Kuwait country brief

Overview

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 almost 18,000 square kilometres, approximately a quarter of the size of Tasmania, and has a population of 4.4 million (2017 est.), with expatriate foreign workers accounting for around two thirds of the population.

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) and is estimated to have the world's sixth largest oil reserves.

Political overview

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'.

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.

Women were granted the right to vote in 2005 and can be, and have been, elected to parliament. The current parliament has one elected female Member of Parliament and one appointed female Cabinet minister.

The most recent parliamentary election, held in November 2016, was Kuwait's seventh election since 2006.  The 2016 election saw more opposition candidates run for positions following boycotts of the 2012 and 2013 elections. Opposition candidates secured almost 50 per cent of seats.  

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 and the United Nations and its various agencies. Kuwait is currently serving as a non-permanent member of the United Nations Security Council for the 2018-19 term.

Kuwait's foreign policy is founded on a long-standing strategic alliance with the United States.

Bilateral relations

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 officially 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.

Economic overview

Kuwait has the sixth largest oil reserves in the world and the world's 30th highest gross domestic product (GDP) per capita (2017 est.). Its small, relatively open economy is dominated by the oil industry and the government sector. It is OPEC's third largest oil producer globally. In 2016, oil revenues comprised about 95 per cent of merchandise exports and about 44 per cent of GDP. 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 fourth largest sovereign wealth fund.

Kuwait has one of the oldest economic systems in the Middle East, with a stock exchange dating back over 55 years and a well-developed banking system. The New Kuwait Vision 2035 national development plan aims to transform Kuwait into a financial, commercial and cultural hub for the northern Gulf region. Vision 2035 focuses on long-term development priorities including infrastructure projects and strengthening the private sector, to reduce Kuwait's dependency on oil export revenues. 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 2017.

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 $602.4 million in 2017. Kuwait is a significant market for Australian exports of wheat, dairy, beef, food and other agricultural products. Prior to the exit of the automotive vehicle industry from Australia, Kuwait was a significant market for Australian passenger motor vehicles. 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. In 2017, there were 1,124 enrolments by Kuwaiti students 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 $8.7 billion (2017), including significant investments from the Kuwait Investment Authority (KIA), and the Kuwait Foreign Petroleum Exploration Company (KUFPEC). Areas of investment include real estate, hotels, banking and the oil and gas sector. 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

  • May 2018: Minister for Agriculture and Water Resources visited Kuwait.
  • February 2018: The then-Minister for Foreign Affairs visited Kuwait.
  • December 2016: Australian Special Envoy for Human Rights visited Kuwait.
  • May 2016: The Governor General visited Kuwait.
  • January 2016: The then-Minister for Tourism and International Education visited Kuwait.
  • December 2015: Parliamentary Delegation (JSCFADT Trade Sub-committee) visited Kuwait.
  • April 2015: The then-Minister of Trade and Investment visited Kuwait with a business delegation.

Updated November 2018.

Last Updated: 15 November 2018