KUWAIT AND THE UNITED STATES: AN AGENDA FOR FUTURE

1. (C) Kuwait and the United States have been full partners
in the defense of Kuwait since the 1990-91 Gulf War.
Beginning with the liberation of Kuwait, the fruits of this
partnership have included the decade long successful
containment of Saddam Hussein's quest for weapons of mass
destruction and regional domination, the modernization and
restructuring of Kuwait's armed forces and most recently the
liberation of Iraq from Saddam's tyranny. Long-standing
cooperation in several other areas has also served our mutual
interests. For example, US firms played an active role in
extinguishing Kuwait's oil fires after the war and rebuilding
key components of the country's infrastructure. Kuwait has
chosen American partners for major investments in its nascent
petrochemical industry and American firms are now favorably
positioned to compete for the Project Kuwait contract to
develop and operate Kuwait's northern oil fields. American
and Kuwaiti experts have also worked closely on nuclear
non-proliferation and other important security issues. For
example, Kuwait has been a willing partner in the global war
on terrorism, offering extensive use of its facilities during
Operation Enduring Freedom and taking steps to prevent the
diversion of funds from legitimate purposes to the financing
of terrorism.



2. (C) Notwithstanding the productive cooperation we have
enjoyed in so many areas, there have been some notable
exceptions. For example, Kuwait has so far failed to live up
to commitments by its Amir to extend suffrage to women and to
award a major commercial power project to an American firm.
There has been little, if any, progress on political,
economic or educational reform. A two-year old investment
law remains unimplemented due to the GOK's failure to draft
implementing regulations. Kuwait remains a poor performer,
even by regional standards, on the protection of intellectual
property rights and the rights of foreign workers. Kuwait
has also not been sufficiently forthright in its support of
efforts to find a just solution to the Israeli-Palestinian
dispute, an issue of professed importance to it. It has not
yet ratified all of the major international conventions
against terrorism, most notably the convention on the
suppression of terrorist finance.



3. (C) With the defeat of Saddam Hussein's regime, our
overall relations with Kuwait are probably as good now as
they've ever been since the immediate aftermath of
liberation. However, potential future problems are already
surfacing. The occasion of the inauguration of a new
National Assembly and a new Council of Ministers in Kuwait,
including a "new" Prime Minister, provides an excellent
opportunity to review the current state of relations and to
consider our most pressing priorities for the future as well
as how best to accomplish them. Paragraphs 10 - 15 contain
our key recommendations.



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The State of Relations


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4. (C) Political Issues: Notwithstanding our stunning
victory over Saddam's forces on the battlefield, the
bilateral relationship is currently burdened by a widely held
perception among Kuwaitis that the USG has not properly
acknowledged Kuwait's indispensable role in the liberation of
Iraq. This sentiment was fueled by the last-minute
cancellation of President Bush's planned visit, and the fact
that primary Iraq reconstruction contracts have been given
only to US contractors. The GOK is already fretting about
our ability to stay the course in Iraq while some private
Kuwaitis gripe at perceived slights such as lack of adequate
(in their eyes) support for TF Hope, the Kuwaiti task force
hunting for Kuwaitis missing in Iraq from the Gulf War. UN
Compensation Commission issues also bear close scrutiny as
potentially huge negatives. There is little understanding
here of the positive role the US played in the negotiation of
UNSC 1483 to preserve
contributions to the UN Compensation Fund. Over time,
continued US requests for GOK resource contributions for
various projects could also gradually help erode the overall
relationship.



5. (S) Somewhat paradoxically, the removal of the Iraqi
threat may negatively alter our ability to advance important
US objectives such as women's suffrage and the extension of
labor law to domestic servants in the coming year. Prior to
the conflict in Iraq, GOK action on such progressive issues -
issues sometimes vehemently opposed by Islamist and other
sectors of Kuwait's generally conservative society - was
often undertaken simply out of fear that inaction would
damage the U.S./Kuwaiti relationship. In other words,
regardless of the merits of the arguments or positions
advocated by the USG, they
were often sold - if tacitly - to the Kuwaiti public as
necessary for maintaining the special strategic/security
relationship with its ultimate security guarantor, the United
States. With the backdrop of this security threat removed,
the GOK will likely meet with less success on divisive issues
such as women's suffrage or the extension of labor rights
(even if it chooses to push them) until a stronger domestic
constituency for these issues arises. In addition, the
election of a National Assembly where so-called Independents
have the potential to provide swing votes on many issues may
prove a further obstacle to the successful passage of
progressive reform, particularly if a cohesive Islamist
opposition emerges. As evidenced by the furor over the
former Minister of Education's comments vis-a-vis education
reform, Islamist demagogues are more than ready to try to tar
any initiative that can be deemed un-Islamic and/or is
associated with the West as being raised solely due to U.S.
"interference" in domestic political matters. It is
difficult to exaggerate the level of sensitivity to any
perceived imposition of Western culture. US initiatives in
key areas of women's suffrage, reform of education and
extension of labor law to domestics will inevitably put us at
cross purposes with some GOK constituencies.



