Kuwait in the stranglehold of crisis: What the state of emergency means for the Gulf and our economy

The news is getting thicker, and what's brewing leaves me, as a long-time observer of the region, feeling rather uneasy. While most of us here in Austria were enjoying our Sunday evening, a state of emergency was already in place in Kuwait. It's no longer just the distant rumble of a military escalation between Iran and Israel – the storm has reached the coast. And it has hit with full force.

The silence over Kuwait City: An airport in a coma

A good friend of mine, who normally flies for Kuwait Airways, sent me a voice message this morning. His voice: tense. He's been stuck with his crew in the transit area of Kuwait City airport for over 24 hours, the plane is grounded, and all flight operations are at a standstill. What I'm hearing from his contacts sounds like chaos: hundreds of stranded passengers, the airport hotels are overflowing, and the staff have no idea when things will get moving again. Kuwait Airways, the nation's prestige project, has practically ceased operations – and that's for an indefinite period. The airspaces are closed, insurers are refusing cover, and pilots no longer dare to take off. An economic catastrophe for a country that lives off transit and trade.

When the world's strongest currency starts to wobble

Even more worrying are the signals I'm getting from the financial sector. The stock exchange in Kuwait has suspended trading – that's the very last resort to prevent a total crash. Insiders from the banking district are reporting frantic phone calls between the central bank and the major trading houses. The Kuwaiti Dinar, long traded as the world's most valuable currency, is under massive pressure. Of course, the official exchange rates are holding for now, but in the exchange bureaus of Kuwait City, it's like a gold rush atmosphere – albeit in the wrong direction. Everyone who can is exchanging Dinars for Dollars or Euros. The run on hard currency has long since begun. If the Kuwaiti Dinar's peg to the Dollar were to slip even slightly, we would have a completely new problem – one that would make oil barrels more expensive far beyond the region and make our imports impossible to calculate.

When even football falls silent

And then there's something else that seems trivial at first glance, but is central to the mood in the country: the matches of the Kuwait national football team have been cancelled. No stadium roar, no shared victories or defeats. In the region, football is the release valve, the only mass event that brings people together. When even that falls silent, then everyone knows: this is really serious. The young people, who would normally be kicking a ball about in the squares of Kuwait City, are now holed up at home staring at the news tickers.

The four levels of the crisis – an overview

Let's summarise what the current developments mean for Kuwait. I see four clear fault lines:

• Military: The region has become a tinderbox. A friendly military attaché confirmed to me that the American bases in the country have been put on the highest state of alert. Yesterday's incidents with drones and fighter jets over the Gulf make it clear how quickly the conflict could spill over.
• Economic: The stock exchange is closed, the Kuwaiti Dinar is staggering, investors are pulling out money – if they still can. The chambers of commerce are expecting massive downturns in the second quarter.
• Infrastructure: Kuwait Airways is at a standstill, the airport in Kuwait City is effectively paralysed. The entire logistics chain for oil, gas, and consumer goods is grinding to a halt.
• Social: People are afraid. The cancellation of the football matches of the Kuwait national football team is just one symptom. Everyday life has disappeared.

For us in Austria, this means: higher energy prices are all but certain, our export businesses that supply the Gulf region must expect total losses, and anyone who had planned a business trip to Kuwait City can forget about it for the time being. The world has just become a bit smaller and more unpredictable. And in the middle of this storm stands a small, rich country that is currently learning that money alone cannot buy peace.