At 64, Kuwait still faces many of the same challenges
As Kuwait marks its National Day, it continues to grapple with the lingering effects of past crises while confronting new economic, political, and security challenges
YASSER AL-ZAYYAT / AFP
Kuwaiti military helicopters perform during an airshow to mark the country's 63rd Independence Day celebrations in Kuwait City on February 26, 2024.
At 64, Kuwait still faces many of the same challenges
Kuwait celebrates its National Day on the 25th of February every year, coinciding with the anniversary of the accession of the late Abdullah Al-Salim Al-Sabah in 1950. Today marks 64 years since Kuwait ended its protectorate treaty with Britain in 1961.
Kuwait has faced numerous challenges since its early days as an independent country, such as when Iraq’s then-prime minister, Abdul-Karim Qasim, insisted that Kuwait was part of Iraq. In response, Sheikh Abdullah, Kuwait’s ruler at the time, sought protection from Britain and the Arab League.
In 1962, a Constituent Assembly was elected to draft the country’s constitution, which was officially adopted in November of the same year. The first parliamentary elections for the National Assembly were held in early 1963. At that time, Kuwait’s oil revenues were enough to sustain its relatively small population, which stood at just 265,000. The newly elected 50-member National Assembly focused on drafting crucial legislation to address economic and social issues.
Nationalist era
In the early years of constitutional rule in the 1960s, Kuwait witnessed a vibrant nationalist movement influenced by leftist, pan-Arab ideologies like that of Egyptian President Gamal Abdel Nasser. This movement saw itself as an extension of the broader Arab nationalist struggle and remained committed to the Palestinian cause and Palestine’s liberation from Israeli occupation.
Today, Kuwait still faces many of the same political and economic challenges it faced in previous decades
Nationalist representatives elected to the legislature championed economic liberalisation and sought to end foreign dominance over Kuwait's oil industry. They called for the abolition of the concession granted to the Kuwait Oil Company (KOC), which was jointly owned by the American Gulf Oil Corporation and British Petroleum (BP). Oil became the backbone of Kuwait's economy, with state revenues from the petroleum sector financing both operational and capital expenditures.
Post-independence crises
In 1982, Kuwait experienced the Souk Al-Manakh stock market crash, which triggered a severe economic downturn and corporate bankruptcies. In August 1990, Kuwait suffered a devastating invasion by Iraqi forces. The subsequent burning of hundreds of oil wells during the Iraqi retreat collapsed the economy.
Following Kuwait's liberation and the return of its citizens from exile, the country began a recovery process. Civilian and political life resumed, and the government started to address lingering economic issues that had persisted since the Souk Al-Manakh crisis.
Laws were introduced to facilitate debt settlements for stock market investors, and the government injected funds to assist citizens by covering their mortgage and consumer debts. Public sector salaries were also increased, and various economic reforms were proposed. However, the government struggled to effectively implement these reforms despite how important they were to the nation's overall well-being—a fact backed up by numerous studies conducted by local and international experts.
Foreign workers constitute about 70% of the workforce in Kuwait.
Demographic challenges
Today, Kuwait still faces many of the same political and economic challenges it faced in previous decades. The country's population has reached a record high, recently estimated at around 5 million people. Kuwaitis make up only 31% of the total population, while expatriates account for 69%. Among them, Indians represent 20%, and Egyptians 13%.
Recent statistics indicate that 96% of Kuwaitis are under the age of 65, with the working-age population (15–64 years old) constituting 64% of citizens, while children under 15 make up 32%. These demographic realities present significant challenges for policymakers, who worry there won't be enough jobs for this large number of young people.
Most Kuwaitis hold government jobs, with 517,000 people employed in the public sector, of whom 77.5% are Kuwaiti nationals. In contrast, they comprise just 4.1% of the private sector workforce, with around 1.73 million employees.
Economic and political reform
In May 2025, Kuwait's National Assembly was dissolved for a period of four years. Observers hope this will give the government the leeway to implement much-needed economic reforms and push forward stalled projects previously hindered by political interference from MPs.
Kuwaiti MPs arrive to attend a parliamentary session at the National Assembly in Kuwait City on January 25, 2023.
In recent months, the government has successfully introduced financial policy reforms and reviewed numerous spending programmes. However, further revisions are required—particularly in light of the newly announced budget for the 2025-2026 fiscal year, which remains at approximately KWD 24bn ($77bn). Meanwhile, a deficit of around KWD 6bn dinars ($19bn) is projected if oil prices stay within their current range.
Oil revenue constitutes 90% of its national income. Unless oil is priced at $90 per barrel, Kuwait will struggle to balance its budget, which is hugely reliant on this revenue stream to sustain its government spending programmes.
Therefore, economic reform is crucial to safeguarding the country's future. Economic diversification, private sector growth, and cultivating a skilled national workforce should be a priority. But with a democratic parliamentary system that hinders economic reform, it logically follows that political reform is also necessary. Electoral reform is essential to foster a greater sense of responsibility among National Assembly members, who should focus on protecting national interests in the short and long term.
Economic diversification in Kuwait requires a complete educational overhaul, adopting modern technologies, and empowering women. Educational reform is key here, as Kuwait's education system continues to fall short of labour market demands. And education must adapt to global transformations driven by technological advancements and artificial intelligence (AI).
A file picture taken on November 21, 2014 shows Kuwait's largest oil refinery at the Al-Ahmadi complex, about 40 kilometres (25 miles) south of the capital Kuwait City.
Regional challenges
Within the Gulf Cooperation Council (GCC), Kuwait faces challenges related to oil markets and the evolving energy landscape over the coming years and decades. A collective Gulf strategy is needed to maximise the benefits of oil and gas resources while aligning with global objectives on climate change and environmental protection.
Gulf states must also navigate political and security challenges, such as the ongoing dispute with Iran over the Al-Durra gas field and its broader ideological ambitions in the Arab world. Meanwhile, Donald Trump's return to the White House has raised serious concerns, as Gulf states heavily rely on their alliances with the US and the European Union for protection.
In conclusion, Kuwait has set ambitious goals for itself. These can be achieved if its leaders use all available tools and mechanisms at their disposal to see them realised.
