The State of Kuwait is situated in the north-east corner of the Arabian Peninsula, bordered by the Republic of Iraq to the north and the Kingdom of Saudi Arabia to the south and west. It also shares a maritime border with the Islamic Republic of Iran. Kuwait covers an area of 18,000 square kilometres, approximately a quarter of the size of Tasmania, and has a population of nearly 4 million, with expatriate foreign workers accounting for around two thirds.
Kuwait's modern history began in the 18th century with the founding of the city of Kuwait by Arab tribes from the Arabian Peninsula. Kuwait became a British protectorate in 1897 and gained independence in 1961.
In August 1990, Kuwait was invaded and forcibly annexed by Iraq under Saddam Hussein. The seven month Iraqi occupation came to an end after direct military intervention by United States-led coalition forces, in which Australia participated.
Oil production in Kuwait had begun in the 1940s and was largely nationalised by Kuwait in 1974. Kuwait is a member of the Organization of Petroleum Exporting Countries (OPEC). Although infrastructure was badly damaged during the war following Saddam Hussein’s invasion, Kuwait restored its oil output to almost pre-occupation levels within two years.
Kuwait is a constitutional monarchy with a parliamentary system of government. The head of state, the Emir, is chosen from the ruling Al-Sabah family and confirmed by the National Assembly (Majlis Al-Umma). The Emir has the power to appoint the Prime Minister, dissolve the Parliament and suspend certain parts of the Constitution. The current Emir is His Highness (HH) Sheikh Sabah Al-Ahmed Al-Jaber Al-Sabah, who acceded to the throne in January 2006.
Kuwait was the first member of the Gulf Cooperative Council (GCC) to establish a directly elected parliament, in 1963. The National Assembly comprises 50 directly elected members who serve four-year terms. The Assembly has the power to question and dismiss ministers, including the Prime Minister, and to block legislation. Although political parties are banned, there are various interest groupings or ‘blocs’. Women were granted the right to vote in 2005 and can be, and have been, elected to parliament.
The Council of Ministers (cabinet) forms the executive level of government and advises and assists the Prime Minister, who is appointed by the Emir. The current Prime Minister is HH Sheikh Jaber Al-Mubarak Al-Hamad Al-Sabah who was appointed in 2011. Cabinet ministers are also ex-officio members of the National Assembly with the same voting rights as elected members of parliament, except in cases of no confidence motions. The most recent parliamentary election was held in July 2013, Kuwait's sixth since 2006. Following this election, two women were appointed to Ministerial positions in the cabinet. A by-election held in June 2014, following the resignation of five National Assembly members, was boycotted by opposition groups. In addition to being a member of the GCC, which includes Bahrain, Oman, Qatar, the United Arab Emirates (UAE) and Saudi Arabia, Kuwait is also a member of the Arab League, the Organisation of Islamic Cooperation (OIC), the Organization of Petroleum Exporting Countries (OPEC), the World Trade Organization (WTO) and the United Nations (UN) and its various agencies.
Kuwait’s foreign policy is founded on a long-standing strategic alliance with the United States.
Australia and Kuwait enjoy a friendly and cooperative relationship. Kuwait recognises the support for Kuwait’s independence and territorial integrity provided by Australia’s contribution to the coalition force which in 1991 liberated Kuwait from the Iraqi occupation. Relations are underpinned by our strong commercial ties and increasing people-to-people links.
Diplomatic relations between the two countries were established formally in 1974 and Australia opened an Embassy in Kuwait City in December 2004. The then Foreign Minister of Australia opened the Australian Embassy at its current premises when he visited Kuwait in June 2008. The Australian Trade Commission (Austrade) opened an office in February 2010. Kuwait upgraded its Liaison Office in Canberra to an Embassy in January 2002 and opened a Cultural office in 2008.
