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U.S. DEPARTMENT OF STATE
BACKGROUND NOTES:  KUWAIT, NOVEMBER 1994
PUBLSIHED BY THE BUREAU OF PUBLIC AFFIARS


November 1994
Official Name: State of Kuwait

PROFILE

Geography
Area:  17,820 sq. km. (about 6,880 sq. mi.); slightly smaller than New
Jersey.
Cities:  Capital-Kuwait (pop. about 700,000).  Other towns-Ahmadi,
Jahra, Fahaheel.
Terrain:  Flat to slightly undulating desert plain.
Climate:  Intensely hot and dry in summers; short, cool winters with
limited rain.

People

Nationality:  Noun and adjective-Kuwaiti(s).
Population (1993):  1.8 million, including non-Kuwaiti citizens.
Annual growth rate (including immigration):  8.7%.
Ethnic groups:  Arab 84%, South Asian, Iranian, Southeast Asian.
Religion: Islam 85% (Kuwaiti citizens are 100% Muslim).
Languages:  Arabic (official); English widely spoken.
Education (free through high school):  Years compulsory--8.  Literacy--
male 78%, female 69% over age of 15.
Health:  Infant mortality rate--13 deaths/1,000 births.  Life
expectancy--72 yrs. male, 76 yrs. female.
Work force (1993):  731,600.

Government

Type:  Constitutional Monarchy.
Independence:  June 19, 1961.
Constitution:  1962.
Branches:  Executive--Amir (head of state).  Legislative--elected
National Assembly (Majlis al-'Umma) of 50 members.  Judicial--High Court
of Appeal.
Political Parties:  None.
Suffrage:  Adult males who resided in Kuwait before 1920, their male
descendants over 21, and Kuwaiti-born sons of naturalized citizens over
21 (eligible voters-over 100,000).
Subdivisions:  Government is centralized, but for administrative
purposes there are five governorates: Kuwait City, Hawalli, Ahmadi,
Jahra, and Farwaniya.

Economy*

GDP (1993):  $24.7 billion.
Annual growth rate:  35%.
Per capita GDP (1993):  $17,000.
Natural resources:  Petroleum, fisheries.
Agriculture:  Most food is imported.  Cultivated land--1%.
Industry:  Types-petroleum extraction and refining, fertilizer,
chemicals, some construction materials.  Water desalinization capacity:
215 million gallons per day.
Trade (1993):  Exports and re-exports--$11.4 billion: oil (90%).  Major
markets--Japan 19%, Netherlands 9%,
U.S. 8%, Pakistan 6%.  Imports--$6.6 billion: food, construction
materials, vehicles and parts, clothing.  Suppliers--U.S. 15%, Japan
12%, Germany 8%,
U.K. 7%.
Official exchange rate (Oct. 1994):  0.30 Kuwaiti dinars=U.S.$1.

*Note:  Some economic data reflect the disruptive 1992 period of the
post-invasion reconstruction and recovery.


PEOPLE

The people residing in the State of Kuwait are primarily Arab in origin,
but less than half of them are from the Arabian Peninsula.  Many Arabs
from nearby states took up residence in Kuwait because of the prosperity
brought by oil production after the 1940s.  However, following the
liberation of Kuwait from Iraqi occupation in 1991, the Kuwaiti
Government undertook a serious effort to reduce the expatriate
population.  Kuwait still has a sizable Iranian and Indian population.
Seventy percent of native Kuwaitis are Sunni Muslims and 30% are Shi'a
Muslims.  There are very few Kuwaiti Christians.  The 74% literacy rate,
one of the Arab world's highest, is due to extensive government support
for the education system.  Public school education, including Kuwait
University, is free, but access is restricted for foreign residents.
The government sends qualified students abroad for degrees not offered
at Kuwait University.  About 1,000 Kuwaitis are currently studying in
U.S. universities.


