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Used to largesse, Kuwaitis may face taxes

New leader says change ahead for oil-rich nation

KUWAIT CITY -- The unprecedented shake-up in Kuwait's ruling family should not affect the oil-rich country's close US ties, but analysts said yesterday there could be significant changes at home -- such as the imposition of taxes.

Kuwait's new leader brings to power a liberal economic philosophy and a vision for turning Kuwait into a Gulf-region financial hub, returning to its pre-oil discovery heritage as a center of trade.

But such a move was seen as impossible without changes in the country's tax-free craddle-to-grave welfare system, a product of its huge earnings from oil.

The emir-designate also was seen as likely to face fresh demands for democratic reforms in a political landscape that was reshaped -- however slightly -- by the crisis that put him in office.

For the first time in the country's history, parliament on Tuesday voted to oust the ailing emir, Sheik Saad Al Abdullah Al Sabah, who had only ascended to the throne nine days earlier.

Within hours, the Cabinet replaced the ousted leader with Prime Minister Sheik Sabah Al Ahmed Al Sabah.

Parliament votes to sanction the appointment on Tuesday, and Sheik Sabah is said to have unanimous support.

The Al Sabah family had been engaged in an increasingly public and embarrassing power struggle since long-serving emir Sheik Jaber Al Ahmed Al Sabah died Jan. 15.

Once confirmed, US-educated economist Rola Dashti said, the new emir would almost certainly push for introducing some taxes, a word foreign to Kuwaitis who are used to state welfare, funded by oil income.

Most Kuwaitis have government-created jobs in a public sector that has become bloated with civil servants who do little work. Even a gradual introduction of taxes would be expected to generate serious opposition in the parliament.

In a Kuwait television interview in June, Sheik Sabah said: ''We don't have taxes. When a woman gives birth, she is provided with [free] medical care, gets baby formula for free . . . and when a citizen dies, the government buries him."

''Why," the then-prime minister asked, ''can't we levy road taxes?"

He was critical of lawmakers who propose wage increases or consumer debt forgiveness every time there was an increase in oil prices.

They ''should think about the future of their children and grandchildren," he said.

Sheik Sabah's liberal credentials got a boost last year when he named the first woman to Kuwait's Cabinet after women were granted political rights.

Kuwaitis expressed relief yesterday that the leadership crisis had been solved.

''We are relieved of the uncertainty," said Ali Dashti, a vice president of an engineering firm. ''It is good the matter ended in a constitutional way, and it is now clear who will be leader."

Many people remember Sheik Saad with affection for the way he rallied Kuwaitis in exile during the seven months of 1990-91 when the country was occupied by Iraqi troops. ''You are the hero of liberation," wrote Al-Watan in its editorial.

Amal al-Shimmiri, 19, a receptionist, said she was deeply saddened by Sheik Saad's illness, describing him as ''our father," but after the matter had been settled, ''we were very relieved."

''In the end all of [the members of the ruling family] are like brothers," she said.

Internationally, the Al Sabah family has not wavered in its close ties with the United States since an American-led coalition drove Saddam Hussein's troops out of the country in 1991. It was one of few Arab countries to back the US-led invasion of Iraq in 2003 and served as a launch pad for the American drive to Baghdad and the ouster of Hussein.

Kuwait remains a base for American forces and a major transit point for men and materiel heading to and from Iraq. Sheik Sabah was a half brother to the deceased Sheik Jaber who owed his restoration to power to American forces after the first Gulf War. He has been unwavering in his backing for ongoing US operations in Iraq.

Political parties are not allowed in Kuwait, where many politicians operate under the banners of various civic or religious organizations.

Sheik Sabah was expected to face pressure to lift that ban, especially from the self-proclaimed Al-Ummah organization, which is not sanctioned by the government but calls itself a party.

Sheik Sabah had run the day-to-day affairs of the country since the late emir and Sheik Saad both fell ill. He, like the deposed emir, is in his mid-70s.

He has a heart pacemaker, but is otherwise said to be in good health.

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