In Kuwait, oil wealth dulls economic change :: Wall Street Journal
Carpe diem

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Suddenly, they were looking at a $9 billion surplus. This was very good news for Kuwaitis like Madelene Al-Jaafar, a 63-year-old widow with three grown children.

Ms. Jaafar estimates she's received about $45,000 in additional subsidies and cash handouts from the government since then.

These include a $688 payment she collected along with each of Kuwait's one million citizens, a waiver for a decade of unpaid electric bills, a hefty bonus for government workers -- including retired ones like Ms. Jaafar -- and a payment of more than $15,000 to help her build a home.
Meanwhile, she's benefiting as Kuwait City undergoes an extreme makeover, with plans for new skyscrapers, waterfront shopping malls and a highly subsidized bus system with luxurious shelters and very short waiting times.
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Qatar announced a waiver of electricity and water charges earlier this year, which will cost the government $400 million annually.
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few things induce complacency like higher oil prices, according to those who want to see the economy modernized. "Oil prices begin to climb, and immediately the government sits back and relaxes," says Ali Al-Mousa, chairman and managing director of Kuwait's Securities Group investment bank and a former minister of planning. "Visit any government office and you can see it today."

The Gulf's unique combination of exceedingly young populations and elephantine public sectors presents the risk of a fiscal time-bomb, supporters of change argue. Almost two-thirds of Kuwaitis are under 20 and will soon want jobs.

They'll expect to find them with Kuwait's employer of first and last resort: the government, which promises a salary to any citizen who wants one. Almost all Kuwaitis who work are on the public payroll.
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Electric power, for example, costs Kuwaitis about 10 percent of the market price. That is no small thing in one of the hottest countries in a hot region, where residents typically run their air-conditioning year-round. Fuel prices are heavily subsidized.

Meanwhile, a new constitution gave every Kuwaiti the "right to work," which basically translated into a guaranteed government job. Most jobs amounted to government sinecures, requiring little time or talent. . . .
When Ms. Jaafar got married, the government gave her and her husband $17,150 to help with expenses. The couple also received free land, a car and cash to help build a house. Their expenses were minimal: electric bills, which often go unpaid, were almost nothing. Subsidized food made basic meals close to free. On her 10th anniversary, a congratulatory check for nearly $250,000 arrived from the government. Ms. Jaafar retired after 15 years in her government job of three hours a day. But her pension still brings in 95 percent of her previous salary, which was $4,116 a month.

Kuwaitis wanting to invest in the stock market can get interest-free loans -- something Ms. Jaafar recently did to cash in on the stock-market boom. Interest-free loans are also available for travel abroad.
Some members of the National Assembly are lobbying for the government to forgive these individual debts -- just as the government recently did for unpaid electric bills. They quote Article 20 of Kuwait's constitution, which stipulates the aim of the national economy includes providing "prosperity for citizens."
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The percentage of working Kuwaitis on the government payroll has risen to 96 percent from 80 percent two years ago.
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Kuwait's National Assembly is elected, and it's among the most active and responsive to constituencies in the region. Although the ruling Emir and the government have the final word, they've been reluctant to flout the elected body's collective will.

But the National Assembly is packed with populists devoted to defending the country's welfare state.

Let's forget about tomorrow
Let's forget about tomorrow
Let's forget about tomorrow for tomorrow never comes
-Forget Domani (N. Newell, R. Ortolani)
-from the MGM Motion Picture "The Yellow Rolls Royce"
Words and Music by Riziero Ortolani and Norman Newell , 1965
With The Allesandro Allessandroni Singers under the direction of Ray Charles