* When Shaikh Salim died in 1921, he was succeeded by his nephew Shaikh Ahmad.

* Sheikh Ahmad’s rule was dominated by 2 important events :

1- economic (the discovery of oil) 2- political (the Majlis Movement)

 1-The economic Base: the Discovery of oil

* Shaikh Ahmad 1st faced an economic recession
(brought on in part by lingering dispute with Saudi Arabia)
that finally prompted a Saudi embargo against Kuwaiti goods from 1923 - 1937.

 2-The Political Base:

The Majlis Movement 1938

* Following Salim’s death, the leading merchants established a twelve-men council that =
petitioned the ruling family to include the merchants in the succession decision.

* The council succeeded in eliciting from (Shaikh Ahmad) a promise to ongoing consultation

* * In part, the council was delayed response by the merchants

to the increasingly authoritarian government established by (shaikh Mubarak)

 Oil revenues & Merchants 1930s

* With the very first trickle of oil revenues, the political relationships at the top began to
change

* Unlike taxes, Oil revenues did not go through the pearl merchants on their way to Shaikh
Ahmad (but went directly from the oil companies to the ruler)

** These revenues were threatening to displace the customs & other taxes paid by merchants
(as the leading state revenues)
* When oil arrived, Kuwait was in the midst of an economic crisis, prompted by:
1- the decline of the pearling industry (by Great Depression)
2- the conflicts with Saudi Arabia (whose trade embargo had cut severely into the trader’s
overland profits)

* The merchants feared they would not enjoy the same control over oil revenue
(that they had from the revenues generated by pearling & trade)

* Following the granting of the initial concession in 1934, merchants tried to climb back into
the loop = arguing that (the oil revenues should be considered state funds)

Revenues:
1- should go to the same body, on which the merchants would be represented
2- should be earmarked for development (leath + education + infrastructure)

2-The Majlis Movement = The movement itself arose in 1938

* The merchants began to organize politically, 1st within the institutions they dominated:
1- the new education Council 2- the Kuwait Municipality
* Early 1938, merchants = demanding reforms
(a greater say in succession + public policy + expansion of social services …)

* In June 1938, the merchants:

1- held an election & chose from among their ranks (a Legislative Assembly)
= to protest & implement new reforms
2- Organized Kuwait’s 1st political party (the National Bloc)

* Outside their new institutions the merchants sought allies in the ruling family.
= they found 1 in the person of (Shaikh Abdullah al-Salim)

* In July the assembly prepared a basic law that asserted the assembly’s
intention and its right to pass a legislation in the areas of:
(security + finance + social policy + foreign policy)

** If the ruler was displeased with some of these reforms, he was still less happy with new
laws = (restricting the expanding power)

 December 1938 = (Shaikh Ahmad) decided the assembly had gone too far.

* When the assembly demanded that it should receive checks from the oil company,
The ruler recognized this as an attempt by the merchants = to reassert their historical
economic power over him.

** In December 1938, he dissolved the assembly.

* The ruler then held elections to a new assembly in 1939

(but when this body refused to ratify the constitution he submitted)= he dissolved this
assembly too.

* The assembly failed for 2 reasons:

1- the opposition was unable to expand its merchants base (into unifying national movement)
2- in its effort to develop new allies, the opposition looked to forces outside Kuwait
= in this effort (threatened Kuwait’s security) = losing more popular support

* Merchants :
- approached (the British political agent in Kuwait) who offered them some tentative support:
1- an underestimation of the movement’s strength
2- to wean the opposition from its ties to (anti-British Iraqi forces)

Britain
* As opposition grew, the British became more concerned that:
(the assembly could eventually mutate into national institution) = Oil-related issues

* By December 1938, Britain had come around to the ruler’s view

that (the assembly had assumed too much power)

= began to turn the merchants into precisely the nationalist force

that (would eventually offer opposition to the British presence)
** the merchants who organized against the ruler in 1938
= (were the leaders of the opposition to Britain’s Palestine policy)

* When British support failed to materialize, the merchants looked to Iraq for support

