Kuwait
Kuwait was attacked and overrun by Iraq on 2 August 1990. Following several weeks of aerial bombardment, a US-led UN coalition began a ground assault on 23 February 1991 that completely liberated Kuwait in four days. Kuwait has spent more than $5 billion dollars to repair oil infrastructure damaged during 1990-91.
While there are no known credible direct threats to expatriates or visitors, the recent military action by U.S. and British forces in Iraq have raised the prospect that individuals or organizations could carry out terror attacks against western interests or personnel. Residents and visitors should exercise caution and take prudent measures to maintain their security. These measures include being vigilantly aware of surroundings, avoiding crowds and demonstrations, keeping a low profile, varying times and routes for all travel, and ensuring travel documents are current.
Emir Sheikh Jabir al-Ahmad al-Jabir al-Sabah succeeded his cousin, Sheikh Sabah al-Salim al-Sabah, as Emir of Kuwait in December 1977, having been prime minister (1965-78) and Heir Apparent from 1966. He has been a decisive leader, having allowed the National Assembly to reform in 1981 and dissolving it in 1986 as disagreements arose over its right to question the ability of ministers. He survived an assassination attempt in 1985 and the Iraqi invasion of Kuwait in August 1990. He fled to Saudi Arabia where he established a government in exile, returning home in March 1991 after Iraq's withdrawal. During his exile, he gained the support of Kuwait's opposition leaders in return for his agreement to restore the National Assembly. He did this in 1992 and in 1999 he gave women the vote.
As one of the world's leading oil producing states, Kuwait's economy is heavily dependent on oil revenues. With the rebound in oil prices since late 1999, Kuwait has reaped a revenue windfall. Kuwait recorded a record trade surplus in 2000, and also large budget surpluses (of around $5-$6 billion) in fiscal years 1999/2000 and 2000/2001. For 2001/2002, Kuwait is forecasting a budget deficit of around $6 billion, but this assumes oil prices of only $15 per barrel. Currently, Kuwait is receiving around $23-$25 per barrel for its oil, and if this continues, Kuwait is likely to experience a significant budget surplus once again. Kuwait's real gross domestic product (GDP) growth for 2000 was estimated at about 5.5%, with forecast real growth of 4.0% for 2001. This follows real GDP growth of only 2.1% in 1999, and a decline of 10.5% during the slump in oil prices in 1998.
The period of low oil prices in 1998 and early 1999 spurred the Kuwaiti government to move towards reducing government subsidies, which provide many services to Kuwaiti citizens at little or no cost. Even with the recent rise in oil prices, these efforts have continued. Kuwait hopes to attract additional foreign investment, and as part of this effort is considering a reduction in the income tax cap on non-Kuwaiti companies from 55% to 25%. Kuwait has started a program to privatize state-owned businesses (outside the oil sector) as a way of reducing subsidies. As part of this program, the Kuwaiti government has begun privatizing health care, electricity, and telecommunications assets. Privatization is complicated by the need to protect the jobs of Kuwaiti citizens, who traditionally have been employed mostly (93%) by state-owned enterprises and the government. Overall, though, the government is attempting to reduce its involvement in the economy, reducing its budget deficit by cutting subsidies and increasing revenues. In March 2001, the government introduced an economic reform package that, among other things, eases restrictions on foreign banks, provides long-term protection to foreign investors against nationalization or confiscation, and eliminates the requirement for foreign companies to have a Kuwaiti sponsor or partner.
In the oil sector, the Kuwaiti constitution forbids foreign ownership of Kuwait's mineral resources, but the Kuwaiti government is exploring allowing foreign investment in upstream oil development under terms (see below for more details) that provide for per-barrel fees to the foreign firms rather than traditional production sharing agreements (PSA's). The idea is highly controversial in Kuwait, and thus far opposition in the Kuwaiti parliament has stalled the initiative.
Kuwait's foreign policy continues to focus on regional security issues. Since Operation Desert Storm in 1991, Kuwait has maintained close military cooperation with Western countries. In October 1994, the United States, the United Kingdom and other countries came to Kuwait's assistance after Iraq moved 70,000 troops and heavy armor close to the Kuwaiti border. In November 1994, Iraq officially recognized Kuwait's sovereignty, territorial integrity and political independence, as well as its borders as defined by the United Nations. Kuwait welcomed the move but continues to demand the release of all Kuwaiti citizens detained in Iraq and called for international sanctions against Iraq to be maintained until it was in compliance with all pertinent U.N. resolutions. In April 2001, Kuwait's cabinet agreed to a joint Gulf Cooperation Council (GCC) defense pact. The security arrangement requires parliamentary approval.
On September 28, 2000, the United Nations Compensation Commission, which handles claims for reparations arising from Iraq's 1990 invasion of Kuwait, approved a $15.9 billion compensation claim by Kuwait for lost oil production and damage to oil reserves, oil wells, and other equipment and facilities caused by Iraqi actions. At the same time, the proportion of revenues from Iraqi oil sales under the "oil for food" program that are used for payment of claims was reduced from 30% to 25%. Iraq condemned the decision, but stated that it would not halt its oil exports, as had earlier been feared.
Although Kuwait does not have political parties, several quasi-political organizations do exist and are represented in parliament, including the Islamic Constitutional Movement, the National Islamic Coalition and the Kuwait Democratic Forum. In May 1997, a new political organization, the National Democratic Rally, was established. The group was founded by government officials, parliamentarians, academics and other professionals, and distinguished itself by including a woman among the ranks of its leadership.
Kuwait's foreign policy continues to focus on regional security issues. Since Operation Desert Storm in 1991, Kuwait has maintained close military cooperation with Western countries. In October 1994, the United States, the United Kingdom and other countries came to Kuwait's assistance after Iraq moved 70,000 troops and heavy armor close to the Kuwaiti border. In November 1994, Iraq officially recognized Kuwait's sovereignty, territorial integrity and political independence, as well as its borders as defined by the United Nations. However, in November 2001 Iraqi Prime Minister Tariq Aziz renewed the claim that Kuwait was part of Iraq.
Travel to and near the Iraq-Kuwait border remains very hazardous and unexploded bombs, mines, booby traps, and other items remain present in open areas and beaches throughout Kuwait.
