Kuwait and West share interests far beyond free navigation in Gulf. Oil-rich state invests billions in foreign economies
London — There are far greater stakes involved in United States and Western support for Kuwait than just the protection of shipping in the Persian Gulf. In recent years, there has been a growing interdependence between free-world economies and both Kuwait's sophisticated oil-resource development and the worldwide investments made with its oil wealth.
With more than 100 billion barrels of proven crude-oil reserves, Kuwait ranks behind only Saudi Arabia and the Soviet Union as a source of the world's oil. According to Kuwait's oil minister, at the current rate of output (about 1.3 million barrels a day), the country's oil resources will last another 200 years.
Even with the world slump in oil prices (which cut in half Kuwait's per capita gross domestic product from $20,000 in 1980 to about $10,000 in 1986) and the country's current budget deficits, its reserve funds of more than $80 billion continue to grow.
Kuwait's funds are invested mainly in the US and other free-world countries, and in many large industrial, real estate, and agricultural ventures around the world. They are involved, for example, in the Indonesian and Chinese oil industries, and in Kiawah, a Kuwaiti-owned, resort-island development off the South Carolina coast of the US.
One of the US Treasury's best-kept secrets is the exact amount, measured in billions of US dollars, that Kuwait and its allies in the six-nation Gulf Cooperation Council invest each year in Treasury notes, bonds, bills, and certificates. This investment has long helped to support the US balance of payments, and now keeps the US budget deficit from growing even larger.
In 1980, at the height of the oil boom, Kuwait bought the US Santa Fe Oil Corporation, and the firm's refined oil products are now expanding into world markets.
Unlike many other major world oil producers, Kuwait refines much of its oil and sells the products (such as gasoline, jet fuel, lubricating oil, and liquified natural gas) through its own operations. In 1986, the Kuwait Petroleum Company bought a network of gasoline service stations in Britain, making it the seventh European country with KPC outlets. Refined oil products distributed through the KPC system now amount to one-fourth of Kuwait's total production quota within the Organization of Petroleum Exporting Countries.
In March 1987, Kuwait completed purchase of British Petroleum operations in Denmark. An improvement of Kuwaiti oil storage and loading facilities in Rotterdam will soon make these competitive with the Soviet Union's capitalist-style oil marketing operations in the Netherlands and Belgium, according to London oil traders.
After Kuwait won full independence from Britain in 1961, and its present ally Iraq was threatening to annex the tiny Gulf state, the US began competing with France and the Soviet Union to become a main arms supplier to Kuwait. US arms shipments began in the mid-1960s.
Since then, government and private sales of US military equipment to Kuwait have totalled nearly $4 billion, including Hawk and improved Hawk antiaircraft missiles (of the sort sold surreptitiously to Iran in the US-Iran arms deals), A-4 Skyhawk combat planes, 155 mm artillery, TOW antitank missiles, armored vehicles, and communications equipment.
In 1984, the US Congress rejected a Reagan administration offer to sell shoulder-fired antiaircraft Stinger missiles to Kuwait. US supporters of Israel managed to block the sale, protesting that the missiles could fall into Palestinian hands.
Kuwait reacted by concluding an arms accord with Moscow, involving more sensitive equipment than the Soviets had supplied previously. This included surface-to-surface and surface-to-air missiles, and the loan of technicians.
Since the superpowers already supply Kuwait's defense needs, the country's ruling family feels it is only natural that the superpowers would help protect Kuwaiti shipping under attack in the international waters of the Gulf. Remarks such as that of newspaper columnist William Safire that Kuwait was ``jerking the US around'' in the tanker-flagging operation are resented in Kuwait.
``We are not interested in playing the big powers off against each other,'' Oil Minister Sheikh Ali Khalifa Sabah said in a recent interview in Kuwait. ``Our intentions are very simple - getting our oil to the free market.''
``As more attacks took place against our tankers in international waters ... we tried to secure a safer flow of oil through contacts with any country which could help ... If the US Congress should decide against reflagging the tankers, that is an American decision and it is perfectly all right with us.''
Western diplomats and businessmen in the Gulf area appear to feel that the West's common interests with Kuwait are so deep and strong that they would survive any clash between the US and Iran.
Mr. Cooley, the Monitor's former Middle East correspondent, is an ABC staff reporter.