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Saud Nasir al-Sabah is the minister of oil for Kuwait and chairman of Kuwait Petroleum Corporation. Best known as his country's ambassador to the United States from 1981-92, he came to wide American attention during the Iraqi invasion and the subsequent crisis and war. He returned to Kuwait in 1992 to serve as minister of information. A member of the ruling house of Kuwait, Mr. Al-Sabah was born in 1944, became a barrister-at-law in 1968 in London, England, and entered government service in 1969 with the Kuwaiti ministry of foreign affairs. Daniel Pipes and Patrick Clawson interviewed him in Washington on November 18, 1998.

DEALING WITH IRAQ

Middle East Quarterly: Kuwait's problems with Iraq remain unresolved. What do you want Baghdad to do?

Saud Nasir al-Sabah: To respect the Security Council resolutions pertaining to it, now over forty in all. Since the invasion of Kuwait in 1990, we have consistently called for just this.

MEQ: Are some resolutions more important than others?

Al-Sabah: Resolution 687 is the mother of resolutions, dealing with weapons of mass destruction, Kuwaiti prisoners of war and hostages in Iraq, just compensation, and the return of all stolen items from Kuwait. Baghdad must not be able to pick and choose from that resolution but must implement it in its entirety.

MEQ: Every few months, the United States either threatens or actually uses force against Iraq. Many observers have concluded that these threats have extremely limited impact. What realistically might force accomplish?

Al-Sabah: Not too much. President Clinton is correct to argue that the start of hostilities would mean the end of UNSCOM [United Nations Special Committee]. That's a very unattractive prospect because UNSCOM needs to continue its work ridding Iraq of all weapons of mass destruction. Put differently, Mr. Clinton has a choice to make: whether to destroy the weapons of mass destruction through air strikes or to have UNSCOM do that job. Nobody wants war; we need UNSCOM to go back to finish its job.

MEQ: Do you see an end to Saddam's pattern of breaking his word, then at the last minute backing down?

Al-Sabah: Iraq has been jerking around the Security Council, the United States, and the whole coalition. We saw this back in February, when it at the last moment backed down from a confrontation and signed an agreement with Secretary-General Kofi Annan, thus narrowly avoiding war. The Clinton administration indicates that it has no more patience with such behavior; if that's so, a serious confrontation appears likely.

MEQ: You have confidence in this administration?

Al-Sabah: Look, I have full confidence in it, as we had in the previous administrations. But that's not even the main issue now. It's not what the administration wishes; it is rather the whole United States of America, plus the coalition, our partners, and the Security Council.

We are on the right course. Iraq did back down in February and again this month. Saddam vowed UNSCOM would never return to Iraq and he had to go back on this; but they're back and they're in business.

MEQ: What's to stop this from happening all over again?

Al-Sabah: It will be a different ball game next time around. Just watch.

MEQ: What is your ideal course right now?

Al-Sabah: Having Saddam contained, forced to implement all Security Council resolutions, even as the outside world works to find a viable and acceptable alternative to comply with all the norms of international law and human rights and democracy. We would like to see a clean-cut end to this regime and a peaceful transition to a better government. That would be a perfect outcome.

SUCCESSION IN IRAQ

MEQ: You have said that a weak Saddam Husayn is less threatening to Kuwait than some other regime.1 Please explain what you mean.

Al-Sabah: We don't see a viable alternative to Saddam Husayn emerging, one that would fulfill our desires to have a democratic and peace-loving Iraq for a neighbor. Given this pessimism, Saddam Husayn is perhaps less threatening than the alternative, which I see mainly as a civil war that would consume Iraq. Once Saddam falls, I expect a major civil war would erupt in Iraq. The Kurds in the north, Shi‘a in the south, and anti-Saddam Sunnis in the middle of Iraq will be busy settling scores. I also fear that a massive civil war would go beyond the borders of Iraq and create chaos in the region, where all the neighboring countries would get involved in it, as they did in Lebanon. Civil war in Iraq would make civil war in Lebanon look like a stroll in the park. We are extremely concerned this civil war could also spill over into Kuwait.

Don't misinterpret what I've said as a brief for Saddam or his regime. I have no brief for Saddam, but we are talking strategic interests.

MEQ: You despair, then, of any alternative to Saddam Husayn?

Al-Sabah: I'm afraid so.

MEQ: Last Sunday [Nov. 15, 1998], President Clinton indicated he now backs the idea of liberating Iraq.

Al-Sabah: We are all for the liberation of Iraq, just as in 1991 we wanted the liberation of Kuwait.

