R 011132Z AUG 89
FM AMEMBASSY KUWAIT
TO SECSTATE WASHDC 6767
INFO AMEMBASSY ABU DHABI
AMEMBASSY BAGHDAD
AMCONSUL DHAHRAN
AMEMBASSY DOHA
AMEMBASSY MANAMA
AMEMBASSY MUSCAT
AMEMBASSY RIYADH

C O N F I D E N T I A L SECTION 01 OF 07 KUWAIT 03922 
 
E.O. 12356:  DECL:OADR 
TAGS: KPRP SOCI ECON EFIN PGOV KU
SUBJECT:  THE MERCHANT FAMILIES LOSE GROUND TO 
-         THE AL-SABAH 
 
REF:  (A) 83 KUWAIT A-7 
-     (B) 88 KUWAIT 6886 
-     (C) 88 KUWAIT 1481 
-     (D) KUWAIT 1948 
-     (E) KUWAIT 3814 
 
¶1.  CONFIDENTIAL -- ENTIRE TEXT. 
- 
------- 
SUMMARY 
------- 
 
¶2.  THE 1980'S HAVE WITNESSED A GRADUAL REALIGNMENT IN 
THE BALANCE OF POWER AMONG KUWAIT'S FOUR MAJOR FAMILY 
GROUPS:  THE RULING AL-SABAH, THE SUNNI AND SHIA 
MERCHANT ARISTOCRACIES, AND THE JENAAT (IRAQI-ORIGIN 
SUNNI).  THE AL-SABAH HAVE BEEN THE MAJOR BENEFICIARIES, 
AS THEY HAVE SOLIDIFIED THEIR HOLD ON GOVERNMENT AND 
EXPANDED THEIR PRESENCE IN FINANCE AND COMMERCE.  THE 
JENAAT WERE FORCED INTO CLOSER ALLIANCE WITH THE AL-SABAH 
FOLLOWING THE 1982 STOCK MARKET CRASH, AS THE RULING 
FAMILY HELPED EXTRACT THEM FROM THEIR FINANCIAL DIFFI- 
CULTIES.  THE SHIAS FOLLOWED A SIMILAR COURSE AS THEIR 
COMMERCIAL TIES TO IRAN CRUMBLED DURING THE GULF WAR. 
THE SUNNIS, WHILE STILL RETAINING GREAT WEALTH AND 
PRESTIGE, HAVE BEEN HOBBLED BY INTRAMURAL SQUABBLING OVER 
HOW TO DIVIDE THE STAGNANT ECONOMIC PIE AVAILABLE TO 
THEM. 
 
¶3.  AS A RESULT OF THIS REALIGNMENT OF POWER, THERE ARE 
FEWER CHECKS ON THE AL-SABAH ABILITY TO MAKE AND IMPLE- 
MENT GOVERNMENT POLICIES.  THIS SHOULD NOT CAUSE ANY 
MAJOR SHIFTS IN FOREIGN POLICY, AS THE RULING FAMILY IS 
BASICALLY PRO-WESTERN.  ALTHOUGH RELATIVELY CONSERVATIVE, 
IT IS NOT PRONE TO EXTREMISM OF ANY STRIPE AND MONOLITHIC 
ONLY ON ISSUES OF SURVIVAL.  DOMESTICALLY, WE MAY SEE A 
GREATER PROCLIVITY FOR THE AL-SABAH TO ASSERT THEIR RULE 
OVER THE OBJECTIONS OF OTHER SEGMENTS OF SOCIETY (THE 
RECENT UNIVERSITY SHAKE-UP COULD BE AN INITIAL HARBINGER 
OF THIS TREND).  ALTHOUGH THE TRADITION OF PLURALISTIC 
DECISION MAKING IS STILL STRONG AND KUWAIT IS NOT ABOUT TO 
BECOME AN AUTARCHY, THE GREATER CONCENTRATION OF POWER 
IN THE HANDS OF THE RULING FAMILY COULD SET THE STAGE FOR 
FURTHER DEMOCRATIZATION OF KUWAITI SOCIETY.  (THIS CABLE 
FULFILLS PART OF POST REPORTING PLAN.)  END SUMMARY. 
- 
--------------------------------------------- --- 
THE SUNNI ARISTOCRACY:  PRAGMATISM THE WATCHWORD 
--------------------------------------------- --- 
¶4.  THE ORIGINS OF KUWAIT'S SOCIAL STRUCTURE DATE TO THE 
FOUNDING OF THE STATE IN THE LATE EIGHTEENTH CENTURY. 
TRADITION HAS IT THAT THE FOUNDING FAMILIES CHOSE ONE OF 
THEIR NUMBER, AL-SABAH, TO HEAD THE GOVERNMENT AND 
"MIND THE STORE" WHILE THE REMAINING FAMILIES PURSUED 
BUSINESS INTERESTS.  DEPENDING ON WHO IS TELLING THE 
STORY, THIS WAS EITHER BECAUSE THE AL-SABAH HAD SHOWN A 
FLAIR FOR MEDIATION, OR BECAUSE THEY WERE THE WEAKEST OF 
THE FOUNDING FAMILIES AND SO WERE GIVEN THE SHORTEST 
(I.E., MOST UNPROFITABLE) END OF THE STICK.  EVEN TODAY 
THE AL-SABAH REFER TO THEMSELVES AS THE "RULING", RATHER 
THAN THE "ROYAL", FAMILY, REFLECTING THE TRADITION OF 
BEING FIRST AMONG EQUALS.  THE OTHER FOUNDING FAMILIES 
FORM THE CORE OF THE SUNNI MERCHANT ARISTOCRACY. 
 
