Michigan-based Dow Chemical (NYSE:DOW) has been forced to scrap a plan to develop a subsidiary in the Middle East after the government of Kuwait pulled out of the arrangement. AP reports:
Kuwait’s government on Sunday scrapped a $17.4 billion joint venture with U.S. petrochemical giant Dow Chemical after criticism from lawmakers that could have led to a political crisis in this small oil-rich state.
The Cabinet, in a statement carried by the state-owned Kuwait News Agency, said the venture, known as K-Dow Petrochemicals, was “very risky” in light of the global financial crisis and low oil prices.
The partnership between Dow and the small but wealthy Middle Eastern nation was slated to begin on January 1. The $7.5 billion investment from the Kuwaiti government had been the subject of withering criticism in that country and was viewed as too risky an expenditure given global economic problems and the collapse of oil prices.
This is more bad news for the Michigan economy as the new company was to be headquartered in Detroit. It adds to the woes for Dow, which has reduced its workforce by more than 10% and shut down nearly two dozen factories as their financial fortunes have sagged along with the rest of the nation.