The Rocky Road That Faces Many Kuwaiti Merchants

Prior to the Iraqi invasion eight months ago, Saeed Shammas and Tareq B. Salem were merchants who lived comfortable lives in a pleasant neighborhood--sort of an Arab version of West Los Angeles.

Today, their cozy lifestyle has vanished, their businesses are largely in ruins and many of their valuables have been stolen. Each is groping to start anew in a post-occupation world that will never be the same--for them or their country.

An erstwhile diplomat whose book and wholesale clothing stores and equipment parts businesses were left in ruins by Iraqi looters, Shammas says he is too old to start over again in business. At 63, he’s talking about reapplying to the diplomatic corps or starting a business consulting practice.

But Salem’s renewal plans abound. Born into a wealthy and established Kuwaiti merchant family, the 45-year-old entrepreneur has gotten his printing business operating again while he assesses the damage to his other investments.

As the Kuwaiti merchant class struggles to regain its balance from the devastating occupation, there are scattered tales of new beginnings mixed with abundant examples of ruin and uncertainty about the future.

“Some merchants are doing very well, and others are very frustrated,” Salem said. “They have no credit and no money.”

Losses in the private sector--to homes and businesses--are expected to account for about half the country’s total damage, according to one U.S. government analyst--a tab of $20 billion or more for homeowners and businessmen.

It is a bill few in the private economy had set aside funds for.

“No one had war insurance,” said Wael Shammas, Saeed’s 36-year-old son who lives in nearby Dubai in the United Arab Emirates. “That’s something oil tankers did.”

Before oil was discovered in Kuwait 53 years ago, the country was largely a nation of merchant traders. Its natural harbor made Kuwait city a hub of Middle East commerce and a center for boat building.

Along with the riches of oil evolved a thoroughly modern merchant class--many of its members Western-educated--that turned Kuwait into a consumer-goods paradise.

Most of that prosperity lies in ruins.

With each passing day, though, the biggest and most aggressive merchants are getting back to normal and catering to crowds hungry for consumer goods that were denied them--or else looted or destroyed--during the occupation. The reopening of the Saudi Arabian border has restored their lifeline to the outside world.

The upscale Sultan Center market on the coast road paralleling the Persian Gulf--Kuwait’s equivalent of Pacific Coast Highway--is mobbed with shoppers. Whole chickens and freshly baked bread, staples of the Kuwaiti dinner table, are especially popular.

Faisal Ali Mutawa, a large retailer whose downtown store’s shelves are laden with Coleman coolers and Kelvinator freezers, says his business is also on the mend. “We’re selling refrigerators and freezers likes hot cakes,” said Mutawa, who has stores throughout the city.

He estimates that Iraqi troops stole $20 million to $30 million in inventory from his stores and warehouses. Not all his goods were stolen, though, and he is importing new merchandise through Saudi Arabia.

The efforts to start anew are occurring against a backdrop of great uncertainty about the future of the emirate’s economy, which some experts believe may never again achieve its preoccupation affluence.

Such industries as banking and real estate, for instance, are likely to undergo major changes as the economy adjusts to post-occupation realities.

“Let’s face it,” says Ali Hamad Bahar, an executive with the National Bank of Kuwait. “We’re never going to be as rich or as prosperous as we used to be.”

Indeed, many Kuwaitis are already braced for a lower standard of living, particularly if the prewar population of 2.2 million is slashed in half. That could happen if, as influential Kuwaitis would prefer, far fewer foreign workers are invited back to a nation where they used to account for more than 70% of the population.

A smaller population would seek fewer loans and require fewer banks. Kuwait now has six commercial banks; it may need only half that many, according to Bahar.

If the population shrinks, lessened demand is also likely to hammer real estate values. Large apartment developments in the suburbs already are standing largely vacant. Residents have fled; their return is uncertain--even unlikely.

“This is an industry that will be hard hit--real estate,” Tareq Salem says.

Salem Abdul Aziz Al-Sabah, governor of the Central Bank of Kuwait, this country’s equivalent of the Federal Reserve, agrees. In an interview, Al-Sabah suggested allowing people to buy the empty flats as condominiums, perhaps as second homes--something that is now against the law.

No one is worried that postwar Kuwait will be a poor country. In addition to its huge oil reserves, the government has an estimated $100 billion in overseas investments.

“Instead of being super-rich, we’ll simply be rich,” says Salem, who favors Western casual wear and drives a black Volvo.

The ruling family, which is expected to name a new Cabinet soon, has yet to announce an official position on business compensation, though Kuwaiti merchants expect to get direct aid or low-interest loans. Already, Sheik Jabbar al Ahmed al Sabah, the emir, has announced that consumer loans will not have to be repaid.

While the rulers ponder policy decisions, Salem is sifting through the rubble of his investments, trying to measure how large the losses are.

His three jewelry stores downtown were thoroughly looted. What remains is a pile of debris. Between his losses and reconstruction, his costs will run in the millions.

“They stole first, then burned everything to cover their tracks,” Salem said outside his once-chic shop, Sadeer Jewellery, on Kuwait city’s main shopping avenue.

Just before the Aug. 2 invasion, Salem acquired a large stake in a fast-growing suburban business that produced cement bags for export throughout the Middle East--including Iraq--and to Europe.

The plant shut down just after the Iraqi invasion; the Iraqis reportedly looted the raw material in systematic fashion.

“The idea was right,” Salem says as he walked through the huge plant, which once ran 24 hours a day and is now eerily silent, save for a few chirping birds. “There’s no reason why we can’t do it again.”

One bright spot for the merchant is that Gulf Bank granted Salem a line of credit that will let him jump-start his printing business. One of his initial contracts will be to print stationery for the bank.

Though bank loans are still rare in Kuwait, Salem received one because his printing equipment--located in an industrial area--was not stolen or vandalized, said Ayad O. F. Serry, a marketing manager for Gulf Bank.

Saeed Shammas was not as fortunate.

The war dealt a cruel hand to the retired diplomat, who served as Kuwait’s ambassador to the Soviet Union, France and Kenya in the 1960s and 1970s.

One of the worst blows, he said, came when Iraqi troops--who set up camp right outside his door--stole $90,000 in gold and cash at gunpoint from a safe inside his house.

His foreign-born partners--the Egyptian who was part-owner of his bookstore and the Lebanese with whom he owned his spare-parts business--have fled.

To be sure, Shammas is hardly destitute. He still has two luxury cars and a home whose comforts would place him squarely in America’s upper middle class. He is, however, feeling very uncertain these days.

Though too young to retire, he figures that he does not have time to build his investments back to their prewar levels. Shammas says he is not independently wealthy and is in debt to the banks on business loans.

“They are going to ask me for the money,” says the dignified and soft-spoken man, “and I’ll have to say: ‘I can’t give it back.’ ”