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Kuwait: Stock Market Booms On Postwar Hopes

  • Charles Recknagel

While stock markets elsewhere in the world are in the doldrums, Kuwait's stock exchange is booming. The reason is that many investors in Kuwait are convinced that Iraqi President Saddam Hussein is about to be ousted and that Iraq's postwar reconstruction will bring a windfall of contracts for local businesses.

Kuwait City, 12 March 2003 (RFE/RL) -- Iraq's 1990 invasion of Kuwait devastated this tiny emirate's oil-rich economy. Now, with U.S.-led forces poised to invade Iraq, Kuwait is set to reap a windfall of economic opportunities that could come from the postwar reconstruction of its larger neighbor.

For many investors here, that invasion now seems so likely that they are rushing to buy shares in Kuwaiti trading companies dealing in everything from importing construction and telecommunications equipment to food. The investors hope the local companies will get a major share of contracts to supply Iraq with the materials it needs to rebuild once Iraqi President Saddam Hussein is gone.

The gambling fever is most evident on the floor of the Kuwait Stock Exchange, where hundreds of businessmen -- almost all in traditional brown and gray robes with white head scarves -- drop in throughout the day to watch the electronic tracking of company share prices.

The share values keep going up in a bull run the likes of which many say they haven't seen since 1979. That was just before the eight-year Iraq-Iran War -- closely followed by the Gulf War -- shook regional stability and gave many investors jitters that continue to this day.

Up in the executive offices, officials of the stock exchange say they are confident the removal of Hussein would make those jitters go away for good.

Wafa Muhammad al-Rashid is manager of the exchange's Technical Bureau, which tracks company gains and losses. She said the continuing crisis over Iraq has long scared foreign investors away from Kuwait and caused many Kuwaiti investors to send their money abroad. "We really would like to finish with this Iraqi crisis. It has been dragging on and on since the invasion and since the liberation of Kuwait. And having a hostile neighbor is not good for any investment," al-Rasheed said.

Now, she said, people feel change is in the air. "If the war finishes, it is going to be a new era for Kuwait for business because we are the closest country to Iraq. And we could participate in rebuilding the infrastructure, and this could mean money," al-Rasheed said.

Signs of money already being made are evident all around Kuwait as vast quantities of military equipment are unloaded in the ports. Kuwait has eight major ports, and all are reported to be operating at maximum capacity to bring in supplies for U.S.-led forces.

Kuwaiti port authorities told local media recently that prior to the military buildup, the country's ports were operating at 65 percent capacity. Now they are working around the clock and under such tight security that only dockworkers can go near them. A blanket ban on any recreational activities in the waters around the ports has prevented even the most curious journalists from viewing how much material is arriving.

Businessmen here say they hope that once all the military hardware moves north, the ports will be equally flooded with civilian goods heading in the same direction.

At the stock exchange, Faisal Haji manages the brokerage office of the Kuwait Investment Company. He said he has heard that contracts are already being made secretly with Iraqi businessmen to bring in some materials for the post-Hussein market. "There should be much construction in Iraq, and I have heard many contracts are already being made to supply many things to Iraq afterwards. We are very close to Iraq, so the Kuwait port will be the main port for supplying Iraq with what they need," Haji said.

He said that one rumored shipment is a stock of air conditioners destined for the southern Iraqi port of Basra, which is sweltering in the summer. Basra, like the rest of Iraq, is hard hit by sanctions, and few today can afford luxury cooling. But regional businessmen are hoping the demand will quickly appear once a war is over and the Iraqi economy begins to recover.

Prior to the 1990 Persian Gulf crisis, Kuwait had strong trading ties with its neighbor. Iraq exported dates and water to the emirate, and Kuwait's large ports served as a major transit point for imports to Iraq. Kuwait, which has only 2.1 million people, would like to restore those ties and again have access to Iraq's population of 26 million.

Today, the trade ties between the two countries are negligible. Postal service between them has been cut since the 1990 Iraqi invasion, and the border has been sealed off by a fenced demilitarized zone. Anyone who wants to visit, or even send a letter to, relatives in Iraq has to do so via a third country.