The headland now occupied by Kuwait City was settled only 300 years ago. In the early 18th century, Kuwait was nothing more than a few tents clustered around a storehouse-cum-fort. Eventually the families living around the fort divided among themselves the responsibilities attached to the new settlement. The Al-Sabah family, whose descendants now rule Kuwait, were appointed to handle local law and order. The small settlement grew quickly. By 1760, when the town's first wall was built, Kuwait's dhow fleet was reckoned to be 800 and its camel caravans travelled regularly to Baghdad and Damascus.
By the early 19th century, Kuwait was a thriving trading port. But trouble was always, literally, just over the horizon. It was often unclear whether Kuwait was part of the Ottoman Empire or not, though official Kuwaiti history is adamant that the shaikhdom was always independent of the Ottomans. During the second half of the 19th century, the Kuwaitis generally got on well with the Ottomans. They skillfully managed to avoid being absorbed into the empire as the Turks sought to solidify their control of eastern Arabia (then known as Al-Hasa). They did, however, agree to take the role of provincial governors of Al-Hasa.
That decision led to the rise of the pivotal figure in the history of modern Kuwait: Shaikh Mubarak al-Sabah al-Sabah, commonly known as Mubarak the Great, who reigned from 1896 to 1915. Mubarak was deeply suspicious of Turkey and was convinced that Constantinople planned to annexe Kuwait. He overthrew and murdered his brother, the emir, did away with another brother and installed himself as ruler. In 1899 Mubarak signed an agreement with Britain: in exchange for the British navy's protection, he promised not to give away territory to, take support from or negotiate with any other foreign power without British consent. Britain's motive for signing the treaty was a desire to keep Germany, then the main ally and financial backer of Turkey, out of the Gulf. The Ottomans continued to claim sovereignty over Kuwait, but they were now in no position to enforce it.
Kuwait spent the early 1920s fighting off the army commanded by Abdul Aziz bin Abdul Rahman Al-Saud, the founder of modern Saudi Arabia. In 1923 the fighting ended with a British-brokered treaty. As a result, an oil concession was granted in 1934 to a US-British joint venture known as the Kuwait Oil Company (KOC). The first wells were sunk in 1936, and by 1938 it was obvious that Kuwait was virtually floating on oil. The outbreak of WWII forced the KOC to suspend operations, but when oil exports took off after the war so did Kuwait's economy. As the country became wealthy, health care, education and the general standard of living improved dramatically.
On 19 June 1961, Kuwait became an independent state. Elections for the first National Assembly were held the following year. Although representatives of the country's leading merchant families won the bulk of the seats, radicals had a toehold in the government from its inception. In August 1976, the cabinet resigned, claiming the assembly had made day-to-day governance impossible. The emir suspended the constitution, dissolved the assembly and asked the crown prince (who, by tradition, also serves as prime minister) to form a new cabinet. New elections were not held until 1981, but the assembly's new majority proved just as troublesome as the last and parliament was dissolved again in 1986.
Despite political and economic tensions, by mid-1990 the country's (and the Gulf's) economic prospects looked bright, particularly when the eight-year Iran-Iraq war ended. So it came as a shock when on 16 July 1990 Iraq sent a letter to the secretary-general of the Arab League accusing Kuwait of exceeding its OPEC quota and of stealing oil from the Iraqi portion of an oil field straddling the border. Iraqi president Saddam Hussein threatened military action. Over the next two weeks a series of envoys bent over backwards to offer Iraq a graceful way out of the dispute. But it was to no avail: Iraqi tanks were in Kuwait City before dawn on 2 August, and by noon they had reached the Saudi frontier. The emir and his cabinet fled to Saudi Arabia.
The United Nations quickly passed a series of resolutions calling on Iraq to withdraw from Kuwait. The Iraqis responded with the claim that they had been invited in by a group of Kuwaiti rebels who had overthrown the emir. On 8 August Iraq annexed the emirate. Western countries, led by the US, began to enforce a UN embargo on trade with Iraq, and in the months that followed more than half a million foreign troops flooded into Saudi Arabia.
At the end of November, the US and the UK secured a UN resolution authorising the use of force to drive Iraq out of Kuwait if the Iraqis did not leave voluntarily before 15 January 1991. The deadline passed, the Iraqis didn't budge and within hours waves of Allied (mostly US) aircraft began a five-week bombing campaign of Iraq and Kuwait. The ground offensive, when it finally came, was something of an anticlimax: Iraq's army disintegrated in a mere 100 hours. At the end of February, Allied forces arrived in a Kuwait City choked by clouds of acrid black smoke from the hundreds of oil wells the Iraqis had torched as they retreated.
The government set about not simply rebuilding Kuwait, but rebuilding it exactly as it had been before the invasion. Meanwhile, a heated debate began over the country's political future. In keeping with a promise the opposition had extracted from the emir during the occupation, elections for a new National Assembly took place in October 1992. The opposition shocked the government by winning over 30 of the new parliament's 50 seats, and opposition MPs secured six of the 16 seats in the Cabinet, though the Al-Sabah family retained control of the key defence, foreign affairs and interior ministries.
By the second anniversary of the invasion, Kuwait's government had largely succeeded in erasing the physical scars of war and occupation, although tensions with Iraq remained high. In 1994, Kuwait convicted several Iraqis on charges of attempting to assassinate former US president George Bush when he visited the emirate the previous year. The plot, according to the Kuwaitis, was uncovered and foiled at the last minute.
Today, many resources are being used to remove land mines and clean up environmental damage left over from the Iraqi retreat, subsidised by the UN to the tune of US$5.9 billion. Ten percent of oil revenues are, by law, put into a trust to prepare for the day that Kuwait's massive oil reserves dry up. Also on the political agenda are women's rights: In May 1999, the Emir decreed that women would for the first time be able to vote and run for office in the 2003 general elections, subject to approval by the parliament.