¶5.  MEMBERSHIP IN THE SUNNI ARISTOCRACY HAS BEEN FAR FROM 
STATIC, AS SUNNI FAMILIES WHO MIGRATED TO KUWAIT OVER THE 
YEARS HAVE BEEN INTEGRATED INTO IT.  FINANCIAL ACUMEN, 
WEALTH AND GULF SUNNI BACKGROUND HAVE BEEN THE TICKETS OF 
ADMISSION.  ONE OF THE MEMBERS OF THE SUNNI ARISTOCRACY, 
KUWAIT INVESTMENT AUTHORITY (KIA) MANAGING DIRECTOR DR. 
FAHAD AL-RASHED, RECENTLY REMINDED THE AMBASSADOR AND 
EMBOFF THAT HIS GRANDFATHER HAD WALKED BAREFOOT OUT OF A 
POOR NEJDI VILLAGE IN SAUDI ARABIA (ZILFI) IN THE EARLY 
TWENTIETH CENTURY SEEKING HIS FORTUNE IN THE CITY-STATE 
TO THE NORTHEAST.  THE FOUNDERS OF THE AL-HAMAD, 
AL-KHORAFI, AL-SHAYA, AL-OSAIMI, AND AL-SAAD 
ARISTOCRATIC FAMILIES DID LIKEWISE.  EVEN SOME LONGER 
ESTABLISHED FAMILIES LIKE THE AL-ABDULRAZZAKS GAINED 
WEALTH AND POWER ONLY RECENTLY.  THE CURRENT PATRIARCH 
OF THE FAMILY TOLD EMBOFF DURING A DIWANIYA CALL THAT AS 
A YOUTH HE WORKED AS A WELL-DIGGER, WHEREAS TODAY HE 
COUNTS THE FAMILY WEALTH IN THE TENS OF MILLIONS OF 
DOLLARS. 
- 
¶6.  THE SUNNI ARISTOCRACY SPREADS ITS INFLUENCE THROUGHOUT 
THE BUSINESS COMMUNITY THROUGH A SERIES OF INTERLOCKING 
DIRECTORATES CENTERED ON THE NATIONAL BANK OF KUWAIT 
(NBK), THE SUNNI FLAGSHIP.  ITS MANAGERS MAINTAIN THAT 
NBK IS THE MOST PROFITABLE OF THE ARAB BANKS AND HOPE IT 
WILL SOMEDAY OVERTAKE ITS CLOSEST RIVALS, NCB OF SAUDI 
ARABIA AND ABC OF BAHRAIN, TO BECOME THE BIGGEST ARAB 
BANK IN TERMS OF ASSETS.  THE ARISTOCRACY'S EXECUTIVE 
TALENT HAS ALSO LONG BEEN PUT TO USE IN HIGH-LEVEL 
GOVERNMENT POSITIONS.  TWO EXAMPLES WILL SUFFICE TO 
INDICATE THE BREADTH OF THE ARISTOCRACY'S INFLUENCE: 
 
-- THE BILLIONAIRE NBK CHAIRMAN, MOHAMMED ABDULMOHSEN 
AL-KHORAFI, HAS A SON WHO IS MINISTER OF FINANCE, A 
COUSIN WHO IS UNDERSECRETARY OF THE INTERIOR, AND CLOSE 
RELATIVES WHO CONTROL THE SUCCESSFUL KUWAITI SAFEWAYS. 
 
-- THE THREE SONS OF THE NBK DEPUTY CHAIRMAN MOHAMED 
ABDUL RAHMAN AL-BAHAR ARE THE CHAIRMEN OF KUWAIT INTER- 
NATIONAL INVESTMENT COMPANY, THE LARGEST PRIVATE 
INVESTMENT COMPANY IN THE COUNTRY; THE KUWAIT INVESTMENT 
COMPANY, THE SECOND LARGEST GOK-OWNED INVESTMENT COMPANY; 
AND THE MANAGER OF A MAJOR IMPORT COMPANY WHICH, AMONG 
OTHER THINGS, HAS THE LOCAL CATERPILLAR CONCESSION.  ONE 
OF THE ELDER AL-BAHAR'S BROTHERS IS THE OFFICE DIRECTOR 
FOR THE CROWN PRINCE, A NEPHEW IS ON THE BOARD OF GULF 
BANK, AND A COUSIN IS ON THE BOARD OF COMMERCIAL BANK. 
- 
¶7.  THE SUNNI ARISTOCRACY HISTORICALLY WAS CONSIDERED A 
LIBERALIZING COUNTERWEIGHT TO THE MORE CONSERVATIVE 
AL-SABAH.  FOR EXAMPLE, IN THE 1920'S AND 1930'S, THE 
MERCHANTS PRESSED (UNSUCCESSFULLY) FOR A MEANINGFUL 
LEGISLATIVE COUNCIL TO CHECK THE EXECUTIVE POWER OF THE 
AL-SABAH.  AT LEAST IN RECENT DECADES, THEIR MOTIVATION 
FOR INVOLVEMENT IN POLITICAL AFFAIRS HAS NOT BEEN BORN OF 
IDEOLOGY, BUT RATHER OF A DESIRE TO MAINTAIN A POLITICAL 
AND BUSINESS CLIMATE CONDUCIVE TO CONTINUED PROFIT- 
MAKING.  THUS, THE DISSOLUTION OF THE NATIONAL ASSEMBLY 
IN 1976 WAS NOT OPPOSED BY THE ARISTOCRACY, SINCE THE 
ASSEMBLY'S POLITICAL ACTIVITIES WERE, IF ANYTHING, 
HARMING THE COMMERCIAL CLIMATE.  TODAY, THE MEMBERS OF 
THE ARISTOCRACY REPRESENT A MULTIPLICITY OF VIEWS ON 
PURELY POLITICAL QUESTIONS.  THE ONE POLICY GOAL THEY 
SHARE IS AVOIDANCE OF ANY POLITICAL, ECONOMIC, OR SE- 
CURITY PROBLEM WHICH COULD HURT THEIR ABILITY TO MAKE 
MONEY; FOR THE SUNNI ARISTOCRACY, PRAGMATISM IS THE 
WATCHWORD. 
 
