Since gaining independence in 1961, Kuwait has been of the most economically productive and politically liberal nations in the Gulf Cooperation Council (GCC) and the wider Arab world. With strong public finances, a young and well-educated population, and vast oil deposits, the country also has a bright future in the global economy, where it looks set to play a more assertive and influential role. Yet, despite past and ongoing success, Kuwait has entered a challenging period in its history, one that will have a profound impact on the country’s long-term growth prospects.
DEVELOPMENT: In 2010, the government initiated a five-year KD31bn ($111.76bn) development plan featuring ambitious capital projects designed to promote economic diversification, upgrade the country’s infrastructure and boost oil production capacity. Although the plan’s approval in the National Assembly was an historic achievement, many are concerned that recurring political disputes between ministers and parliamentarians will delay its implementation. Further, Kuwait’s continued progress depends on the state’s ability to shift more economic activity to the private sector, which currently accounts for only 37% of GDP. By passing new legislation regarding privatisation, capital markets and labour laws, and by encouraging public-private partnerships, officials plan to increase the private sector’s share of GDP to 44% by the time that the development plan ends in 2014.
HISTORY: Modern-day Kuwait was established during the 17th century by the Bani Khalid tribe in Arabia. In the mid-1800s, the Al Sabah dynasty came to power, a ruling family that still governs the country today under a hereditary constitutional monarchy.
As the area came under pressure from the Ottoman Empire during the 19th century, Kuwait sought protection from the West, and became a protectorate of the British Empire. Throughout the 19th century, Kuwait benefitted from its strategic location along trade routes, and became a major centre for the exchange of spices and pearls. The government began creating internationally-recognised boundaries in the decades following the First World War, and in 1938 oil was first discovered. After declaring independence from the British in 1961, the nation accelerated oil production and signed new border agreements with Iraq and Saudi Arabia. However, recurring border disputes with Iraq culminated in that country’s invasion of Kuwait in 1990, followed by a UN-mandated intervention, led by the US. Kuwait was liberated in 1991 after a seven-month Iraqi occupation, but fleeing Iraqi forces set fire to 749 oil wells, which caused huge financial losses for the state as well as widespread environmental devastation.
Kuwait has largely recovered from the Iraqi invasion, and has regained its status as one of the world’s largest oil exporters. Many are looking towards a new era, characterised by improved relations between Kuwait and the Iraqi government.
Kuwait maintains excellent diplomatic and economic relations with the international community. Ties with the US are particularly strong, as reflected by Kuwait’s public support for the US-led invasion of Iraq in 2003. While the US has begun reducing its presence in the region, Kuwait continues to serve as an important logistics base for American military and civilian reconstruction operations.
POPULATION: Kuwait’s population is roughly 3.5m, about one quarter of which are Kuwaiti nationals. Traditionally Kuwaitis have favoured working in the public sector, but they are now joining the private labour force in rising numbers, a trend the authorities want to encourage going forward. In 2010, some 20% of Kuwaiti nationals were privately employed, up from 16% in 2007. Numbering about 2.4m, the nation’s expatriate community is predominantly comprised of workers from the Indian subcontinent, the Middle East, and South-east Asia. Given the anticipated rate of construction over the next several years, it is expected that in the medium term these numbers may increase further. In the long term though it is hoped continued infrastructure development will stimulate private consumption and the real estate market.
RELIGION & CULTURE: According to the Kuwaiti constitution, Islam is the official state religion, and sharia law is one of the key sources of legislation. Compared to other Gulf nations, such as the UAE, Bahrain or Qatar, Kuwait adheres to a fairly conservative interpretation of Islam. However, Islamic practices in Kuwait are considered more liberal than those in Saudi Arabia, where Wahabism is dominant. Though most of Kuwait’s Muslims are Sunni, including the ruling family, there is a substantial Shia minority that represents between 15% and 30% of the total population. Kuwait also has sizeable Christian, Hindu and Buddhist communities, which have been granted freedom of worship under the constitution.
LANGUAGE: The official language in Kuwait is Arabic, which is used in all government announcements and documentation. It is recommended correspondence with government offices be conducted in Modern Standard Arabic, as English speakers are not always available. Nevertheless, English is widely used and understood, especially in academia and the business community. English is also included in the national curriculum, and it is quite common for Kuwaitis to study abroad at universities located in the US or UK. The Kuwait Times and the Arab Times are the country’s two main English-language newspapers.
EDUCATION: Overseen by the Ministry of Education (MoE), public schooling is compulsory for all children aged 6-14. After kindergarten, the general education system is divided into three tiers – elementary, intermediate and secondary – each of which entails four years of study. Although public schools are segregated by sex, women are granted the same rights to education as men, and account for just under half of enrolment in domestic universities. Public education is completely free for nationals, with the government paying for transportation, meals, books and medical attention for students. The government also provides generous subsidies for nationals attending private and international schools, which are monitored by the Private Education Department at the MoE. Private schools have expanded rapidly in recent years, with Kuwaiti families increasingly opting to send their children to academies that offer Western-style curricula taught in English. Private schools also cater to the country’s large expatriate population.
Post-secondary schooling is overseen by the Ministry of Higher Education, which regulates university accreditation and staff qualification. Established in 1966, Kuwait University is the country’s first and only public higher education institution. There are also a number of private tertiary schools, including the Gulf Institute of Science and Technology, the American University of Kuwait, the Arab Open University and the Australian College of Kuwait. Overall, around 75% of the eligible population is currently using higher education facilities in one form or another.
GEOGRAPHY & CLIMATE: Kuwait is strategically located at the head of the Gulf in the north-east corner of the Arabian peninsula. It shares land borders with Saudi Arabia to the south and Iraq in the north, and a sea border to the east with Iran. At 17,818 sq km, it is one of the world’s smallest countries, though it has 500 km of coastline, and its sovereign territory includes nine Gulf islands. The island of Failaka, at the mouth of Kuwait Bay, is densely populated and contains an ancient Greek temple built by the army of Alexander the Great. Boubyan Island, meanwhile, has been slated for significant development, with nearly $4bn allocated for a new port facility.
Kuwait is primarily flat desert plain, and only 20% of the nation’s land area is currently inhabited. The country has no access to natural water reservoirs, and has one of the lowest per capita fresh water supplies in the world, with roughly 90% of its water resources derived from seawater desalination.
The country has an arid climate, with hot and dry summers lasting from April to September, when temperatures can climb past 50° Celsius. Winter weather typically begins in November, when temperatures range from 15-20° Celsius, but can drop in the evening, sometimes to as far as 0° Celsius. Rainfall only averages 110 mm per year, occurring intermittently in the winter and spring seasons.
NATURAL RESOURCES: Kuwait has an abundant supply of hydrocarbons, as it contains nearly 10% of the world’s oil reserves. In the 2010/11 fiscal year, oil revenues grew 17% to KD19.4bn ($69.9bn), accounting for 93% of total revenue. Each day, the country’s major refineries produce over 3m barrels of oil, with plans in place to boost production capacity to 3.5m barrels per day by 2015, and 4m by 2020.
Outside of the oil and gas section, the country has sufficient seafood to support an active fishing industry. Overall, around 50% of seafood comes from local fisheries, though concerns exist regarding overfishing and seafood depletion. Generally, the nation’s overall food requirements are served by imports from a variety of foreign markets, instead of domestically.
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