The artists have been exhibiting works in the graphic arts, photography, animation and fashion in private galleries but also bypassing traditional venues and arts groups – and possible censorship – by showing their work online to reach an audience beyond the 3.7 million people in Kuwait.

“They are creating an excellent buzz,” said Lucy Topalian, who runs the Dar Al Funoon gallery in Kuwait which showcases contemporary art from around the world.

Young people in tailored trousers and elegant jackets packed her small gallery earlier this month to view Abdullah al-Saab’s dark dresses, shirts and capes hanging from the ceiling in front of large black-and-white photographs.

The people in the photographs were blindfolded, some with labels such as “wife”, “lover” or “friend”. One depicted a man – the designer himself – bound with a thick rope, another a woman in a smart dress spilling coffee from a paper cup as a foreign maid kneeled on the floor to clear up the mess.

“I thought that some people would take it a little bit sensitively. The amazing thing is that they actually have an open mind and they can relate to it,” said Saab, 27, on the opening night of the show, “Boundaries”.

Art aficionados and experts say those like Saab in their 20s and 30s are helping to revive a cultural life damaged by indifference, religious conservatism and, possibly most importantly, the Iraqi invasion in 1990.

Kuwait has since rebuilt its badly damaged oil infrastructure and in recent years private companies have poured money into building skyscrapers, shopping malls and restaurants.

But many believe the arts have been neglected in a country where state spending on basic public infrastructure has slowed in recent years due to bureaucracy and political infighting, despite huge oil revenues.

They point out that elsewhere in the Gulf, governments have not only spent heavily on transport and transforming public spaces, but also invested in museums and art projects.

DESTRUCTION OF WAR

When Sheikha Paula al-Sabah came home after U.S.-led troops expelled Saddam Hussein’s forces in 1991, she found her house had been wrecked and the walls stripped of Middle Eastern and Western art collected over decades. It took her several years before she could bear to collect again.

“We have to catch up on a lot of things, but obviously there were so many other things that were a priority when your whole infrastructure was destroyed,” Sheika Paula, an American who married a member of Kuwait’s royal family, told Reuters.

Other Gulf cities like Dubai and Doha pulled ahead in the international arts world in the period, but some connoisseurs say Kuwait still holds the edge thanks to its rich cultural history and relative openness.

“The rest of the Gulf hasn’t caught up with where Kuwait was 50 years ago, not only politically but also culturally,” said Sultan Sooud al-Qassemi, an influential UAE collector and commentator and founder of the Sharjah-based Barjeel Art Foundation.

He cited Kuwaiti theatre, art exhibitions, commissions and patronage, television and radio drama as examples of creative innovation.

“However, today the art scene is in need of a long-overdue revival,” he said, calling for national museums to be renovated and reopened.

Sheikha Paula agreed it was time for the country to improve its exhibition spaces, renovate museums and celebrate its comprehensive Islamic art collection.

She cited the opening of the Contemporary Art Platform gallery and annual auctions organised by her daughter Lulu as evidence of a new phase in Kuwait’s cultural life.

“It is a moment whose time has come,” the former New Yorker said. “These young collectors now are in their late 20s and 30s. So this is a whole new energy. This is a whole new way of looking at art.”

That energy comes from challenging traditional ideas, said Wafaa al-Husaini, a 23-year-old design student at the American University of Kuwait who uses 3D animation and graphics to explore issues such as sectarianism and feminism.

She set up a feminist group called Neda, which is organised online and distributes posters of women doing things normally seen as culturally unacceptable for them such as riding a motorbike, fixing a car or smoking.

“I think it is the younger generation that is rebelling against the norms and boundaries,” she said, dressed in a T-shirt she designed with the slogan “I am a man” in decorated Arabic script.

CREATIVE FREEDOM

Kuwait enjoys greater political freedom and debate than the other countries in the six-nation Gulf Cooperation Council and this feeds into an environment where artists can afford to take bigger risks, artists and art lovers said. Limits remain, however.

Graphic designer Mohammad Sharaf described his bemusement on reading news reports from neighbouring Saudi Arabia, where women are not allowed to drive, that women would no longer be stopped from bicycling in parks as long as they were accompanied by a male guardian.

“It was so silly, I did not expect it was true actually, when I saw (the news) the first time,” Sharaf, 31, said in his office scattered with posters and art books in a shopping mall. “I illustrated the real scene according to what they described.”

“Allowed” shows a Saudi woman on a bicycle with her guardian in a small basket behind her, staring out over the top of her head. The simple black, white and red image was used widely in Arab and Western media and reposted on hundreds of blogs and other Websites.

Sharaf has also produced work about his native Kuwait, such as a poster showing the parliament building made of bones or pieces about free speech, inspired in part by the explosion of democratic debate in North Africa and the Middle East sparked by the Arab Spring uprisings.

He says he has not faced any restrictions in Kuwait, but adds he keeps his works subtle and any criticism indirect.

“I don’t assign names, or something very certain; it’s always vague. Actually it protects me, and from another aspect, each viewer can absorb it differently,” he said.

Some more established artists have run into difficulties after pushing the boundaries. Shurooq Amin’s “It’s a Man’s World” exhibition was shut down in 2012 in Kuwait after authorities said her paintings were “obscene”.

