Kuwait's parliament may be dissolved after crisis

By Ulf Laessing and Rania El Gamal

KUWAIT (Reuters) - Kuwait's ruler is expected to dissolve parliament in the Gulf oil exporter after the government's resignation brought a long-running political crisis to a head, analysts and politicians said on Tuesday.

"I think the emir will dissolve the parliament to end this crisis between government and parliament," said political analyst Ali al-Baghli, a former oil minister.

"The government was not decisive enough and lacked a clear agenda and MPs focused on popular demands... There is hope that a new assembly will change things but I am not too optimistic."

The cabinet quit on Monday, less than a year after it was sworn in, complaining of a lack of cooperation from a parliament that has challenged ministers, prompting several resignations. The standoff has paralyzed political life and delayed economic reform.

Kuwait wants to diversify the economy away from oil to emulate the success of Gulf neighbors Dubai or Bahrain which have become regional financial centers. But a bill to set up a financial regulator and open up the stock market to more foreign investment has been stalled in parliament.

Deputies have also forced the cabinet to set up a fund to buy back bad debts Kuwaiti nationals incurred from shopping sprees, in a blow to plans to end reliance on a nanny state.

Kuwait has yet to name an oil minister to replace Badr al-Humaidhi, who resigned days after his appointment in November under pressure from hostile deputies. The previous cabinet had resigned to avert a parliamentary no-confidence vote in the then health minister, a member of the ruling family.

Emir Sheikh Sabah al-Ahmad al-Sabah, who has the last say in politics, has repeatedly urged deputies and the government to work together for the sake of the country, but to little avail.

OPTIONS

Sheikh Sabah, who returned from a personal visit to Morocco on Tuesday, has two constitutional options to address the crisis, politicians and analysts say.

He can accept the resignation and name the current or a new prime minister to form a new cabinet or he can dissolve parliament and call an election within two months.

Kuwait's parliament has been dissolved four times since it was established in 1963. Sheikh Sabah's predecessors suspended the assembly for six years in 1986 and five years in 1976.

Islamist lawmaker Dhaifallah Bu-Ramiah said the ruler would probably dissolve the assembly since intermittent cabinet reshuffles over the past year had failed to break the deadlock.

"We are afraid that we get an unconstitutional dissolution. The situation is grave and we will not accept it," he said, referring to the possibility of a repeat of 1986.

Parliament had made progress approving long-awaited reforms such as a reduction in taxes on foreign firms and privatization of the loss-making national airline.