By Ulf Laessing and Rania El Gamal
KUWAIT (Reuters) - Kuwait's ruler dissolved parliament andset an election for May 17 on Wednesday after a politicalcrisis that delayed economic reforms forced the oil exportingstate's government to resign.
"We were hoping that our brothers in the two authorities,legislative and executive ... would achieve the aspiration ofour people ... and we were patient for a long time," SheikhSabah al-Ahmad al-Sabah said in a speech.
Sheikh Sabah, who has the final say in the mainly SunniMuslim country's politics, said repeated calls for cooperationbetween lawmakers and the government were not heeded.
"To protect our homeland and citizens from irresponsibleconduct that has crossed boundaries and did not take intoconsideration past experiences ... and to safeguard nationalunity I have decided to dissolve parliament," said SheikhSabah.
The crisis was caused by a standoff between the cabinet andparliament, which has a history of challenging the government-- unusual for a region where countries like Saudi Arabia aredominated by ruling families.
Kuwait, whose stock market rallied on investor hopes thereforms would be approved by a new assembly, wants to diversifyits economy away from oil like Gulf Arab neighbours Dubai andBahrain that have become regional financial centres.
The official news agency said polls will be held on May 17.
The dissolution followed the resignation of the cabinet onMonday, less than a year after it was sworn in, complaining ofa lack of cooperation from the assembly. Sheikh Sabah did notsay if he had also accepted the resignation of the cabinet.
Traditionally a new government is appointed afterelections.
PARALYSIS
The standoff had paralysed political life and delayed keyeconomic reforms in the OPEC producer and key U.S. ally, whereone of every three nationals is Shi'ite.
The bourse rallied to an all-time high on Wednesday. Thebenchmark rose 1.5 percent to 14,450.40 points.
Sheikh Sabah told Kuwaitis that their loyalty should beonly to God and the homeland rather than any "sect, tribe orgroup".
Several Shi'ite politicians including two members of thedissolved house took part last month in a ceremonycommemorating a slain leader of Hezbollah, a Shi'ite Lebaneseguerrilla group, raising sectarian tensions in the country.
This is the fifth dissolution of the former Britishprotectorate's parliament since the house was set up in 1963.
The emir cut short a holiday to Morocco and returned lateon Tuesday to deal with the crisis, holding urgent talks withthe parliament's speaker, the crown prince and the primeminister.
"This is a wrong decision," Mohammad al-Saqr, the head ofparliament's foreign affairs committee, told Al Jazeera.
Parliament had made progress approving long-awaited reformssuch as a reduction in taxes on foreign firms and privatisationof the loss-making national airline.
But tensions flared again on Sunday when lawmakers demandeda new raise for public sector employees who comprise over 90percent of working Kuwaitis.
The demands put parliament on a collision course with thecabinet which raised salaries in February to offset the effectof spiralling inflation.
A bill to set up a financial regulator and open up thestock market to more foreign investment has been stalled in thehouse.
Deputies have also forced the cabinet to set up a fund tobuy back bad debts Kuwaiti nationals incurred from shoppingsprees, in a blow to plans to reduce dependence on the state.
Kuwait has yet to name an oil minister to replace Badral-Humaidhi, who resigned days after his appointment inNovember under pressure from hostile deputies. The previouscabinet had resigned to avert a parliamentary no-confidencevote in the then health minister, a member of the rulingfamily.
Parliament members have to approve the state budget and alllaws and exercise their right to question ministers. It passeda law in 2005 giving women the right to vote and run inelections.
(Writing by Lin Noueihed and Inal Ersan)