HISTORY

Kuwait's modern history began in the 18th century with the founding of
the city of Kuwait by the Uteiba section of the Anaiza tribe, who
wandered north from Qatar.  Its first definite contact with the West was
between 1775 and 1779, when the British-operated Persian Gulf-Aleppo
Mail Service was diverted through Kuwait from Persian-occupied Basra (in
Iraq).

During the 19th century, Kuwait tried to obtain British support to
maintain its independence from the Turks and various powerful Arabian
Peninsula groups.  In 1899, the ruler Sheikh Mubarak Al Sabah--"the
Great"--signed an agreement with the United Kingdom pledging himself and
his successors neither to cede any territory nor to receive agents or
representatives of any foreign power without the British Government's
consent.  Britain agreed to grant an annual subsidy to support the
Sheikh and his heirs and to provide its protection.  Kuwait enjoyed
special treaty relations with the U.K., which handled Kuwait's foreign
affairs and was responsible for its security.

Mubarak was followed as ruler by his son Jabir (1915-17) and another son
Salim (1917-21).  Subsequent amirs descended from these two brothers.
Sheikh Ahmed al-Jabir Al Sabah ruled from 1921 until his death in 1950,
and Sheikh Abdullah al-Salim Al Sabah from 1950 to 1965.  By early 1961,
the British had withdrawn their special court system, which handled the
cases of foreigners resident in Kuwait, and the Kuwaiti Government began
to exercise legal jurisdiction under new laws drawn up by an Egyptian
jurist.  On June 19, 1961, Kuwait became fully independent following an
exchange of notes with the United Kingdom.

The boundary with Saudi Arabia was set in 1922 with the Treaty of Uqair
following the Battle of Jahrah.  This treaty also established the
Kuwait-Saudi Arabia Neutral Zone, an area of about 5,180 sq. km. (2,000
sq. mi.) adjoining Kuwait's southern border.  In December 1969, Kuwait
and Saudi Arabia signed an agreement dividing the Neutral Zone (now
called the Divided Zone) and demarcating a new international boundary.
Both countries share equally the Divided Zone's petroleum, onshore and
offshore.

Kuwait's northern border with Iraq dates from an agreement made with
Turkey in 1913.  Iraq accepted this claim in 1932 upon its independence
from Turkey.  However, following Kuwait's independence in 1961, Iraq
claimed Kuwait, under the pretense that Kuwait had been part of the
Ottoman Empire subject to Iraqi suzerainty.  In 1963, Iraq reaffirmed
its acceptance of Kuwaiti sovereignty and the boundary it agreed to in
1913 and 1932, in the "Agreed Minutes between the State of Kuwait and
the Republic of Iraq Regarding the Restoration of Friendly Relations,
Recognition, and Related Matters."

In August 1990, Iraq nevertheless invaded Kuwait, but was forced out
seven months later by a UN coalition led by the United States.
Following liberation, the UN, under Security Council Resolution 687,
demarcated the Iraq-Kuwait boundary on the basis of the 1932 and the
1963 agreements between the two states.  Although the demarcation is
final and reaffirmed under Chapter VII of the UN Charter by UNSCR 833,
Iraq has refused to accept and continues to make claims to Kuwait.


GOVERNMENT AND POLITICAL CONDITIONS

The State of Kuwait has been ruled by the Sabah family since 1751.  The
1962 constitution contains detailed provisions on the powers and
relationships of the branches of government and on the rights of
citizens.  Upon the death of an amir, the crown prince assumes his
position.  A new crown prince is then selected by members of the Sabah
family from among the direct descendants of Mubarak the Great.  Under
the constitution, the designation is subject to the approval of the
National Assembly.  Since independence, successions have been orderly,
both in 1965 and 1978.