--------------------------------------------- ---- 
THE SHIA ARISTOCRACY:  COUNTERWEIGHT TO THE SUNNI 
--------------------------------------------- ---- 
¶8.  THE SHIA ARISTOCRACY IS COMPOSED OF THREE FAMILIES 
WHO MIGRATED TO KUWAIT FROM IRAN AND IRAQ BETWEEN 1850 
AND 1900:  THE BEHBEHANIS (INCLUDING THE AL-ABULHASSANS 
AND THE AL-MAARAFIS); THE AL-KAZEMIS; AND THE QABAZARDS. 
THE BEHBEHANIS AND THE AL-KAZEMI CLAIM ARABIC ANCESTRY, 
BUT MOST KUWAITIS CONSIDER ALL OF THE SHIA ARISTOCRATS 
TO BE OF PERSIAN STOCK.  LIKE THE SUNNI ARISTOCRATS, 
THEY HAVE ACHIEVED THEIR STATUS BY VIRTUE  OF ACCUMULATED 
WEALTH AND FINANCIAL ACUMEN, AND HAVE EMPLOYED THEIR 
EXECUTIVE TALENT IN GOK POSITIONS.  THEIR BUSINESS 
ACTIVITY IS CENTERED AROUND THE AL-AHLI BANK, WHICH THEY 
CONTROL, AND THEIR GOVERNMENT INVOLVEMENT AROUND THE 
OIL INDUSTRY, HIGHER EDUCATION, AND THE MEDIA. 
- 
¶9.  THE SHIA ARISTOCRACY HAS LONG BEEN USED BY THE AL- 
SABAH AS A COUNTERWEIGHT TO SUNNI DOMINANCE OF COMMERCE 
AND FINANCE AND AS A CONNECTION TO IRAN.  THE SHIA 
ABDULMUTALIB AL-KAZEMI, OIL MINISTER FROM 1975 TO 1978, 
PRESIDED OVER THE NATIONALIZATION OF KUWAIT'S OIL INDUS- 
TRY, WHICH CREATED A NEW SOURCE OF WEALTH AND POWER FOR 
THE AL-SABAH INDEPENDENT OF THE SUNNI ARISTOCRATS.  SHIA 
ARISTOCRATS HAVE CONTINUED TO FILL MANAGEMENT POSITIONS 
IN THE OIL INDUSTRY.  THE AMIR ALSO REPORTEDLY USED 
AL-AHLI BANK AS HIS CONDUIT FOR FINANCIAL RELATIONS 
WITH IRAN DURING THE REIGN OF THE SHAH.  BY THE START OF 
THE 1980'S, THE SHIA ARISTOCRATS AND THE AL-SABAH ENJOYED 
A SYMBIOTIC WORKING RELATIONSHIP IN WHICH EACH SIDE 
HELPED THE OTHER REMAIN INDEPENDENT OF THE SUNNI 
MERCHANTS. 
 
