Kuwait's hereditary monarchy retains power but faces greater demands for democracy
Kuwait is a small state at the north of the Persian Gulf between Iraq and Saudi Arabia. It has some oases and a few small fertile areas, but the country consists largely of a sloping plain that is almost entirely desert.
A couple of generations ago, Kuwaitis were nomadic tribesmen. But since 1946 oil has made Kuwait very wealthy. Kuwaitis are among the richest people in the world—and are also entitled to free education and subsidized health care, and are spared the inconvenience of income tax.
The government spends around 6% of its total budget on health, though it now requires expatriates to pay for services at public hospitals and clinics. Education is compulsory and has given Kuwait one of the higher literacy rates of Arab countries.
Most of the work is done by expatriates. In 2006 Kuwaitis made up only 35% of the population and only 17% of the labour force—the rest being immigrant workers. The largest numbers nowadays are from Egypt, Palestine, and Lebanon, but there are also many from South Asia. Almost all employed Kuwaitis choose to work for the government or for public corporations.
Kuwait is still floating on a sea of oil. It has about 10% of world reserves, mostly in the Burgan field south of Kuwait City. At present rates of extraction, this should last for 100 years or more. Since the 1970s, the oil industry has been nationalized. The government owns local refineries and also markets around 40% of its own oil. Kuwait Petroleum International operates more petrol stations using the ‘Q8’ brand name in five European countries. In addition, Kuwait has large reserves of gas.
Oil accounts for 52% of GDP and around 95% of export earnings. It also provides 75% of government income with most of the rest coming from overseas investments made with previous oil income.
Kuwait has some manufacturing industry—also linked to oil. In the past this has typically involved such low-value products as ammonia, urea, and fertilizers. But there have been efforts to move to more profitable products such as polypropylene.
With scarcely any arable land or water for irrigation, Kuwait's agriculture is very limited. Some farms grow vegetables and fruits but almost all the country's food has to be imported. There is also a fishing industry whose catches are dedicated to the local market.
Disturbed by the thought of taxation
Much of the oil infrastructure was restored since the 1990 Gulf War, but Kuwait's economy will never be the same. To pay for the war the government had to sell off around half its $100-billion overseas investments.
The government also responded by introducing some charges for health care, for example, and there have been suggestions for income or consumption taxes. But there is stiff opposition from conservatives who argue that the government should instead attack corruption and reduce defence expenditure.
One of the most important external influences has been neighbouring Iraq. In 1961, when Kuwait achieved full independence, Iraq claimed the territory as part of Iraq. Finally in August 1990 Iraq, led by Saddam Hussein, occupied Kuwait until it was expelled by a US-led coalition in Operation Desert Storm. Kuwait was naturally also a strong supporter of the US invasion of Iraq in 2003 and of the fall of Saddam Hussein.