These are but two examples of the political changes and economic instability facing Europe right now. But with an ever globalizing world, will these shifts in politics and economy eventually affect the Middle East or Kuwait? A question that economist Hajjaj Bukhadour thinks is an important one that is rarely asked or taken into consideration. “This topic is very important and is never addressed. Politicians or Parliament never talk about this issue, not even the banks consider the changes in Europe,” says Bukhadour.” They focus all our attention on the performance of oil. But the change in oil prices or economic crises in Europe, from where we import many of the products and services to Kuwait for the oil industry, will affect us and preventative measures can be taken,” explained the economist.
Bukhadour believes that any changes in politics or the west in general, will affect the Middle East. He explains that in Europe, the priorities are going to change but the strategy stays the same. “Whether it is Europe or America, these countries have a plan for the future. For instance, they know what the plan is for 20 years in advance, their long -term plan is the same. Aspects like national security or the stability of their economy are clear, so much so that any party coming to rule will not have a different view or they will not change them,” said the economist about political strategies in Europe.
He explained that Europe and America know what the challenges and goals are, the only change is how they approach or to reach these goals. “This is different from democrat to republican , from the labor party to the conservative party. It is the approach taken that will affect the priorities. Countries will now ask themselves, ‘do I support this country more than this country in the Middle East? Should I invest here before locally?,” said Bukhadour .
Bukhadour explains that Kuwait is perceived as a country rich with oil and it is one of the countries that will last until the end in oil production along with Saudi Arabia and Iraq. This will affect the way struggling countries in Europe will deal with us.
“With the change of priorities and approach, Kuwait should understand this and take this into consideration. How to chose their investments, how to build up their cooperation with the socialist party, for instance. Socialism has a different criteria to achieve stability and economy. The application is different but the objective remains the same. Now Kuwait should understand the theory of socialism and capitalism or any political party ruling in Europe, they should lay down the strategy of their investments according to this,” he explains.
Bukhadour believes that Kuwait needs to know where to invest, how to invest, how much to invest and in what sector to invest in, when it comes to Europe and its new governments. “In France for instance, socialism will focus on more small and medium sized companies, they will create jobs, and reduce interest rates, probably. They will also focus on local spending, which will inevitably mean that they will reduce their currency. There will be a lot of changes,” the economist explained.
“In order to not be affected, and to be able to take advantage, we need to take preventive measures. Otherwise, we will be stuck and lost in all the changes in Europe,” said Bukhadour.
In 2007, the Kuwaiti dinar was de-pegged from the US dollar and re-pegged to a basket of currencies in which the euro played a big role. This , Bukhadour believes, will affect our currency policy. “the central bank should take the fact that the euro will depreciate and should adjust to stabilize the KD more. The dollar will go up and the price of oil will come down and we need to adjust according to that. We have to also understand what America’s reaction will be to all this. The United States might cash out more dollars in the market because the euro will get weaker. The euro will be lowered so they can spend more in the local market, and to attract more foreign investment; all factors that should be calculated and taken into consideration when Kuwait is going to do business.
