Kuwait: Trouble in the Garden

There was, after all, a serpent even in the Garden of Eden.

Kuwait, that Connecticut-sized sandspit at the head of the Persian Gulf, controls one-quarter of the world's petroleum, collects $600 million in oil royalties annually and boasts a greater per capita income for its 468,000 people—$3,000 a year—than the U.S. Yet Kuwait's very prosperity has brought it some economic problems. The country is so saturated with imported autos, refrigerators, TV sets and other durable goods that sales have slumped for its 17,000 shopkeepers. Making this situation worse, a flood of job-seeking immigrants from other, poorer Arab lands has raised Kuwait's population by 46% since 1961. Last week, tightening its policy of Kuwait for the Kuwaitis, the government imposed stiff new jail sentences and fines for immigration violations and amended dismissal provisions of the civil service code to pave the way for an anticipated purge of non-Kuwaiti government employees.

Disenchanted Immigrants. Such harsh measures seem likely to cause an exodus of the immigrants, who now constitute more than half the population. Many of them had already become disenchanted with Kuwait because they are denied citizenship and have been increasingly limited in their choice of jobs by a government anxious to protect the 200,000 native (and minority) Kuwaitis. Some immigrants have sent their families back home, moved from houses into apartments and begun saving rather than spending their money. Result: a glut of empty houses, a crimp in the real estate market, and a further reduction in consumer spending.

Such problems are a bit hard for Kuwait's neighbors to take seriously, considering that Kuwait's immense oil royalties have created more than 1,000 native millionaires and made the country a big source of funds for most of the Middle East. Kuwait has given other Arab states at least $1 billion in grants and loans, most of which will never be repaid.

Stung by criticism that this policy amounted to little more than bribery to insure noninterference by Kuwait's powerful neighbors, the government has decided henceforth to make all grants through the $280 million Kuwait Fund for Arab Economic Development, which will allocate money only for specific, economically sound projects in other Arab countries. For their part, wealthy Kuwait residents have invested $1.5 billion of their own outside the country, own $350 million in real estate in Beirut alone. The government has another $1.2 billion on deposit in foreign countries, but has done the pound no favor by cutting down its investments in Britain by 50% (to $252 million) in the last two years.