Kuwait’s hydrocarbon sector’s strike is far from being over
BY Abdullah Al Elyan
The saga of a short-lived strike by Kuwait’s Union of Petroleum and Petrochemical Workers (UPPW) on April 17, is far from over. The strike, which nearly halved the country’s hydrocarbon output on the first day, and threatened its revenues in just three days, may resume any day now as UPPW says it was duped into calling it off.
What Really Happened
On April 17, some 13,000 UPPW workers in blue jumpsuits bearing badges that read “We shall not compromise,” went on strike to protest the privatization of the oil and petrochemical sector and to reject a new reform plan endorsed by the cabinet last month, which they say greatly diminishes their rights.
UPPW’s message was clear. Work would not resume until the government amends the new plan. The reform strategy, which still needs the parliament’s approval as a legislation, equates the ranks of oil and petrochemical employees with other public sector workers, stripping the former of an exclusive package of privileges and rights. UPPW employees would then lose entitlements without their consent, something the UPPW sees as illegal.
The cabinet was adamant that it has a constitutional and legal obligation to preserve national resources and funds.
The new amendment calls for slashing the workers’ annual financial rewards by up to 70 percent, UPPW head Farhan Al Ajami tells Newsweek Middle East.
“We were only forced to go on strike after we hit a dead end with the officials we were negotiating with,” he adds.
He was referring to failed discussions between UPPW chiefs and representatives of Kuwait’s National Petroleum Company (KNPC) and the government. The government reacted to the strike with calls to disband the union, and then referred its heads to the judiciary for destabilizing the country. The UPPW rejected the accusation, saying that under the plan, only the union or the judiciary had the authority to disband the body.
However, the strike was abruptly suspended, after a sheikh from the ruling family, acting as a mediator between the union and the ruler’s office, said the latter wanted an end to the protest in order to “safeguard the country’s best interests,” according to sources from the UPPW. To honor the ruler’s wishes, the UPPW called off the strike on April 19, only three days after it was initiated.
But the ruler’s court was swift to deny—in an official statement—it had issued such orders or that it had intervened in any way. The statement left the UPPW feeling it had been tricked into ending the strike.
“Our demands have increased now after we found out that we were lied to. We want that the person behind this allusion that the ruler wished to end the strike, be questioned and dealt with,” a UPPW chief, Mohammed Al Hajri tells Newsweek Middle East.
Asked about the cabinet’s request for UPPW leaders to be put on trial, Hajri appeared unperturbed. “We did not steal from anyone and we did not strike deals or support merchants or own companies in the oil sector,” a clear reference to some government officials who had been accused of making shady deals and squandering public money.
He refuted allegations that the union intended to harm the country, adding that the whole issue was to protect the employees’ rights.
“We shall go to court with our heads held high, and shall walk out in the same manner. We are in a country that [is governed by law], and respects the Constitution and international agreements and the rights of the laborers. The law supports us,” he adds.
According to Newsweek Middle East’s sources, the sheikh who acted as mediator was stripped of a number of privileges, including a monthly salary given to members of the ruling family, and denied access to the protocols lounge at Kuwait’s International Airport.
The UPPW is also expected to reverse its call to suspend the strike any day this week.
Meanwhile, the body is currently in negotiations with government representatives as well as the oil sector to reach a compromise. The talks follow a meeting between Prime Minister Sheikh Jaber Al Mubarak Al Sabah and union officials, a few hours after the strike was suspended.
UPPW chief, Saif Al Qahtani told Newsweek Middle East that under the UPPW deal, oil and petrochemical workers will be excluded from the new government plan; will maintain some of their exclusive privileges, including annual bonuses, but other financial benefits will be reduced; and they will receive a pledge the sector would not be privatized.
While the union’s intentions seem to be honorable, some are questioning the timing of the strike and who is really behind it.
“There are several questions that cross our minds. Is it really a proper time to hold it, at a time when oil prices are low and the region is witnessing all these events? Does the strike have political dimensions? And is it supported by a specific party?” Member of Parliament, Dr. Khalil Abdullah tells Newsweek Middle East.
Although freedom of expression, including public protests, is guaranteed by the Constitution, Abdullah says there are instances when this constitutional right doesn’t apply.
“True that the Constitution preserves their right to stop working for a good cause, but they don’t have the right to derail or harm the state’s interests by shutting down the state’s main source of income,” he argues.
