Kuwait Scraps Deal With Dow Chemical

Sheik Nasser was reappointed to his post though he has yet to form a new Cabinet.

Dow, one of the world's largest chemical companies, and Kuwait's Petrochemical Industries Co., a subsidiary of the Kuwait Petroleum Corp., had hoped the joint venture would help them capture a larger share of the global chemicals market and boost profitability. The company was to be headquartered in the Detroit area.

But the sharp drop in crude oil prices -- from mid-July highs of nearly $150 per barrel to under $40 currently, has hit Kuwait and its oil-rich Gulf Arab neighbors, hard.

The Kuwaiti stock exchange has fallen by about 35% since the beginning of the year, and some investors have criticized the government for what they said was a lack of action to stave off the impact of the global meltdown.

Dow has also faced difficulties, and announced earlier this month that it was cutting about 11% of its work force, closing 20 plants and selling off several businesses to cut costs amid the financial downturn.

As criticism over the deal mounted in Kuwait, Oil Minister Mohammed al-Eleim defended the venture as profitable, saying it was carefully studied by international consultants for over two years.

The Cabinet said in its Sunday statement it "rejected" politicizing the issue which is harming the country by impeding development projects.