US embassy cable - 03KUWAIT2949

UNCLAS SECTION 01 OF 05 KUWAIT 002949 
 
SIPDIS 
 
STATE FOR NEA/FO, NEA/ARP, NEA/PPD, G/IWI 
 
E.O. 12958: N/A 
TAGS: EAID, ETRD, KPAO, KU, PGOV, PHUM, PREL, SCUL, SOCI 
SUBJECT: (U) MEPI 03-04: COUNTRY STRATEGY FOR KUWAIT 
 
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. 
 
---------------------- 
ECONOMIC REFORM 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  Current barriers to investment (including outdated 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 
assistance 
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 
parliamentarians), 
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, 
privatization 
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). 
 
----------------------- 
EDUCATION REFORM 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 
Education 
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 
educational 
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 
operations. 
----------------------- 
POLITICAL REFORM PILLAR 
----------------------- 
 
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 
strengthening 
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 
concurrent 
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 
Kuwait. 
Kuwaiti womens' rights activists have already been in contact 
with NDI on this 
issue; 
 
-- 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 
substantive 
information used in public consciousness raising. 
 
Political parties: 
------------------ 
 
The impediment to the existence of political parties is 
governmental 
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. 
 
Parliament: 
----------- 
 
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 
institutional 
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. 
 
JONES 
JONES