A painting of a woman in a mini-dress sitting on a man’s lap entitled “My Mistress and Family” and another showing three men playing cards and drinking what appeared to be contraband alcohol were deemed by authorities a step too far.

Yet in April this year she received an “Artist of the Year” prize at the Arab Woman Awards held in Kuwait, in what she sees as a sign of an improved appreciation of bold artwork.

Amin said it was important to quietly encourage young artists in a country where such a career can be especially difficult.

“It is not a big gigantic scream from the top of a mountain, it’s a little whisper in someone’s ear,” she said.

(Editing by Sonya Hepinstall)

The artists have been exhibiting works in the graphic arts,
photography, animation and fashion in private galleries but also
bypassing traditional venues and arts groups – and possible
censorship – by showing their work online to reach an audience
beyond the 3.7 million people in Kuwait.

“They are creating an excellent buzz,” said Lucy Topalian,
who runs the Dar Al Funoon gallery in Kuwait which showcases
contemporary art from around the world.

Young people in tailored trousers and elegant jackets packed
her small gallery earlier this month to view Abdullah al-Saab’s
dark dresses, shirts and capes hanging from the ceiling in front
of large black-and-white photographs.

The people in the photographs were blindfolded, some with
labels such as “wife”, “lover” or “friend”. One depicted a man -
the designer himself – bound with a thick rope, another a woman
in a smart dress spilling coffee from a paper cup as a foreign
maid kneeled on the floor to clear up the mess.

“I thought that some people would take it a little bit
sensitively. The amazing thing is that they actually have an
open mind and they can relate to it,” said Saab, 27, on the
opening night of the show, “Boundaries”.

Art aficionados and experts say those like Saab in their 20s
and 30s are helping to revive a cultural life damaged by
indifference, religious conservatism and, possibly most
importantly, the Iraqi invasion in 1990.

Kuwait has since rebuilt its badly damaged oil
infrastructure and in recent years private companies have poured
money into building skyscrapers, shopping malls and restaurants.

But many believe the arts have been neglected in a country
where state spending on basic public infrastructure has slowed
in recent years due to bureaucracy and political infighting,
despite huge oil revenues.

They point out that elsewhere in the Gulf, governments have
not only spent heavily on transport and transforming public
spaces, but also invested in museums and art projects.

DESTRUCTION OF WAR

When Sheikha Paula al-Sabah came home after U.S.-led troops
expelled Saddam Hussein’s forces in 1991, she found her house
had been wrecked and the walls stripped of Middle Eastern and
Western art collected over decades. It took her several years
before she could bear to collect again.

“We have to catch up on a lot of things, but obviously there
were so many other things that were a priority when your whole
infrastructure was destroyed,” Sheika Paula, an American who
married a member of Kuwait’s royal family, told Reuters.

Other Gulf cities like Dubai and Doha pulled ahead in the
international arts world in the period, but some connoisseurs
say Kuwait still holds the edge thanks to its rich cultural
history and relative openness.

“The rest of the Gulf hasn’t caught up with where Kuwait was
50 years ago, not only politically but also culturally,” said
Sultan Sooud al-Qassemi, an influential UAE collector and
commentator and founder of the Sharjah-based Barjeel Art
Foundation.

He cited Kuwaiti theatre, art exhibitions, commissions and
patronage, television and radio drama as examples of creative
innovation.

“However, today the art scene is in need of a long-overdue
revival,” he said, calling for national museums to be renovated
and reopened.

Sheikha Paula agreed it was time for the country to improve
its exhibition spaces, renovate museums and celebrate its
comprehensive Islamic art collection.

She cited the opening of the Contemporary Art Platform
gallery and annual auctions organised by her daughter Lulu as
evidence of a new phase in Kuwait’s cultural life.

“It is a moment whose time has come,” the former New Yorker
said. “These young collectors now are in their late 20s and 30s.
So this is a whole new energy. This is a whole new way of
looking at art.”

That energy comes from challenging traditional ideas, said
Wafaa al-Husaini, a 23-year-old design student at the American
University of Kuwait who uses 3D animation and graphics to
explore issues such as sectarianism and feminism.

She set up a feminist group called Neda, which is organised
online and distributes posters of women doing things normally
seen as culturally unacceptable for them such as riding a
motorbike, fixing a car or smoking.

“I think it is the younger generation that is rebelling
against the norms and boundaries,” she said, dressed in a
T-shirt she designed with the slogan “I am a man” in decorated
Arabic script.

CREATIVE FREEDOM

Kuwait enjoys greater political freedom and debate than the
other countries in the six-nation Gulf Cooperation Council and
this feeds into an environment where artists can afford to take
bigger risks, artists and art lovers said. Limits remain,
however.

Graphic designer Mohammad Sharaf described his bemusement on
reading news reports from neighbouring Saudi Arabia, where women
are not allowed to drive, that women would no longer be stopped
from bicycling in parks as long as they were accompanied by a
male guardian.

“It was so silly, I did not expect it was true actually,
when I saw (the news) the first time,” Sharaf, 31, said in his
office scattered with posters and art books in a shopping mall.
“I illustrated the real scene according to what they described.”

