Situated between Iraq and Saudi Arabia at the north-western corner of the Gulf, Kuwait operates as a constitutional monarchy, and is a founding member of both the GCC and the Organisation of the Petroleum Exporting Countries (OPEC). Led by a hereditary leader, the emir, it boasts the oldest directly elected Parliament among the Gulf Arab states. Despite its modest land size, Kuwait holds the world’s sixth-largest crude oil reserves, which have served as a robust foundation for sustained economic development and prosperity. With one of the most dynamic political systems in the region, the hope is that the executive and legislative branches of government can work together to advance the policy changes and strategies needed to fulfil the ambitions of the long-term development plan, New Kuwait 2035.
Development
Kuwait’s economic strength primarily comes from its considerable oil reserves, estimated at 100bn barrels as of October 2023. It hosts the world’s second-largest oil field, Burgan. The country’s crude production averaged about 2.6 million barrels per day (bpd) in August 2023 and the government aims to increase production capacity to 3.7m bpd by 2035. Oil has fuelled Kuwait’s development since the Second World War, and production took on a central role in the economy after it was nationalised in 1975. Approximately 50% of GDP and nearly 90% of government revenue stems from oil, fostering decades of strong public finances and consecutive budget surpluses, as well as the establishment of an extensive welfare system that has granted nationals a high quality of life.
While the private sector’s contribution to economic growth was somewhat restrained in the 1990s and early 2000s, Kuwait has produced a number of internationally successful firms across multiple industries. Some examples include telecommunications giant Zain, international logistics organisation Agility, low-cost air carrier Jazeera Airways and Kuwait Finance House, the world’s second-largest Islamic bank. In recent years, Kuwait has embarked on an economic diversification programme in order to jump-start public-private collaboration via high-impact infrastructure projects and the privatisation of government assets.
New Kuwait
In 2017 the government initiated the national economic development plan, New Kuwait 2035. This comprehensive programme aims to transform the country into a financial, cultural and commercial centre within the Gulf through 164 strategic programmes based on seven pillars: public administration, the economy, infrastructure, the living environment, health care, human capital and global positioning.
Among the many priorities of New Kuwait 2035 are goals to expand the role of the private sector, incentivise public-private partnerships (PPPs), encourage human capital development, upgrade existing infrastructure, and generate a support mechanism for small and medium-sized enterprises. Against a backdrop of volatile oil prices, particularly during the 2014-16 period, the initiatives outlined by New Kuwait 2035 came at a critical juncture, playing a pivotal role in enhancing the country’s competitiveness as an investment destination (see Trade & Investment chapter).
By 2021, 43 ministries and other authorities had identified strategic projects in various sectors to serve the new vision, including Silk City, the five islands development, and the Al Zour refinery and petrochemicals complex, as well as a number of ongoing and planned projects being realised via PPP partnerships focusing on electricity, oil and gas, human capital, health care, food security, housing and logistics.
History
Kuwait’s archaeological record begins in the second millennium BCE with the colonisation of an outlying island, Failaka, by the Mesopotamians and later by the Greeks. The region came under the Islamic caliphate during its expansion throughout the Arabian Peninsula in the 7th century CE. Permanently settled in the 17th century by the Bani Khalid tribe, the area prospered as a key trading hub on the silk route between India, Central Asia, the Middle East and Europe. As its wealth grew, the city fortified, which gave Kuwait its name, a diminutive of an Arabic word meaning “fortress built near water”. Faced with imperial interests from the Ottoman Empire in the 19th century, Kuwait’s ruling Al Sabah family courted British favour and formally agreed to become a protectorate in 1899. Declared an independent principality under British protection during the Second World War, Kuwait remained allied to the British until it declared independence in 1961.