6. (S/NOFORN) Military Cooperation Issues: Although
military-military cooperation remains generally excellent,
there are already some signs of deterioration in this area as
well. The GOK recently informed us that it has decided to
cancel its participation in Exercise Lucky Sentinel, the only
bilateral joint and combined exercise on the books.
(This decision seems to be budget driven and possibly subject
to change.) They are also pushing back on Burden Sharing
support under the bilateral Defense Cooperation Agreement for
our planned long-term deployment of an augmented Brigade
Combat Team (15,000 US troops) and dragging their feet on
Camp Arifjan upgrades (which could delay our planned early
2005 departure from Camp Doha) and on previous commitments to
upgrades at Al Jaber and Al Salem Airbases. Meanwhile,
delays in the search for POW's, continued high throughput of
USG officials and Iraqis without proper documentation (visas)
on short notice are a potential political irritant that might
eventually impact on mil-mil relations. On the other hand, a
bright spot is that the Minister of Defense and the Chief of
Staff are known quantities with whom we've worked well.



7. (S/NOFORN) Counter-Terrorism/Security Issues: The USG has
enjoyed excellent cooperation from the various Kuwaiti
government organs involved in counter terrorism and security
issues since the terrorist attacks of September 11,
culminating in a number of new cooperative initiatives during
the war in Iraq. Many of these initiatives, aimed at
countering potential Iraqi threats, were worked at a vigorous
pace before and during the war, leading to extreme fatigue on
the part of Kuwaiti services. The Kuwaiti State Security
(KSS) Service, overworked during the war, will no doubt slow
its pace somewhat as it focuses on its move to a new
headquarters this fall. Most KSS officers of senior rank are
planning long vacations beginning in late July or August
2003, returning to work just prior to the move in October.
The KSS still has an interim director and many officers are
suffering from chronically poor morale as a result of public
criticism (fueled by allegations of abuse from extremists
arrested or questioned by KSS) and their perceived lack of
adequate compensation. All of the above issues will likely
contribute to an anticipated slowing in joint
counter-terrorism efforts in the near term. Moreover,
leadership on this front, which should come from the Minister
of Interior, remains a question mark, as we have relatively
little experience with the newly named minister.
Nonetheless, physical security provided by the Ministry of
Interior should remain fully adequate and we expect no
diminution in this regard. Kuwaiti support is also expected
to remain strong on military security issues. The
well-respected director of the Kuwaiti military intelligence
(KMI) service, Brigadier General Khalid al-Jarrah al-Sabah,
has been informally named the new J-2 for the Ministry of
Defense, insuring a proactive senior interlocutor in military
security issues for the foreseeable future. On the political
level, the continued detention of 12 Kuwait at GTMO could
become an irritant as the detainees' families and their
sympathizers periodically stir the pot.



8. (C) Commercial Issues: Commercial relations are a
relatively bright spot in bilateral relations. We've won
several contracts for American companies recently and US
firms are well positioned to be big players in the
development of Kuwait's northern oil fields. However, the
terms offered thus far are not at all attractive. The status
of the Amir's commitment on the Al Zour North power project
also remains elusive. (The Ambassador recently transmitted
Secretary of Commerce Evan's letter to the Prime Minister

SIPDIS
asking for reaffirmation of this commitment - by "employing
US firms to supply equipment and services necessary for the
development of this power project.") Such advocacy demands
will continue, potentially alienating domestic constituencies
already disappointed by the alleged lack of success thus far
of Kuwaiti companies in securing contracts on Iraq
reconstruction programs. An upside, however, could be
growing cooperation between US and Kuwaiti firms to exploit
commercial opportunities in Iraq.



