ShareKUWAIT: We do not know whether any of the previous government’s projects are binding for the next government — however, we believe there is nothing wrong with commenting on one that will help stop a mistake. The preventive decision is less harmful than fixing an error. A vivid example is the new British government’s rotation last week and the cancellation of its project with fiscal policy expansion. The Kuwaiti decision, as published in the media and attributed to official sources, is to expropriate the Jleeb Al-Shuyoukh area, demolish it and then sell its lands at a public auction for use as private housing, as well as for investment and commercial housing, according to its current division.
In our estimation, the project has many flaws. In addition to its inability to remedy the spread of slums, disorder and security in the region, other repercussions of the decision may be unbearable. The first drawback of the decision is that evacuating an area of this size and overcrowded in nature, without providing a ready alternative will lead to an unorganized and undesirable form of migration to other areas. This means spreading and generalizing its impact instead of limiting them.
The second defect is in the acquisition decision and the excess liquidity it provides for real estate owners in the region, with labor migration to the other areas as a catalyst and the scarcity of several investment opportunities for those funds. That may push real estate prices outside the area to higher levels in a country where there is no logical justification for the levels of unbearable property prices. With the possible increase in real estate prices, the prices of goods and services will rise, reducing the real income of those with fixed incomes with all its economic and social repercussions.
The third defect is the improper use of public financial resources, even temporarily, until the removal and auction are completed. This is a matter that may take years at a time when the country is almost entirely dependent on providing its liquidity and financial solvency on the state of the oil market, which it has no influence on and oil prices began to fall rapidly.
Finally, the acquisition of an area in Kuwait opens the door to pressures of reciprocity in other areas, which may not succeed, but it is enough to distract the efforts of a new administration as it leads to the illusion that public finance is in surplus and it opens the appetite of others to other claims. Once again, we do not yet know the next government’s formation and cannot be certain that it will abide by the decisions of a previous government after its formation. Therefore, this is a warning article mentioning some of the consequences of such a decision if the next government decides to review it. – Al Shal report