* Iraq :
1- had its own interest in Kuwait = (arguing that it had inherited the Ottoman claim to the region)
= (this assertion was based on the never-ratified Anglo-Ottoman Convention of 1913
= which declared (Kuwait an autonomous district of the Ottoman Empire)
2- was interested in extending its access to the Gulf
3- In 1938, as the Majlis Movement was growing in Kuwait, the Iraqi foreign minister went before his
parliament (to claim Kuwait as an inseparable part of Iraq)
4- Iraq offered significant (verbal + material) support for the movement
5- Iraqi government encouraged (a newspaper + radio disinformation campaign)
= to encourage Kuwaiti opposition

* Some merchants accepted Iraqi support (in the hope that they could manipulate it to their
own ends)

* This distinction was lost on those Kuwaitis who did not want to be absorbed by Iraq

* Once the movement had been defeated,(the Shaikh) was free to spend his revenues with
little constraint.

 WWII
* WWII came along = The British suspended operations & left Kuwait
* It was only with the end of the war that operations resumed.
* In 1946 the 1st barrel of oil was exported = (the industry developed rapidly)

 Independence: The Establishment of Kuwait as a State

* In 1950, (Shaikh Ahmad) died and was succeeded by his cousin (Shaikh Abdullah)

* His rule witnessed Kuwait’s transformation

from (a poor & dependent British protectorate) to (a wealthy independent state)

* His accession day is celebrated as (Kuwait’s national day)

because of the role he played in bringing Kuwait from (poverty & dependence ) to
(independence & wealth)
* Oil revenues = inaugurating a broad (development program)
 1950s
* In key ways, Kuwait soon became the example these other states would follow.
* Kuwait saw the rapid expansion of new development projects & state spending on
infrastructure (communications, transportation, & state administration)

* The ruler shifted the emphasis toward a broadly based & highly popular program of (social
services) :
1- providing Kuwaitis with (free health care & education)
2- a variety of welfare benefits
3- guaranteed state employment
4- New hospitals & clinics were built + schools
5- The government paid Kuwaitis to go abroad (for treatment or further education)
6- Teachers & health care personnel (were trained or imported) to provide the new services
Hospital + Education + Oil & Britain

* The new oil revenues proved, however, to be a mixed blessing.

1- The Majlis Movement (1930s)
2- Large sums of money went to (inappropriately selected + poorly designed) projects (1950s)

* By the early 1950s the new spending had brought Kuwait to the verge of bankruptcy

* The crisis had its roots in a number of factors, among them:

1- the simple optimism prompted by revenues (so sudden + so large)
2- (Shaikh Abdullah) attributed much of the blame to Britain
+ (the British political representatives) who tried to force their advisers on (Kuwaiti
government)

** Oil = thus prompted an important change in Kuwait’s relationship with Britain

* With the end of War + resumption of oil operations =

Britain now (made a concerted effort to increase its influence in Kuwait)

* What had previously been primarily (a political relationship) took on (a new economic
dimension)
= as (the British Agency) tried to encourage the Kuwaiti government to
(invest its revenues in & through British firms). = Britain succeeded

 Shaikh Abdullah al-Salem = called a halt to all nonessential state spending

* Britain :
1- tried to deepen its political as well as its economic relationship with Kuwait
2- tried to force (Shaikh Abdullah) to take on new British advisers
= aggravating the ruler’s economic problems

** As Britain had been defeated in its efforts to deal with the Shaikh as any but (a de facto
ruler), it had little to gain from maintain Kuwait’s formal dependent status.
= The Stage was set for independence

* On June 19, 1961 = Britain granted Kuwait independence

= replaced (the 1899 agreement) with new letters of friendship

* Kuwait’s early independence from Britain is in some measure

= (due to the ruler’s successful resistance to British administrative pressures)
* Iraqi claim on Kuwait following independence =
forced (Shaikh Abdullah) to turn to (Britain & the Arab League) for military support

 Shaikh Abdullah al-Salim

* (Shaikh Abdullah’s) last accomplishment (following independence)
= was (to introduce more representative institutions to Kuwait)
* 1961:
Immediately on signing the treaty with Britain,
the ruler set up (a Constituent Assembly) = to draft a constitution