“Allowed” shows a Saudi woman on a bicycle with her guardian
in a small basket behind her, staring out over the top of her
head. The simple black, white and red image was used widely in
Arab and Western media and reposted on hundreds of blogs and
other Websites.

Sharaf has also produced work about his native Kuwait, such
as a poster showing the parliament building made of bones or
pieces about free speech, inspired in part by the explosion of
democratic debate in North Africa and the Middle East sparked by
the Arab Spring uprisings.

He says he has not faced any restrictions in Kuwait, but
adds he keeps his works subtle and any criticism indirect.

“I don’t assign names, or something very certain; it’s
always vague. Actually it protects me, and from another aspect,
each viewer can absorb it differently,” he said.

Some more established artists have run into difficulties
after pushing the boundaries. Shurooq Amin’s “It’s a Man’s
World” exhibition was shut down in 2012 in Kuwait after
authorities said her paintings were “obscene”.

A painting of a woman in a mini-dress sitting on a man’s lap
entitled “My Mistress and Family” and another showing three men
playing cards and drinking what appeared to be contraband
alcohol were deemed by authorities a step too far.

Yet in April this year she received an “Artist of the Year”
prize at the Arab Woman Awards held in Kuwait, in what she sees
as a sign of an improved appreciation of bold artwork.

Amin said it was important to quietly encourage young
artists in a country where such a career can be especially
difficult.

“It is not a big gigantic scream from the top of a mountain,
it’s a little whisper in someone’s ear,” she said.

(Editing by Sonya Hepinstall)

The order for the new planes would include 15 A320neo
narrowbody jets and 10 of Airbus’s new A350-900 XWB, Chairman
Sami al-Nisf told a news conference on Thursday.

“We signed a letter of acceptance with Airbus,” he said,
adding that this was the step before signing a memorandum of
understanding with Airbus within the next couple of weeks.

He declined to give a value for the order. The airline
expects Airbus, owned by aerospace and defence group EADS
, to start delivering the aircraft in 2019.

A source said on Monday that Kuwait Airways would pay around
850 million dinars ($2.98 billion) for 25 new planes. Such an
order would be worth $4.38 billion at list prices, but aircraft
are often sold at a discount.

The airline judged Airbus’s offer the most attractive based
on price and technical specifications in a tender that included
Boeing and Bombardier, the source said.

The airline wants to take out of service 11 jets from its
old fleet of 17, in which the planes’ average age is 18 years.

The options are for five more A320neo and five more A350-900
XWB, Nisf said. He added that under the deal, which has
government approval, the airline would also lease a further 22
Airbus jets.

The company is in talks with local and international banks
for part of the financing.

Airbus is confident the A350, Europe’s response to the
Boeing 787 Dreamliner, can make its maiden flight in the summer,
it said earlier this week.

The Kuwait Airways order comes months after the Gulf Arab
state was awarded $500 million by Iraqi Airways for damage
caused when former Iraqi President Saddam Hussein’s forces
seized aircraft and parts, ending a two-decade row over
compensation.

One of the world’s richest countries per capita, Kuwait has struggled for years to get big infrastructure projects off the ground because of bureaucratic red tape and political turmoil. A parliamentary election in December was the fifth in six years.

The election seemed to be a turning point, however, since an opposition boycott of the poll meant members of parliament seen as more willing to cooperate with the government were elected.

This stirred investor hopes that the state would ramp up spending under a 30 billion dinar ($105 billion) development plan, which aims to draw private and foreign investment and diversify the oil-reliant economy.

That optimism, which has helped to fuel a more than 30 percent rise in the stock market since the start of this year, could come to an end on June 16.

The constitutional court is expected to rule on an emergency decree issued by Kuwait’s ruler last year, six weeks before the December poll, which changed the rules for voting and triggered some of the largest street protests in the country’s history.

If the court rules that the decree was not constitutional, parliament will need to be dissolved, triggering a snap election, and legislation passed by the assembly may also be made invalid – sending Kuwait back to square one in economic policy terms, or close to it.

“An annulment of the current parliament and the return of major political uncertainty would be negative for investor perceptions and the economy,” said Farouk Soussa, Middle East chief economist at Citigroup in Dubai.

If the court rules in favor of Emir Sheikh Sabah al-Ahmad al-Sabah’s decree, which changed the number of votes per citizen to one from four, the current parliament will be able to continue; this would make progress on investment more likely.

INDEPENDENT COURT

The court is widely seen as independent in Kuwait, which has the most democratic political system in the Gulf Arab region. Analysts and diplomats think the ruling could go either way.

“All Kuwaitis, we pride ourselves – even the opposition, even the government detractors – that our judiciary system is one of the best and the most independent in the Arab world,” said Abdullah al-Shayji, chairman of the political science department at Kuwait University.

In the past, constitutional court judges have issued some rulings in line with the government’s wishes, but they have also passed verdicts with the opposite effect.

Last June, for example, the court effectively dissolved a parliament dominated by the opposition, citing a technicality. But in September, it rejected a government request to change electoral boundaries, saying it did not have the authority to rule on the matter; it was this ruling that ultimately prompted the emir to issue his emergency decree.