Kuwait’s economic wealth and regional ties grew in the second half of the 20th century, as it became a founding member of the GCC in 1981 alongside Bahrain, Oman, Qatar, Saudi Arabia and the UAE. However, the country’s history in the latter part of the century was defined by Iraqi occupation in 1990-91, during which some 749 oil wells were set alight and destroyed by occupying forces. Despite this challenge, Kuwait made a robust recovery, with post-war economic efforts focused on rebuilding the country. In subsequent years the focus has shifted towards diversification and sustainable economic development.
Recent Growth
The economy has been largely driven by the government since the nationalisation of the oil and gas industry in 1975. While this led to a golden era for the country, security soon took precedence over economic development during the Iran-Iraq War in 1980-88 and the Iraqi occupation in 1990-91.
The two decades since these conflicts have seen considerable stability. However, economic and industrial development remains largely government-led, despite efforts to enhance the role of the private sector. Following the economic downturn in 2020 due to the Covid-19 pandemic, GDP growth rebounded, reaching 1.3% in 2021 and experiencing a surge of 8.9% in 2022. This recovery was driven by the resumption of domestic activity, strong oil prices and controlled inflation. Despite these positive trends, the IMF forecast expansion to slow to -0.6% in 2023, before a return to growth in 2024, projected at 3.6%. Looking ahead, the creation of Silk City aims to enhance trade and investment, contributing an anticipated $35bn to annual GDP, while the proposed establishment of a new sovereign wealth fund, Ciyada, is envisioned to accelerate Kuwait’s economic growth and bolster the development of mega-projects (see Economy chapter).
Population & Demographics
As of June 2023 Kuwait had an estimated 4.8m inhabitants, with non-Kuwaitis constituting 68.3% of the total. With 98% of the population living in cities, Kuwait has a very high rate of urbanisation centred on the capital of Kuwait City on the coast, largely due to the extreme desert climate. As Kuwait embraces more liberal socio-political concepts, representation has become a point of contention, particularly among the post-liberation generation. At the forefront of this are the 100,000 Bidoon, or stateless people, in the country. Additionally, while around 200,000 tribal and Bedouin people were granted nationality in the 1960s and 1970s, in some cases citizenship has not been extended to subsequent generations. Excluded from political, economic and social participation, tribal groups operate as para-political structures and they have consistently demonstrated against the government’s policies towards them.
Parliament & Politics
Agreements between the head of government and elected members of Parliament have, at times, been contentious and short-lived, and the contemporary political landscape is symptomatic of that relationship. The principal prerogative of Parliament is to oversee and maintain the quality of ministerial policy and conduct. However, it can also exercise power that is not afforded to neighbouring national assemblies, such as the ratification and vetoing of laws proposed by the executive branch.
Formal inquiries and the questioning of ministers have been a precursor to votes of no confidence, which is the strongest tool available for Parliament to ensure government accountability. However, a declaration of non-cooperation by either party requires the emir to dissolve the legislature or executive. There have been several standoffs between Parliament and the government in Kuwait, the most recent occurring in February 2024, leading the emir to dissolve Parliament for the third time since June 2022.
Checks & Balances
Parliamentarians have historically pursued their responsibilities with conviction, which brought them into confrontation with the government in 2009, when Parliament summoned then-Prime Minister Sheikh Nasser Al Mohammed Al Ahmad Al Sabah. Between 2009 and 2011 Parliament forced Sheikh Nasser to resign four times; however, in all cases he was reappointed by the emir. Sheikh Nasser was ultimately replaced by Prime Minister Sheikh Jaber Al Mubarak Al Hamad Al Sabah in December 2011, effectively reinforcing the constitutional integrity of the country’s checks and balances.
The emir’s dissolution of Parliament precipitated national elections that were held in February 2012. The elections heralded a new Parliament that embodied Kuwait’s disparate groups. Adjourned in June 2012 when it called in the ministers of finance and labour for questioning, the Constitutional Court (CC) ruled in the same month that the 2011 dissolution of Parliament was unconstitutional, rendering the February 2012 elections null and void, and a new Parliament was elected in 2013. In October 2016 the emir dissolved Parliament and a general election was held in November 2016, with a voter turnout of around 70%.