* 1962:
(Shaikh Abdullah) named his brother (Shaikh Sabah) = heir apparent

* Following the approval of (the draft document) in November 1962,

elections were held in January 1963 for Kuwait’s 1st (National Assembly)

* (Shaikh Abdullah) died in 1965 & was succeeded by (Shaikh Sabah al-Salim)

 Shaikh Sabah al-Salem (1965 – 1977)

* His rule saw the consolidation of the leadership & other institutions (introduced by Shaikh
Abdullah)

* Kuwait’s 1st foreign minister

* (Shaikh Abdullah) nomination of (Shaikh Sabah) as (heir apparent) in 1962

= had been a that time a surprise choice
= (breaking alternation) in the two sides that had prevailed since the reigns of (Shaikhs Jabir
& Salim)

 Shaikh Sabah al-Salim

1- In his development plans, (Shaikh Sabah) :
benefited from the rising revenues that accompanied the oil price increases of 1973
= allowing him to expand the services introduced by (Shaikh Abdullah)

2- He used the new revenues = to create (a Reserve Fund for Future Generations)

3- Under his leadership, Kuwait also assumed full ownership of (the Kuwait Oil Company)
= increasing Kuwait’s direct control over the source of revenues

 Shaikh Jabir al-Ahmad (1977 – 2006)

* (Shaikh Sabah) did arrange a smooth transition to the rule of his successor his cousin:
(Shaikh Jabir al-Ahmad) : appointed (heir apparent in 1966) + prime minister

* (Shaikh Jabir’s) rule saw a series of crises :

1- (economic problems) associated with the decline in oil prices (in the 1980s)
2- (political problems) associated with the 2nd dissolution of the assembly (in 1986)
3- the Iraqi invasion (of 1990) & its aftermath
Souk Al-Manakh:

“Kuwait's al-Manakh stock market crash in August 1982, which resulted in an outstanding debt of US
$94 billion, subjected banks to high risks and precipitated an economic recession, business failures,
and bankruptcies.”
  The Oil Economy

* One of Kuwait’s 1st attraction to early settlers was its sheltered harbor.

Pearl diving was the 1st Kuwaiti industry to flourish

 Transit trade (19th century)

* Kuwait became a conduit for transit trade between (the Gulf & the Far East +
Europe + Africa)

Important points:

1- The long-term impact was to tie Kuwait to the European economies, primarily
through Britain,
= shifting Kuwait’s own economy from:
its (local & regional orientation) to (an international orientation)

2- From a historical perspective :

the transformation Kuwait experienced was part of a much larger process
that came to tie most of the 3rd World to the 1st World
= to create a distinction between the 2

3- For Kuwait, however, what was important was the particular local effect this
transformation had.

4- In the 19th century:

the British presence began to change the nature of the regional Gulf economy

5- The economic effect of the growing British presence (was not as great on Kuwait as
it was on other states):
a- because the Kuwaitis were particularly successful in locating economic niches of
their own
b- because Britain’s primary interest in Kuwait was still strategic
(its concern lay with protecting its access to India)

 Great Britain & Shaikh Mubarak

* The economic impact of Britain’s presence was felt in Kuwait, (most clearly during
the reign of Mubarak)

* Mubarak’s British alliance =

1- accelerated economic changes already underway
2- turning Kuwait’s economy orientation from (a regional) to (an international) one

* This economic integration into a British & ultimately a world economy =

deepened after the Mubarak period.
 Later, the economy as a whole suffered:
1- WWI caused serious dislocation to Kuwait’s economy.
In order to limit supplies reaching the Ottoman forces,
(the British banned caravan trade at Kuwait).

2- The recession deepened after the war

When (Ibn Saud) demanded 7% transit tax on good crossing Kuwait destined for central
Arabia

3- The Japanese invention of cultured pearls =

 lowered the price of natural pearls dramatically
 Mortally wounding the Gulf pearling industry
 Linked European pearl buyers with Japanese products
WWII(1939 - 1945 ) During the war, Kuwaiti economy again suffered.

* It was only after the end of the war

that oil could assume its leading economic role in Kuwait.