In their upcoming ruling, the judges will assess whether the decree can be described as a “decree of necessity” and if it was issued in the correct way. The constitution lets the emir pass urgent decrees when parliament is not in session or dissolved.

The emir said at the time that the voting rule changes aimed to ensure security and stability in Kuwait, following months of political stalemate between the cabinet and parliament.

Opposition politicians, who boycotted the December election in protest at the decree, said changes to the voting system should be agreed by parliament. Protesters alleged the new rules aimed to weaken the opposition, which was able to form effective parliamentary alliances under the old four-vote system in a country where political parties are banned.

MODEST PROGRESS

The opposition boycott of the election meant that liberals, Shi’ites, neutral MPs and complete newcomers to parliamentary politics were elected to the assembly, initially working well with the cabinet.

They have passed some laws seen as helping the economy, such as a law aimed at simplifying the issuance of company licenses and plans for a fund to aid small and medium-sized firms.

“The authorities now seem more determined to put a shoulder to the wheel to get the economy going, including on the projects,” said Daniel Kaye, head of macroeconomic research at National Bank of Kuwait.

Under the new parliament, partly because of a more stable political environment, two major projects have inched towards implementation.

The government signed a contract with South Korea’s Hyundai Engineering and Construction Co last November to design and build a $2.6 billion causeway connecting the north and south of the country. In January, it signed a deal with a consortium led by France’s GDF-Suez, and including Sumitomo Corp of Japan, to build the Az Zour gas-fired power and seawater treatment plant.

From the cabinet’s point of view, the current parliament is by no means perfect; there are signs of some of the old tensions. This week MPs submitted requests to interrogate the oil minister and interior minister over their performance, which could lead to a vote of no confidence in them.

Members of the cabinet then offered to resign and the government kept away from two parliament sessions, causing them to be cancelled.

The possibility that the court ruling could lead to a fresh election means that some MPs may want to be seen as holding the government to account, Kuwait University’s Shayji said.

“There are now some problems between the parliament and the government, because of dissatisfaction with some of the ministers and a lack of cooperation on the part of some ministers,” said Saleh Ashour, a long-serving MP.

“Everyone is waiting for the constitutional court ruling.”

Nor is the current parliament’s economic policy-making completely in line with the cabinet’s wishes. In April the assembly passed a consumer debt relief law allowing the state to spend up to 744 million dinars to buy loans taken out from banks before March 2008, write off the interest and reschedule repayments.

Economists described the law as a populist measure forced on the government by MPs. While the state can afford the measure, with its 14 straight years of budget surpluses, bankers argued that the plan encouraged bad behavior by consumers and could cost local banks money.

But measures to reform the economy and get development projects on track still appear more likely under the current parliament than under a new one which would include opposition MPs emboldened by a court ruling against the emir’s decree.

“We would like to see further, deeper economic reforms that help support the private sector and make the economy more dynamic,” NBK’s Kaye said, citing privatization, labor market reforms, housing policy and business regulation as key areas.

(Additional reporting by Mahmoud Harby; Editing by Andrew Torchia)

The proposal calls for state-owned Kuwait Airways to
buy 25 new Airbus jets and to lease a further 13 to upgrade its
fleet but needs government approval, the source said. It could
be signed by the end of this month.

The move comes months after Kuwait was awarded $500 million
by Iraqi Airways for damage caused when former Iraqi President
Saddam Hussein’s forces seized aircraft and parts, ending a
two-decade row over compensation.

The Kuwaiti airline’s aircraft buying committee judged that
Airbus made the most attractive offer in a tender process which
included bids from Boeing and Bombardier, the
source said.

The source declined to be named because the deal still needs
government approval.

In August 2007, Kuwait Airways cancelled an order for 19
passenger planes worth $3 billion from local lessor Alafco
after failing to get government approval.

Under the new proposal, Kuwait Airways would pay around 850
million dinars ($2.98 billion) for the 25 new planes, which
would include 10 wide-bodied A350-900 jets and 15 of the slimmer
medium-haul A320neo, the source said.

Such an order would be worth $4.38 billion at list prices,
but aircraft are usually sold at a discount.

The A350 is designed to counter Boeing’s 787
Dreamliner, which would have been included in the deal scrapped
in 2007.

Kuwait Airways would start receiving the Airbus aircraft
from 2019, the source said, confirming details of the talks
originally reported by Al-Watan newspaper on Sunday.

“The final decision is the government’s,” the source said.
“I think by the end of this month, they should take it.”

Kuwait Airways and Airbus, which is owned by aerospace and
defence group EADS, declined to comment.

Under the plan, the airline would also lease 13 of Airbus’s
A330 and A320 models for six years, the source said, without
giving an estimate for the cost of that part of the agreement.

One of the reasons the Airbus deal was seen as favourable
was that it combined the new and leased jets, the source said,
adding that the leased jets should start arriving this summer.

The airline wants to take 11 jets from its old fleet out of
service.

