BMI's Executive Summary

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Although Kuwait enjoys a generally high inter-state security rating, with the US and Iran continuing to square off in a confrontation over the latter's nuclear programme, these are nervous times in the region. Iran has implied that any attack on its territory will be met with a missile-led counter-attack on US forces in the Gulf, including those stationed in Kuwait. This worry lies behind Kuwait's current focus on a US$9bn upgrade and extension of its Patriot missile defence system. Some analysts have gone as far as suggesting that the installation of the Patriot system is a major factor in US planning around any 'window' for some kind of military action against Tehran during the course of 2008.

Setting the Iran wild card on one side, an ongoing issue for Kuwait is how it responds to both domestic and international pressures to undertake political reforms with the aim of increasing democracy in the state. The deadlock between the government and parliament, while reflecting the country's relative political openness, is also getting in the way of economic reforms and development – the danger is that it may end up being a real source of domestic instability and therefore generate insecurity.

Kuwait has a small number of indirect security threats, but benefits from the external security endowed upon it by the US. In the past, its geo-strategic location made it precarious to threats, from an Iraqi invasion in 1991 and the possibility of an Iraqi missile strike on Kuwait prior to the US-led coalition invasion of Iraq in 2003. Kuwait faces a limited internal threat from al-Qaeda-linked militants operating on Kuwaiti soil. As with many of the region's ruling regimes, there is a degree of protest from within disaffected sections of the population. The emirate will remain concerned with the ongoing instabilities in post-war Iraq and the possibility of Kuwaiti jihadis returning from Iraq.

Kuwait lacks an established indigenous defence industry of significance, and its armed forces are almost entirely reliant upon procurements from foreign sources for equipment and training. The Kuwaiti economy is currently able to support a high level of military expenditure as high oil prices raised the oil revenue in recent years, leading to record excess budget surpluses. The continuation of the upgrading of Kuwaiti military hardware and equipment is unlikely to decrease in the near future given the ongoing US involvement in the region and the current strength of the Kuwaiti economy. On this basis, high military expenditure is therefore likely to continue into the foreseeable future. US foreign military assistance will continue to dominate Kuwait's imports trade with the vast majority of its arms procurements being supplied by US-based companies. Kuwait does, however, increasingly obtain arms from a wider source of suppliers, including European and Asian states. The emirate does not have an extensive arms export industry.

Chapter 1 - Executive Summary

SWOT Analysis

Kuwait Political SWOT

Kuwait Security SWOT

Kuwait Defence Industry SWOT

Kuwait Business Environment SWOT

Kuwait Economic SWOT

Chapter 2 - Political Overview

Domestic Political Outlook

Increasing Democratic Freedom: A Threat To Stability?

Its All Coming Out Now

Implications Of Increased Democratic Freedom

External Political Outlook

Growing Risks From The Neighbours

Opportunities Amid Risks

Making Friends In Asia

Chapter 3 - Security Risk Analysis

BMI’s Security Ratings

Risk Ratings

Table: Regional Risk Ratings

Table: State Terrorism Vulnerability Index

Regional Security: The Middle East And North Africa

Inter-State Conflicts

Internal Conflicts

Kuwait Security Risk Ratings

Kuwait Conflict Risk

Kuwait Terrorism Risk

Kuwait Physical Safety Risk

Chapter 4 - Security Overview

External Security Situation

Internal Security Situation

Democratic Reform

US Presence On Kuwaiti Soil

Iraq

Islamic Militancy

Chapter 5 - Military Structure & Defence Industry

Armed Forces

Table: Regional Armed Forces (including conscripted) 2006

International Deployments

Weapons of Mass Destruction

Market Structure

Arms Trade Overview

Industry Trends & Developments

Procurement Trends & Developments

Chapter 6 - Industry Forecast Scenario

Table: Kuwait Defence Sector – Historical Data & Forecasts

Key Risks To BMI’s Forecast Scenario

Chapter 7 - Macroeconomic Forecast

Buoyant Growth

Consumption To Remain Strong

Risks To Outlook

Table: Economic Activity

Chapter 8 - BMI Forecast Modelling

How we generate our industry forecasts

Defence Industry

Sources

Chapter 9 - Appendix A: Risk Ratings Methodology

Conflict Risk Methodology

Terrorism Risk Methodology

Physical Safety Risk Methodology

Overall Risk Rating

State Vulnerability Index

Competitive Landscape for MEA Defence & Security: Sample of  
Companies Ranked

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Rankings and Competitive Landscapes by production and sales; market share and change on previous year; number of employees, ownership structure and year established. Also includes analysis of company expansion, export and investment strategies.

Network of Defence & Security Sources

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BMI's Middle East & Africa Defence & Security Reports are based on an extensive network of multilateral organisations, government departments, automotive industry associations, chambers of commerce and company reports. Information sources include: