KUWAIT, March 16 (Reuters) - Kuwait's ruler accepted the cabinet's resignation on Monday after deputies moved to question the prime minister, deepening a political crisis which threatens an economic stimulus plan, state media said.
Here are reasons and possible implications of the move:
REASONS FOR RESIGNATION
* Analysts said the cabinet resigned to end a pattern of political crises hitting the Gulf Arab state over the last two years as parliament has been blocking major economic reforms and focused on questioning ministers.
* Parliament is dominated by Islamists, tribal and independent politicians who oppose scaling back a massive welfare state. Analysts say it must be trimmed to attract more investment and lower dependence on oil revenues.
* Islamists tightened their grip in the last election in May 2008 and since then have pushed to increase state aid for citizens, in contrast to government plans to encourage employment in the private sector.
* Several MPs across political groups have voiced opposition to a $5 billion economic stimulus plan, demanding it is linked to a bailout of indebted citizens. The government rejects this, as it wants to end dependence on a 'nanny state'.
* Some analysts and politicians said Kuwait's ruler might try to resolve the crisis by dissolving parliament and calling an election. Sheikh Sabah al-Ahmad al-Sabah dissolved parliament a year ago to end a similar row but to no avail.
* "It is likely that the emir will dissolve parliament and call for early elections...and then decide on a new government and a new prime minister," said Shafiq Ghabra, head of the American University of Kuwait.
* "A dissolution is still on the agenda," an MP who asked not to be named told Reuters minutes after state media said the ruler had accepted the resignation.
* When the cabinet resigned in November, the ruler reappointed Sheikh Nasser al-Mohammad al-Sabah as prime minister, but some analysts say he is politically too weak to deal with parliament.
POLITICAL SYSTEM
* The world's seventh-largest oil exporter has an outspoken parliament with full legislative powers, unusual in a region controlled by ruling families. The cabinet is accountable to parliament which can question ministers over state affairs including the country's oil sector and sovereign wealth fund.
* With parties banned, parliamentary work is often chaotic and unproductive with MPs flooding the floor with motions without coordination.
* Many confrontations have occurred between the government and MPs since the election of the country's first parliament in 1963. Sheikh Sabah's predecessors suspended the assembly for six years beginning in 1986 and five years in 1976.
WHAT IS AT STAKE?
* Apart from the $5 billion rescue package, other economic bills have been repeatedly delayed due to protracted political bickering. A plan to set up a markets regulator has been in the works since 2007.
* Disputes between parliament and the government have played a part in delaying for over a decade plans to explore northern parts of Kuwait for oil and to privatise state firms.
According to Egyptian bank EFG-Hermes, only 14 percent of all planned state investment plans have been started or concluded due to opposition from MPs, poor planning or bureaucracy.
* Analysts say Kuwait needs to reduce its reliance on oil to limit the impact of oil revenue fluctuations on its budget and prepare itself for the time its reserves dry up. Kuwait lags behind other Gulf states such as the United Arab Emirates, Qatar and Bahrain, in attracting foreign investment. (Reporting by Ulf Laessing and Rania El Gamal; Editing by Dominic Evans) ((ulf.laessing@reuters.com; +965 224 089 45; Reuters Messaging:ulf.laessing@reuters.net))