Kuwait experienced an unprecedented era of prosperity under Amir Sabah
al-Salim Al Sabah, who died in 1977 after ruling for 12 years, and under
his successor, Amir Jabir Ahmed el-Jaber Al Sabah.  The country was
transformed into a highly developed welfare state with a free market
economy.  During the seven-month occupation by Iraq, the Amir, the
Government, and many Kuwaitis took refuge in Saudi Arabia or other
nations.  The Amir and the government successfully managed Kuwaiti
affairs from Saudi Arabia, London, and elsewhere during the period,
relying on substantial Kuwaiti investments available outside Kuwait for
funding and war-related expenses.  His return after the liberation in
February 1991 was relatively smooth.

Kuwait's first National Assembly was elected in 1963, with follow-on
elections held in 1967, 1971, and 1975.  From 1976 to 1981, the National
Assembly was suspended.  Following elections in 1981 and 1985, the
National Assembly was again dissolved.  Fulfilling a promise made during
the period of Iraqi occupation, the Amir held new elections for the
National Assembly in 1992.  No political parties exist in Kuwait,
although there are groupings (such as extended families) that function
like parties.  The ideological representation in the Kuwaiti National
Assembly is broad, with a majority of the 1992 Assembly members being
considered as "opposition" in their orientation.  Although the Amir
maintains the final word on most government policies, the National
Assembly plays a real role in decision-making, with powers to initiate
legislation, question government ministers, and express lack of
confidence in individual ministers.  Five of the elected National
Assembly members were selected to serve as cabinet ministers.


Principal Government Officials

Amir--His Highness Sheikh Jabir al-Ahmad al-Jabir Al Sabah
Crown Prince and Prime Minister--His Highness Sheikh Saad al-Abdullah
al-Salim Al Sabah
First Deputy Prime Minister and Minister of Foreign Affairs--Sheikh
Sabah al-Ahmed al-Jaber Al Sabah

Ambassador to the United States--Mohammad Sabah Salim Al Sabah
Ambassador to the United Nations--Mohammad K. Abdalhasan

Kuwait maintains an embassy in the United States at 2940 Tilden Street
NW., Washington, D.C. 20008 (tel. [phone]).


ECONOMY

Kuwait is a small country with massive oil reserves, whose economy has
been traditionally dominated by the state and its oil industry.

During the 1970s, Kuwait benefited from the dramatic rise in oil prices,
which Kuwait actively promoted through its membership in the
Organization of Petroleum Exporting Countries (OPEC).  More recently,
the economy has suffered from the triple shock of a 1982 securities
market crash, the mid 1980s drop in oil prices, and the 1990 Iraqi
invasion and occupation.  The Kuwaiti Government-in-exile depended upon
its $100 billion in overseas investments during the occupation in order
to help pay for the reconstruction.  Thus, by 1993, this balance was cut
to less than half of its pre-invasion level.  The wealth of Kuwait is
based primarily on oil and capital reserves, and the Iraqi occupation
severely damaged both.  In the closing hours of the Gulf war in February
1991, the Iraqi occupation forces set ablaze or damaged 749 of Kuwait's
oil wells.  All of these fires were extinguished within a year.
Production has been restored, and refineries and facilities have been
modernized.  Oil exports surpassed their pre-invasion levels in 1993
with production levels only constrained by OPEC quotas.

Oil

In 1934, the ruler of Kuwait granted an oil concession to the Kuwait Oil
Co. (KOC), jointly owned by the British Petroleum Co. and Gulf Oil Corp.
In 1976, the Kuwaiti Government nationalized KOC.  The following year,
Kuwait took over onshore production in the Divided Zone between Kuwait
and Saudi Arabia.  KOC produces jointly there with Texaco, Inc., which,
by its 1984 purchase of Getty Oil Co., acquired the Saudi Arabian
onshore concession in the Divided Zone.

Offshore the Divided Zone, the Arabian Oil Co., 80% owned by Japanese
interests and 10% each by the Kuwaiti and Saudi Governments, has
produced on behalf of both countries since 1961.

