Kuwait ruler accepts cabinet resignation

POLITICAL CRISIS: Kuwait economic stimulus plan under threat as cabinet resigns. (Getty Images)

Kuwait's ruler accepted the cabinet's resignation on Monday after deputies moved to question the prime minister, state media said, deepening a political crisis which threatens an economic stimulus plan.

Frequent cabinet changes do not usually affect the oil policies of OPEC-member Kuwait, the world's seventh-largest oil exporter, which are set by a high state energy council.

But the stalemate could further delay approval of a 1.5 billion dinar ($5.11 billion) rescue plan, including bank guarantees to soften the impact of the global financial crisis and plans to lower the nation's dependence on oil.

State media did not say whether the ruler, who has the last say, would reappoint Prime Minister Sheikh Nasser al-Mohammad al-Sabah, name a successor or dissolve parliament as he did in March 2008 to end a similar standoff.

State television said the cabinet would continue work until a new lineup - Kuwait's fifth in two years -takes over. The cabinet had resigned in November after a similar request by MPs but the ruler reappointed his nephew as prime minister.

Earlier this month, several deputies submitted a request to question Prime Minister Sheikh Nasser, a member of the ruling family, pushing to crisis point a long-running dispute between parliament and the government.

Analysts and diplomats said Kuwait's ruler Emir Sheikh Sabah al-Ahmad al-Sabah might appoint a new prime minister to form a fresh cabinet or dissolve parliament.

"I personally expect parliament to be dissolved or bring a new cabinet headed by a new prime minister. The crisis has reached a stage which requires to change the government," political analyst Shamlan al-Eissa said.

"All options are open. Some say the emir might appoint a new prime minister," said a Western diplomat.

"Prime Minister Sheikh Nasser ... has submitted tonight his resignation and the resignation of his brothers the ministers to Emir Sheikh Sabah al-Ahmad al-Sabah, and it was accepted," state TV said in a brief alert.

Kuwait allows more political freedom than other Gulf Arab states but questioning the prime minister, a nephew of the ruler, is considered crossing a red line. No prime minister has ever allowed themselves to be questioned.

Several deputies have accused the prime minister of a wide range of issues including cancelling a $17-billion deal with Dow Chemical in December and mismanagement of ministries.

A similar crisis led to the resignation of the cabinet in November but the ruler reappointed Sheikh Nasser as prime minister, triggering protests by deputies.

Several bills, such as a plan to set up a financial regulator, have been delayed by the political crisis.

Kuwait has been forced to step in to save its fifth-largest lender Gulf Bank as the global financial crisis bites despite the country's substantial oil revenues.

Analysts say investment firms such as Investment Dar and Global Investment House badly need the rescue plan to get new loans and weather the financial crisis. (Reuters)

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