As the possibility of war in Iraq grows ever stronger, Kuwait is on a heightened state of alert. Coastguards have carried out a series of exercises in readiness for possible Iraqi speed boat attacks on crude carriers owned by Kuwait Oil Tanker Company. Restrictions have been imposed on the movement of civilians in the western and northern oil fields. In Kuwait City, the Education Ministry has ordered the closure of government-run schools until 22 March.

Having been caught hopelessly off guard in August 1990, when Iraqi tanks rolled across the border unchallenged, Kuwait is not about to make the same mistake again. 'We are ready this time for any eventuality,' says Ahmed al-Arbeed, chairman and managing director of KOC. Government preparations have been backed up by a substantial US military build-up, which has done much to calm nerves.

It has also raised hopes that, after 13 years of living in the shadow of Saddam Hussein, the threat from Baghdad will finally be exorcised, allowing normality to return.

'We want the Iraqi issue to be resolved once and for all,' says Ahmad Essa al-Ajeel, vice-president of Kuwait Projects Company, a leading private-sector holding firm. 'We wish to see an elected civilian government in Baghdad, which will work towards better relations with its neighbours. Our geographical position will allow us to be an economic partner in the reconstruction of Iraq.'

Until 1990, Kuwait was an important transit point for goods bound for Iraq. Local businessmen and entrepreneurs are now looking to regain that status and are already positioning themselves for a post-Saddam Iraq. The word in the local diwaniyas is that Kuwaitis have been buying up land, under pseudonyms, along the Tigris river, through real estate agents in Amman. More visible has been the recent influx of regional trading and contracting companies, seeking registration at the Kuwait Chamber of Commerce & Industry and the Central Tenders Committee. Their sights are not set on the domestic market, but on opportunities further north.

Kuwaitis maintain that they bear no animosity towards ordinary Iraqis. 'We have no problem with the people of Iraq. Our ties are historic and strong. There are many Kuwaitis married to Iraqis,' says Yahya al-Sumait, a former housing minister. However, it is a very different story when it comes to the regime. The hardships wrought by the Iraqi invaders in 1990 are still fresh in the memory and few are willing to forgive or forget, especially while more than 600 Kuwaitis are still unaccounted for in Iraq. Recent efforts by Jordan to resolve the issue have come to nothing.

Kuwait remains deeply suspicious of the government in Baghdad, despite an apology issued in December for the 1990 invasion. 'The apology should not be taken as a sign of weakness on our part or an illegal tactic, but rather a clarification of facts as we see them,' the Iraqi statement read.

Far from appeasing Kuwaitis, the statement had the opposite effect. 'He [Saddam Hussein] referred to us as 'my people in Kuwait'. This is unacceptable . we will never give up our sovereignty,' says Al-Sumait. The deeply-held suspicion appeared to be well-placed in late January, when Iraqi Deputy Prime Minister Tariq Aziz conceded that Kuwait could be a legitimate target for attack if the US launched a war on Baghdad.

The presence of US soldiers has not been welcomed by everyone in Kuwait. Over the past four months, a series of ambushes on US military and civilian personnel has left three dead. Each time, the government has pointed the finger of blame at Al-Qaeda, and has gone to the lengths of stripping the infamous Sulaiman Abu Ghaith, a senior Al-Qaeda operative, of his Kuwaiti nationality.

Having both suffered at the hands of Iraq, it is perhaps understandable that Kuwait and Iran are now moving closer together, both politically and economically. Kuwait signed in mid-January a memorandum of understanding (MoU) with Tehran to import at least 300 million cubic feet a day of natural gas. At the same time, an inter-governmental protocol was signed for the proposed water pipeline, which will bring water from the Karkeh dam in Iran to Kuwait.

For Kuwait to derive maximum benefits from relations with its neighbours - be it Iran or Iraq under a new regime - it is imperative to set its own house in order. Three major issues need to be tackled: defining a new role for the National Assembly (parliament); accelerating the bureaucratic decision-making process; and clarifying the political succession question.

Elections are due in the summer for the National Assembly, whose four-year term expires on 22 July. Whatever the outcome, Kuwaitis hope the new parliament will play a more constructive role in mapping out Kuwait's future. 'The [present] assembly has not served any purpose. We have seen constant bickering over the past four years between the government and members,' says Al-Ajeel. 'We wish to see the election of a younger generation. The main question will be whether we will see a change for the better or worse.'

The desire to see an injection of younger blood is not just confined to the national assembly elections. The failing health of both the Emir Sheikh Jaber al-Ahmed al-Sabah and Crown Prince Sheikh Saad Abdullah al-Salem al-Sabah has brought the succession question into focus. Says Al-Sumait: 'The Al-Sabah family is taking calculated steps on the succession issue. They are testing the minds of their people. But succession will not be an issue in Kuwait. This is not a slogan.'

Among those tipped for higher office is Deputy Prime Minister and Defence Minister Sheikh Jaber al-Ahmed al-Sabah. Other names mentioned include Deputy Prime Minister and Interior Minister Sheikh Mohammed Khaled al-Sabah, Acting Finance & Planning and Minister of State for Foreign Affairs Minister Sheikh Mohammed Sabah al-Sabah and Sheikh Nasser Sabah al-Ahmed al-Sabah, office director of the Crown Prince.

There is a growing feeling within Kuwait that the time for change - both political and economic - is ripe. Despite the strength of oil revenues, the macroeconomic argument for new policies is compelling. A fast-growing local population seeking employment, an underdeveloped private sector and the need to diversify the economy away from oil-dependency are all putting policy planners under pressure. If evidence is needed of the unbalanced nature of the Kuwaiti economy, it is provided by a stark statistic from the latest report by the Public Authority for Civil Information: 93 per cent of Kuwaitis are employed by the public sector.

But the long-term policy makers are finding it hard to see beyond a short-term issue. Painful as the thought might be - and fraught with risk - a successful war in Iraq, followed by a successful peace, could breathe new life into Kuwait and rebuild a bridge that was burnt 13 years ago. It could be the bridge to better times for Kuwait.

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