The Kuwait Petroleum Corp. (KPC), an integrated international oil
company, is the parent company of the government's operations in the
petroleum sector, and includes Kuwait Oil Company, which produced oil
and gas; Kuwait National Petroleum Co., refining and domestic sales;
Petrochemical Industries Co., producing ammonia and urea; Kuwait Foreign
Petroleum Exploration Co., with several concessions in developing
countries; Kuwait Oil Tanker Co.; and Santa Fe International Corp.  The
latter, purchased outright in 1982, gives KPC a worldwide presence in
the petroleum industry.

KPC has also purchased from Gulf Oil Co. refineries and associated
service stations in the Benelux nations and Scandinavia, as well as
storage facilities and a network of service stations in Italy.  In 1987,
KPC bought a 19% share in British Petroleum, which was later reduced to
10%.  KPC markets its products in Europe under the brand Q8 and is
interested in the markets of the United States and Japan.

Kuwait has about 77 billion barrels of recoverable oil; Saudi Arabia is
the only single country which has larger reserves.  Estimated capacity,
before the war, was about 2.4 million barrels per day (b/d).  During the
Iraqi occupation, Kuwait's oil producing capacity was reduced to
practically nothing.  However, tremendous recovery and improvements have
been made.  Oil production was 1.5 million b/d by the end of 1992, and
pre-war capacity was restored in 1993.  Kuwait's OPEC quota in August
1994 is 2 million b/d.

Social Benefits

The government has sponsored many social welfare, public works, and
development plans financed with oil and investment revenues.  Among the
benefits for Kuwaiti citizens are retirement income, marriage bonuses,
housing loans, virtually guaranteed employment, free medical services,
and education at all levels.  Foreign nationals residing in Kuwait
obtain some, but not all, of the welfare services.  The right to own
stock in publicly traded companies, real estate, and banks or a majority
interest in a business is limited to Kuwaiti citizens and citizens of
GCC states under limited circumstances.

Industry and Development

Industry in Kuwait consists of several large export-oriented
petrochemical units, oil refineries, and a range of small manufacturers.
It also includes large water desalinization, ammonia, desulfurization,
fertilizer, brick, block, and cement plants.  During the invasion, the
Iraqis looted nearly all movable items of worth, especially high
technology items and small machinery.  Much of this has been replaced
with newer equipment.

Agriculture

Agriculture is limited by the lack of water and arable land.  The
government has experimented in growing food through hydroponics and
carefully managed farms.  However, most of the soil which was suitable
for farming in south central Kuwait was destroyed when Iraqi troops set
fire to oil wells in the area and created vast "oil lakes."  Fish and
shrimp are plentiful in territorial waters, and large-scale commercial
fishing has been undertaken locally and in the Indian Ocean.

Shipping

The Kuwait Oil Tankers Co. has 35 crude oil and refined product carriers
and is the largest tanker company in an OPEC country.  Kuwait is also a
member of the United Arab Shipping Company.

Trade, Finance, and Aid

The Kuwaiti dinar is a strong currency pegged to a basket of currencies
in which the U.S. dollar has the most weight.  Kuwait ordinarily runs a
balance-of-payments surplus.

Government revenues are dependent on oil revenues.  Revenues for Kuwaiti
fiscal year ending in June 1992 were $3 billion, down from a pre-war
level of nearly $6 billion.  Expenditures, mainly in costs of
reconstruction and residual costs of the war, as well as major increases
in defense spending, soared to nearly $40 billion, from a pre-war norm
of about $10 billion.  In 1993, Kuwait resumed pre-war spending levels.

The government's two reserve funds, the Fund for Future Generations and
the General Reserve Fund, which totaled nearly $100 billion prior to the
invasion in 1990, were the primary source of capital for the Kuwaiti
Government during the war.  Currently, these funds have been depleted to
$40-$50 billion.  The bulk of this reserve is invested in the United
States, Germany, the United Kingdom, France, Japan, and Southeast Asia.
In order of importance, foreign assets are believed to be invested in
stocks and bonds, fixed yield instruments (mostly short term), and real
estate.  Kuwait follows a generally conservative investment policy.

