQ
AL-MANAKH STOCK MARKET, AND GROWING AUTHORITARIANISM
FROM A GOVERNMENT IN CONTROL OF SEEMINGLY UNLIMITED
PETRO-DOLLARS.


7. NOT SURPRISINGLY, DURING THE EIGHTIES EVERY GROUP IN
KUWAIT BECAME MORE AND MORE RELIANT ON GOVERNMENT
LARGESS; THE TRADITIONALLY INDEPENDENT SUNNI MERCHANTS
SUFFERED THE MOST AS A RESULT. AS THE MERCHANT FAMILIES
LOST TRADITIONAL POLITICAL POWER AND INDEPENDENCE, SOME
INCREASINGLY ADOPTED AN "OPPOSITION" STANCE TOWARDS THE
AL-SABAH, AFFECTING PERFORCE THEIR BEHIND THE SCENES
EXERCISE OF INFLUENCE. OTHERS HAVE TRIED TO CONTINUE
THEIR OLD POLICIES BUT FROM A MUCH WEAKENED POSITION.
UNLIKE MOST OF KUWAIT'S OTHER "OPPOSITION" GROUPS, THE
MERCHANT FAMILIES DO NOT NECESSARILY SUPPORT INCREASED
DEMOCRATIZATION, EXPANDED SUFFRAGE, OR OTHER POLITICAL
REFORM (INCLUDING IMPLEMENTATION OF ISLAMIC LAW).
INSTEAD, THEY EMPHASIZE THE NEED TO GIVE INCREASED
POLITICAL POWER TO KUWAITIS WITH PROVEN LEADERSHIP AND
MANAGEMENT SKILLS (THEMSELVES) SO KUWAIT'S OIL WEALTH
WILL BE USED WISELY WHILE A MONETARY AND REGULATORY
CLIMATE FAVORABLE TO THE PRIVATE SECTOR IS ENSURED.

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THE NINETIES -- POLITICAL FREEFALL?
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8. EXTREMELY ACTIVE AND PROMINENT IN PAST GOVERNMENTS
AND POLITICAL CAMPAIGNS, THE SUNNI MERCHANT FAMILIES NOW
APPEAR TO BE FAILING TO ORGANIZE EFFECTIVELY FOR THE
COUNTRY'S SCHEDULED OCTOBER PARLIAMENTARY ELECTIONS.
THE MERCHANT FAMILIES ATTRACTED SOME ATTENTION IN THE
RECENT HIGHLY POLITICIZED ELECTIONS FOR THE BOARD OF THE
CHAMBER OF COMMERCE. HOWEVER, THE OUTCOME OF THAT
ELECTION ILLUSTRATED THE POLITICAL INERTIA OF THE
MERCHANT ARISTOCRATS. SOME OBSERVERS CHARACTERIZED THE
CHAMBER OF COMMERCE ELECTION AS A DRY RUN FOR OCTOBER
ELECTIONS PITTING A DEMOCRATIC OPPOSITION AGAINST A
SLATE OF CANDIDATES BACKED BY THE AL-SABAH. IN FACT,
THE FACE-OFF WAS MORE OF A POLITICAL PRIMARY WITH A
CHOICE BETWEEN THE BIG-NAME SUNNI MERCHANTS WHO HAVE
ALWAYS CONTROLLED THE CHAMBER OF COMMERCE AND A GROUP OF
NEWCOMERS TRYING TO UNSEAT THE TRADITIONALISTS BY
RUNNING A SLATE FROM THE "ORDINARY FAMILIES" INCLUDING
SOME SHIA, BEDOUIN, AND NON-ARISTOCRATIC BUSINESSMEN.
THIS KUWAITI "RAINBOW COALITION" FAILED CONVINCINGLY IN
ITS ATTEMPT TO UNSEAT THE ELITE FAMILIES FROM THEIR
POWER BASE IN THE CHAMBER OF COMMERCE.


9. SEEMINGLY CONTENT TO HAVE PROVED THAT THEY RETAIN
THEIR GRIP ON THE BASTION OF SUNNI MERCHANT POWER, THE
LEADING MEMBERS OF THE FAMILIES APPARENTLY ARE NOT
TAKING EFFECTIVE ACTIONS TO COMPETE IN THE OCTOBER
ELECTIONS FOR THE NATIONAL ASSEMBLY. WHILE THE MERCHANT
FAMILIES HAVE A "PROTO-PARTY" REPRESENTED IN THE
OPPOSITION ALLIANCE, THEIR GROUP, THE CONSTITUTIONAL
FRONT, HAS DONE LITTLE IF ANYTHING TO ORGANIZE
EFFECTIVELY IN ANTICIPATION OF ELECTIONS. THE ONLY
PROMINENT SUNNI MERCHANT WHO HAS DECLARED HIS CANDIDACY
TO DATE IS FORMER FINANCE MINISTER AND PARLIAMENTARIAN
JASIM AL-KHORAFI. OVERALL, THE MERCHANT FAMILIES --
BOTH INDIVIDUALLY AND COLLECTIVELY -- HAVE FOR THE FIRST
TIME IN THE HISTORY OF KUWAITI ELECTIONS FAILED TO AGREE
ON A SLATE OF CANDIDATES. WITH THIS LACK OF AGREEMENT
MANY OF THE MOST POPULAR, ABLE, AND
POLITICALLY-CONNECTED MERCHANT LEADERS HAVE APPARENTLY
REFUSED TO RUN.