------------------------------------------- 
THE JENAAT:  WESTERN-ORIENTED NOUVEAU-RICHE 
------------------------------------------- 
¶10.  THE JENAAT ARE A GROUP OF SUNNI FAMILIES, MORE 
PROPERLY A CLAN, WHICH MIGRATED TO KUWAIT FROM NORTHERN 
IRAQ IN THE EARLY 19TH CENTURY.  THE CLAN INCLUDES THE 
AL-MUTAWA, AL-SALEH, AL-SURI, AL-SULTAN, AL-ISSA, 
AL-BADR, AL-MUSALLEM, AL-NAJI, AL-JASSEM, AND THE 
AL-YASSEEN FAMILIES.  THE JENAAT NUMBER WELL OVER 10,000 
AND ARE KUWAIT'S LARGEST FAMILY GROUP.  WHILE MOST WEAR 
TRADITIONAL KUWAITI DRESS, THEIR FAIR COMPLEXION, 
INCLUDING SOME BLONDS, GIVES THEM A DISTINCTLY EUROPEAN 
APPEARANCE.  THEY MARRY ALMOST EXCLUSIVELY WITHIN THE 
FAMILY (WHEN MARRYING KUWAITIS), AND HAVE KEPT THEIR 
DISTANCE FROM THE OTHER SUNNI FAMILIES. 
- 
¶11.  THE JENAAT RISE TO PROMINENCE DATES FROM THE EARLY 
PART OF THIS CENTURY WHEN THE AL-SABAH ADOPTED THE JENAAT 
ORPHAN YUSIF AL-ISSA.  YUSIF GREW UP IN THE AL-SABAH 
HOUSEHOLD AND SOLIDIFIED HIS TIES WITH THE RULING FAMILY 
WHEN HE SERVED ON THE LEGISLATIVE COUNCIL IN THE 1930'S 
AND DEFENDED THE AMIR AGAINST ITS ATTEMPTS TO DILUTE HIS 
AUTHORITY.  YUSIF INSISTED THAT EACH OF HIS TWELVE SONS 
RECEIVE A FIRST-RATE EDUCATION IN THE U.S. OR UK, AND A 
CONTINUING FAMILY EMPHASIS ON QUALITY EDUCATION HAS 
CAUSED A HIGHER PROPORTION OF JENAAT THAN OTHER KUWAITIS 
TO HAVE WESTERN BUSINESS DEGREES (AND WESTERN WIVES).  IT 
HAS ALSO LED THE JENAAT TO SUPPLY MANY OF THE PROFESSIONAL 
AND TECHNICAL EXPERTS NEEDED BY KUWAITI PRIVATE COMPANIES 
AND THE GOK-OWNED OIL CONCERNS, ALTHOUGH IN THE 1960'S 
CLAN MEMBERS BEGAN TO MOVE INTO OWNERSHIP POSITIONS WITH 
THE HELP OF THE JENAAT-CONTROLLED GULF BANK.  REFLECTIVE 
OF THE RANGE OF JENAAT EXPERIENCE AND OPINION IS THE 
PROMINENCE OF SOME CLAN MEMBERS AMONG KUWAITIS COMMITTED 
TO "PAN-ARAB" CAUSES. 
 
¶12.  THERE IS NO LOVE LOST BETWEEN THE SUNNI ARISTOCRACY 
AND THE JENAAT.  THE SUNNI MERCHANTS CONSIDER THE JENAAT 
"NOUVEAU RICHE" WHO TRADED ON YUSIF'S CONNECTION WITH THE 
AL-SABAH TO MAKE INROADS INTO COMMERCE AND FINANCE.  THE 
JENAAT, IN TURN, ARE GENERALLY CONSIDERED THE MOST ANTI- 
SHIA KUWAITIS, PROBABLY BECAUSE THE SHIA ARE SEEN AS 
RIVALS FOR THE FAVOR OF THE AL-SABAH AND FOR MANAGEMENT 
POSITIONS WITHIN THE OIL INDUSTRY.  THE JENAAT DO HAVE A 
STRONG POSITION WITHIN THE OIL INDUSTRY -- OIL MINISTER 
SHAIKH ALI-KHALIFA AL-SABAH IS SOMETIMES REFERRED TO AS 
THE "JENAAT SHAIKH" BECAUSE OF HIS RELIANCE ON THEIR 
TALENTS -- BUT THERE HAS NEVER BEEN AN INDICATION THAT THE 
AL-SABAH WOULD FOREGO THEIR CONNECTION TO THE SHIA 
ARISTOCRACY AT THE BEHEST OF THE JENAAT.  ALTHOUGH THE 
JENAAT HAVE CARVED OUT AN IMPORTANT POSITION AS A 
WESTERN-ORIENTED TECHNOCRATIC ELITE, THEY HAVE NEVER 
REACHED A POSITION WHERE THEY COULD INDEPENDENTLY 
CHALLENGE THE SUNNI OR SHIA ESTABLISHMENTS. 
- 
--------------------------------------------- ---- 
SOUK AL-MANAKH CRASH:  A WATERSHED FOR THE JENAAT 
--------------------------------------------- ---- 
¶13.  BY 1980, THE FOUR MAJOR FAMILY GROUPS HAD ACHIEVED 
A CAREFUL BALANCE OF POWER.  THIS BALANCE WAS SOON TO BE 
UPSET.  THE FIRST SHOCK TO THE SYSTEM WAS THE 1982 SOUK 
AL-MANAKH STOCK MARKET CRASH, IN WHICH THE JENAAT LOST A 
LOT OF MONEY AND A GREAT DEAL OF PRESTIGE.  JENAAT 
MEMBERS, PARTICULARLY THE AL-MUTAWA, WERE INVOLVED IN 
SOME OF THE BIGGEST FAILED DEALS WHICH SPARKED THE CRASH, 
AND THE SUNNI ARISTOCRACY TRIED TO BLAME THE CRASH ON THE 
UNBRIDLED GREED OF THE JENAAT.  THERE WERE ALSO 
ACCUSATIONS THAT THE HEAD OF THE CLAN, MUSTAFA AL-SULTAN, 
USED HIS POSITION AS HEAD OF GULF BANK TO PROTECT THE 
CLAN'S WEALTH BY BLOCKING ACCOUNTS OF MANAKH PLAYERS 
WHO WERE IN DEBT TO IT. 
 