Kuwait has been a major source of foreign economic assistance to other
states through the Kuwait Fund for Arab Economic Development, an
autonomous state institution created in 1961 on the pattern of Western
and international development agencies.  In 1974, the fund's lending
mandate was expanded to include all-not just Arab-developing countries.
Over the years aid was provided to Egypt, Syria, and Jordan, as well as
the Palestine Liberation Organization.  During the Iran-Iraq war,
significant Kuwaiti aid was given to the Iraqis.  Due to sizable post-
war expenditures, Kuwaiti foreign assistance was limited to $350 million
in 1992, but this is expected to rise slowly as budget deficits
continue.  From 1979-1989, bilateral aid to less developed countries
totaled about $18 billion.


FOREIGN RELATIONS

Following independence in June 1961, Kuwait faced its first major
foreign policy problem arising from Iraqi claims to Kuwait's territory.
The Iraqis threatened invasion, but were dissuaded by the U.K.'s ready
response to the Amir's request for assistance.  Kuwait presented its
case before the United Nations and preserved its sovereignty.  U.K.
forces were later withdrawn and replaced by troops from Arab League
nations, which were withdrawn in 1963 at Kuwait's request.

On August 2, 1990, Iraq invaded and occupied Kuwait.  Through U.S.
efforts, a multinational coalition was assembled, and, under UN
auspices, initiated military action against Iraq to liberate Kuwait.
Arab states, especially the other five members of the Gulf Cooperation
Council (Saudi Arabia, Bahrain, Qatar, Oman, and the United Arab
Emirates), Egypt, and Syria, supported Kuwait by sending troops to fight
with the coalition.  Many European and East Asian states sent either
troops, equipment, or financial support.

After liberation, Kuwait concentrated its foreign policy efforts on
development of ties to states which had participated in the
multinational coalition.  Notably, these states were given the lead role
in Kuwait's reconstruction.  Conversely, Kuwait's relations with those
nations that supported Iraq, among them Jordan, Sudan, Yemen, and Cuba,
remain strained or non-existent.  Palestine Liberation Organization
(PLO) Chairman Yasir Arafat's support for Saddam Hussein during the war
has also affected Kuwait's attitudes toward the PLO and the peace
process.

Since the conclusion of the Gulf war, Kuwait has made efforts to secure
allies throughout the world, particularly United Nations Security
Council members.   In addition to the United States, defense
arrangements have been concluded with the United Kingdom, Russia, and
France.  Close ties to other key Arab members of the Gulf war coalition-
-Egypt and Syria--have also been sustained.

Kuwait is a member of the UN and some of its specialized and related
agencies, including the World Bank (IBRD), International Monetary Fund
(IMF), World Trade Organization (WTO), General Agreement on Tariffs and
Trade (GATT); African Development Bank (AFDB), Arab Fund for Economic
and Social Development (AFESD), Arab League, Arab Monetary Fund (AMF),
Council of Arab Economic Unity (CAEU), Economic and Social Commission
for Western Asia (ESCWA), Group of 77 (G-77), Gulf Cooperation Council
(GCC), INMARSAT, International Development Association (IDA),
International Finance Corporation, International Fund for Agricultural
Development, International Labor Organization (ILO), International
Marine Organization, Interpol, INTELSAT, IOC, Islamic Development Bank
(IDB), League of Red Cross and Red Crescent Societies (LORCS), Non-
Aligned Movement, Organization of Arab Petroleum Exporting Countries
(OAPEC), Organization of the Islamic Conference (OIC), Organization of
Petroleum Exporting Countries (OPEC), and the International Atomic
Energy Agency (IAEA).


DEFENSE

Before the Gulf war, Kuwait maintained a small military force consisting
of army, navy, and air force units.  The majority of equipment for the
military was supplied by the United Kingdom.  Aside from the few units
that were able to escape to Saudi Arabia, including a majority of the
air force, all of this equipment was either destroyed or taken by the
Iraqis.  Much of the property returned by Iraq after the Gulf war was
damaged beyond repair.  Iraq still retains a substantial amount of
captured Kuwaiti military equipment in violation of UN resolutions.

