In short, the inefficiencies of patronage and unsoundness of the economic system which is currently preferred in Kuwait is dangerous to many citizen's mental and spiritual health in many ways. It is also an inefficient use of trained labor.
This disrespect for even Kuwaiti national laborers and specialists has helped lead to a great brain drain (from one of the wealthiest countries in the world) as the many foreign-trained Kuwaitis-such as health care specialists and doctors-often quickly give-up and take on better job offers & under better working conditions in other lands around the globe.
EX-PATS, ARAB GULF, INC. AND COSTS
Concerning the role of ex-pat or native entrepreneurs working in the Gulf Arab states, an editor for the Middle East Intelligence Bulletin notes, "Economic activity throughout the Arab world is dominated by the state and by businessmen who benefit from government patronage. Successful businessmen in the Arab world are far more concerned about preserving their own preferential individual relationships with government officials than they are about whether their governments gain entry into the World Trade Oranganisation or lift restrictions."
There are many Arab and non-Arab ex-pats that thrive in the business world of the Gulf. Nonetheless, as Etheridge points out, "The cost of monopolies cum cartels is paid by the whole society." She lists the problems as follows:
(1)Prices for consumer goods and services tend to be inflated, often running several times higher than the international average. (2)Competition is stifled and newcomers to the marketplace find it difficult, if not nearly impossible to break in. (3)Customer service is nearly non-existent. (4)Innovation, research and development are stifled. Product or service quality is inconsistent and typically below the international average.
Whereas, these problems may be less endemic in Dubai than in other Gulf Arab states or regional emirates, I recall that for decades the current leader of Dubai and head of the UAE owned exclusively all rights to taxis in the emirates-making this famed free-marketer very wealthy indeed.
Having previously lived in the neighboring Emirate of Sharjah and having paid cheaper rates for taxi service there than in Dubai City, I know that a lot of poor foreign workers in Dubai were forced to pay more-than-they-should-have in taxi fairs to help make this Emir ever better-off financially.
Moreover, lack of competition in the water-desalinization sector in Kuwait is costing Kuwait residents greatly in terms of inconvenience. It currently costs the government-run plants some 45 dollars a barrel to produce water. I am quite certain that if private water desalinization firms from various corners of the world were invited to open up shop and were finally given proper access to do so by the Kuwait economy, they could cut that cost of production in half within a year or two.
Certainly, petroleum and water are subsidized in Kuwait and in other gulf countries. This leads constantly to inefficiencies in conservation and urban design that will continue to hurt the land for many more decades. (Saudi Arabia is ranked even worse in this area than Kuwait.)
One final example, a metro has been needed in Kuwait since before I arrived here in January 2004. Yet, no construction has started and the usual elitist suspects (or patronage cronies in the government) will eventually get the construction contract. Similarly, in Dubai, although construction of its metro is nearing completion now, it has already taken too long and the roadways are horribly paralyzing to commute on 12 hours or more each day.
STRANGE USA AND IMF RESPONSES
Strangely, the IMF has continued to give the Gulf regions positive forecasts for 2007 and 2008 simply based upon the facts that oil prices will remain high. The IMF peculiarly "lauds the region, noting that government economic policies are 'on the right track' with many oil-exporting countries stepping up spending and upgrading infrastructure. It cites, for example, the Gulf Cooperation council (GCC) countries' plans to invest $700 billion from 2006 through 2010 to cover upgrades and development of the energy sector, infrastructure and real estate."
Rightly, Etheridge has criticized the IMF on this, "This seems all well and good-until the tenders are issued and the two same construction firms take 80 Percent of the project or until the five major hotel chains get together and agree to raise room rates by 15 percent, regardless of occupancy."
Similar to the sad lack of criticism from the IMF, the USA's leadership has been lax in the last few years in seriously castigating Kuwait and other Gulf states in their lack of seriousness in carrying out international promises and trade & tariff treaties.
For example, Kuwait and most of the other Gulf Arab states are already members of the WTO, but they have not been taking seriously the rules on business, financing, transparency, anti-monopoly legislation enforcement, and on treatment of labor. This American silence is certainly to some degree a result of the fact that the USA has its handful already with neighboring Iraq and Iran. Hence, it has apparently decided to kiss-up to the Gulf Arab state governments for the coming years. This means that American and European petroleum users will continue to support these WTO abusers with little criticism or threat of retaliation for many of their closed markets in the foreseeable future.
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