9. (C) Economic Reform Issues: Cooperation on economic
policy issues remains perhaps the most disappointing area of
our bilateral relationship. Without significant further
progress on the protection of intellectual property rights
this year, Kuwait should be put on the Special 301 Priority
Watch List. GOK tax policy and offset requirements as well
as the GOK's failure to conform to its WTO obligations are
also potentially serious negatives. In developing our
program to address these and other economic issues with
Kuwait, we will emphasize the win-win aspects of market-based
reform. Rather than emphasize the IPR revenue that U.S.
exporters lose to counterfeiters of software and
entertainment products, for example, we will quantify the
costs to Kuwait's importers, distributors and its nascent IPR
industry. Rather than dwell on past stumbles in our
bilateral efforts toward economic and regulatory reform, we
will attempt to tie progressive GOK actions to beneficial
regional or multilateral steps at the WTO and elsewhere. The
same strategy will be applied to the issue of the inequity in
Kuwait's treatment of foreign workers, by
highlighting the increased productivity that enlightened
labor law produces over time.



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Achieving the Bilateral Agenda


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10. (C) It is an axiom of international diplomacy that a
downturn in bilateral relations follows any great effort in a
common cause. In the case of Kuwait, the GOK leadership and
the majority of the country's elites have stood steadfastly
with the US against Iraq at some cost to their relations with
their Muslim/Arab neighbors. While they had very good
reasons for doing so--Kuwaitis needed no reminder of the
existential threat they faced from Saddam--it must be said
that their support for us during OIF exceeded our
expectations. Now that that threat has been removed we must
show our friends here that the US continues to value its
friendship and commitment to Kuwait, and that we do not view
the country merely as a cash cow for international
commitments or as a parking lot for regional military forces.
While Kuwait continues to be a moderate and relatively (by
Arab world standards) progressive society, even Desert Storm
and OIF did not completely inoculate it against the wider
political currents sweeping the Muslim world. Lacking
personal experience with liberation, younger Kuwaitis are
particularly vulnerable to these contagions. Our strategies
to effect the changes enumerated above should be conducted in
a manner that supports reform without allowing our opponents
to convince the average Kuwaiti
that we are wantonly interfering in domestic affairs. We
must therefore be prepared to articulate clearly the reasons
behind our requests, why we feel we have a stake in the
issues and how our proposals will benefit Kuwait as well as
the US. These are sometimes difficult tasks to accomplish;
we will then need Washington's active support to succeed.
Our key recommendations are given below.



11. (C) Political Issues:

-- Increased visits by high-level USG officials (including
the Secretary, and hopefully, the President) this fall would
do much to reverse the ongoing erosion in relations due to
local concerns that Kuwait's contributions to OIF have not
been sufficiently recognized by the USG. Such visits would
also help to bolster Shaykh Sabah at an early stage of his
tenure as Prime Minister and could energize him to act on
issues of importance to us sooner than otherwise.

-- If visits to Kuwait are not feasible for the
Secretary/President, an invitation for Shaykh Sabah to visit

SIPDIS
Washington in the fall would be well received, although it
would not have the same domestic resonance in Kuwait as a
visit here.

-- With regard to specific issues, our highest priorities are
women's suffrage, educational reform and trafficking in
persons, primarily a labor reform issue here. All lie in the
sensitive socio/religious field. They will be our toughest
nuts to crack. Given the political environment, our work on
such issues must be persistent but low-key.
-- Substantive embassy sections are coordinating closely with
one another to target post's MEPI proposals effectively and
accurately to build domestic constituencies in favor of
reform. Specific suggestions include an increase in
exchanges between influential Kuwaitis and U.S. NGO's
focusing on advancing the role of women in political life.

-- Facilitation of contacts between the National Assembly and
the US Congress could also be beneficial. We need to work
harder to arrange visits to Washington by key
parliamentarians and to exploit the temporary surge in
CODEL's passing through Kuwait to set up meetings with
important counterparts in the National Assembly as well as
with GOK officials.