¶14.  THE JENAAT'S PROBLEMS AFTER THE MANAKH DISASTER GAVE 
THE AL-SABAH AN OPENING TO AUGMENT THEIR RELATIONSHIP 
WITH THE CLAN, AS THE FINANCIAL COMMUNITY TURNED TO THE 
GOK TO RESCUE KUWAIT'S FINANCIAL SYSTEM.  THE RULING 
FAMILY MADE THE MOST OF THIS OPPORTUNITY.  ALTHOUGH THE 
FINANCE MINISTER AT THE TIME WAS A SUNNI ARISTOCRAT WHO 
FAVORED LETTING THE MANAKH CHIPS FALL WHERE THEY MAY, 
THE GOK DECIDED TO IMPLEMENT A BAIL-OUT OF THE BANKS AND 
DEBTORS MOST AFFECTED BY THE CRASH.  THERE WERE EVEN 
CHARGES THAT THE AL-SABAH AND JENAAT HAD CONSPIRED TO 
SETTLE UNFAIRLY A NUMBER OF THE CLAIMS RESULTING FROM 
THE CRASH. 
- 
¶15.  WHATEVER THE PROPRIETY OF THEIR ACTIONS, THE AL- 
SABAH MANAGED TO PUT MANY OF THE JENAAT IN THEIR DEBT, 
BOTH FIGURATIVELY AND LITERALLY, AND EXTEND THEIR PRE- 
VIOUSLY LIMITED PARTICIPATION IN JENAAT BUSINESS 
ACTIVITIES.  FOR EXAMPLE, FOR THE FIRST TIME, AN AL-SABAH 
WAS NAMED TO THE BOARD OF THE GULF BANK AFTER THE BANK'S 
SOLVENCY WAS RESTORED BY THE GOK.  THE JENAAT ARE 
WIDELY SEEN AS HAVING SURVIVED THE MARKET COLLAPSE DUE 
IN LARGE PART TO AL-SABAH PATRONAGE, AND TO HAVE BEEN 
FORCED INTO CLOSER ALLIANCE WITH THE RULING FAMILY AS A 
RESULT.  THE AL-SABAH, MEANWHILE, MANAGED TO SURVIVE THE 
POLITICAL CRISIS CAUSED BY THE NATIONAL ASSEMBLY'S 
CRITICISM OF THE BAIL-OUT PROGRAM AND ITS SUBSEQUENT 
DISSOLUTION, LARGELY BECAUSE THE PRAGMATIC SUNNI 
ARISTOCRACY CAME TO SEE POLITICAL STABILITY AS ESSENTIAL 
TO BUSINESS CONFIDENCE. 
 
------------------------------------- 
THE GULF WAR AND THE SHIA ARISTOCRACY 
------------------------------------- 
¶16.  WHILE THE JENAAT WERE SWIFTLY WOUNDED BY THE SOUK 
AL-MANAKH CRASH, THE SHIA ARISTOCRACY WERE SLOWLY BLED 
BY THE IRAN-IRAQ WAR.  THEY SUFFERED SERIOUS ECONOMIC 
SETBACKS AS LUCRATIVE FINANCIAL LINKS WITH IRAN WERE 
BROKEN AND THE CENTER OF THE TRADING RELATIONSHIP WITH 
IRAN WAS DIVERTED TO DUBAI.  THE SHIA-CONTROLLED AL-AHLI 
BANK FACED SERIOUS FINANCIAL PROBLEMS AND HAD TO RECEIVE 
GOK FINANCIAL ASSISTANCE TO SURVIVE.  AS WAS THE CASE 
WITH GULF BANK, THE AL-SABAH DEMANDED AND RECEIVED A 
SEAT ON THE AL-AHLI BOARD IN RETURN FOR THE GOK BAIL-OUT 
AND AS A SYMBOL OF THE SHIA'S INCREASED DEPENDENCE ON 
THE RULING FAMILY'S PATRONAGE. 
- 
¶17.  MORE SERIOUS FOR THE SHIA ARISTOCRACY THAN THEIR 
FINANCIAL PROBLEMS WAS THE QUESTIONING OF THEIR LOYALTY. 
THIS REACHED A PEAK WHEN SHIA WORKERS WERE IMPLICATED IN 
THE SABOTAGE OF THE KPC REFINERY AT AHMADI AND THE 
JENAAT HEAD OF KOTC, ABDULFATAH AL-BADER, BEGAN ARGUING 
THAT KPC SHOULD SACK ALL OF ITS SHIA EMPLOYEES.  OIL 
MINISTER SHAIKH ALI-KHALIFA AL-SABAH AND KPC MARKETING 
DIRECTOR SHAIKH ALI JABER AL-SABAH, THE AMIR'S SON-IN- 
LAW, BLOCKED ANY PRECIPITATE AXING OF SHIA MANAGERS, 
KEEPING, FOR EXAMPLE, A QABAZARD AS DEPUTY MANAGING 
DIRECTOR OF KOTC.  NEVERTHELESS, THE SHIA ARISTOCRATS 
FELT CONSTRAINED TO KEEP LOW PUBLIC PROFILES AND TO 
PROFESS THEIR LOYALTY TO THE STATE WITH GREAT OSTENTATION 
ON THE DIWANIYA CIRCUIT.  NOW THAT THE WAR HAS WOUND 
DOWN, THE SHIA ARISTOCRATS ARE LEFT WITH MUCH LESS 
FINANCIAL POWER AND A GREATER SENSE OF DEBT TO THE 
AL-SABAH FOR THE PROTECTION AFFORDED DURING THE WAR 
YEARS. 
 
