IV.  POLITICAL ENVIRONMENT

A.  Nature of Bilateral Relationship with the United States

Although there are no bilateral treaties between the United States and Kuwait,
the relationship between the two countries is as strong now as it was during
the immediate post war era.  During the three years since the liberation of
Kuwait by the U.S.-led coalition forces, a shift has occurred in the buying
patterns of the Kuwaitis, particularly in the government and defense sectors.
The perceived "goodwill advantage" that American companies enjoyed because of
the role the U.S. played in liberating Kuwait has given way to the pressures
of strong competition from market forces and accelerated marketing efforts of
other coalition member countries.

American companies are successful in winning a significant share of
defense-related contracts, which are awarded largely on the basis of technical
capabilities and price.  U.S. technology is highly respected in the Kuwaiti
market and efforts are presently underway to develop technical standards for
industrial and consumer goods that mirror those of the United States.


B.  Major Political Issues Affecting Business Climate

In terms of safety and security, U.S. firms should not find anything in Kuwait
to interfere with normal business operations.  Kuwait has already signed
defense cooperation agreements with the United States, the U.K., and France.

The government of Kuwait continues to pursue the "Kuwaitization" of the labor
force.  Although initial plans to reduce the number of expatriates in the
country are now seen as unrealistic, public and political pressure will
continue for all firms and government ministries to reduce their dependency on
non-Kuwaitis.  An increase in the number of Kuwaiti employees will increase
the demand for training, consulting, and educational services, which
non-Kuwaitis as well as Kuwaitis will provide in the near future.  The result
of such training, however, will eventually be to replace expatriates with
Kuwaitis, particularly in the managerial, financial, engineering, computer and
other technical areas.  Kuwait will generally seek information technology to
reduce the number of employees, especially expatriates.

The government of Kuwait encourages joint ventures between foreign and Kuwaiti
organizations, but requires by law that Kuwaiti partners retain the majority
share.  Currently, the bar on majority foreign ownership and other laws and
statutes governing foreign participation in business in Kuwait are under
review.  The government plans to revise, and in some cases repeal, regulations
that have a negative impact on foreign investment in Kuwait, especially where
the transfer of technology is involved.


C.  Brief Synopsis of Political System, Schedule for Elections
    and Orientation of Major Political Parties

Kuwait's rulers (Amirs), drawn from the Al-Sabah family, have governed the
country in consultation with prominent families and community leaders for over
200 years.  Kuwaitis do not enjoy the right to change the head of state.
However, Kuwaitis eligible to vote choose the membership of the National
Assembly.  The Constitution provides that elections for the National Assembly
take place every four years by secret ballot.  The Amir has twice (from 1976
to 1981 and from 1986 to 1992) suspended constitutional provisions by decree
and ruled extraconstitutionally.

The October 1992 National Assembly elections and the subsequent convening of
the assembly marked a return to parliamentary life. The electoral law provides
that candidates for the 50-seat assembly be self-nominated.  In 1992, 303
candidates registered for the parliamentary elections.  During 1993 the
assembly assumed an active role, enacting legislation, including the national
budget.

Workers' Rights:
Kuwaiti workers have the right to join unions, but Kuwaiti law prevents the
establishment of more than one union per functional area or more than one
general confederation.  Union membership in 1993 was approximately 28,400
people organized in 14 unions.  All but two of the unions, the Bank Workers'
Union and the Kuwait Airways Workers' Union, are affiliated with the Kuwait
Trade Union Federation (KTUF).  The KTUF consists of nine civil service unions
(18,800 members) and three oil sector unions (6,900 members), but the oil
unions have equal representation (36 members) in the 72-member KTUF Assembly.

Political Parties:
While political parties are banned, the government has taken no action against
a number of political groups that acted much like parties during the 1992
elections and the succeeding national assembly session.  Political activity
also finds its outlet in informal, family-based social gatherings known as
diwaniyas.  Professional groups, bar associations, and scientific bodies
operate and maintain international contacts without government interference.