What to do with $38 billion?

[Fairthought]

Kuwait's Budget surplus surges to $38 billion!!

http://www.middle-east-online.com/english/?id=15822

With record oil prices, this is not a surprise. Kuwait's budget was based on a $21/barrel price for oil. Kuwaiti exports have actually averaged $58/barrel. Sitting on 10% of the world's proven oil reserves, This nation of just under 1 million people is no stranger to wealth.

But historically, whenever gulf states find themselves with money to burn (which is often) they choose to spend a big chunk of it on arms purchases.
Given Kuwait's special relationship with the US, we can anticipate Kuwait will spend $10 billion or so on American weapons.

What would Kuwait buy?

Predictions, anyone?

[Lavi]

It's a quite interesting question. Usually when Gulf States goes arms shopping they buy only the very best available, and with unrest next door and 'nuke rattling' over the Gulf I think your rigth in assuming they will buy something nice.

Armour is always popular in the desert, best guess Abrams, Bradleys or Leclercs. Self-propelled artillery might also be considered. However, to counter the armour of the enemy, Longbows might also be an option, and to counter the enemy choppers fighter planes are always nice, F-16's of some very late block would be a good guess I think.

I don't think the navy will get that much, perhaps a patrol craft or two, or maybe a small missile corvette?

Other guesses? (I know, I went quite a bit over budget... :D )

[Fairthought]

With a $38 billion surplus, and $100 billion slush fund to boot, I don't think you can go over budget.

[IDonT]

How about invest it to diversify your economy for the day oil runs dry. Most of these oil rich countries will be in trouble when their oil is gone.

[FuManChu]

How about invest it to diversify your economy for the day oil runs dry. Most of these oil rich countries will be in trouble when their oil is gone.

Well said. Kuwait should re-invest their windfall, not blow it on something that they may well not need anyway. Perhaps invest a little in AAW platforms.

[adeptitus]

Prior to the first Gulf War, the Kuwaitis were known as "the Arabs who knew how to make money", versus the Saudis were known as "the Arabs who only knew how to spend money". Kuwaitis back then had a rep for being financially savvy and made many good investments, so that the government budget was not as heavily dependent on petro as Saudis.

$38 billion sounds like a lot, but money is hard to make and easy to spend. If I were the Kuwatis, I'd prolly invest it and have Uncle Sam provide security for me. =/

[crazyinsane105]

Prior to the first Gulf War, the Kuwaitis were known as "the Arabs who knew how to make money", versus the Saudis were known as "the Arabs who only knew how to spend money". Kuwaitis back then had a rep for being financially savvy and made many good investments, so that the government budget was not as heavily dependent on petro as Saudis.

$38 billion sounds like a lot, but money is hard to make and easy to spend. If I were the Kuwatis, I'd prolly invest it and have Uncle Sam provide security for me. =/

There are quite a few problems of having Uncle Sam providing security for your country. The Kuwaitis would be better off like the Saudis if they started to buy from the Europeans or even the Russians or the Chinese.

[f2000]

yeah they buy plz-45 howitzer from china after plz-45 win against us and european competitor.they get cheaper stuff.gud decision by kuwaitis.
maybe they think after gulf war 1 how easily iraqis beat them

[Baibar of Jalat]

Prior to the first Gulf War, the Kuwaitis were known as "the Arabs who knew how to make money", versus the Saudis were known as "the Arabs who only knew how to spend money". Kuwaitis back then had a rep for being financially savvy and made many good investments, so that the government budget was not as heavily dependent on petro as Saudis

The recent oil boom has led to a greater emphasis on diversifying their economies. The oil price crash of 1998 is still fresh in their minds of the GCC countries. A large number of economist have seen that most of the money has been spent in longer term projects such as banking, tourism and aquiring other important assets.

More investment is been going into countries such as the far east esp china. lesser money is being invested in mature markets of the United States and Europe. BUT diversfying from the complete dependence on oil willm prob take at least 30 years, even then oil would be still important for economy.

I wonder if the attempted blocking of the aquisation of US ports by the Dubai company, (which is unlikely but we have to see). Could cause the UAE and other Mid east to diversy arms esp UAE who has an order of around 80 f -16s worth billions and other large deals. We have wait and see again.

I am wondering do the majority of Armericans oppose this deal?. Out of this controversy the US public have found out the Chinese operate some important companies. Its ringing alarm bells in the US
But seriously i am wondeing how will this percieved Anti Arab and Muslim feeling gonna effect US relations with mid east.

[adeptitus]

I am wondering do the majority of Armericans oppose this deal?. Out of this controversy the US public have found out the Chinese operate some important companies. Its ringing alarm bells in the US
But seriously i am wondeing how will this percieved Anti Arab and Muslim feeling gonna effect US relations with mid east.

Here's an article with some numbers:
http://racerelations.about.com/b/a/246047.htm

Since the pending deal was announced, bi-partisan criticism has grown louder and stronger. (Also see Liberal US Politics Guide Deborah White's blog - "Bipartisan Howls as White House Quietly Outsources US Port Operations to United Arab Emirates.") And a majority of the American public is significantly opposed. For example, a WSJ Poll asked, ”Should the US allow a Dubai company to manage American ports?” The responses as tallied on Tuesday evening broke down as follows: 66% No - 34% Yes.

Those opposed to the deal cite a threat to national security. They argue that the UAE was a finance center for the 9/11 terror attacks, and therefore cannot be trusted to secure U.S. ports.

[Gollevainen]

Well To my knowlidge, Kuwait is heading towards Finnish AMV wheeled IFV, wich is in my obinion, an exelent choice...inspite the cartoon-fuzz and the fact that we were a scandinavic nation...