MEQ: Baqir al-Hakim, the Iraqi opposition leader living in Tehran, has visited Kuwait. Is your government providing him with support?

Al-Sabah: We welcome all the opposition groups in Kuwait, just as the United States does here. We don't want to meddle in the internal affairs of Iraq, but we try to work with the Iraqis to find an alternative to the existing regime. We have a lot at stake in a neighbor that would respect the territory, integrity, and sovereignty of Kuwait.

MEQ: And what role do you see his and the other Iraqi opposition groups playing in
arriving at a democratic and peaceful Iraq?

Al-Sabah: Whether Baqir al-Hakim finds support inside Iraq is something we leave to the Iraqi people. But when will they have the chance to decide? Not ever under the regime of Saddam Husayn. That would happen only in the aftermath of the regime's collapse, followed by civil war and who knows what disasters—which is our major fear.

MEQ: Have the Iraqi opposition groups renounced the claim to Kuwait?

Al-Sabah: Baqir al-Hakim and the other opposition leaders have all made that
commitment.

United States

MEQ: Is the United States the permanent guarantor of Kuwaiti sovereignty?

Al-Sabah: Kuwait is a small nation bordered by larger nations. Before 1990, we never focused on a large military force, directing our income instead to education, health, and the like. Following the events of 1990, though, we came to terms with the fact that Kuwait should have a viable deterrent military force, and since then we have been working hard to build it. Toward this end, we have identified our allies and are working with them to achieve that objective.

MEQ: Are you there yet?

Al-Sabah: No, not yet. Take into account the size of the country and its population, and you see what a very great challenge this is. Fortunately, the United States, Britain, France, and many of our friends offer our very small nation an alliance.

MEQ: Do you see a way of Kuwait weaning itself from dependence on the United States?

 

Al-Sabah: Despite our real efforts to build a military force, Kuwait will for the foreseeable future continue to need a strong alliance with the United States, Britain, France and other coalition forces to achieve its objectives. Within the next five, maybe ten years, we could have a deterrence force that would allow us to avoid involving young men and women from the United States and others in our fight, but a smaller country like Kuwait will always need the support of larger allies.

MEQ: Would it be fair to say that the security of Kuwait ultimately depends on American public opinion?

Al-Sabah: It remains very important.

MEQ: Do you worry about a softening in American public opinion?

Al-Sabah: Not really. I was in Houston the other night having dinner with President Bush, Governor Bush, and others. The conversation turned to some people talking about the sufferings of the Iraqi people. I said fine, we all sympathize with the sufferings of the Iraqi people, but doesn't anyone really sympathize with the sufferings of the American people? I look at the sufferings of those tens of thousands of soldiers who have to be apart from their families during the holiday season. When you see those young men and women leaving their loved ones behind, crying and kissing, hugging each other, boarding military planes, going to fight a war—that's more suffering than anyone else experiences. Thanksgiving is coming up, then Christmas and New Year's, and they'll spend it in the front-lines, not knowing whether they'll be coming back or not. This is the suffering we should be talking about.

MEQ: Do you expect that American public opinion will stay strong on the matter of protecting Kuwait?

Al-Sabah: I'm quite confident.

MEQ: On what basis?

Al-Sabah: Because the American people are decent and reasonable. They have a sense of right from wrong, and they're willing to work for human rights, democracy, and freedom. These are the most important things which the American people believe in.

MEQ: Things are getting more solid or more dicey in this regard?

Al-Sabah: Better. Remember, it took a lot of teaching and coaching in 1990-91 for the American people to know exactly what was going on in our part of the world. By 1998, a much larger number of people support U.S. policy in the region. Action against Iraq and Saddam Husayn wins virtually unanimous support in Congress, whether in the House or the Senate, on the Democratic side or the Republican. In fact, Congress is pushing the president to do more. This is a complete reversal from 1990-91, when the Senate barely approved the use of force against Iraq. That's why I'm quite confident about American public opinion.

MEQ: Do you worry about Kuwait depending on an outside force?

Al-Sabah: Well, we are hardly alone in this. Had it not been for the political and military support of the United States, for instance, Israel would not exist today.

MEQ: True, they have American weapons; but you have soldiers.

Al-Sabah: They have weapons and soldiers.

MEQ: They don't have American soldiers.

Al-Sabah: Not American soldiers but many Jewish Americans immigrate to Israel and become Israeli citizens. That's how there are now six million Israelis. Where do you think they come from?

MEQ: Not the United States, except for a hundred thousand of them, or 1½ percent of the total population.

