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03KUWAIT2949 2003-07-03 06:08:00 UNCLASSIFIED Embassy Kuwait
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					  UNCLAS SECTION 01 OF 05 KUWAIT 002949 



E.O. 12958: N/A

REF: STATE 126550

1. (SBU) Post welcomes the opportunity to present this MEPI
country strategy
for Kuwait. As we consider how best to engage on these
issues, particularly on
sensitive issues such as political reform and education
(where the U.S. has
already been unjustly accused of inappropriate interference),
it is important to ensure that we do a lot of listening
before endorsing specific projects, and that we work behind
the scenes to build up the capacity of like-minded local
advocacy groups to press their case. We will also need to
spend sufficient time and effort to persuade Kuwait's leaders
that their national interest is best served by reform. (This
is a point that they seem to accept intellectually, but on
which they are either unwilling or unable to act.)

2. (U) The strategies below are delineated by pillar.




3. (SBU) Where Kuwait should be in three to five years:
The challenge for Kuwait is to reduce the role of the public
sector in the
economy. Within three to five years, frameworks to regulate
privatized industries (including the introduction and
enforcement of a rigorous competition policy) should be in
place. Current barriers to investment (including outdated
agency laws and ownership restrictions) should be falling, as
should barriers to trade (such as the wrong-headed
International Conformity Certificate Program). Kuwait should
begin taking an active role in the WTO. Trade and customs
rules should be sufficiently modernized and streamlined to
ensure that the country is the main entrepot for movement of
goods and services into a rebuilding Iraq. Small-scale
privatizations should have begun.

4. (SBU) Strategies to get there:

Intellectual Property Rights (IPR) Reform:


(Supports MEPI Goals of global competitiveness and
encouraging investment.)
Kuwait's current IPR laws (the Copyright law, specifically)
are not fully TRIPS
compliant. Further, enforcement mechanisms are weak,
penalties are barely a
slap on the wrist, and judges and prosecutors do not have
sufficient background
or training. As a result, piracy rates in Kuwait are
approaching 80 percent
for some products.

Improving IPR protection will require several steps:
programs to review and
improve current legal frameworks (working with both
government and National
Assembly representatives); extended training and/or technical
programs for police investigators and officers on detecting
and apprehending
pirates; and extended training and/or technical assistance
programs to train
judges and prosecutors. Justice officials will also benefit
from programs that
focus on rules of evidence, and on the benefits of
establishing a special IPR
court. Finally, we should work with GOK officials on a
public relations
campaign to change attitudes about IPR protection.

Commercial Law Reform


(Supports MEPI Goals of global competitiveness and
encouraging investment.)
Current commercial laws in Kuwait are not extraordinarily
bad, but the legal
process is slow and opaque. Tax law, on the other hand, is
bad (with a top
rate of 55 percent), old (passed in 1955), discriminatory
(applies only to
non-Kuwaiti firms) and opaque (the tax department appears to
rule anyway it
wants, regularly ignoring precedent). The lack of
consistency, transparency, and predictability of both tax and
commercial law are key impediments to attracting both foreign
and domestic investment.

The GOK has on several occasions requested consultations with
Treasury on
negotiating a bilateral tax treaty and the request has been
turned down flat
due to the discriminatory nature of the GOK tax law. We
recommend engaging the
GOK in serious discussions on such a treaty, but hinging the
conclusion of the
agreement on deep changes in the current GOK tax scheme. As
for commercial Law
Reform, we understand that the Department of Justice is
moving forward with
plans to establish a Regional Legal Advisor (RLA) position in
the Gulf; we
believe this is an excellent step. Additionally (and cross
cutting to
political reform and the President's plan for training
Kuwait's National Assembly has very few professional staff in
key areas such as
researching and drafting legislation. A technical assistance
program to help
the legislature build professional staff for its key
committees, or even to
establish something along the lines of our own Congressional
Research Service,
would immensely enhance the Assembly's effectiveness. Also,
in an effort to
increase transparency, the USG could work with our OECD
partners in a
determined effort to get Gulf States like Kuwait to abide by
the OECD's
anti-bribery conventions.

Reducing the Role of Government in the Economy



(Supports MEPI Goals of Encouraging Investment and
Facilitating SME Growth.)
Approximately 92 percent of employed Kuwaiti citizens work
for the Kuwaiti government, and approximately 80 percent of
budgeted government revenues are used to pay salaries and
wages. The government dominates nearly every facet of the
economy; public-sector wages and salaries have become a
mechanism to distribute oil wealth.

While many proclaim that privatization is the only solution,
alone will not be sufficient. Before privatization begins,
the USG should
offer technical assistance in developing regulatory systems
and comprehensive,
rigorous competition policy, to ensure that public monopolies
do not simply
become private monopolies. In addition, prior to privatizing
state-owned firms and government services, competition and
investment rules should be written to
encourage domestic and foreign investment. Training programs
to improve
business skills of displaced government workers and new
graduates (both men and
women) will be necessary to ensure that these new entrants
into the private
labor force have the required expertise (cross cuts to the
Education pillar).