Opposition candidates took the lead, winning 24 out of 50 seats, while 20 incumbents were re-elected. Opposition candidates won 24 seats in general elections held in December 2020. The election was seen as a victory for the opposition bloc. Since the inauguration of the 16th Parliament in December 2020, Kuwait has witnessed political turbulence, marked by the formation and subsequent resignation of four Cabinets. In August 2022 Parliament was dissolved, leading to new elections in September, where opposition candidates made substantial gains. Following the election, in October 2022 the crown prince appointed a new Cabinet, which underwent reshuffling in an attempt to foster collaboration with the opposition. However, the constitutional court annulled the elections, reinstating the 2020 National Assembly and dissolving the 2022 one. Consequently, in May 2023, then-Crown Prince Sheikh Mishal Al Ahmad Al Jaber Al Sabah dissolved the legislature again, paving the way for new parliamentary elections in June 2023, where the opposition secured a majority. In December 2023 Kuwait faced a change in leadership when the Emir, Sheikh Nawaf Al Ahmad Al Jaber Al Sabah, passed away after a three-year reign, with Sheikh Mishal named as the new emir.
Constitutional Constructs
While the CC’s June 2012 ruling outwardly reinforces the judiciary’s impartiality, the ramifications were less obvious. The recall of the 2011 Parliament, seen as a pro-government move, was only avoided because many officials declined to return to office. However, the CC reinforced its impartiality in August 2012, when it upheld the motion to limit the number of voting districts from 25 to five.
Sharia law is a primary source of legislation, but law and government regulations remain largely secular. While adherence to Islamic principles is strict in some respects, the country granted universal suffrage in 2005, and female members of Parliament have been elected in the subsequent years.
Education
Schooling is compulsory between the ages of six and 14. Budget surpluses in recent years have supported the development of a robust education system, and the country has achieved a 100% enrolment rate in primary and secondary schooling for boys and girls (see Education & Health chapter). The education system is divided into three tiers: elementary, intermediate and secondary. It is overseen by the Ministry of Education, while post-secondary schooling is handled by the Ministry of Higher Education. Domestic enrolment is notably lower at the tertiary level, partially because many Kuwaitis choose to study abroad.
All public schools are segregated by gender and are free for nationals. Pressure to reform the education system and align it with future economic needs is increasing, resulting in a rise in popularity of international schools that offer Western curricula. Kuwait University is the sole public higher education institution serving the domestic market. Private tertiary institutions are also helping meet the increasing demand.
Geography & Climate
Kuwait’s landmass covers an area of 17,818 sq km. Its territory includes nine islands off its coast, the largest of which is Boubyan, north of Kuwait City and home to Mubarak Al Kabeer Port, which received bids for the tender for the first phase of operations in October 2023. Kuwait City is based on a natural deepwater port, but dredging works have been undertaken to extend access to other port facilities.
Kuwait is predominantly a desert plain, with a maximum elevation of 306 metres. It shares land borders with Saudi Arabia and Iraq, in addition to a maritime border with Iran. An significant oil-producing area, the southern region is a neutral zone shared with Saudi Arabia under joint administration.
The desert climate, with summer temperatures reaching as high as 48°C, makes most of the country unsuitable for cultivation. As such, 20% of land is inhabited, and most settlements are located along the 500-km coastline. Kuwait lacks sufficient natural freshwater resources, with 90% of water needs met through the use of desalination plants. Understanding the impact of its harsh climatic conditions on the economic growth of key sectors, Kuwait is working to adapt to climate change challenges such as high temperatures, low rainfall, rising sea levels, depleting water resources and dust storms.
Natural Resources
While Kuwait has one of the largest known oil deposits, as its oilfields have matured they have become harder to access. Output has tapered, putting pressure on the economy. Plans to increase production will require substantial infrastructure upgrades – a central aspect of the New Kuwait 2035 vision. Kuwait is also home to a number of cement manufacturers that use local resources, and the coastal waters support a small fishing industry.
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