“It is in that sense that we need a constitutional and legal text. Besides, the motto raised by those on strike, ‘No to selling Kuwait,’ is it really them or a political slogan? They didn’t even give negotiations a chance and directly rushed to strike,” he claims.
The Constitutional Court “is currently deliberating the legality of strikes in Kuwait,” Abdullah reveals.
Firing back against insinuations of a hidden agenda, Qahtani said, “No one has the right to question our patriotism or motives.” He reiterated that the union was “merely protecting the employees’ rights. There are no hidden agendas behind the strike.”
On his part, MP Hamdan Al Azmi, defended UPPW’s right to go on strike over, what he described as “attempts to cut down the number of employees in the hydrocarbon sector,” and to privatize the sector in favor of some traders.
Azmi supports his claims with an economic reform plan, recently endorsed by the government, and which lifts a ban on the privatization of several government sectors.
He disclosed that he and other colleagues had called for an emergency parliamentary session to discuss the strike, but that it never materialized because they were unable to achieve quorum.
The UPPW, according to Azmi, resorted to strike after it had depleted all means to reach a compromise with the government.
“News reaching the leadership of Kuwait, about the strike and the events surrounding it, are misguiding,” he says, adding that the strike did not impact Kuwait’s obligations.
“I don’t believe the workers had the intention of harming the country. They were only trying to defend their rights,” he adds.
However, on April 23, Deputy Premier, Finance Minister and acting Oil Minister Anas Al Saleh, denied that the nation’s financial and economic reform plan embodied any notion of privatizing the oil and gas sector, or selling government assets to individuals or firms that may monopolize them.
“The reform plan does not give the government a free hand in changing or amending current laws without referring such action to the parliament first,” he added in a statement carried by the state news agency KUNA.
Saleh said that the reform plan “is a government obligation for financial and economic reforms in accordance with the goals set for the nation’s development plan for the fiscal year 2016-17, and which the lawmakers approved last June.”
How Does the Strike Impact Kuwait?
Although KNPC and its subsidiaries were able to operate the company’s three refineries on the first day of the strike, under a contingency plan, their output dropped almost by half from 930,000 to 520,000 barrels in one day.
The decline continued for the remainder of the three days contrary to a statement by KNPC’s Chief Executive Officer, Mohammed Al Mutairi saying that none of the fuel stations or supply networks of the Ministry of Electricity were affected by the strike.
“We learned that KNPC brought in foreign workers, from nearby Gulf countries, as well as Arabs and Asians, but that they weren’t able to operate the refineries properly,” says Qahtani.
Export operations, however, proceeded “according to plan,” and the country was able “to meet the most prominent global market demands as agreed upon with the customers,” according to Sheikh Talal Al Sabah, spokesperson for Kuwait’s oil sector. Al Sabah further stressed on the ample supply of gasoline and other petroleum byproducts in Kuwait’s local market which “are sufficient for 25 days… while the state’s strategic stockpile is enough for 31 days.”
But despite those assurances, energy specialists told Newsweek Middle East they believe that the country’s revenues would have been drastically impacted had the UPPW not suspended the strike.
Qahtani agrees. He said the strike could have had a stronger impact, but that UPPW kept one unit operational because it was “vital for hospitals to remain functioning, and the country to stay lit. We are against a strike that paralyzes the country or harms fellow citizens.”
Energy specialist, Hamad Al Terkait, who also sits on the Board of MEGlobal, a joint venture of EQUATE Petrochemical Company and Petrochemical Industries Company (PIC), tells Newsweek Middle East that the strike wouldn’t impact Kuwait’s reputation on the international level, as everyone expects oil producing companies to restrain expenses at one point or another.
The oil sector in Kuwait, according to Terkait, “is the country’s top source of revenue… and it also leads in terms of expenditures.”
According to him, the thought of privatizing the sector has been there for quite some time. “It is not a shame to privatize a public sector. The shame would be not defining the goals of such a step,” he says.
According to Terkait, KNPC, should have sat down and negotiated with the workers to avoid the strike. “Bonuses could have been frozen till international oil prices recovered, rather than wiping them,” he adds.
Motlaq Al Zaabi, a union board member, tells Newsweek Middle East that the union will continue to protect the sector in face of individual greed.
“We know that the oil sector is the main source of income for Kuwait. Striking is a legitimate step and a right safeguarded by international conventions to which Kuwait is signatory,” says Zaabi.
“We can go back to strike anytime the negotiations with the authorities fail to reach a solution,” he adds.