Despite boasting the largest fiscal surplus (~23% of GDP) of Gulf-based oil exporters (with a population of 2.8m it holds 7.6% of the world’s total proven reserves and currently does roughly 2.8m b/d in production which is fifth among OPEC members), Kuwait’s ongoing political rancor leaves it ever-dependent on energy (40% of GDP versus 27% for Saudi Arabia), delays reform and pointedly “sours the investment case” per Silk Invest CIO Daniel Broby, though given its surplus, socio-economic largesse (this spring the Ministry of Finance announced a one-time monetary payment, food and utility subsidies and salaries increases together worth roughly 6% of GDP, for instance) should be able to allay at least some tensions for quite some time.  Yet it could also serve to perpetually hinder the defacto rivalry raging between the ruling family and “a fluid assembly dominated by loose blocs of Islamist and tribal deputies” that in effect leaves Kuwait “a lot less dynamic than ambitious Gulf neighbours such as Qatar, Dubai and Abu Dhabi, and less attractive to foreign investors.”  Kuwait’s flagship index dropped 0.7 percent in 2010 and has dithered in 2011 as well–down 6.5% YTD, topped only by Egypt’s 30% plunge, and with space to flounder perhaps given it still boasts MENA’s second-highest trailing PE ratio.  All this despite the fact that its state-run oil company is set to up production to 4m b/d within the next decade, assuming its impending deal with Exxon to help develop complicated fields near the northern border comes to fruition.  On that latter note, however, the FT notes that hitherto “parliament has vociferously opposed any agreement with foreign companies.”

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