Education Minister Nayef al-Hajraf, Commerce and Industry Minister Anas al-Saleh and Sheikh Mohammad al-Mubarak al-Sabah, all in their early 40s, had come for an informal meeting with some 30 Kuwaiti bloggers and online journalists to discuss issues that concern young people.

“It was an ice-breaking action,” Sheikh Mohammad, a member of the ruling family who is Kuwait’s minister for cabinet and municipal affairs, told Reuters.

“We wanted them to hear what we had to say. We wanted to hear what they had to say,” he said in the April interview.

Like most countries in the Gulf region, Kuwait has seen little of the kind of turmoil that turfed out entrenched rulers in other Arab countries in 2011. But opposition politicians and a youth movement have been emboldened.

Dozens of activists and political figures have been charged since late last year with insulting 83-year-old ruler Sheikh Sabah al-Ahmad al-Sabah, mainly in comments made online.

Young people regularly spill out onto the street to protest over local issues. Most of the gatherings are peaceful, but some have resulted in clashes with police.

In an attempt to prepare for the future of a country where more than half of citizens are under 25, Kuwait has tasked the three men and other younger officials with exploring reform. With little desire to substantively change the political structure – the Al-Sabah family has ruled Kuwait for 250 years – the men are focusing their efforts on the economy.

Their concerns about Kuwait’s economic future give them common ground with many activists, a Kuwait-based diplomat said.

“They understand the difficulties and the realities of the situation here,” the diplomat said. “But they face huge hurdles.”

THEY GET IT

A major oil producer and U.S. ally, Kuwait is one of the world’s richest countries per capita and one of the most politically free in the Gulf, but development has stalled due to bureaucracy and political upheaval – December’s parliamentary election was the fifth since 2006.

The economy is almost entirely dependent on oil, even more than most in the oil-rich Gulf region. Income from crude made up 94 percent of Kuwait’s state revenues in the first 10 months of the fiscal year.

The International Monetary Fund has warned that Kuwait may exhaust all of its oil savings by 2017 if it keeps raising state spending at the current rapid rate.

Officials like Sheikh Mohammad, an influential member of the younger generation of the Al-Sabah family, are acutely aware of the threat posed by this lack of diversification, diplomats and political analysts say.

The younger officials may also be amenable to modest political reforms to ease long-running tensions between the hand-picked government and elected parliament, which are seen to be among the main factors holding up development, they say.

Education Minister Hajraf, who observers say is determined to overhaul the lagging education system, was CEO at an Abu Dhabi real estate company and worked as a financial advisor to Kuwait’s stock exchange before going into government.

He studied at the University of Illinois and completed a doctorate in accounting at Britain’s Hull University.

Saleh, the commerce and industry minister, worked for several financial companies in Kuwait after studying business administration at the University of Portland.

Sheikh Mohammad, the son of a well-known female Kuwaiti poet and a former deputy ruler, like his colleagues speaks almost flawless English thanks to his studies in Britain.

He favors an informal style, especially when meeting young Kuwaitis. At a recent youth conference, he applauded Prime Minister Sheikh Jaber al-Mubarak al-Sabah’s decision to relax the dress code, no longer requiring that ministers wear the formal “bisht” cloak over their everyday white robes.

“I was told, no, don’t wear it; the prime minister is not wearing it, and I was very happy to hear that,” he said.

The young ministers have the ear of the prime minister, who selected them for his cabinet, although their influence on major policymaking is not thought to be comparable to the emir’s close advisors.

“These guys absolutely get it,” another Kuwait-based diplomat said. “They understand the need for reform, particularly on the business side.”

HOUSING AND BUREAUCRACY

This younger generation has contributed to attempts to address the housing shortage and curb the bureaucracy that has held up investment – top concerns for young Kuwaitis today.

A report from the Oxford Business Group said in April that the waiting list for government-subsidized housing has grown to more than 100,000 in a country of 1.2 million Kuwaitis with access to generous welfare benefits.

The government hopes to remedy the shortage with new developments.

There has also been more immediate progress at the multi-billion-dinar sovereign wealth fund, where the amount of money allocated for the part of the fund focused on saving for future generations was more than doubled last year.

Hajraf oversaw that change during a brief stint as finance minister after his predecessor was forced out by a hostile parliament.

The Commerce Ministry under Saleh last year also pushed through a companies law aimed at simplifying procedures and encouraging investment.

The ministry plans to issue temporary company licenses on the same day the application is made, rather than having people wait up to a year for a permanent license – a common complaint among young Kuwaiti entrepreneurs.

THE MEETING AT THE COFFEE SHOP

Some of those who attended the coffee shop meeting on January 22 were disappointed, partly because Kuwaiti media turned up to what was supposed to be a private gathering and the talks veered off into daily politics instead of focusing on a long-term vision for the country.

“There were people from the outside, and they messed up the event,” Khalil Alhamar, a 23-year-old who runs the blog Q8path, told Reuters.

But al-Qabas, an independent daily owned by business families, praised the meeting as an attempt to encourage a dialogue between the government and the youth.

Young people were turned off by official speeches and were turning to social media, the newspaper said in a column at the time. It called the meeting a strange but promising attempt to change the government’s style.

“It is a breakthrough from the formal address, filled with courtesies and empty promises, which state departments’ offices routinely spew out,” columnist Iqbal al-Ahmad wrote.