------------------------------------------- 
THE SUNNI:  DAMAGED FROM WITHOUT AND WITHIN 
------------------------------------------- 
¶18.  THE SUNNI ARISTOCRATS WHO HAD BEEN MIDDLEMEN IN 
TRADE WITH IRAN AND IRAQ SAW THEIR PROFITS DECLINE DURING 
THE GULF WAR, AS THE NORMAL TRADE AND FINANCIAL 
ACTIVITIES OF THE COMBATANTS SHRANK OR WERE DIVERTED 
ELSEWHERE.  THE ARISTOCRACY MANAGED TO SURVIVE BECAUSE 
OF THE SIZE AND DIVERSITY OF THEIR FINANCIAL INTERESTS, 
NBK REMAINS THE ONLY KUWAITI PRIVATE BANK WHICH HAS 
NOT HAD TO TURN TO THE GOK FOR FINANCIAL ASSISTANCE; IT 
STILL HAS NO AL-SABAH ON ITS BOARD.  NEVERTHELESS, THE 
WAR PUT A DAMPER ON THE GROWTH OF SUNNI ECONOMIC POWER. 
THE PICTURE IS NOT A GREAT DEAL BRIGHTER NOW THAT THE 
SHOOTING HAS CEASED.  IRAQ'S LACK OF HARD CURRENCY AND 
APPETITE FOR ADDITIONAL CREDIT AND THE GOK'S REFUSAL TO 
ADVANCE THE CAPITAL WHICH KUWAITI CONTRACTORS NEED TO 
COMPETE FOR MAJOR PROJECTS HAS DASHED THE SUNNI 
ARISTOCRATS HOPES FOR PROFITING QUICKLY FROM POST-WAR 
RECONSTRUCTION IN IRAQ.  THE SUNNI MERCHANTS ARE FAR 
FROM PAUPERS, BUT THEIR WEALTH IS NOT GROWING AT THE 
PACE IT ONCE DID. 
- 
¶19.  THE SUNNI ARISTOCRACY'S PROBLEMS HAVE BEEN 
EXACERBATED BY INTRAMURAL SQUABBLING.  THE ELDEST SON OF 
MULTI-BILLIONAIRE YUSIF AHMED AL-GHANIM, ARGUABLY THE 
RICHEST SUNNI MERCHANT, HAS SPENT MOST OF THE DECADE 
IN THE U.S. DUE TO DIFFERENCES WITH HIS FATHER.  OTHER 
SENIOR MEMBERS OF THE FAMILY ARE FEUDING FOR VARIOUS 
REASONS.  TWO SUNNI FAMILIES, THE AL-KHALEDS AND AL- 
GHARABALLYS, ARE FIGHTING OVER POTENTIALLY PROFITABLE 
SPONSORSHIP OF THE LOCAL FRENCH SCHOOL.  SIMILAR DISPUTES 
OVER CONTROL OF OTHER PROFITABLE VENTURES HAVE SPRUNG 
UP AS MEMBERS OF THE SUNNI ARISTOCRACY MANEUVER TO 
SECURE SLICES OF A STAGNANT ECONOMIC PIE.  THESE FAMILY 
DIFFERENCES HAMSTRING THE SUNNI AND MEAN THEY CANNOT 
EASILY MOUNT A UNIFIED CAMPAIGN TO RE-ASSERT THEMSELVES 
VIS-A-VIS THE AL-SABAH.  THEY ARE THUS ENDING THE DECADE 
WEAKER THAN THEY ENTERED IT, BOTH FINANCIALLY AND 
POLITICALLY. 
 
--------------------------------------------- -- 
THE AL-SABAH INCREASE THEIR FINANCIAL CLOUT ... 
--------------------------------------------- -- 
¶20.  WHILE KUWAIT'S OTHER THREE FAMILY POWER BLOCS 
SUFFERED ECONOMIC SETBACKS DURING THE 1980'S, THE 
AL-SABAH WERE AUGMENTING THEIR POWER.  THEY TIED GOK 
FINANCIAL FORTUNES TO OIL REVENUES AND INVESTMENT IN THE 
DEVELOPED WORLD, THEREBY INSULATING THEM FROM THE EFFECTS 
OF THE GULF WAR (WITH NO SMALL HELP FROM THE UNITED 
STATES NAVY).  GOK, AND BY IMPLICATION AL-SABAH, 
FINANCIAL CLOUT THUS WAS STRENGTHENED RELATIVE TO PRIVATE 
KUWAITI INTERESTS. 
- 
¶21.  AL-SABAH FAMILY MEMBERS HAVE ALSO BEEN ABLE TO 
INCREASE THEIR PERSONAL FORTUNES IN THE 1980'S DUE IN 
PART TO THEIR GOK CONNECTIONS.  THE RICHEST AL-SABAH 
OF ALL MAY BE SHAIKH SALEM AL-ALI AL-SABAH, WHO HEADS 
THE NATIONAL GUARD AND HAS REPORTEDLY AMASSED A FORTUNE 
BY BROKERING ARMS DEALS WITH KUWAIT OR NEIGHBORING ARAB 
STATES.  A QUIET MAN, HIS HUGE, WELL-FURNISHED DIWANIYA 
HAS ALWAYS BEEN EERILY EMPTY EXCEPT FOR FAMILY RETAINERS 
WHENEVER EMBOFFS HAVE DROPPED IN ON EID CALLS.  HIS 
BANK ACCOUNTS, HOWEVER, ARE FAR FROM EMPTY; A LOCAL 
BANKER RECENTLY TOLD EMBOFF THAT SHAIKH SALEM AL-ALI 
HAD ALMOST TWO BILLION RPT BILLION DOLLARS ON DEPOSIT 
IN LOCAL BANKS ALONE, WHICH WOULD MAKE HIM ONE OF THE 
THREE OR FOUR RICHEST KUWAITIS. 
 
