SCENESETTER FOR JANUARY 7 VISIT OF CODEL MCCONNELL

C O N F I D E N T I A L KUWAIT 000004

SIPDIS

NEA/ARP, NEA/RA

E.O. 12958: DECL: 12/30/2019
TAGS: PREL PGOV PTER PHUM ECON KU
SUBJECT: SCENESETTER FOR JANUARY 7 VISIT OF CODEL MCCONNELL

REF: STATE 130327

Classified By: Political Counselor Pete O'Donohue for reasons 1.4 b and
d


1. (U) Mission Kuwait warmly welcomes the January 7 visit of
CODEL McConnell. Ambassador and country team look forward to
providing the CODEL with a classified briefing on January 7.
Given the brevity of CODEL's stay in Kuwait, no meetings with
GOK officials have been arranged.


Kuwait Snapshot
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2. (U) Kuwait is a Gulf emirate whose small size (about the
size of New Jersey) and population (approximately 1.1 million
Kuwait citizens and 2.3 million expatriates) belie its
outsize geostrategic importance. Our strong bilateral
relationship is founded upon close security ties that have
endured since the 1991 liberation of Kuwait from Saddam,s
Iraq, and are manifested today in Kuwait serving as a key
military training and logistical support hub. A major
exporter of both capital (over 34 billion USD in outward FDI
over the past five years)QQfy@fVX\Brgest
proven oil resources in the world),Kuwait also punches
above its weight economically. Politically, Kuwait is a
constitutional emirate with a freely-elected parliament
(including four women MPs, all U.S. PhD holders) and is home
to one of the freest medias in the region; many Kuwaitis, and
particularly the Kuwaiti elite, have studied or traveled to
the United States and visa numbers, after a post-9/11 period
of decline, are again on the rise.


U.S. - Kuwait Security Relations
--------------

3. (C) Kuwait's backing of OIF and OEF has come in the formof
both financial support and a very permissive operating
environment. Kuwaiti support for the U.S. military presence
has included, in material terms alone, over USD 1.2 billion
annually in such benefits as free access to bases, waived
port and air support fees, customs waivers, subsidized fuel
and other services. Kuwait also provides the U.S. military
with essentially open access to ten bases, including two air
bases (Ali Al Salem Air Base and Al Mubarak Air Base at
Kuwait City International Airport, five land bases (Camps
Arifjan, Buehring, and Virginia, plus access to a Life
Support Area facility located on Ali Al Salem Air Base --
which serves as the primary ARCENT hub for moving U.S. forces
to CENTCOM forward-deployed bases -- and the joint
U.S./Kuwait Khabari border crossing facility, which
streamlines convoy operations into and out of Iraq),two port
facilities (Kuwait Naval Base and Shuaybah Port),and a
Defense Distribution Depot, a 100 acre warehouse complex
which facilitates, on average, 1.4 million shipments per year
of military equipment. Camp Buehring, notably, serves as a
venue for U.S. Army/Marines "spin-up" training prior to
deployment to Iraq (and, on occasion, Afghanistan) and
serves, as well, as a location where joint exercise training
is conducted involving U.S. and Kuwaiti forces. Kuwait also
provides U.S. forces with access to its 2,250 sq/km Udairi
Range facility, considered one of the world's best venues for
land/air live-fire and combined arms combat training.
Approximately 90,000 U.S. military personnel per year utilize
this facility for live-fire training purposes.



4. (C) At present, over 20,000 U.S. military personnel
(including some 5,000 contractors) are located at bases and
facilities in Kuwait, with the bulk at Camp Arifjan. GOK
support for the presence of these personnel has been
essential to our ability to conduct OIF and has enhanced our
ability to conduct operations in the Afghanistan/Pakistan
theater. In CY 2008 alone, some 1,750,000 U.S. forces
transited through Kuwait, either en route to Iraq or other
deployment locations or back to the U.S., utilizing Kuwaiti
bases and benefitting from Kuwaiti provided fuel and
services. The Embassy-based Office of Military
Cooperation-Kuwait (OMC-K) facilitates training of Kuwaiti
military counterparts and conducts an extensive Foreign
Military Sales (FMS) program. At present, the U.S. has over
125 active FMS cases with Kuwait amounting to over USD 8.1
billion in value. U.S. military operational flexibility in
Kuwait has been largely governed by the favorable terms of a
Defense Cooperation Agreement (DCA) with the GOK signed in
1991 and extended for ten years in 2001; the GOK has
indicated it may want to re-negotiate aspects of the present
agreement when the present agreement concludes in 2011.
Support on Regional Issues
--------------

5. (C) A key Gulf-region ally, Kuwait has been a generally
helpful interlocutor on the Middle East Peace Process and
Iran, and has been increasingly responsive to our concerns on
terrorism. While deeply concerned about perceived Israeli
intransigence on the settlements issue and the status of
Jerusalem, Kuwait has been supportive of the Palestinian
Authority's role as the sole Palestinian interlocutor on the
peace process and has contributed assistance to support the
PA. On Iran, Kuwait is worried about Iran,s nuclear
intentions, but equally fears that any attack on Iranian
nuclear facilities would have disastrous consequences for
Kuwait, Iran's close neighbor. Kuwait, therefore, regularly
urges caution and dialogue on the nuclear issue, while
publicly and privately urging Iran to work with the
international community and abide by IAEA safeguards.


Economic Issues: Oil and Investment
--------------

6. (C) Kuwait has the third largest economy in the GCC,
behind Saudi Arabia and the UAE. It is a major oil producer,
holding from 8-9 percent of the world,s proven oil reserves
and has an economy which is heavily dependent on oil exports
(including considerable exports to the U.S.). On the oil
front, Kuwait plans to invest approximately $80 billion over
the next five years (divided between upstream and downstream)
to raise its oil production capacity from a current 3 million
barrels per day to 4 million barrels per day by 2020. Kuwait
is a major international investor, with its Sovereign Wealth
Fund, the Kuwait Investment Authority managing over $200
billion in assets. Although KIA does not disclose its asset
allocation strategy, it is a major investor in the U.S. (as
are Kuwaiti private sector investors); KIA has in the past
been willing to step in to invest in major but potentially
troubled financial services companies as a means of helping
restore confidence in and maintain international financial
equilibrium. With the exception of Dow Chemical and
CitiGroup, there is little U.S. direct investment in Kuwait,
in part as a result of the fact that the oil sector is closed
to direct foreign investment by constitutional writ, and in
part because Kuwait,s markets and tendering processes are
less than fully transparent.



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For more reporting from Embassy Kuwait, visit:
visit Kuwait's Classified Website at:

http://www.intelink.sgov.gov/wiki/Portal:Kuwa it
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JONES