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Kuwait Defence and Security Report Q1 2012
Business Monitor International, Dec 2011, Pages: 90
Business Monitor International's Kuwait Defence and Security Report provides industry professionals and strategists, corporate analysts, defence and security associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Kuwait's defence and security industry.
Over the last quarter, Kuwait shifted slightly further away from its status as being one of the countries in the region most insulated from large-scale unrest and moved nearer towards being a country exposed to the escalating political upheaval in the Middle East region. In terms of the nation’s external defence and security issues, tensions have flared up with Iraq once more as the two countries develop their respective new ports. Twenty-one years since Iraq occupied Kuwait and declared the small country the 19th Iraqi province, it is Iraq that is now concerned by what it sees as Kuwaiti impingement on its territorial rights. With armed forces being deployed on Bubiyan Island, the location of the new Kuwaiti port, and Iraqi militants threatening to strike, BMI notes that the glut of new Gulf port developments is beginning to rock the region's sometimes-fragile balance.
On the domestic front, political unrest continues to heighten in the form of protest rallies, which are increasing in both frequency and size. On September 21, a protest rally was conducted by nearly 2,000 Kuwaitis outside parliament in Kuwait City to show their dissent against alleged corruption in the government. The march was held after a report by al-Qabas newspaper in August that several banks in the country are attempting to deal with suspiciously large deposits by some parliamentary members and their families. BMI sees a growing possibility that anti-government discontent in Kuwait could translate into increased political instability. Recent actions by the government demonstrate the extent of its concern over underlying political tensions. If controversy over a corruption scandal escalates further over the coming weeks, there is an increasing chance that the Emir may accede to opposition demands for a dissolution of parliament.
The Kuwait Parliament is by its nature unstable. Members of Parliament are elected in districts. However, the Prime Minister is appointed by the Emir. In Parliament on June 23 a no-confidence vote occurred against the Prime Minister. While Prime Minister Sheikh Nasser al-Mohammad al-Sabah survived this vote, the instability added hope and fervour to the protests on the streets. Kuwait's Emir Sheikh Sabah al- Ahmad al-Sabah has warned against any unrest and security threats in the country, saying there will be zero tolerance and BMI notes that this may prove to be a potential flash point going forward. At this stage, however, the government has not used any violence to stem protests. On a structural basis, however, Kuwait can be considered to be pretty secure in the region. Unemployment is not an issue, I can boast a generous welfare system, and the lion’s share of the population are employed by the government.
A large scale US military presence in Kuwait, which supports the US’ operations in Iraq, serves as something of a symbol of security and stability for the country. Recent US Department of Defense contract awards and budgetary allocations indicate a substantial increase in the resources funnelled from the Pentagon into Middle East operations in Kuwait, suggesting an expanding role for US military forces in the region. Indeed it appears that Camp Arifjan and Ali Al Salem Air Base, both located in Kuwait, are being readied to offer more self-sustaining capabilities, as opposed to being utilised as temporary transit hubs for both equipment and military personnel from combat zones in the surrounding region.
Moreover, in the context of increasing US military operations in Pakistan and Yemen, and a perpetual operational focus on containment of the regional supremacy that is Iran, Kuwait would seem to serve as a geographically logical centre for sustained military coordination in the absence of US troop presence in Iraq and Afghanistan. The recent build-up of uncertainty across the Middle East in 2011 only cements the interests of the US in retaining an active presence in the region. While one can only speculate on the overarching operational goals, it is evident that withdrawal from Iraq, and possibly Afghanistan, is not an indication of an American draw-down from the region.
High energy prices underpin Kuwait’s economy and ability to undertake large scale arms purchases. Its status as a key crude supplier to energy-hungry China is likely to become an increasingly important position in this respect over the coming years. What is more, Kuwait’s balance sheet is in good order: it remains on track to post a large budget surplus this for 2011. The government's fiscal position will benefit heavily from the spike in global energy prices, though BMI expects that increased revenues will be offset to a great extent by rising public spending. BMI forecasts Kuwait's budget surplus to come in at 21.7% of GDP this fiscal year (beginning April 1, 2011).
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