¶22.  THE NET RESULT OF THE CHANGES IN THE 1980'S HAS 
BEEN A SIGNIFICANT SHIFT IN THE ROLE PLAYED BY THE 
AL-SABAH IN THE LOCAL ECONOMY.  IN THE LATE 1970'S, THE 
MERCHANTS WERE ABLE TO PUT A MEMBER OF THE AL-SABAH 
OUT OF THE IMPORT BUSINESS BY QUIETLY PASSING THE WORD 
TO THE CROWN PRINCE THAT THE MAN WAS TRESPASSING ONTO 
TERRITORY RESERVED FOR OTHERS, AND THE RULING FAMILY 
HAD LITTLE INFLUENCE IN THE PRIVATE BANKING ESTABLISH- 
MENT.  NOW, THE MERCHANTS WORRY THAT THEY WILL BE 
FORCED TO FIND ROOM IN THEIR BUSINESSES FOR YOUNG 
UNDER-EMPLOYED AL-SABAH, AND THE FAMILY HAS SEATS ON 
THE BOARDS OF THREE OF THE FOUR LARGEST PRIVATE BANKS 
(AL-AHLI, COMMERCIAL, AND GULF).  THE OLD TABOOS HAVE 
BEEN BROKEN, AND THE AL-SABAH ARE CLEARLY FREE TO 
COMPETE WITH THE OTHER FAMILY POWER BLOCS ON THEIR 
OWN TURF. 
- 
------------------------------------------- 
...AND CONSOLIDATE AL-SABAH POLITICAL POWER 
------------------------------------------- 
¶23.  BEFORE IT WAS SUSPENDED IN 1986, THE NATIONAL 
ASSEMBLY HAD BEEN A BRAKE ON AL-SABAH POWER AND A 
VEHICLE BY WHICH THE OTHER FAMILIES COULD PUT THEM 
ON NOTICE WHEN THEIR GRASP EXTENDED TOO FAR.  ONE THING 
THE MAJORITY IN THE NATIONAL ASSEMBLY HAD IN COMMON 
WAS THAT IT WAS NON-AL-SABAH AND COULD CALL THE RULING 
FAMILY TO ACCOUNT.  ALTHOUGH THE AMIR IS STILL CAREFUL 
TO OBSERVE FORM AND CONSULT WITH THE MERCHANT 
PATRIARCHS WHEN CONSIDERING MAJOR POLITICAL MOVES LIKE A 
CABINET CHANGE, THERE IS NO LONGER ANY VEHICLE EXCEPT 
THE INFORMAL DIWANIYA SYSTEM BY WHICH THE FAMILIES CAN 
DEMAND AN ACCOUNTING FROM THE AL-SABAH.  HOWEVER, THEY 
ARE IN A WEAKENED POSITION TO MAKE DEMANDS THROUGH THIS 
INFORMAL SYSTEM, NOW THAT THE JENAAT AND SHIA 
ARISTOCRACY ARE BEHOLDEN TO THE AL-SABAH TO A GREATER 
DEGREE, AND THE SUNNI ARISTOCRATS ARE LESS ABLE TO BACK 
THEIR POLITICAL INTERESTS WITH FINANCIAL MUSCLE. 
 
