Kuwait emir accepts cabinet resignation, keeps PM

KUWAIT (Reuters) - Kuwait's ruler has accepted the resignation of the government in a bid to end a crisis with parliament, but reappointed his nephew as prime minister, the speaker of the assembly said on Monday.

Last week, the cabinet quit over a request by three Sunni Islamist MPs to question the prime minister over a controversial visit by an Iranian Shi'ite cleric but the emir, who has the last say in politics, did not immediately accept it.

The new cabinet will be the fourth in the Gulf Arab state and OPEC member since March 2007 after previous line-ups resigned, or the ruler, Sheikh Sabah al-Ahmad al-Sabah, reshuffled cabinets to resolve similar standoffs. He dissolved parliament in March to end a protracted row with MPs.

With a new government in place, deputies cannot question Prime Minister Sheikh Nasser al-Mohammad al-Sabah on the same grounds again. But as parliament has a history of challenging the cabinet, it remains to be seen whether cooperation with the new government will improve.

The crisis jeopardizes crucial economic reforms, such as a plan to set up a markets regulator and measures to tackle the impact of the global financial crisis by pumping cash into the second-largest Arab bourse to reverse months of declines.

"The emir decided to accept the resignation of the government and there are instructions to reappoint Sheikh Nasser as prime minister," parliamentary speaker Jassim al-Kharafi told reporters. "This is a chance to resolve the negative (issues)."

CORRUPTION ALLEGATIONS

He said no timeframe had been set for the formation of the new cabinet, adding that the next parliamentary session on December 16 would be canceled.

The three deputies were objecting to Sheikh Nasser's decision to allow the visit by the Iranian cleric, who they said had insulted the Prophet Mohammad's revered companions.

They had also wanted to question the prime minister over alleged corruption and mismanagement of funds in the world's seventh-largest oil exporter.

"We now need a strong government that is able to tackle the current challenges," Islamist MP Nasser al-Sana told reporters. Abdul-Latif al-Amiri, another Islamist deputy, said: "We need ministers who don't pursue personal interest and are competent."

Kuwait's parliament is regarded as one of the most politically open among the Gulf Arab states, and regularly challenges the government.

The last assembly dedicated much time to questioning ministers and there have been multiple changes in the government lineup over the past two years as a number of ministers have stepped down under parliamentary pressure.

Kuwaiti rulers have dissolved parliament five times since 1976 to avoid questioning and no-confidence votes.

Kuwait's oil policy is managed by a council and changes in government have no direct impact on it.

But Kuwaitis have voiced growing frustration at the political upheavals they say are holding their country back at a time when unity is critical to overcome the impact of the global financial crisis.

(Writing by Lin Noueihed and Ulf Laessing, editing by Mark Trevelyan)