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Kuwait

Flag of Kuwait

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 4.5 million (2019), 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 seventh largest oil reserves.

Political overview

Kuwait is a constitutional monarchy with a parliamentary system of government. The head of state, the Amir, is chosen from the ruling Al-Sabah family and confirmed by the National Assembly (Majlis Al-Umma). The Amir has the power to appoint the Prime Minister, dissolve the Parliament and suspend certain parts of the Constitution. The current Amir is His Highness (HH) Sheikh Nawaf Al-Ahmad Al-Jaber Al-Sabah, who acceded to the throne in September 2020.

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 Amir. The Prime Minister is HH Sheikh Sabah Al-Khaled Al-Hamad Al-Sabah. Cabinet ministers, while usually drawn from outside the National Assembly, 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 does not have an elected female Member of Parliament and only one woman appointed to Cabinet. On 2 March 2021, the Amir announced the new Cabinet (16 members).

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

Bilateral relations

Australia and Kuwait enjoy a friendly and cooperative relationship. Relations are underpinned by our strong trade and investment ties and people-to-people links, across the education, science and technology sphere. 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.

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.

Kuwait and Australia held their first Senior Officials’ Talks in November 2020, which involved a variety of government and commercial stakeholders. Trade, investment and education formed a key focus of discussions.

Economic overview

Kuwait the world's 58th highest gross domestic product (GDP) per capita (2019 est.). Its small, relatively open economy is dominated by the oil industry and the government sector. It is OPEC's fourth largest oil producer globally (2020 est.). Kuwait’s economy is dependent on the oil sector, accounting for approximately 40 per cent of its GDP and 90 per cent of government revenue.  Kuwait has traditionally contributed a proportion of its revenue 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. 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 0.6 per cent in 2019.

The COVID-19 pandemic has had a significant impact on Kuwait’s economy, particularly due to the impact of COVID-19 measures on commerce and the pandemics effect on global 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 trade amounted to $664 million in 2019 (including exports trans-shipped through Dubai). Kuwait is a significant market for Australian exports of wheat and live sheep. Other key commodities include barley, dairy, meat, fruits and vegetables. 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 2018, there were 855 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. While student numbers dropped following the onset of the pandemic, Australia’s effective COVID-19 response compared with other leading international student markets may present opportunities for Kuwaiti students to study in Australia when borders have re-opened.

Up to 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 $13.4 billion (2019), including significant investments from KIA, and the Kuwait Foreign Petroleum Exploration Company (KUFPEC). Areas of investment include real estate, hotels, banking and the oil and gas sector.

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.

High level visits

  • January 2019: Parliamentary Delegation visited Kuwait
  • 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.
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