5. (SBU) Where Kuwait should be in three to five years:
School curricula emphasize excellence in math and science
skills, focusing on
critical thinking skills and preparation to enter the
(private) workplace. New
private universities expand educational choice and create
competition for
educational services.

6. (SBU) Strategies to get there:

The issue of educational reform is highly politicized in
Kuwait. Islamists
have in the past (falsely) accused the embassy of pushing for
the expurgation
of Quranic texts from school curricula, and a senior Ministry
of Education
official, a noted progressive administrator, has told us that
she fears that
USG program involvement in educational reform would be a
lightning rod for
local criticism. Any MEPI educational initiatives involving
Kuwait must,
therefore, have the lightest USG fingerprint possible if they
are to succeed.
With this caveat in mind, we propose the following strategies:

- Use the International Visitor program to expose Ministry of
officials to curriculum reform/civil society programs in the
US, and build on
these relationships to influence internal reform efforts.
(Post is sending an
MOE official charged with curriculum development on an
upcoming civil society
IV program this fall.)

- Establish summer programs in the US for Kuwaiti middle/high
school students
ages 12-17. Such a program would allow young Kuwaitis an
opportunity to see
themselves and their culture in an international context--an
important goal in
an environment where Islamist teachers and administrators
sometimes impart a
stridently polarized and sectarian worldview to the young.

- Seek GOK involvement in proposed MEPI Arabic book
translation pilot program
for third and fourth grades. (Again, USG profile for this
program would have
to be very low.)

- Communicate to Kuwaiti audiences that countries that adopt
strategies that emphasize critical thinking, foreign
languages and knowledge of
foreign cultures tend to be strong and well-integrated into
the international
economy, while countries that do not tend to be weak and
isolated. Use speaker
programs, op/eds and discussions by embassy officers to
emphasize this point.

--Work with Kuwait University to establish American Studies
courses and
increase American studies course content.

--Explore opportunities to develop cooperative relationships
with Kuwait's new private universities as they begin




7. (SBU) Where Kuwait should be in three to five years:
Women have full
political rights. All citizens have full political rights.
Political parties
allowed to form and participate in the political process.
Kuwait's parliament
becoming a partner in, and not an obstacle to, the country's
political and
economic development. Kuwaitis begin to understand that the
rights of
citizenship also come with significant responsibilities.
NGOs to track
government transparency and accountability begin in operate
in Kuwait.

8. (SBU) Strategies to get there (all support MEPI goals of
democratic processes and promoting the rule of law and
accountable, effective
government institutions):

Women's political rights:


Our overall strategy must be to support indigenous efforts.
It would be
counter-productive to foster public perception that the US
seeks to impose its
own cultural or religious values. We propose a program of
interventions targeting three audiences: women's-rights
advocates themselves,
Kuwaiti society at large, and policy makers.

- Strengthen the capacity of women's advocacy groups through

-- establish a Leadership Development Institute for women in
Kuwaiti womens' rights activists have already been in contact
with NDI on this

-- workshops on developing effective advocacy campaigns.
Kuwaiti womens'
rights activists have expressed interest in mounting an
advocacy campaign to
push for equal benefits for women under Kuwait's child
allowance law;

-- facilitation of contacts and mutual support among Arab and
Muslim women from
many countries.

- Help Kuwaiti women transcend their social and political
differences through a
gender-budgeting analysis (funding requested per ref B) to
highlight issues of
common concern, such as unequal treatment of female-headed
households, gender
imbalance in health, education and family-related services.

- Raise public consciousness of the impact on society of the
degree of female
empowerment, through guest speakers, publications,
round-tables, media events.

- Dialogue with policy makers: senior USG officials should
convey consistently
that gender equality is both politically important to us and
highly beneficial
to society. Decision-makers should be exposed to the same
information used in public consciousness raising.

Political parties:


The impediment to the existence of political parties is
opposition, presumably based on fear that parties would be
harder to control.
The result is that the most organized groups in the National
Assembly are the
Islamists, who share a defined ideology and agenda (though
even they are
divided into at least four distinct groups in the Assembly).
We propose a
strategy of policy dialogue and public awareness-raising,
featuring consistent
affirmations of the right of association, and examination of
the impact the
prohibition on political parties is having on the character
and quality of the
National Assembly.



Kuwait's National Assembly is the oldest national democratic
institution in any
of the Arab Gulf states. As such, it is a source of national
pride and a
factor in the stability of the country. Yet the institution
shows very mixed
quality -- not surprising, as some of its members can be
elected with less than
a thousand votes. We propose to offer access to
capacity-building courses for
members and staffers. Key areas of interest include budget
analysis; effective
oversight; and research skills/resources, so that on a given
issue the Assembly
can draw on best practices and lessons learned from around
the world.

Civil-society monitoring of government:


We propose to strengthen the ability of existing NGOs to act
as responsible
"watchdogs," by offering training workshops and facilitating
contact with reputable similar organizations abroad. We also
propose that the
US policy dialogue with the GOK encourage openness to
responsible civil-society
watchdog groups. The following themes suggest themselves:
transparency and
accountability are fundamental to the long-term health of
government and the
stability of society; all governments are subject to outside
scrutiny in
today's inter-connected world; Kuwait's international
reputation is best
protected by openness and responsiveness.