 Multinatinationals & The State:

The History of Oil
* The oil industry in Kuwait has been dominated by one company (Kuwait Oil
Company= KOC) = originally a fifty-fifty join holding of :

(The Anglo-Persian Oil Company = APOC) & ( Gulf Oil )

= the predecessor of British Petroleum = U.S. company

* KOC’s domination of the Kuwaiti market was the result of a long & competitive
negotiating process.

* The History of the oil industry in Kuwait began in 1911

when (APOC) asked the British political resident in the Gulf to approach (Shaikh
Mubarak)
with a request for concession

* In 1913, Britain carried out the 1st geological survey for oil in Kuwait + approached
(Shaikh Mubarak)

* (Shaikh Mubarak) agreed that if oil were found,

he would grant no concessions except to groups approved by the British government

** Britain:
1-By the end of WWI Britain was prepared to try again in Kuwait.
2- had made the decision to convert its navy to oil
3- had purchased a majority ownership in (APOC)
* The company began negotiating with (Shaikh Ahmad) for a concession in his
territory,
= putting forward an offer in 1922.

* However, by then competition had appeared.

* (Frank Holmes)
1- Following the war, New Zealand businessman began canvassing the area for
concessions that his group, (Eastern & General Syndicate), would then resell.

2- approached (Shaikh Ahmad) in 1923, letting him know the terms (EGS)
= had offered (Ibn-Saud) terms that were far better than what (APOC) was offering
(Shaikh Ahmad)

* (Shaikh Ahmad) :
1- rejected the offer from (APOC)
2- requested & received British permission to entertain (Holme’s) proposal

Shaikh Ahmad:
Began talking to both companies = Each offer had its weakness
* Holmes obtained a concession for :
Bahrain + the Saudi-Kuwaiti
Neutral Zone
 EGS
1- In 1926, EGS was stretched to the limit and, for a price, was willing to offer its
interest to APOC.

2- APOC:
a- found the price too high
b- its geologists were not optimistic about the finding oil

3- EGS turned to Gulf Oil :

a- which was anxious to find new sources of oil
b- was optimistic about Bahrain & Kuwait
* Gulf had been unable to get concessions in the area
because the British had already tied up the region (with their exclusive treaties with
the Gulf leaders).

* In 1927, Gulf agreed to purchase EGS interests in the area.

* (Shaikh Ahmad) saw opportunity in this new situation:

1- it meant he could balance his British alliance with that of another powerful state …
2- perhaps get a measure of protection from other states

* In 1932, oil was found in Bahrain.

  APOC + GULF OIL
= decided to cut a deal with each other & in 1933 formed a joint company

* In 1934, (Shaikh Ahmad) signed the 1st Kuwaiti concession with KOC
(giving the company a 75 year exclusive grant to explore for oil in Kuwait)

1938 Burgan field

WWII = Operations were halted

* Kuwait National Petroleum Company (KNPC) = established in 1960 *
Nationalization in 1975

 Oil-Based Development
* Kuwait’s pre-oil industries, notably pearling, were in decline even before oil arrived
= Oil ensured that they would never revive

 KPC + KOC + KNPC

* Kuwait’s oil sector is controlled by the Kuwaiti Petroleum Corporation (KPC),
= established in 1980

* (KPC) : An integrated oil company

*……… is a large international corporation + a rival eighth sister among the leading oil
companies
 The Benefits & the Costs of Oil
* Oil revenues allowed the state to provide a wide range of new services to the
population.
1- the development of infrastructure (new roads + harbor + water system ….)
2- a variety of social services (education) 3- Health care was also provided

a. after WWII the state began taking over what was then a rudimentary health care
system
based on ( a small hospital & clinic) program introduced by the American Mission
of the Dutch Reformed institution.
b. The 1st post-oil development in the health sector
was the construction of the (Amiri Hospital)

c. A comprehensive health care system was developed, marking Kuwait the 1st Gulf
state to introduce a health system that offered free comprehensive service to the
entire population

4- Affordable housing has been a state priority = (State funds)

Other social services also grew = Ministry of Social affair