[DPRKUnderground]

Kuwait will Submarines just in case Iran wants to do something funny. They have enough for at least 3! They should also buy the Al-Khalid, good for the desert.

[Fairthought]

The Kuwaiti $100 Billion slush fund I mentioned was set up to prepare Kuwait's economy for a post-oil exporting era. It's called the 'Future Generations Fund'. A portion of the $38 billion surplus will probably go into that, but it's not necessary as the fund already gets annual fiscal payments.

The Kuwaitis' have VERY little military manpower. Most people who live there are ineligible as they are foreign workers. The few soldiers they do have are recruited/conscripted from spoiled-rotten citizenry and are drawn to hotshot military roles such as special forces and fighter jet pilots. Ordinary infantry jobs are extremely unattractive.

[adeptitus]

According to the CIA world factbook, Kuwait has 18,743 men reaching military age annually, and 737,292 men fit for military service between ages 15-49.

Prior to the first Gulf War, Kuwait had an army of about 16,000 men. After Gulf War I they were only about to reconstitute a force of about 8,000. Here's a description of the state of Kuwati army:

http://www.country-data.com/cgi-bin/query/r-7616.html
Unlike other Persian Gulf states, Kuwait has a conscription system that obligates young men to serve for two years beginning at the age of eighteen. Educational deferments are granted, and university graduates serve for only one year. In practice, exemptions are liberally granted, and most young Kuwaitis are able to avoid military duty. Estimates are that only 20 to 30 percent of the prewar military ranks were filled by Kuwaiti nationals. Military and security forces had been purged of Shia personnel during the 1980s. At the outbreak of the gulf war, Palestinians filled many technical positions, supported by thousands of Pakistanis, Indians, and Filipinos in maintenance and logistic functions. Officers on detail from Britain, Pakistan, Egypt, and Jordan provided military expertise. Lower ranks in the army and security forces were occupied predominantly by bidun who had taken reasonably well to military life but were poorly prepared to absorb training in operating and servicing modern equipment. In spite of reports that many bidun fought well against the Iraqis, many were expelled from the army in 1991 for alleged collaboration. Because of their removal and the removal of Palestinians and other non-Kuwaitis, the ranks of the services became seriously depleted. Few Kuwaitis volunteer for military service, and conscription is not regarded as an acceptable option. Under the circumstances, Kuwait will be hard pressed to meet its goal of a postwar armed strength of 30,000. A relaxation of the policy toward bidun was hinted at by the statement of the minister of defense that people of "unspecified nationality" may be retained after screening for loyalty and may even be given Kuwaiti citizenship. With respect to conscription, the minister of defense in July 1991 said that the system was being reviewed to make it more effective.

Seems to me that a war with Iraq, the Kuwaitis shouldn't object to conscriptions too much! Assuming 2 year draft with 80% "fit for service" ratio, that would give them a 30,000 men conscript force, plus professional soliders.

[Baibar of Jalat]

Origionally by Gollevainen
Well To my knowlidge, Kuwait is heading towards Finnish AMV wheeled IFV, wich is in my obinion, an exelent choice...inspite the cartoon-fuzz and the fact that we were a scandinavic nation...

In my opinion it wont be wise because they need to atleast bring a level of standization to their militay unless the IFV is really easy to maintain and it uses auto parts that could be bought commercially.


Origionally by Fairthought
The Kuwaiti $100 Billion slush fund I mentioned was set up to prepare Kuwait's economy for a post-oil exporting era. It's called the 'Future Generations Fund'. A portion of the $38 billion surplus will probably go into that, but it's not necessary as the fund already gets annual fiscal payments.

Heres an article saying how little the US is directly getting Arab money relative to 1970s oil boom. These budget surpluses in the GCC, which kuwait is a member is more likely to stay at home. The reports and websites i have been read shows a general trend amongts Arabs esp Suadis to be mature with their cash, when in comparison to the seventies they largely spent it on short term projects.

one report i read a while back from fanacial times most oil money has not been spent yet. As i stated above we have to wait and see if their divrsification is successful.

http://www.nytimes.com/2006/02/25/business/worldbusiness/25invest.html?ex=1141534800&en=f2888fdb6963ddcc&ei=5070

[Indianfighter]

Kuwait is being braced by the US, for a possible future war against Iran, which is Shiite.
Shiites and Sunni Arabs have political differences and hence maintain military readiness against each other.

It is likely that with a possible future war against Iran, and with Iraq now being managed by Shiites, Kuwait is trying to modernize its armed forces.

It may have ben urged by the US to do so, as it might have been conveyed to them that US may not come to their defence repeatedly. Also that USA's forces are stretched in Iraq and Afghanistan may result in the US not being able to spare much military resources to defend Kuwait in the event of a war.

[Red not Dead]

How about invest it to diversify your economy for the day oil runs dry. Most of these oil rich countries will be in trouble when their oil is gone.

Cough someone's been watching Syriana Cough...Nothing wrong about that one. But how to diversify your economy against the Western Triad and a rising Asia. Conclusion the Arab states are Doomed. Iran being the slight exception.

[FreeAsia2000]

Cough someone's been watching Syriana Cough...Nothing wrong about that one. But how to diversify your economy against the Western Triad and a rising Asia. Conclusion the Arab states are Doomed. Iran being the slight exception.

Correct.

The Arab states are doomed because of three reasons.

1. They don't have a domestic mandate

2. They don't have world class financial markets, although this is
improving

3. They don't have an industrial base.