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MERCHANT LEADERSHIP CRISIS
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10. ONE OF THE MOST IMPORTANT -- AND DAMAGING --
PROBLEMS FOR THE MERCHANTS' POLITICAL FUTURE IS
SELF-IMPOSED. THERE IS AN ALMOST CRIPPLING ABSENCE OF A
FORMAL STRUCTURE THAT WOULD ALLOW FOR THE DEVELOPMENT OF
NEW LEADERSHIP. THE MERCHANTS AFTER ALL REPRESENT
EXTENDED TRADITIONAL CLANS THAT CANNOT EASILY ADOPT THE
INSTITUTIONAL TRAPPINGS OF A PARTY OR POLITICAL INTEREST
GROUP. NEWLY REELECTED CHAIRMAN OF THE CHAMBER OF
COMMERCE ABD AL-AZIZ AL-SAGER, A FORMER NATIONAL
ASSEMBLY SPEAKER AND MINISTER OF HEALTH, IS NOW 79 YEARS
OLD. WHILE STILL ALERT, HIS HEALTH IS POOR AND HE
REFUSES TO RELINQUISH ANY PERSONAL POWER. SAGER ALSO
RESISTS THE CREATION OF ANY STRUCTURE TO ALLOW YOUNGER
MERCHANTS TO ASSUME ANY INTER-FAMILY LEADERSHIP
AUTHORITY.


11. ANOTHER INTERNAL PROBLEM THE MERCHANTS FACE IS THAT
MANY OF THE MOST IMPRESSIVE MEMBERS OF THE FAMILIES ARE
MORE COMFORTABLE PURSUING BUSINESS RATHER THAN POLITICAL
INTERESTS. UNWILLING TO CHALLENGE ABD AL-AZIZ AL-SAGER
AND HIS SEPTUAGENARIAN CRONIES, THE MIDDLE GENERATION
MERCHANTS WHO COULD NATURALLY PROVIDE LEADERSHIP TO
THEIR FAMILIES ARE TOO OFTEN MORE ABSORBED WITH
HAPPENINGS IN NEW YORK, LONDON, PARIS, OR GENEVA THAN IN
KUWAIT. WHILE REGARDING THEMSELVES AS THE "TRUE
KUWAITIS", THEY HAVE LITTLE INTEREST IN DIRTYING THEIR
HANDS WITH THE QUOTIDIAN PROBLEMS OF THEIR MORE
CONSERVATIVE AND MIDDLE-CLASS COUNTRYMEN. THE
ARISTOCRATIC MERCHANTS HAVE ALWAYS DESPAIRED OF THE
"IGNORANT" LOYALTY OF KUWAIT'S BEDOUIN TO THE AL-SABAH,
IGNORING THE FACT THAT THE LEGITIMACY OF THE AL-SABAH
AMONG AVERAGE KUWAITIS STEMS FROM SEVERAL DECADES OF
AL-SABAH INVOLVEMENT IN PROVIDING VALUED GOVERNMENT
SERVICES.


12. SOME YOUNGER MEMBERS OF THE MERCHANT FAMILIES HAVE
BECOME MORE AND MORE IDENTIFIED WITH OTHER GROUPS IN THE
OPPOSITION ALLIANCE. MUHAMMAD JASIM AL-SAGER, EDITOR OF
"AL-QABAS" NEWSPAPER AND NEPHEW OF THE SUNNI MERCHANT
PATRIARCH ABDELAZIZ AL-SAGER, IS A SPOKESMAN FOR A MUCH
BROADER OPPOSITION POINT OF VIEW THAN JUST THAT OF THE
SUNNI MERCHANTS. TWO SONS OF ONE OF KUWAIT'S WEALTHIEST
MERCHANTS, ABDEL AZIZ AL-GHANNAM, ARE MEMBERS OF THE
MOSLEM FUNDAMENTALIST MOVEMENT - MUCH TO THE CHAGRIN OF
THE OLDER FAMILY MEMBERS. YET EVEN THOUGH THESE YOUNGER
GENERATION MERCHANTS HAVE ADOPTED AN INCREASINGLY
IDEOLOGICAL BASE FOR THEIR OPPOSITION POSITION, IT
APPEARS UP TO THIS POINT THAT THEIR PRIMARY TIES REMAIN
ULTIMATELY WITH THEIR FAMILIES.


13. THE HOPE OF SOME OF OUR MERCHANT CONTACTS IS THAT
AFTER THE ELECTIONS, THE AL-SABAH WILL ASK LEADING
MERCHANT FAMILY LEADERS TO JOIN THE GOVERNMENT IN KEY
CABINET POSITIONS. THEY ARGUE THAT ONLY THE BIG-NAME
MERCHANTS CAN PROVIDE THE LEADERSHIP AND EXPERTISE
NEEDED TO GUIDE KUWAIT THROUGH THE MULTIPLE CHALLENGES
IT FACES OVER THE NEXT SEVERAL YEARS. THE MERCHANTS
CLAIM (WITH A GREAT WEIGHT OF EVIDENCE) THAT ONLY WHEN
THE AL-SABAH HAVE GOVERNED WITH THE GUIDANCE AND UNDER
THE INFLUENCE OF THE SUNNI MERCHANTS HAS THE COUNTRY
PROSPERED. THEY AGREE, HOWEVER, THAT THE RULING FAMILY,
ACCUSTOMED TO UNCHECKED EXERCISE OF POWER AND
EXPENDITURE OF PUBLIC FUNDS, WILL NEVER WILLINGLY INVITE
STRONG, INDEPENDENT MINISTERS INTO THE GOVERNMENT.
WHILE THE MERCHANTS MAY LONG FOR THE DAYS WHEN THEY
COULD SHARE POWER WITH THE AL-SABAH, CONSTITUTIONAL RULE
IN POST-WAR KUWAIT IS LIKELY TO SEE OTHER MORE ACTIVE
AND AMBITIOUS BLOCS CONTESTING FOR THAT PRIVILEGE.

GNEHM



CONFIDENTIAL