Oil transformed all aspects of life in Kuwait, turning it into an exuberantly rich, hi-tech state in just a few decades, making it the model for other gulf countries.

Geography

Kuwait is situated in the Middle East, at the northern tip of the Gulf, between Iraq in the west and Saudi Arabia in the east. It has a land area of 17,820 sq km.

Historical background

The area around Kuwait has been settled for thousands of years. By the 18th century, several groups migrated from the interior of the Arabian Peninsula and inhabited what is now present-day Kuwait city. Colonial Britain oversaw foreign relations and defence for the ruling Kuwaiti al-Sabah dynasty from 1899 until independence in 1961.

Modern political history

Although oil was discovered in Kuwait in the late 30s, it was not until after the second world war that Kuwait began to export large quantities of oil. The revenues transformed the society, with large-scale construction and economic development growing at an astonishing rate. The power of the ruling al-Sabah family grew as well.

In the 60s and 70s, Kuwait became a leading, although not radical, voice in support of Arab nationalism and the Palestinian quest for a homeland. Pan-Arabism was popular, especially among students, and many teachers and journalists in Kuwait were Palestinian.

In 1990 relations with Iraq worsened. Iraq accused Kuwait of exceeding Opec production quotas for oil and stealing more than $2bn in oil from a contested reserve - al-Rumailah - that lay beneath both countries.

Iraq also demanded Kuwait cancel the debt Iraq owed from the Iran-Iraq war. When Saddam Hussein mobilised Iraqi troops on the border in late July 1990, Kuwait had neither the military might nor the external protection to prevent an invasion.

On 2 August, Iraq invaded Kuwait and quickly overwhelmed Kuwaiti forces. A US-led international force assembled in neighbouring Saudi Arabia and evicted Iraq from Kuwait after six weeks of fighting in January 1991.

As the Iraqis retreated, much of Kuwait's industry, infrastructure, and buildings were destroyed. Among the most heavily damaged were royal palaces, government and other public buildings, oil wells and roads. Looting was widespread, on both an individual and organised basis: Entire collections from libraries, museums and laboratories were transported to Iraq.

Since the war, Kuwait has been largely rebuilt. However, due to later crises, such as a 1994 incident in which Iraq amassed troops near the Kuwaiti border, Kuwait has relied heavily on the United States for continued protection. Kuwait served as a major launching point for the 2003 US-led invasion of Iraq, which overthrew Saddam Hussein.

Official name: State of Kuwait
Capital: Kuwait City
Form of government: Constitutional monarchy
Gained independence: 19 June 1961

Economy:

Kuwait is a small, rich, relatively open economy with proven crude oil reserves of about 98bn barrels - 10% of world reserves.

Petroleum accounts for nearly half of GDP, 95% of export revenues and 80% of government income.

The country's climate limits agricultural development. Consequently, with the exception of fish, it depends almost wholly on food imports. About 75% of potable water must be distilled or imported.

Currency: Dinar (KWD) - 1 USD = (app) 0.29 KWD
Natural resources: Petroleum, fish, shrimp, natural gas
Major industries: Petroleum, petrochemicals, desalination, food-processing, construction materials
GDP: $35.4bn (2002 est)
GDP annual growth rate: -1.0% (2002 est)
Per capita GDP: $15,000 (2003 est)
Imports: 39.6% of GDP (2002 est)
Exports: 48.3% of GDP (2002 est)

Military

Before the Gulf war, Kuwait maintained a small military force consisting of army, navy and air force units. The majority of equipment for the military was supplied by the United Kingdom.

Aside from the few units that were able to escape to Saudi Arabia, including a majority of the air force, all of this equipment was either destroyed or taken by the Iraqis during the 1990-91 war.

Much of the property returned by Iraq after the Gulf war was damaged beyond repair. Iraq retained a substantial amount of captured Kuwaiti military equipment.

Military budget: $3.9bn (2002 est)
Army size: 15,500 active troops

Culture

Kuwait city has modern landmarks, with skyscrapers dominating the skyline and plenty of shopping malls. A predominant feature of Kuwait may actually be its turbulent weather: small sudden cloudbursts are common from October to April and bring heavy rain, which can damage roads and houses; sandstorms and dust storms occur throughout the year, but are most common between March and August.

Population: 2,521,000 (2003 est)
Languages: Arabic (official), English
Religion: Muslim 85% official (Sunni 70%, Shia 30%), Christian, Hindu, Farsi, and others 15%
Ethnic diversity: Arab 80%, South Asian 9%, Iranian 4%, others 7%
Literacy rate: 83.5%
Important media: Two leading newspapers are the weekly Al-Watan (Arabic) and the Kuwait Times (English); Kuwaiti TV is state-run, but operates three networks and a satellite channel.

Sources: World Bank, countryreports.org, MSN Encarta, politinfo.com, The Almanac