THE London-based office which controls about $100 billion of the Kuwaiti government's foreign investments holds the financial key to the long-term strategy for rebuilding the ravaged Gulf emirate. British officials and businessmen hope that the Kuwait Investment Office's proximity on their own doorstep will help them obtain a sizable share of short- and long-term reconstruction projects.
Senior KIO executives and members of the Kuwaiti government-in-exile have spent the past few days in London drawing up plans for mobilizing the reserves to help pay for reconstruction.
Early estimates of the cost of reconstruction range from $50 billion to $100 billion. How Kuwait uses what Abdul-Aziz al-Sabah, governor of Kuwait's central bank, has called ``our only financial source,'' will largely determine the speed and success of the rebuilding program.
Ten British companies are already short-listed for Kuwaiti contracts as big business worldwide scrambles to gain a share in rebuilding Kuwait City, putting hundreds of oil wells back on stream, and restoring the country's infrastructure. The British are in tough competition with companies from the United States, France, Turkey, the Netherlands, and Saudi Arabia.
Neil Chapman, a director of Biwater, a British water contractor, says the rebuilding program will consist of two phases.
``There is a need for emergency repair and refurbishment, so that essential services can be restored. After that will come the really big contracts for future rebuilding. Restoring water supplies is a top priority in both phases,'' he says.
Other British companies asked to bid for emergency restoration work include Wimpey, John Laing, Higgs and Hill, and GEC Marconi.
The initial 90-day phase the two-part program is being coordinated by the US Army Corps of Engineers. At first British contractors feared that because of this the US would enjoy an unfair edge in the awarding of short-term contracts, but they are now reported to be more relaxed.
Last week Kuwait's prime minister, Crown Prince Saad al-Abdullah al-Sabah, told British Prime Minister John Major that his government planned to award substantial contracts to British companies. Later British officials hinted that up to 20 percent of long-term contracts could come Britain's way.
Japan and South Korea, both of which played no direct part in the Gulf war, have been told that they can expect few if any contracts to come their way.
The KIO is a highly secretive organization, and the details of its recovery program are hard to uncover. There are doubts too about how Kuwait will pay for the restoration work.
Since Aug. 2 of last year, when Iraq invaded Kuwait, the KIO has been the scene of a tussle between al-Sabah family members who do not want Kuwait's financial reserves to be eroded, and a younger breed of technocrats who favor the selective selling off of assets. There were signs at the weekend that the royal family was winning the day. Jassim al-Khafari, a former finance minister, said: ``I doubt that we will sell many of our assets. It is not a good time for that. We are more likely to borrow, using o ur assets as collateral.''
The City of London - the British capital's financial district - hopes to play a leading role in advising the KIO on its recovery plan and in mobilizing credits to pay for reconstruction.
David Douglas-Home, chairman of Morgan-Grenfell International, this week is leading a team of British financial-service experts to Saudi Arabia and Kuwait.
They plan to propose measures aimed at training more Kuwaitis to occupy senior positions in their country's future financial administration.
A flurry of meetings between top City of London bankers and senior Kuwait officials began last week. One project under discussion is the housing of a British multicompany work force of 600 in a self-contained floating hotel in Kuwait City Bay.
Lord Prior, chairman of GEC, held talks in January with Crown Prince Saad and proposed that the British team should undertake a $1 billion program of reconstruction, including work on electricity, sewage, health care, and oil and gas production.