12. (S/NOFORN) Military Cooperation:

-- While we should not rule out active participation in
coalition activities outside Kuwait's borders, the true
military value of this partnership lies in Kuwait's strategic
location and readiness to provide a base of operations.
Although Kuwait is currently resisting increasing levels of
requested burden sharing support, this probably reflects
fiscal realities and a perception of the elimination of their
principal threat more than anything else. We should have
little real difficulty maintaining a significant US military
presence (primarily land forces) while focusing our
engagement with the Kuwaitis on bilateral exercises, training
and military sales targeted to give needed capabilities.

-- A robust slate of engagement activities is critical to
honing KAF capabilities, maintaining personal relationships
with key military and GOK leaders, and providing a stable
foundation for continued activities in Iraq, as well as for
any potential future requirements in the GWOT. Planned
enhancements to Camp Arifjan, to which we should move the
bulk of our forces in early 2005, and upgrades to the two
airbases will support this and should be pushed.

-- The US must also make every attempt to ensure
interoperability of Kuwait's military with our own and their
willingness to employ it if needed. Continuance of a full
slate of bilateral exercises will help ensure this and must
be stressed continuously. Such continued engagement
activities should stress the global terrorist nature of the
threat (ala Saudi 12 May 03 attacks) and the capabilities
Kuwait needs to defend against similar threats.

-- Several bilateral activities this fall and/or early 2004
could serve all these goals: a meeting of the bilateral
Defense Review Group followed by a visit of the Minister of
Defense to the US, during which a meeting of the Joint
Military Commission could take place for the first time since


1999.



13. (S/NOFORN) Counter-Terrorism/Security:

-- As threats related to Iraq continue to diminish we will be
able to focus even greater attention on foreign and domestic
Sunni extremists such as al-Qa'ida members and sympathizers,
as well as Iranian sponsored threats and local Hizbullah
elements. This will mean turning even more attention to
potential threats from Kuwaiti citizens-a very sensitive
political issue for KSS, KMI and the Ministry of Interior.
It will surely take time and considerable patient effort to
re-energize the Kuwaiti security forces and focus them on
working jointly on our perceived priority threats.

-- Continued high level visits from ORCA HQ and invitations
to the Minister of Interior to visit there will be crucial in
nurturing these efforts. We May also wish to consider visits
by senior FBI and Department of Justice Officials, as well as
by State's
Coordinator for Counter-terrorism and the Assistant Secretary
for Diplomatic Security, perhaps in conjunction with any
future visits to Iraq.



14. (C) Commercial:

-- We will continue to pursue advocacy requests
energetically, including through written appeals from senior
Administration officials on high-value cases, such as Project
Kuwait and the al-Zour North power plant. However, we should
recognize the limitations of such approaches.

-- To adequately exploit the many commercial opportunities
likely to be available in Kuwait in the coming two years,
full staffing of the embassy's FCS section will be essential.
We also encourage Washington to reconsider our previous
proposal for the establishment of a trade and investment
promotion office in Kuwait.

-- This will help to get the GOK and Kuwaiti private sector
more actively engaged on Iraqi reconstruction. Mobilizing
private investment and job creation is much more important
than any concessional assistance we can possibly wring out of
the GOK.


15. (C) Economic Reform:

-- Based on our consultations with industry representatives,
relevant USG agencies and WTO guidelines, we will engage the
GOK with specific proposals to achieve reform of all major
IPR areas, including amendments to its copyright law and
improved inter-ministerial cooperation on enforcement. We
will promote industry-designed seminars and training programs
on combating piracy. We will work with EB's IPR office to
adapt to Kuwait's environment an enforcement model that USTR
has recommended for Poland.

-- On economic and regulatory reform issues, we will lay the
groundwork by encouraging Kuwait's return to long-suspended
negotiations on a Double-Taxation Treaty. A Bilateral
Investment Treaty and a Trade and Investment Framework
Agreement may also be potentially
negotiable. USTR is preparing summaries of USG's earlier
positions on a BIT and Double-Taxation Treaty. The GOK
meanwhile is documenting its earlier positions and
formulating an initial offer.

-- On terrorist finance, in the short term, we will encourage
the Ministry of Finance and the Central Bank of Kuwait to
nominate officers for U.S. Department of the Treasury
Anti-Terrorist Financing and Money-Laundering Courses. We
will also work with the GOK to
prepare a base-line study of GOK actions on freeze requests
up until this time.
JONES