Al-Sabah: Yes, immigrants come from many different countries, but the country needs U.S. financial, technical, and military assistance to build a viable deterrent force.

Israel

MEQ: Speaking of Israel, in early 1996, you praised that country for tolerating the Iraqi Scud missiles in 1991, noting that if it had entered the war against Iraq, the international coalition would have collapsed.2 What sort of response did your groundbreaking comment provoke?

Al-Sabah: Having lived in Washington during Desert Storm in 1991, I've become very open with my views. I say the same again: Had Israel entered the war, that would have harmed, divided, and split the coalition and made a mess of the Desert Storm operation. Deputy Secretary Lawrence Eagleberger's mission to Israel, when he encouraged the Israelis to stay out, was a fantastic success. Their self-constraint not to enter the war was well received by us. Israel made a wise decision; their restraint helped bring the whole operation to a satisfactory conclusion.

MEQ: You also talk of a need to come to terms with Israel's existence, to move beyond the stale arguments of the past.

Al-Sabah: That's not just for Kuwait to do but for the whole Arab world. We have in fact come to terms with Israeli existence.

MEQ: The whole Arab world has come to terms with that?

 

Al-Sabah: Yes, the whole Arab League. No one calls for the elimination of Israel. The Camp David agreements, the Oslo agreements—those and other documents indicate that everything is in line. The acceptance of Israel as a state is behind us; it's no longer a contentious issue now. The discussion now is about details: where to draw the borders is the issue, as well as the fate of the Palestinians, and the whole geopolitical arrangement. That's for the Palestinians and Israelis to work out, and they have been doing just that at Wye Plantation. Still, it will take some time for a feeling of trust to develop between the two parties. I'm cautiously optimistic.

MEQ: You're saying there has been full acceptance of a sovereign Jewish State in the Middle East?

Al-Sabah: No doubt about it. Look at the diplomatic relations Israel has with Egypt, Jordan, and the Palestinians. Acceptance as an issue is behind us.

The Oil Market

MEQ: Why is the price of oil now so low, hovering just above $10 a barrel?

Al-Sabah: I attribute the decline in oil prices mostly to the OPEC [Organization of Petroleum Exporting Countries] decision taken in Jakarta in December 1997, when OPEC legitimized all the violations which increased the quota totals from 23 million to 26 million a day. Those 3 million barrels of oil flooded the market on the understanding that there would be no further violations. Of course, that's just wishful thinking. Violations continue, to the point that OPEC members now produce 28 million barrels a day. So prices began to decline immediately after the December 1997 meeting, and they've been declining ever since. At subsequent meetings in March and June, we reduced the output by 2.6 million barrels a day from OPEC. That improved prices and stabilized them. Had we not done this, the price of the barrel of oil would be just $6 today. We're having over 90 percent compliance, a very impressive record.

MEQ: Which way do you see oil going in the near-term future?

Al-Sabah: I expect the average oil price in 1999 to be 25 percent below current prices, and that this low price will persist for some time.

MEQ: The U.N. Security Council has authorized Iraq to export $10.4 billion worth of oil a year. By some estimates, the increase in Iraqi oil output in 1998 compared to 1997 will be as much as the reduction in the output of all other (OPEC) members, or about 1.5 million barrels a day. To what extent is this increased Iraqi oil output responsible for the drop in oil prices since late 1997? Would it be accurate to say that the U.N. Security Council action has meant a loss of billions of dollars in income for the Gulf Cooperation Council (GCC)3 states?

Al-Sabah: At the time the cuts were made in June, Iraq was producing around 1.4-1.5 million barrels a day. We did not expect it to increase by around 1 million barrels a day, to 2.4-2.5 million barrels, which in fact did happen in the subsequent three months. Putting all these factors together—excessive production, noncompliance, then over 90 percent compliance, Iraq coming into the oil market—something like 1.5 to 2 million barrels of excess oil is still on the market. This explains the decline in oil prices.

MEQ: What is the impact of the fall in prices?

Al-Sabah: This price hurts the economies of all the oil exporting countries—look at Iran with its 70 million people, Nigeria with 100 million, or Indonesia with 200 million. Though we in Kuwait are least affected because of our small population and substantial financial reserves, we still do not want to sell an important strategic commodity at such a low price. The United States is also hurt, especially the southern states and the oil companies. Majors have done better than smaller U.S. companies, many of which have gone into liquidation because of the low oil prices.

MEQ: What price would you like to see?

Al-Sabah: At our last meeting in June when we made all those cuts and commitments, we looked at $16-17 per barrel as a reasonable price.

OPEC

MEQ: What is the role of OPEC these days?

