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Kuwait Research Paper

Posted by admin as Free papers

Free Research Paper on Kuwait

Kuwait is a small Arab country situated in southwestern Asia between the countries of Iraq and Saudi Arabia and bounded by the Persian Gulf. Kuwait is believed to be one of fifteen states that gave birth to civilization and thus were considered the ‘cradle of humanity’ states.

Speaking about the geographic coordinates of Kuwait, I have to note that they are 29° 30′ North, 45° 45′ East. Kuwait can be easily found on the map of Southwest Asia (Foster, 132).

Geographic area of Kuwait is 17820 square kilometers. All the area is located on the land, despite the existence of 9 tiny islands belonging to Kuwait in the Persian Gulf. That area makes Kuwait similar to New Jersey in size.

Kuwait borders make up 462 kilometers (about 300 miles). The border with Iraq is about 240 kilometers while the border with Saudi Arabia is about 222 kilometers. The coastline of the state of Kuwait extends for 500 kilometers.

The climate in Kuwait is dry desert, meaning that it gets very hot in the summer and during the day and cool at night and during winters. The terrain throughout Kuwait is flat desert plain. The lowest point in Kuwait is the Persian gulf which is 0 meters above the sea level. The highest point is said to be located 300 yards above the ground yet bears no name since it is a part of a plain’s landscape curves (Stephenson, 190).

Kuwait possess vast amounts of resources such as oil, natural gas and smaller amounts of fish and shrimp.

Because of barren terrain, Kuwait has only about 1/3 of a percent of arable land and less than 6/100 of a percent of permanent crops that grow because of irrigation that covers only about 70 square kilometers of territory of Kuwait.

Kuwait possesses many natural hazards such as cloudbursts that take place in Kuwait predominantly in autumn and winter (from October till April). Cloudbursts usually bring heavy rain and devastate roads and houses. In the summer, Kuwait is exposed to sandstorms that take place predominantly from March to August.

Kuwait has various environmental issue it is to resolve such as limited natural fresh water resources, ever increasing desertification and air and water pollution created by petrochemical and gas industries of Kuwait.

Currently, the state of Kuwait is a part of several international agreements such as agreement on climate change, desertification, hazardous waste, law of the sea, marine dumping, nuclear test ban, ozone layer protection. The global community pressures Kuwait to ratify Biodiversity and endangered species agreements, yet currently Kuwait does not conduct negotiations in these areas.

Kuwait is a large plain desert with little altitude changes. Kuwait has 9 small islands with the largest of them, called Bubiyan, being linked to the mainland Kuwait by a bridge. In 1991 (after the Gulf War), the island of Bubiyan turned into a military base and allows not civilians in. The other islands are called Auhah, Failaka, Kubbar, Miskan, Qaruh, Umm al Maradim, Umm an Namel, and Warbah (Mulloy, 48).

The capital of Kuwait is called Kuwait. The other three major cities are Al-Jahrah, Salmiya and Hawalli.

As for the economic development of Kuwait, one needs to understand that Kuwait is a small yet open economy compared to other Arab countries that is linked strongly to the production of oil and natural gas. Kuwait is said to possess about 90 billion barrels of oil, which would make it about 10% of global oil reserves. Petroleum export accounts for 50% of Kuwait’s GDP and is about 88% of total export revenue generated by Kuwait. Petroleum export accounts for 80% of government revenue. As noted earlier, water is scarce in Kuwait just like arable land, thus, agriculture is non-existent in Kuwait. Kuwait fully depends on imports of food except for fish which is caught by Kuwait fishermen in the Persian gulf. 80% of Kuwait’s water is either imported or distilled. The ever increasing oil prices over the past few years allowed Kuwait to generate more revenues and lower the budget deficit by about 50% to $3 billion in 2002.

The government in Kuwait is rather inactive and does not initiate any progressive reforms. The government is pro-western and relies on the foreign direct investment in the petrogas industry and oil field development in Northern part of Kuwait. The dependence on foreign capital is explained by Iraqi invasion of Kuwait and the devastation of its oil infrastructure.

The government of Kuwait appears to take great responsibility in the social welfare development of the country and sponsors many public works and development plans which is attempts to finance with the oil and investment revenues that Kuwait has at its disposal. Kuwait citizens have a guaranteed retirement income, marriage bonuses, child bonuses, various housing loans, virtually 100% employment, free and easily available medical services and free education at all levels (Mirepoix, 98). Even foreigners living in Kuwait can obtain most of the free services available to Kuwait nationals. For instance, foreigners are not allowed to own stock in publicly traded companies, real estate and Kuwait banks. Also foreigners are not allowed to have a majority interest in a business.

Speaking about Industry and Development in Kuwait, one can say that the industry comprises several large export-oriented companies dealing with oil, petroleum and natural gas. Also industry comprises many refineries and small manufacturers belonging to the petrochemical industry. Water desalinization companies, ammonia/ sulphur, fertilizer producing companies together with cement and brick/block and construction companies are the ones that account for virtually all industry in Kuwait. During the war and occupation by Iraq, Kuwait lost most of its machinery and technology. At present much effort is made to fully replace the lost technology with new and advanced technology as brought into the country with the FDIs (Martin, 51).

Speaking about the Agriculture in Kuwait, one has to note that it is almost non existent since Kuwait experiences drastic deficit of water and arable land. Kuwait government conducts experiments with growing food through the process of hydroponics and at carefully managed and government-sponsored farms, yet apparently, the current agriculture cannot feed Kuwait. The most fertile soil of Kuwait was located in south central Kuwait, yet during the war with Iraq it became barren after the fires at the oil wells and oil spills contaminated the area creating oil lakes/ponds. The only other agricultural resource that Kuwait possesses is the shrimp and fish that are plentiful in territorial waters in the Persian Gulf. Kuwait had bought the fishing rights for large scale commercial fishing in the Indian Ocean in the territorial waters of other countries.