Blogger Alhamar wondered whether anything would come of it, however.

“We have lots of talk but we need action,” he said.

(Additional reporting by Mahmoud Harby; Editing by Sonya Hepinstall)

Kuwait, a U.S. ally, has avoided a mass Arab Spring-style uprising but unrest flared last year after the emir changed the electoral law before a parliamentary election, a move opposition figures said was meant to deny them a parliamentary majority. The opposition boycotted the December 1 election.

Musallam al-Barrak, an outspoken former member of parliament, was accorded bail from his sentencing to five years in jail last week for remarks made at a rally last year.

The jail sentence triggered a series of street protests that underscored increasing friction between opposition figures and the government, headed by a prime minister picked by the emir.

“Today the popular movement had a victory, today the people had a victory and tomorrow the constitution will have a victory,” Barrak told a crowd awaiting him outside the heavily-guarded court in the burning midday sun after the hearing.

“Today I see that the popular movement will achieve its goals,” he said, smiling and looking calm, after chanting supporters hoisted him on their shoulders and carried him through the court gates.

Hundreds of Barrak’s backers crammed into the court building after the ruling, cheering, whistling and chanting: “The people want Musallam al-Barrak,” and “God is great”.

“(This) will ease tension,” former opposition lawmaker Khaled al-Tahous said outside the court building where police and national guard members watched the jubilation of Barrak’s faithful.

His five-year sentence was not overturned on Monday, defense lawyer Dokki al-Hasban told Reuters.

But the court ruled that Barrak should be granted bail, on a payment of 5,000 dinars ($17,600), and that his defense team would have a chance to argue his case next month.

His defense had argued that last week’s verdict was invalid because they had not been allowed to call witnesses.

OPPOSITION LEADER

Barrak, a populist politician who draws support from some of Kuwait’s powerful tribes, was not taken into custody after his sentencing.

Security forces had searched his guesthouse and a neighboring home last week but failed to find him, supporters said. It was not clear why police had not taken him into custody during subsequent speeches at the guesthouse.

Barrak, who has emerged as a quasi-opposition leader in a country were political parties are banned, was found guilty of insulting Sheikh Sabah al-Ahmed al-Sabah in a speech in October last year in which he urged the emir to avoid “autocratic rule”.

The government said voting rules were amended to bring Kuwait’s electoral system in line with others elsewhere.

While Kuwait allows more freedom of speech than other Gulf Arab states, the emir has the last say in state affairs and is deemed “immune and inviolable” in the constitution. He is shielded from public criticism by the penal code.

There has been a series of trials in Kuwait in recent months involving opposition activists accused of insulting the emir, mainly on social media.

International rights groups have called on Kuwait to drop the cases, saying they violate freedom of speech. Kuwait’s government says authorities need to implement the law.

($1 = 0.2849 Kuwaiti dinars)

(Editing by Mark Heinrich)

Citizens had taken out personal loans, often more than one -
perhaps to buy a car or renovate a house – and were unable to
pay the money back. They were victims of high interest rates and
punishing repayment schedules, the lawmakers said.

Their solution was for the government to come to the rescue,
using Kuwait’s oil wealth to ease the “suffering” of indebted
citizens. They advocated the kind of largesse which has defined
the Gulf state’s relationship with its people for decades.

After three hours of debate, parliament and the cabinet
agreed on a law allowing the state to spend up to 744 million
dinars ($2.6 billion) to buy loans taken out from banks before
March 2008, write off the interest and reschedule repayments.

Bankers and economists were not impressed, saying the plan
rewarded poor money management and would be bad for a banking
sector which is still recovering from the global financial
crisis. Some banks may lose money in the scheme and beyond that,
the exercise could encourage irresponsible behaviour that might
hurt the sector in future, the bankers argued.

“It will create a moral hazard for the banking system,” said
Ananthakrishnan Prasad, mission chief for Kuwait at the
International Monetary Fund.

“It will raise the incentives for banks to take riskier
positions, and it will raise the incentives for borrowers to
take more debt in the future,” he said on the sidelines of a
finance conference in Kuwait this week.

Prasad said the IMF had warned Kuwait about such issues
before, and that it would give such guidance to any other
country which thought about writing off its citizens’ debt.

UNUSUAL

In most parts of the world, a scheme to use state money to
pay for delinquent borrowers’ consumer loans would arouse
widespread public criticism.

The fact that it did not in Kuwait – most people expressed
no surprise – underlined how the country has developed a pattern
of using its vast oil wealth for political patronage.

Many Gulf Arab nations use state money for such handouts.
Last May, for example, the United Arab Emirates government said
it would settle up to 5 million dirhams ($1.36 million) worth of
defaulted loans for each indebted local citizen.

Such generosity may be one reason that most countries in the
region have avoided the severe social unrest which has hit other
parts of the Arab world since 2011.

But the Kuwaiti loan plan is unusual in its large scale and
the fact that it appears to have been pressed on a reluctant
cabinet by the Kuwaiti parliament, which is the most independent
and outspoken in the six-nation Gulf Cooperation Council.