Al-Sabah: Exports from OPEC and non-OPEC sources are about equivalent these days. Many countries that previously had to import have now entered the market as exporters. In short, the OPEC of today is not OPEC of the 1970s. It's no longer a cartel as it used to be.

MEQ: When non-OPEC countries like Mexico, Norway, Oman, and Russia attend OPEC meetings and join in OPEC efforts, aren't they de facto members of the club?

Al-Sabah: Frankly, some non-OPEC countries attending our meetings in some instances fulfill our agreements better than do OPEC
members.

MEQ: Non-OPEC states have a better record of compliance than the OPEC ones?

Al-Sabah: From our records, yes, better than some—not all—members of OPEC.

MEQ: So the difference between OPEC and non-OPEC producers is in name only?

Al-Sabah: You have to understand why they come to our meetings. They feel the same pain of too-low prices that we do.

MEQ: Is the difference between OPEC and non-OPEC anything more than theoretical?

Al-Sabah: The key is not who belongs to OPEC but who produces oil. When we met recently in Capetown, South Africa, lots of non-OPEC states took part to coordinate with OPEC by cutting production to get better prices. That's a very positive step that I'm glad to see.

The Role of Oil in Kuwait

MEQ: Oil represents 93 percent of the Kuwaiti government's revenues. What is the path to reducing its economic dominance?

Al-Sabah: In my view, that figure spells danger; in fact, it's a ridiculously large percentage. We are moving now to introduce sources of income other than oil. The government has submitted a plan that targets high-income individuals and companies to raise revenues for the state. We have not created burdens on the low-income and limited-income people. I hope parliament will accept the plan in its entirety. It will still not be a large enough revenue, but at least it's a beginning.

MEQ: Revenue for the government or the country?

Al-Sabah: To the government or to the country—same thing.

MEQ: It's not quite the same. If it is only a new source of revenue for the government, that doesn't decrease the role of oil in the overall economy.

Al-Sabah: We're hoping it will complement the oil income and thereby decrease our reliance on oil.

MEQ: The government's reliance on oil is going to decrease?

Al-Sabah: Exactly.

MEQ: Will the Kuwaiti economy always be tied to the price of oil?

Al-Sabah: This is a matter of parliamentary politics. When you have a democracy as we have in Kuwait, the government does not have a free hand to make decisions and adopt them without going to parliament. And when it does go to parliament, politics becomes paramount. Each legislator wants to upstage the others. If we asked for new taxes or tariffs, parliament would reject the proposal—just as it would an opposite initiative to reduce taxes.

MEQ: Nothing can get through?

Al-Sabah: Well, the troubled economic situation in Kuwait helps us move toward a better understanding with parliament. The large deficit and the need to draw from reserves to bridge the deficit has awakened people.

MEQ: Economic problems are a blessing in disguise?

Al-Sabah: Some Kuwaitis would agree, saying that the low price of oil is what we need to make changes—but don't count me among them. A reduced income has made the government, parliament, and public opinion in Kuwait all more inclined to see the economy as everyone's problem. This is an improvement; but I would also like to see higher oil prices. Unfortunately, it seems, we cannot have both.

Kuwait's Economy

MEQ: What are you doing to grow Kuwait's economy and to find other sources of income?

Al-Sabah: The minister of finance has more details on this, but I can tell you we've had the World Bank and the International Monetary Fund come to Kuwait. They've given us very good reports on what should be done. But it all boils down to politics, and we cannot move ahead until we have some kind of arrangement with parliament which will be acceptable to all. I'm optimistic that in the next session of parliament, we could have some kind of arrangement worked out.

MEQ: Among the GCC states, how does Kuwait rank in terms of preparing for the age after oil?

Al-Sabah: Many GCC states have done better than we have, and some have gone way ahead of us. They are free to take any decision they want to because, unlike us, they don't have a parliament to answer to.

MEQ: What have they done that you have not?

Al-Sabah: Take utilities: Kuwait is the GCC country with the cheapest gasoline at the pump, the cheapest electrical power, and the cheapest water—because the government subsidizes them. In addition, the government pension fund is much, much higher than in other Gulf countries. When we talked about increasing the price of gasoline, an uproar followed. We just wanted to bring our prices level with those of the GCC countries, but even this proposal was rejected.

MEQ: Looking back on the great oil boom of the 1970s, would you say the Kuwaiti government handled the enormous influx of oil well? Have there been lessons learned?

