Compared to the world as Kuwaitis knew it in 1990, the present is a very strange place. Gone is the fiction of non-aligned Arabism and the pretence that foreign powers exercised little sway over rulers in the Gulf. Today Kuwait is guaranteed by security pacts with Britain, the United States, France and Russia. Last autumn a border scare brought thousands of Western troops and planes rushing back to its aid.
Kuwait once prided itself on tolerance and, by Gulf standards, a measure of liberalism. Its tolerance did not survive the angry seven months of occupation. Today it is a less cosmopolitan place. Hordes of guest-workers from the Indian subcontinent fled after the invasion. Upon liberation, tens of thousands of Palestinians were evicted from the emirate with callous brutality, paying the price for popular Palestinian support for Saddam Hussein.
Yet, paradoxically, Kuwait now boasts by far the most liberal political climate in the Gulf, its busy parliament and contentious press a reproach both to the totalitarianism still practised in Baghdad and to the somnolent autocracies elsewhere in the Arabian peninsula.
It is not democracy, Western-style. The suffrage is restricted and there are constitutional limits on the powers of parliament. None the less, Kuwait's elected representatives criticise government policy and scrutinise the budget. Both "Islamist" and liberal tendencies have a voice. Members of the ruling al-Sabah family have come in for censure over allegations of corruption. A wide variety of newspapers serve Kuwait's population of 1.8 million, publishing in conditions of comparative freedom.
Much of this is the result of Western pressure on the al-Sabah family to demonstrate a measure of democratic reform in order to placate congressional and public opinion in the US.
The US and other Western countries also see Kuwait's modest political liberties as possible models for the modernisation of other monarchies in the Gulf, although that may prove to be a triumph of optimism over experience.
Two fundamental criteria - Iraq and oil prices - continue to dictate reality to the Kuwaitis, their conservative Arab neighbours and their Western allies.
The unresolved dilemma of Iraq looms over every aspect of the emirate's policy. Kuwait believes that its safest line is a hard one. This week the Prime Minister rejected Iraqi overtures, which were coupled to Saddam Hussein's campaign to lift United Nations sanctions. The Kuwaiti government wants proof of the fate of 605 prisoners of war and full restitution of wealth plundered or destroyed by the Iraqis. In truth these individual disputes serve to buttress Kuwait's real purpose: to persuade the West that Saddam must fall from power before Iraq can be considered safe.
Recent statistics from Baghdad show that the Iraqi armed forces have been rebuilt since their defeat in 1991, numbering 382,000 men and 650,000 reservists with 2,200 tanks and armoured vehicles backed up by more than 300 combat aircraft. These are still intimidatory figures to the Kuwaitis, even though Iraq claims to have dismantled its weapons of mass destruction.
Kuwait is aware that its own main weapon remains the imposition of UN sanctions on Baghdad. These measures are responsible for keeping Iraq off the world oil market, a factor in keeping prices unsettled.
Kuwait's oil wells are flowing again, providing 98 per cent of export revenue. More than 2 million barrels a day yielded more than $11bn (pounds 7bn) in 1994, the first time since the invasion that Kuwait surpassed its pre- war income of about $10.2bn. Massive investment to update oilfield technology will continue to drain cash reserves, while Kuwait still bears the financial burdens of the war. Yet with about 10 per cent of global crude reserves and 3 per cent of daily production, the emirate's economy looks secure in the long term.
Some analysts predict that oil prices, currently about $16 a barrel, could drop sharply if Iraq comes back on stream. But other oil industry experts think the effect would be temporary, because there is little elasticity between world supply and demand.
Robert Fisk, second section