¶24.  THIS IS NOT TO SAY THERE HAS BEEN ANY OBVIOUS OR 
DRAMATIC SHIFT IN OVERT POLITICAL POWER.  THE CABINET 
REMAINS CAREFULLY BALANCED BETWEEN THE AL-SABAH AND 
OTHER FAMILIES, ALTHOUGH, WITH THE EXCEPTION OF FINANCE, 
THE NON-AL-SABAH PORTFOLIOS ARE NOT KEY ONES.  THERE HAS 
BEEN A GROWING AWARENESS, HOWEVER, THAT THE AL-SABAH 
MAY BE ABLE TO MAKE POLITICAL MOVES WITH LESS RESTRAINT 
THAN IN THE PAST.  THE RECENT CONTROVERSIAL SHAKE-UP OF 
UNIVERSITY ADMINISTRATION APPARENTLY INDUCED BY THE 
RULING FAMILY (REF E) IS ONE INDICATOR OF THIS TREND. 
A SIGN TO WATCH FOR IN THE FUTURE IS THE FATE OF FINANCE 
MINISTER JASSIM AL-KHARAFI, A MEMBER OF THE SUNNI 
ARISTOCRACY.  SHOULD HE BE REPLACED BY AN AL-SABAH, 
THIS, ALONG WITH RETENTION OF AN AL-SABAH AS HEAD OF 
THE CENTRAL BANK, WOULD GIVE THE RULING FAMILY MANAGERIAL 
CONTROL OVER FISCAL AND MONETARY POLICY AND FURTHER 
AUGMENT THEIR HOLD ON GOVERNMENT INSTITUTIONS. 
- 
--------------------------------------------- ------- 
IMPLICATIONS FOR FOREIGN AND DOMESTIC POLICY -- MORE 
AUTHORITARIANISM ON THE WAY? 
--------------------------------------------- ------- 
¶25.  AN INCREASED CONCENTRATION OF POWER IN THE RULING 
FAMILY SHOULD NOT HAVE ANY IMMEDIATE IMPLICATIONS FOR 
KUWAITI FOREIGN POLICY, WHICH HAS TRADITIONALLY BEEN THE 
PRESERVE OF THE AL-SABAH IN ANY CASE.  THE CONSERVATIVE 
AL-SABAH ARE PRAGMATIC, CAREFUL RULERS FAVORABLY 
DISPOSED TOWARD SOLID TIES WITH THE WEST, AS WAS AMPLY 
DEMONSTRATED BY IMPLEMENTATION OF THE MARITIME PRO- 
TECTION REGIME.  THEY SHOW NO DISPOSITION TOWARD 
EXTREMIST VIEWS WHICH COULD DEVELOP INTO ANTI-WESTERN 
POLICIES.  THE DECLINING INFLUENCE OF OTHER FAMILY 
GROUPS COULD EVENTUALLY ALLOW THE AL-SABAH TO ACT WITH 
LESS RESTRAINT ON FOREIGN POLICY ISSUES, BUT WE DO NOT 
ENVISION THIS HAVING ANY SIGNIFICANT IMPACT ON U.S. 
INTERESTS. 
 
¶26.  DOMESTICALLY, REDUCED CHECKS ON AL-SABAH EXECUTIVE 
POWER DECREASE THE PROSPECTS FOR ACCELERATED DEMOCRATI- 
ZATION AND COULD LEAD TO A MORE AUTHORITARIAN SOCIETY. 
IT IS HARD TO IMAGINE ANY OF THE OTHER FAMILY POWER 
BLOCS, IN THEIR WEAKENED STATES, LEADING THE CHARGE FOR 
RESTORATION OF A NATIONAL ASSEMBLY WITH TEETH.  ON THE 
OTHER HAND, THE STRONG KUWAITI TRADITION OF PLURALISTIC 
DECISION-MAKING WILL PROBABLY PRECLUDE ANY RASH POWER 
GRABS BY THE RULING FAMILY.  MORE LIKELY, THE AL-SABAH 
WILL WORK TOWARD ACCRETION OF POWER SLOWLY AND 
DELIBERATELY, WHILE BEING CAREFUL TO PRESERVE THE 
APPEARANCE OF CONSULTATION WITH THE OTHER FAMILY BLOCS 
AND CONTINUING TO PLAY THOSE BLOCS OFF AGAINST EACH 
OTHER.  THE OTHER FAMILIES WILL NO DOUBT GRUMBLE ABOUT 
THIS DEVELOPMENT.  HOWEVER, GIVEN THEIR WEAKENED 
POSITIONS AND PROBABLE AL-SABAH CAUTION ABOUT GOING TOO 
FAR TOO FAST, THE RULING FAMILY SHOULD BE ABLE TO EFFECT 
A GREATER CENTRALIZATION OF AUTHORITY IN KUWAIT WITHOUT 
BEING CHALLENGED BY ANY SERIOUS DOMESTIC DISSENT. 
- 
¶27.  THE MOST AVAILABLE CHECK ON AL-SABAH POWER MAY BE 
THE DIVERSITY OF THE RULING FAMILY ITSELF.  EXCEPT IN 
THE CASE OF SURVIVAL ISSUES, THE AL-SABAH ARE NOT 
MONOLITHIC.  A LIVELY MANEUVERING FOR POWER AND 
INFLUENCE BETWEEN THE JABER AND SALEM BRANCHES (REF D) 
IS ALMOST ASSURED BY THE ORGANIZATION AND SUCCESSION 
PATTERNS DEVELOPED OVER DECADES.  IT HAS BEEN REPORTED, 
FOR EXAMPLE, THAT THE RECENT UNIVERSITY SHAKE-UP AROSE 
NOT FROM A CONCERTED AL-SABAH DECISION BUT FROM THE 
PLAYING OUT OF THESE INTER-RIVALRIES.  TO PLAY THE GAME, 
AL-SABAH FACTIONS CAN AND DO SEEK OUT ALLIES AMONG THE 
MERCHANTS, TRIBES OR OTHER ELEMENTS ON SPECIFIC ISSUES. 
THUS, WHILE THE RELATIVE ACCRETION OF AL-SABAH POWER 
ALTERS THE WEIGHTS OF SOME ELEMENTS IN THE KUWAITI 
EQUATION, THE RESILIENCY AND DYNAMISM OF THE KUWAITI 
SYSTEM WILL CONTINUE TO MAKE IT ONE OF THE MORE 
INTERESTING AND DURABLE IN THE REGION. 
 
HOWELL