Members of parliament justified the scheme by arguing that
the central bank had not been strict enough on banks’ lending
practices before 2008.

“We began to realise that the problems were not in the loans
but in the unjust and unfair and illegal interest that the banks
were calculating and accumulating their profits and hurting the
people,” MP Maasouma al-Mubarak said ahead of last week’s vote.

Under the scheme, banks assessed to have overcharged
interest, by asking for more than 4 percentage points above the
central bank’s discount rate, would have to pay it back to
customers. The plan will affect around 47,000 Kuwaitis in a
country of 1.2 million citizens; it is not yet clear if banks as
a group will end up losing money in the scheme, or how much.

Banking executives rejected the lawmakers’ accusations,
saying lenders had been working within parameters set by the
central bank and had done nothing wrong.

“That is why I am surprised…at the reaction that says the
banks have been overcharging and so on,” Michel Accad, chief
executive of Gulf Bank, Kuwait’s fourth largest lender
by market value, told the audience at the conference.

“I mean, come on, let’s be realistic. Not only they haven’t
overcharged, generally speaking, but this is also one of the
lowest spreads in any country for consumer loans.” The loans
were generally charging about 3 percentage points above the
discount rate, he added.

By 2011, consumer lending in Kuwait had more than doubled to
607.7 million dinars from 276.5 million in 2008, according to
statistics from the central bank.

The debt plan means Kuwaitis will want to borrow even more,
Finance Minister Mustafa al-Shamali told reporters this week.

“Sure, it will encourage more borrowing…because you eased
the burden on a large amount of people and they have the freedom
to borrow again,” said Shamali, who had long warned against
writing off loans.

The cost of the scheme for Kuwaiti banks will be limited,
said Hamad al-Marzouq, chairman of Ahli United Bank
and head of Kuwait’s banking association. But parliament’s
debate was an unfair attack on the banks’ reputations, he said.

“Many of the politicians were looking for an excuse to make
political gains, and there were a lot of false allegations
regarding banks committing violations.”

Kuwaiti banks are still recovering from a collapse of the
country’s investment sector. Many firms borrowed cheaply in the
mid-2000s to invest in local stocks and real estate; the global
crisis meant loans could not be refinanced and asset values
plummeted – the local stock market has dropped more than 55
percent from its June 2008 peak – forcing local banks to
provision for billions of dinars of debt restructurings.

POLITICAL GAINS

Many of the lawmakers elected to a new parliament last
December made debt relief a major part of their campaign
platforms. They put heavy pressure on the cabinet to approve a
plan – pressure which the cabinet, keen to avoid the friction
which marred its relations with the last parliament, felt it
could not entirely resist.

The MPs could cite a long tradition of financial aid for
Kuwaiti citizens. Kuwait wrote off almost all consumer debt
after the 1991 Gulf War as part of a series of handouts to help
Kuwaitis return from exile.

It wiped out millions more in a plan to settle $20 billion
in bad loans stemming mostly from a 1982 stock market crash that
was caused by investors speculating on stocks.

With 14 consecutive years of budget surpluses, Kuwait can
easily afford its new loan buyout plan. But while the debt
relief could boost consumer spending, it is not the best way to
help the economy in the long run, economists say.

They argue that Kuwait needs instead to implement major
parts of a 30 billion dinar development plan, which includes big
infrastructure projects and seeks to attract foreign invesment.
The plan was announced in late 2010 but has faced delays due
partly to disagreements between the cabinet and parliament.

Economists also warn that Kuwait may not have the money to
spend on such debt relief programmes in future. The IMF has
calculated that Kuwait may have exhausted all of its oil savings
by 2017 if it keeps raising state spending at the current rate.

In March last year, after the cabinet agreed a 25 percent
pay rise for government employees, customs workers responded by
going on strike for even bigger salary hikes, followed by staff
at the state airline.

MPs argued during the debate on the loan buyout plan that
some Kuwaitis were paying loan installments equivalent to 60 or
70 percent of their salaries.Ÿ But Ahli United’s Marzouq said
this did not take into account the trend of rising wages.

“Salaries from that period until now have probably at least
doubled, with the generosity of the government,” he said.

The plan has also drawn criticism from some Kuwaitis who
have loans from Islamic banks, which are not covered by the
scheme, and from people who have managed their money carefully.

“I don’t agree with it – I don’t have a loan so where is the
fairness?” said student Fahad, 30, sitting at a coffee shop with
his laptop on the outskirts of the capital.

“This is (the debtors’) problem. Why didn’t they calculate
their income and expenditure? It is not up to the government to
solve these mistakes,” he said.

His 32-year-old friend, Assem Malallah, had another
solution. Why not just spread state money between all Kuwaitis,
rather than only the indebted ones?

“They should be fair with the money and give the same amount
to all of us,” he said.

Zain’s 2012 earnings release states Zain Iraq would likely
launch an IPO in the first half of 2013, but the company’s
chairman now appears to have extended that target date.

“We are now taking the legal procedures and we think by the
end of the year we will finish the public offering,” Asaad Ahmed
al-Banwan told shareholders at the company’s annual meeting on
Sunday.