Kuwait possess more than 40 crude oil and refined oil product tankers/carriers and hosts the largest tanker company in the OPEC organization, called Kuwait Oil Tankers Co (Heatwole, 320).

As for the trade, finance, and aid present in Kuwait, one needs to point out the fact that Kuwait currency unit is called Dinar. Dinar is a relatively strong currency that is pegged to a basket of various currencies like US dollar, Euro, Japanese Yen, British pound and other. Historically Kuwait runs a balance of payments surplus and this strategy is believed to benefit this small Arab country greatly from year to year.

As noted earlier, the Kuwait government depends greatly on the revenues obtained from the sale of oil, gas and petroleum products to other countries. Kuwait’s fiscal surplus is usually 10-15% of the GDP during high oil prices and can experience budget deficits during low oil prices as set by the world markets.

The Kuwait government has set aside two special reserve funds called Fund for Future Generations and the General Reserve Fund, that together possessed more than $110 billion prior to the Iraqi occupation in the 1990s. At present these funds are believed to be around $100 billion despite their drastic depletion during the war with Iraq (Sutcliffe, 121). The funds are invested in the top world countries like the USA, Germany, Great Britain, Japan and Southeast Asia (Taiwan). These foreign assets are invested in stocks, bonds, fixed yield instruments and real estate. The Fund for Future Generations and the General Reserve Fund usually obey the conservative investor policy.

One needs to note that despite its small geographic size Kuwait had been a primary source of investment and assistance to other developing Arab countries through the Fund for Arab Economic Development, an independent investment institution that was created in 1962 with the purpose of investing in the neighboring Arab states. In 1975, the Fund for Arab Economic Development started to invest in other developing countries, which were not necessarily Arab.

Kuwait was responsible for the aid to Egypt, Syria and Jordan, let alone to many other individual organizations located in the middle east. During the Iraq-Iran war, Kuwait supported Iraq and provided tremendous economic support to the Iraqi leader and the army. In 2000 alone, Kuwait issued loans and technical assistance grants totally more than $600 million.

Speaking about some key statistics, one needs to know that the purchasing power parity in Kuwait is $41.46 billion in 2003. The GDP growth rate over the past 5 years averaged 3%. The per capital purchasing power parity was $19,200 in 2003. Industry provided about 60% of the GDP, while services account for another 39.5%, leaving 0.5% for agriculture.

Kuwait is believed to be a rather stable economy with inflation rarely surpassing 3%. In 2003, inflation rate was only 1.5%. Kuwait possess the labor force of 1.4 million, with non-Kuwaitis accounting for about 75% of the total labor force (Davis, 273). The government and social services account for 55% of all occupations, services account for 35%, while industry and agriculture account for remaining 10%. The unemployment rate in Kuwait has always been extremely low and rarely surpassed 2.5%.

The budget of Kuwait oftentimes possesses a surplus. For the year ended 2002, the budget revenues were $28 billion, while budget expenditures were $16 billion. Despite increasing foreign direct investments in Kuwait, industrial production in 2002 slumped by 4%. Currently, much effort is made to engage in the production of electricity to have enough capacity to export it.

Currently, Kuwait exports oil, gas and oil-related products like petroleum and fertilizers accounting for $23 billion to countries like Japan, South Korea, United States, Taiwan or Pakistan.

Imports of Kuwait are always much smaller and in 2002 accounted for only $10 billion. The primary imports were food, water, construction materials, technology, vehicles and clothes. The imports to Kuwait originate in the USA, Japan, Germany, China, Europe and Saudi Arabia

Despite impressive GDP and net export figures, Kuwait is a global debtor owing to the outside world more than $12 billion in 2003.

The demographics of Kuwait are worth noting since it possesses only about 80% of Arabs, a low figure compared to other Arab countries. Kuwait hosts many Egyptians, stateless Arabs, Indians, Pakistanis, Filipinos, and Bangladeshis. In the past Kuwait hosted many Palestinians who nevertheless were ordered to leave Kuwait by Yassir Arafat after Kuwait invasion by Iraq.

Although the official language in Kuwait is Arabic, the majority of population understands and speaks English. 84% of Kuwait’s citizens are Sunni Muslims. Shii Muslims are a Muslim minority group.

Another interesting thing that needs to be presented about Kuwait is its uniquely distinct culture. Unlike other Arab countries, Kuwait represents an extremely liberal and hospital country. Kuwait possesses a unique institution called Diwaniah, a special gathering place for males where Kuwait males are able to sit and discuss various global matters be they political, social, religious, or economical. Diwaniah takes place several times per week and in large cities every night and represent democratic foundation of Kuwait. No other Arab country possesses a place where people are able to express themselves freely and discuss various matters so liberally and without fear of being arrested. The host of Diwaniah serves drinks (non-alcoholic) and snacks to stimulate the conversation of the guests. Diwaniah is usually organized by prominent business figures in Kuwait and post invitations in major newspapers and magazines, thus allowing everyone from the public to come over and talk (Blij, 77).

After gaining independence in 1961, Kuwait immediately was threatened by Iraq that presented claims on Kuwait territory. The invasion of Kuwait by Iraq was prevented with the help of the British troops that were stationed in Kuwait at the request of Kuwait’s Emir (leader). The United Nations supported Kuwait’s sovereignty yet advised Kuwait to host foreign troops till 1963 to prevent invasion from Iraq. Kuwait pursued democratic development yet had to stick to oil/gas/petroleum industries because of scarce resources. During the past war in Iraq, Kuwait supported democracy and the USA and was the host country for the US troops.

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