Kuwait has the sixth largest oil reserves in the world and the world’s seventeenth highest gross domestic product (GDP) per capita. Its small, relatively open economy is dominated by the oil industry and the government sector. Oil revenues comprise about 90 per cent of merchandise exports and about half of GDP and of total government revenues. Kuwait generally has healthy fiscal and current account surpluses, although lower oil prices through 2015 have substantially reduced its fiscal surplus. Kuwait contributes a proportion of its revenue (historically ten per cent) into a Future Generations Fund managed by the Kuwait Investment Authority (KIA). KIA is considered to be the world’s sixth largest sovereign wealth fund.
Kuwait has one of the oldest economic systems in the Middle East, with a stock exchange dating back over 50 years and a well-developed banking system. The latest five-year development plan (2015-2020) aims to transform Kuwait into a financial and commercial centre for the northern Gulf region. The Plan includes intended spending of US$116 billion on energy and infrastructure projects and strengthening of the role of the private sector. Kuwait has implemented reforms to allow 100 per cent foreign ownership of inward foreign investments in most non-oil and gas sectors and is seeking to encourage foreign businesses into Kuwait.
Major industries include real estate, shipping, construction, cement, water desalination, construction materials and financial services. Real GDP grew by 2.6 per cent in 2014 (IMF estimate) and is expected to grow more slowly in 2015 on the back of lower oil prices.
Trade and Investment
The trade relationship is substantial, with strong potential for further expansion in the energy sector (professional services and related equipment), education, agribusiness, advanced manufacturing, tourism and other services. Two-way merchandise trade amounted to over $901 million in 2013-14. This figure understates the level of trade as it does not capture Australian exports trans-shipped to Kuwait through the regional entrepôt of Dubai.
Kuwait is a significant market for Australian exports of passenger motor vehicles, wheat, dairy and food products. It is Australia’s largest market for live sheep with exports valued at $62 million in 2013-14. Imports from Kuwait are almost entirely petroleum products and fertilisers.
Kuwait is also an important market for Australian education and tourism services which build the people-to-people relationship. Some 1,500 Kuwaiti students are enrolled in Australian institutions, the majority on Kuwait Government scholarships. The establishment of the Australian College of Kuwait in 2004 and Box Hill College of Kuwait in 2007 has assisted in expanding educational links.
Over 1,000 Australians reside in Kuwait, employed mainly in the education, banking, oil and gas and security industries. Australian companies with offices in Kuwait are predominately centred around engineering and construction management services, and education.
Kuwait’s investments in Australia are estimated at over $12 billion, including significant investments from the Kuwaiti sovereign wealth fund, KIA, and the Kuwait Foreign Petroleum Exploration Company (KUFPEC). Areas of investment include real estate, hotels, banking and the oil and gas sector including KUFPEC’s stake in the Wheatstone LNG project. Kuwait Finance House, one of the largest Islamic banks in Kuwait, has an office in Melbourne, while private Kuwaiti companies, including Agility Logistics, Action Group Holdings and the Al-Ghanim Group, have also invested in Australia.
There is considerable scope for Australia to develop further the bilateral commercial relationship with Kuwait. Kuwait’s plans to develop infrastructure mega-projects and to diversify the skills base of its citizens represent significant opportunities for Australian companies. English is widely spoken and Kuwait has low import tariffs and taxes. The number of Australian food and beverage products in Kuwait has increased in recent years. There is also scope for growth in sectors including construction, infrastructure, education and health services.
A priority for the Australian Government is the resumption of free trade agreement negotiations with the Gulf Cooperation Council, including Kuwait.
High level visits
2015: Trade and Investment Minister Robb visited Kuwait with a business delegation.
2012: The then-Ministers for Agriculture, Fisheries and Forestry and for Resources and Energy, and the then-Chief of the Australian Defence Force visited Kuwait.
2011: The then-Governor-General visited Kuwait.
2010: The then-Minister of Innovation, Industry and Science, visited Kuwait.
2008: The then-Foreign Minister visited Kuwait.
2007: The then-Prime Minister visited Kuwait.
2005 & 2011: Delegations from the Kuwait National Assembly and the Kuwait-Australia Parliamentary Friendship Group visited Australia.
2002 & 2005: Australian Parliamentary Delegations visited Kuwait.
Updated May 2015