Zain Iraq along with rival mobile operators Asiacell
, an Ooredoo (Qatar Telecom) subsidiary, and
France Telecom affiliate Korek all missed an August
2011 deadline to float a quarter of their shares and list on the
Iraq Stock Exchange (ISX).

Asiacell is the only one of this trio to now have done so.
It debuted on the ISX in February following a fully-subscribed
$1.27 billion share sale that was Iraq’s largest ever flotation.

Yet much of this demand came from Ooredoo, which increased
its stake to 64 percent from 53.9 percent as part of the
offering.

That Ooredoo stepped in to meet a shortfall in demand from
retail and institutional investors has increased doubts that
Iraq’s other operators will be able to sell their full allotment
of shares, especially as Asiacell had first mover advantage in
terms of attracting local liquidity.

Asiacell now accounts for more than half of the ISX’s
combined market value of about $9.63 billion and its listing
also boosted daily turnover to $7.1 million in February from
$4.6 million a month earlier, according to data from the
Federation of Euro-Asian Stock Exchanges.

Asiacell shares surged in their first few days of trading,
but have now fallen back to their IPO price of 22 dinars.

Zain appears likely to be the sole seller in Zain Iraq’s
IPO, which could cut the Kuwaiti firm’s holding to 51 percent
from 76 percent, according to company statements in March.

(Reporting by Sylvia Westall in Kuwait; additional reporting
and writing by Matt Smith in Dubai; Editing by Michael Perry)

Kuwait is one of the world’s richest countries per capita
and many lawmakers elected in a new parliament in December had
made debt relief a priority of their campaigns and put pressure
on the new cabinet to approve a plan.

Economists and government officials have voiced concerns
about the long-term sustainability of such measures and say
Kuwait should concentrate its funds on infrastructure
development, not financial aid.

Such largesse has a long history in Kuwait.

The government wrote off almost all consumer debt after the
1991 Gulf War that ended Iraqi occupation, one of a series of
handouts helping Kuwaitis return from exile and restart life in
the country.

It then wrote off millions more in a plan to settle $20
billion in bad loans stemming mostly from a 1982 stock market
crash caused by investors speculating on stocks with borrowed
money.

Finance Minister Mustapha al-Shamali said on Tuesday that
the government was expecting to pay up to 744 million dinars
($2.6 billion) for the latest plan, which covers personal loans
taken out from commercial banks before the end of March 2008.
Loans from Islamic banks are not included.

“The banks were accumulating their interest in an unfair and
unjust way,” MP Maasouma al-Mubarak said ahead of the vote. She
said the central bank had not done enough to check the rates
banks were charging Kuwaitis for loans.

Under the law, banks would have to pay back any overcharged
interest to citizens. This would apply to interest charged at
more than 4 percent over the discount rate and it was not
immediately clear how much this would cost.

“It’s obvious for the banks, for Kuwait as a banking centre,
that this does not look very good,” a banking source said,
criticising the measure as a political move.

The government and parliament have had a fractious
relationship in recent years and an agreement on the loans’
issue may make it easier for the government to get lawmakers’
support to pass other legislation.

“I think the legislation first of all is a clear reminder
that although the make-up of parliament has changed its populist
nature has not,” Liz Martins, senior regional economist at HSBC
in Dubai, said.

“It is telling that in a time that the government is looking
to push ahead with its national development plan, and sees this
parliament as an ally in that, the bank loan write-off is the
most concrete action parliament has taken,” she said, adding
that the plan was nevertheless affordable for wealthy Kuwait.

GIFTS TO KUWAITIS

Around 74,000 Kuwaitis are eligible for the plan, known as
the “family support fund.” There are about 3.7 people living in
Kuwait, 1.2 million of them Kuwaiti nationals.

It is not the first time Kuwait has given out financial aid
to its citizens.

In 2011, to mark three major anniversaries, ruler Sheikh
Sabah al-Ahmad al-Sabah granted 1,000 dinars to each Kuwaiti and
free food rations for 13 months.

Kuwait’s oil wealth and generous welfare state have helped
to shield the Gulf country from severe Arab Spring-style unrest,
although there have been demonstrations over political
participation and other local issues.

Wednesday’s bill passed with 50 votes for, four against and
three abstentions.

“It is unfair and unhelpful to the country,” Fouad
Abdulrahman Alhadlaq, deputy general manager at Al Dar Asset
Management in Kuwait, said, commenting on the law.

“Four percent of the Kuwaiti population benefits from it and
it also punishes those dealing with Islamic banks.”

Lawmakers had originally sought a complete bailout of
billions of dollars of household debt but met strong resistance
from policymakers who said the plans were not feasible.

“There were a lot of people who were enthusiastic in taking
out loans and now they are stuck,” MP Nabeel al-Fadhl said. The
plan means that borrowers will pay back their loans to the
government at a suitable rate and in proportion to their income,
he said.

The International Monetary Fund said last year that Kuwait
will have exhausted all of its oil savings by 2017 if it kept
spending money at the current rate.
($1 = 0.2855 Kuwaiti dinars)

(Additional reporting by Mahmoud Harby, Ahmed Hagagy and
William Maclean; Editing by Yara Bayoumy and Susan Fenton)