VZCZCXYZ0000
PP RUEHWEB

DE RUEHKU #0008/01 0051310
ZNR UUUUU ZZH
P 051310Z JAN 10
FM AMEMBASSY KUWAIT
TO RUEHC/SECSTATE WASHDC PRIORITY 4409
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS KUWAIT 000008 
 
SENSITIVE 
SIPDIS 
 
NEA/ARP, NEA/RA 
 
E.O. 12958: N/A 
TAGS: PREL PGOV PTER PHUM ECON KU
SUBJECT: SBU SCENESETTER FOR JANUARY 7 VISIT OF CODEL 
MCCONNELL 
 
REF: STATE 130327 
 
 ¶1. (U) Mission Kuwait warmly welcomes the January 7 visit of 
CODEL McConnell.  Ambassador and country team look forward to 
providing the CODEL with a classified briefing on January 7. 
Given the brevity of CODEL's stay in Kuwait, no meetings with 
GOK officials have been arranged. 
 
Kuwait Snapshot 
--------------- 
¶2.  (U) Kuwait is a Gulf emirate whose small size (about the 
size of New Jersey) and population (approximately 1.1 million 
Kuwit citizens and 2.3 million expatriates) belie its outsize 
geostrategic importance.  Our strong bilateral relationship 
is founded upon close security ties that have endured since 
the 1991 liberation of Kuwait from Saddam's Iraq, and are 
manifested today in Kuwait serving as a key military training 
and logistical support hub.  A major exporter of both capital 
(over 34 billion USD in outward FDI over the past five years) 
and oil (with the fifth largest proven oil resources in the 
world), Kuwait also punches above its weight economically. 
Politically, Kuwait is a constitutional emirate with a 
freely-elected parliament (including four women MPs, all U.S. 
PhD holders) and is home to one of the freest medias in the 
region; many Kuwaitis, and particularly the Kuwaiti elite, 
have studied or traveled to the United States and visa 
numbers, after a post9/11 period of decline, are again on the 
rise. 
 
U.S. - Kuwait Security Relations 
-------------------------------- 
¶3. (SBU) Kuwait's backing of OIF has come in the form of both 
significant financial support and a permissive operating 
environment.  Kuwaiti support for the U.S. military presence 
has included, in material terms alone, over USD 1.2 billion 
annually in such benefits as free access to bases, waived 
port and air support fees, customs waivers, subsidized fuel 
and other services.  Kuwait also provides the U.S. military 
with access to a number of air and land bases as well as to 
port facilities and a border crossing facility; Kuwait serves 
as an important venue for "spin up training" for US. forces 
prior to deployment elsewhere in the region.  Several 
thousand U.S. military personnel are located on bases and 
facilities in Kuwait and many more pass through here en route 
to Iraq or back to the U.S. 
 
Support on Regional Issues 
-------------------------- 
¶4. (SBU)  A key Gulf-region ally, Kuwait has been a generally 
helpful interlocutor on the Middle East Peace Process and 
Iran, and has been increasingly responsive to our concerns on 
terrorism.  While deeply concerned about perceived Israeli 
intransigence on the settlements issue and the status of 
Jerusalem, Kuwait has been supportive of the Palestinian 
Authority's role as the sole Palestinian interlocutor on the 
peace process and has contributed assistance to support the 
PA.  On Iran, Kuwait has publicly expressed concerns about 
Iran's nuclear intentions, but also fears that any attack on 
Iranian nuclear facilities would have disastrous consequences 
for Kuwait, Iran's close neighbor.  Kuwait, therefore, 
regularly urges caution and dialogue on the nuclear issue, 
while publicly and privately urging Iran to work with the 
international community and abide by IAEA safeguards. 
 
Economic Issues: Oil and Investment 
--------------------------------------- 
¶5. (SBU)  KuwaQ has the third largest economy in the GCC, 
behind Saudi Arabia and the UAE.  It is a major oil producer, 
holding from 8-9 percent of the world's proven oil reserves 
and has an economy which is heavily dependent on oil exports 
(including considerable exports to the U.S.).  On the oil 
front, Kuwait plans to invest approximately $80 billion over 
the next five years (divided between upstream and downstream) 
to raise its oil production capacity from a current 3 million 
barrels per day to 4 million barrels of oil per day by 2020. 
Kuwait is a major international investor, with its Sovereign 
Wealth Fund, the Kuwait Investment Authority believed to be 
managing over $200 billion in assets.  Although KIA does not 
disclose its asset allocation strategy, it is a major 
investor in the U.S. (as are Kuwaiti private sector 
investors); KIA has in the past been willing to step in to 
invest in major but potentially troubled financial services 
companies as a means of helping restore confidence in and 
maintain international financial equilibrium.  With the 
exceptiion of Dow Chemical and CitiGroup, there is little 
U.S. direct investment in Kuwait, in part as a result of the 
fact that the oil sector is closed to direct foreign 
investment by constitutional writ, and in part because 
 
Kuwait's markets and tendering processes are less than fully 
transparent. 
 
 
 
 
 
 
********************************************* ********* 
For more reporting from Embassy Kuwait, visit: 
visit Kuwait's Classified Website at: 
 
http://www.intelink.sgov.gov/wiki/Portal:Kuwa it 
********************************************* ********* 
JONES