Since the war, Kuwait, with the help of the U.S. and other allies, has
made significant efforts to increase the size and modernity of their
armed forces.  These efforts are succeeding.  The government also
continues to improve defense arrangements with other Arab states, as
well as UN Security Council members.

A separately organized National Guard maintains internal security.
Police forces are under the authority of the Ministry of Interior.


U.S.-KUWAITI RELATIONS

A U.S. consulate was opened at Kuwait in October 1951 and was elevated
to embassy status at the time of Kuwait's independence 10 years later.
The United States supports Kuwait's sovereignty, security, and
independence as well as closer cooperation among the GCC countries.

In 1987, cooperation between the United States and Kuwait increased due
to the implementation of the maritime protection regime to ensure
freedom of navigation through the Gulf for 11 Kuwaiti tankers that were
reflagged with U.S. markings.

The U.S.-Kuwaiti partnership reached dramatic new levels of cooperation
after the Iraqi invasion.  The United States assumed a leading role in
the implementation of Operation Desert Shield.  The United States led
the UN Security Council to demand Iraqi withdrawal from Kuwait and
authorize the use of force, if necessary, to remove Iraqi forces from
the occupied country.   The United States played a major role in the
evolution of Desert Shield into Desert Storm, the multinational military
operation to liberate the State of Kuwait.

Eventually, the U.S. provided the bulk of the troops and equipment that
were used by the multinational coalition that liberated Kuwait.  The
U.S.-Kuwaiti relationship has remained strong in the post-war period.

The United States has provided military and defense technical assistance
to Kuwait from both foreign military sales (FMS) and commercial sources.
All transactions have been made by direct cash sale.  The U.S. Office of
Military Cooperation in Kuwait is attached to the American Embassy and
manages the FMS program.  U.S. military sales to Kuwait total $3.1
billion, $1.6 billion of which has been purchased since the close of the
Gulf war.  Principal U.S. military systems currently purchased by the
Kuwait Defense Forces are Patriot missile system, F-18 Hornet fighters,
and the M1A2 Main Battle Tank.

The United States is currently Kuwait's largest supplier, and Kuwait is
the fifth-largest market in the Middle East for U.S. goods and services.
U.S. exports to Kuwait totaled $1.2 billion in 1991.  Since the Gulf
war, Kuwaiti attitudes toward Americans and American products have been
excellent.  Provided their prices are reasonable, U.S. firms have a
competitive advantage in many areas requiring advanced technology, such
as oil field equipment and services, electric power generation and
distribution equipment, telecommunications gear, consumer goods, and
military equipment.  In 1993, Kuwait publicly announced abandonment of
the secondary and tertiary aspects of the Arab boycott of Israel (those
aspects affecting U.S. firms).


Principal U.S. Officials

Ambassador--Ryan C. Crocker
Deputy Chief of Mission--Georgia DeBell
Political Officer--Margaret Scobey
Commercial Officer--Johnny Brown
Economic Officer--Paul H. Tyson
Consular Officer--Kevin Richardson
Public Affairs Officer (USIS)--Millie McCoo
Chief, Office of Military Cooperation--Gen. Robert Ivany USA

The U.S. embassy in Kuwait is located at Bneid al-Gar, Kuwait (opposite
the Safir Hotel).  The mailing address is P.O. Box 77, SAFAT, 13001
SAFAT, Kuwait; or Unit 69000 APO AE 09880.

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Published by the U.S. Department of State  Bureau of Public Affairs --
Office of  Public Communication -- Washington, DC  20520 --
Managing Editor:  Peter A. Knecht

Department of State Publication 7855 -- Background Notes Series -- This
material is in the public domain and may be reprinted without
permission; citation of this source is appreciated.

For sale by the Superintendent of Documents, U.S. Government Printing
Office, Washington, DC 20402.

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