39. Briefing Memorandum From the Assistant Secretary of State for Near Eastern and South Asian Affairs (Sisco) to Secretary of State Kissinger 1
KUWAIT: Possible Pressure Points
There are only limited ways in which the United States could apply pressure on the Kuwaitis. We have no economic or military assistance programs in Kuwait. Although Kuwait’s economy, perhaps more than any other in the world, is trade oriented and almost totally dependent on the importation of goods and services, the United States’ 12% share of this market—although significant—is not crucial to Kuwait. The industrial items, consumer durables, and small amounts of grains and foodstuffs we sell Kuwait can all be replaced by competing goods from Europe and Japan. The medium-size American community (about 1100) is almost entirely business and oil-oriented. Its departure would not have much of an impact on the economy or the country’s oil operations. (There are only five or six American oilmen in key executive positions.) Therefore, any pressure unilaterally applied by the United States is unlikely to have any effect other than to increase the sense of anger and frustration Kuwaitis feel over our policies in the Middle East.
The ability for the United States to apply an effective pressure is also limited by the fact that Kuwait, because of its small size, great wealth, large Palestinian population, and resultant vulnerability must [Page 191] maintain good relations with all the larger Arab states. It must stay carefully in step within the mainstream of Arab political thinking. Especially in response to unilateral American pressure, it could not afford to pursue policies on pan-Arab or Arab-Israel issues which were independent of the consensus of large Arab states.
The following is a list of possible pressures we might exercise in the economic, military and political fields:
Economic
A. Terminate All Ongoing Reimbursable Technical Assistance (Federal Highway Administration, National Bureau of Standards)
Means of Implementation: Withdraw existing personnel.
Kuwaiti Reaction: Annoyance but countermeasures unlikely.
Pro: This action would point to U.S. displeasure with Kuwait policy but not directly harm U.S. economic and business interests in Kuwait.
Contra: It would have little impact on Kuwait. The Kuwaitis could easily arrange to purchase technical expertise elsewhere.
B. Discourage American Companies from Bidding on Kuwaiti Projects or Signing Contracts with Kuwait Government Agencies
Means of Implementation: Public statements by senior Administration officials and informal contacts by State and Commerce with the American business community.
Kuwaiti Reaction: Official dismay; Kuwait National Assembly would probably press the government to take countermeasures such as boycotting American goods.
Pro: It would remind the Kuwaitis that they cannot count on U.S. technology or managerial skills if they take measures adversely affecting our economic relations.
Contra: Such action would have little impact and the business would go elsewhere.
C. Embargo Food Shipments and Oil Equipment Spares
Means of Implementation: The President would instruct Commerce and Agriculture to require and withhold export licenses under the 1969 Export Administration Act.
Kuwaiti Reaction: This would cause a great uproar in the Kuwaiti Assembly and the leadership would be under pressure to take countermeasures against U.S. interests; oil production would be further reduced unless other consuming countries agreed to make up the deficit.
Pro: The Kuwaitis are entirely dependent on imports of food, oil equipment and spares. This action would underscore their dependence upon keeping trade free of politically-contrived obstacles which must be avoided to maintain Kuwait’s economic health.
[Page 192]Contra: The Kuwaitis could find alternative suppliers and place the burden on finding spares on the foreign oil operators. This action would run counter to our longer range objective of encouraging the Kuwaitis to increase their oil production.
D. Suspend International Financial Transactions with Kuwaiti Financial Institutions and Freeze Kuwait Government and Privately Owned Assets in the U.S.
Means of Implementation: President issues a national emergency decree and instructs Treasury to freeze assets under the 1917 Trading with the Enemy Act.
Kuwaiti Reaction: Convert any dollar holdings held in Europe to other currencies; nationalize all U.S. investments in Kuwait (currently about $400 million).
Pro: Kuwaitis have about $1 billion in public and privately held investments in the U.S. and it would be a severe psychological blow.
Contra: The majority of Kuwait Government and private holdings are outside the U.S. Moreover, many private Kuwait holdings may be difficult to identify since the U.S. has no investment laws requiring registration of ultimate ownership and these assets have traditionally been channeled through British and Swiss intermediaries.
Military
A. Withdraw Our Offer to Sell Kuwait any Military Equipment and Recall the DOD Military Sales Representative Now in Kuwait (we have pending with the Kuwaitis some 46 letters of offer amounting to some $500 million for a variety of defense equipment and services) and Cancel Kuwait’s Eligibility for Foreign Military Sales
Means of Implementation: Revoking Presidential determination making Kuwait eligible for FMS and DOD/State action to stop military discussions with Kuwaitis now being carried on by our Ambassador.
Kuwait Reaction: Since negotiations over possible arms sales have been held in secret, the Kuwaiti public would not be immediately aware of this step. The Government would be unhappy over this decision and might at a politically useful time use it to justify taking countermeasures.
Pro: Such a step would receive favorable Congressional reaction.
Contra: Discussions on arms purchases from the U.S. have been underway for over six months during which time no letter of offer has been signed. The Kuwaitis have also been negotiating with the British and French for the same types of equipment they have been discussing with us and could turn to these sources of supply or possibly to the Soviet Union.
[Page 193]Political
A. Let It be Known that the United States Does Not Feel Itself Committed to the Kuwait-Iraqi Border Described in the 1932 and Referred to in the 1963 Agreements (Iraq has never agreed to a formal demarcation of this border)
Means of Implementation: Statement by a senior State Department official.
Kuwaiti Reaction: The Government would be very upset and the National Assembly would accuse the United States of interference in a matter of domestic jurisdiction. The Kuwaitis would seek Saudi and Egyptian support on the boundary issue.
Pro: Formal demarcation and an end to the border problem with Iraq is Kuwait’s primary foreign policy objective. A change in U.S. support for Kuwait’s position would remind it of its vulnerability vis-à-vis Iraq and of the need to have good relations with world powers capable of exerting military force which indirectly serves Kuwait’s security.
Contra: It would further weaken the position of a moderate government which is already under pressure from radical elements within and outside Kuwait. It would strengthen Iraq’s territorial ambitions in the Gulf without gaining us any significant advantages in terms of our relations with Baghdad. It would upset the Saudis as well as the Shah of Iran.
B. Withdraw U.S. Ambassador from Kuwait
Means of Implementation: Department action.
Kuwaiti Reaction: Concern and frustration that the U.S. does not understand the reasons for Kuwait’s inability to act independently. The Kuwaiti leadership would probably agree to National Assembly demands to nationalize Gulf’s investment in the Kuwait Oil Company and would recall the Kuwaiti Ambassador in Washington.
Pro: Recall of the Ambassador would more than anything else point up to the Kuwaitis our concern over Kuwaiti policies which we found objectionable.
Contra: The Kuwaiti leadership would be under considerable pressures from leftist, Arab nationalist, and Palestinian elements to take drastic actions against U.S. interests in the country.
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Summary: The NEA Bureau prepared a paper for Kissinger that discussed possible methods of applying pressure to Kuwait to end its oil embargo against the West and concluded that the U.S. had very limited means of doing so.
Source: National Archives, RG 59, Central Files, 1970–73, Box 2432, POL Kuwait, 1/1/1970. Secret; Sensitive; Nodis. Drafted on November 23 by Dickman.
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