Al-Sabah: I'd rather not engage in Monday-morning quarterbacking about the 1970s. We shouldn't cry over spilled milk for we're in a different position today. Now in the 1990s we have to look at things afresh. The low price of oil today calls for a very clear-headed strategy.

MEQ: Please be specific.

Al-Sabah: For example, the private sector hasn't been very active in Kuwait. The time is ripe now for this to change. We're looking seriously at introducing legislation or programs to involve the private sector and increase their role in the economy. More profoundly, Kuwait in the petroleum age is a welfare state where no one wants to put too much burden on limited-income individuals. That whole mentality must go.

MEQ: So in terms of lessons learned, the government shouldn't be quite such a dominant force in the economy?

Al-Sabah: Absolutely.

MEQ: What role do you see for foreign private enterprise in Kuwait's oil industry? For example, during a visit to the United States in October 1998, Saudi Crown Prince ‘Abdullah asked U.S. oil firms for advice on developing his country's oil and gas resources. Do you see U.S. firms playing a similar role in the Kuwaiti oil industry?

Al-Sabah: Crown Prince ‘Abdullah was talking to oil companies to get ideas from them, to find out how they could be involved. We in Kuwait have gone a long way in discussions and negotiations to see about investment by the international oil companies in our country. Actually, this decision was taken back in 1994, but it's never been pursued, again for political reasons; the parliament might disapprove of it. I've taken it upon myself to pursue this idea and, with the approval of parliament, will implement it.

MEQ: There is much speculation about GCC countries attracting foreign financing for their oil projects; at last report, Saudi ARAMCO has borrowed $4 billion on international markets. Kuwait faces large annual budget deficits so long as oil prices remain at their current levels. Do you see a role for foreign financing of Kuwaiti oil, gas, or refining projects?

Al-Sabah: During the past six months we've worked hard to find a way to involve the international oil companies. There's a large oil potential in Kuwait that has not been tapped that could significantly increase our production. We also need huge amounts of money to improve existing oil fields. We are talking with all the international oil companies about their working under operating service agreements in Kuwait. The concept we have presented to the U.S. companies has been well received by all of the ones we've talked with. We see them taking over certain oil fields in Kuwait or parts of certain oil fields, with the assumption that they will increase production by up to 100 percent. Such an increase in production entails new technology and new capital, something like $4-5 billion; this the international oil companies would do, not Kuwait. They are willing in principle; now we are discussing the numbers—what they expect to get in return for their capital investment and operating expenditures.

Across the board they show acceptance, and hopefully within the next few months, we can conclude this arrangement. This is good for Kuwait with regard to strategic interest, financial interest, and technological benefits, which involve our own people and operations.

MEQ: But aren't these old ideas?

Al-Sabah: Well, the general topics have been around, but we made a basic change: rather than ask the companies for ideas, we gave them ours. I said to my people, "Look, don't wait for them to come and tell us what they want. Tell them what we want." We've worked hard to get this whole concept together, and I am here in Washington for consultations with the international oil companies to pursue just this.

MEQ: How about more private enterprise within Kuwait?

Al-Sabah: There's lots to do here, too. In my field, for example, the oil industry, we are looking to sell off substantial parts of the dominant institution, the Kuwait Petroleum Corporation [KPC]. The government needs to hold on to some parts: the upstream and downstream, for example, which have a strategic dimension and should be kept within the KPC. But the two large companies in the petrochemical industry and the tankers are not needed. The KPC should not own them; they don't represent a strategic interest for KPC or for the oil industry. These can go to the private sector, thereby lifting a major burden from our shoulders. We're looking now at privatizing them and have commissioned top international consultant firms to help us privatize them.

MEQ: That's all you'll sell?

Al-Sabah: Hardly. We're also looking at privatizing all the gas stations in Kuwait. I don't need to run those gas stations. Let them work on the market force, which they don't now. Today, if the price of Kuwaiti export crude is under $12 a barrel, there is no subsidy for gasoline at the gas stations. If the gas increases over twelve dollars, the government starts providing subsidies. We have to find a formula, a system where there would be no subsidy of gasoline, so that its price would go up and down as it does elsewhere in the world. Let the consumer benefit from the drop in oil prices, and let him pay when the oil prices increase. Trouble, again, is politics; parliament stands in the way. But once we get over the political hurdle here, then I think we're on our way—and not just with oil, for we're also looking at privatization in many other sectors of government such as communications and transportation, including Kuwait Airways.

 

1 Al-Khalij, Jan. 1996.
2 Radio Monte Carlo, Feb. 1, 1996.
3 Saudi Arabia, Kuwait, Bahrain, Qatar, the United Arab Emirates, and Oman.