However, in 1898 many elements incited Britain to reconsider its policy towards Kuwait. Such as the Ottoman military activities near Basra, and the Russian and German plans that were threatening British interests in the region of the Arabian Gulf. Thus, on the basis of a decision from Lord Curzon, the British viceroy in India, British Political Resident Mead concluded a protectorate agreement with the ruler of Kuwait, Sheikh Mubarak Al-Sabah on January 23, 1899, which defined Kuwait as:
"An independent Country Under British Protection"
Britain promised to protect Sheikh Mubarak and his heirs, and in turn the latter agreed to conclude no treaties with other powers, to admit no foreign agents and to cede no part of Kuwait's territory without British consent.
This agreement limited the rights of Kuwait to deal conclusively with its lands without British approval. However, the agreement did not give Britain the right to intervene in the internal affairs of Kuwait.
In November 1914, Britain recognized Kuwait as an independent emirate that enjoyed British protection.
Since 1934, Kuwaiti-British relations went beyond the Arab domain, They were influenced by other greater international influence due to the competition of American companies in drilling for oil in Kuwait and other emirates of the Arabian Gulf.
On the internal scene, Kuwait witnessed advances both related to the rule and the local administration. In 1921, the State Consultative Council was formed by appointment. The second national regular school was established and called Al-Ahmadiya School. It was given the name of the ruler of Kuwait at that time, Sheikh Ahmad Al-Jaber Al-Sabah. The first national regular school had been inaugurated in December 1911. It was called Al-Mubarakiya School after the name of the ruler of Kuwait, Sheikh Mubarak Al-Sabah. The municipality was founded in 1930. The members of the city council were elected in 1932, when Kuwait witnessed the first election in its history.
Life was difficult in this period. This was due to the fact that the traditional economy of Kuwait, like any other country or emirate in the Arabian Gulf and the Arabian Peninsula, was closely based on the sea. Diving for pearls, fishing, shipbuilding and nets as well as other activities related to the desert, such as herding were the professions prevailing at that time. Kuwaiti society showed its sympathy for the cases of the Arab Nation, with the Palestinian case at the top. In 1936, Kuwait witnessed a donation campaign carried out by the Kuwaiti people for Palestine.
In December 1934, Sheikh Ahmad Al-Jaber Al-Sabah, the ruler of Kuwait at that time, signed an agreement for oil drilling with the Kuwait Oil Company (Anglo-American Company). In 1936-1938, the primary drilling operations proved that Kuwaiti lands were rich in oil, a matter that dramatically increased the importance of the country.
Concerning the government, in June 1938, Kuwait witnessed the election of the first legislative council that was held from July to December 1938.
In June 1946 the first shipment of Kuwaiti oil was exported. In the late forties (1949) a construction movement started in Kuwait with the building of some public utilities, a new hospital and roads.
Simultaneously with this economic, cultural and population development, Kuwait proceeded towards progress and independence since the beginning of the fifties. The economic, intellectual and cultural movement flourished in Kuwait and the number of the literate people and the schools increased. In addition, more educational missions were sent to the universities all over the world.
In this period, Kuwaiti society had to face many internal and external challenges as Kuwait evolved from a poor country to a rich one enjoying great financial potentiality. At many different levels, oil production was a turning point for Kuwait, a matter which intensified British interest in Kuwait, as its international importance increased.
At the beginning of the fifties, Kuwait witnessed development and reformation in the local administration. The High Executive Committee was formed in 1954; then the Supreme Council and the Organizational Authority in 1956; in addition to governmental local councils such as the Education Councill, City Council and Health Council.
Kuwait was heading for independence. National political awareness was increasing. The activities of Kuwaiti youth increased and they started to criticize the administrative conditions.
At that time, the ruler of Kuwait was Sheikh Abdullah Al-Salem Al-Sabah, who had been the chairman of the first parliament in Kuwait in 1938. He welcomed constructive criticism and was keen to achieve fully considered steps on the way to independence and constitutional government.
In 1959 Kuwait took steps to enact laws and establish systems such as the Naturalization Law in 1959, the Kuwaiti Currency Law in 1960, the Passports Law and the Organization of Government Departments. These were all steps along the way to full independence which Sheikh Abdullah Al-Salem Al-Sabah had resolved to see to the end. In fact, Kuwait was not apart from interaction and participation in many Arab social and cultural activities as well as those of the Arab League.
Sheikh Abdullah Al-Salem Al-Sabah realized that the protectorate agreement was no longer appropriate after the changes that had taken place in the conditions of Kuwait. At that time, Kuwait was heading for independence and had already taken large strides on its way. The Kuwaiti people no longer accepted the restrictions imposed by the protectorate agreement, though they realized very well that this protectorate had many advantages in this period. Yet, circumstances had changed, which necessitated cancellation of the agreement. Thus, the ruler of Kuwait, Sheikh Abdullah Al-Salem Al-Sabah, expressed his desire to replace the old agreement with a new friendship agreement that went along with the development and changes that had taken place.
The British government accepted the Kuwaiti demand. Diplomatic notes were exchanged between Sir William Luce, the British Political Resident in the Arabian Gulf at that time, and Sheikh Abdullah Al-Salem Al-Sabah, the ruler of Kuwait, on June 19, 1961. According to this agreement the following terms were carried out:
- The agreement of January 23, 1899 was terminated as being inconsistent with the independence and sovereignty of Kuwait.
- Relations between the two countries should continue to be governed by a spirit of close friendship.
- When appropriate the two governments would consult together on matters which concerned them both.
- Nothing in these conclusions would affect the readiness of Her Majesty's Government to assist the Government of Kuwait if the latter requested such assistance.
In so doing, Kuwait declared its independence on June 19, 1961.
A draft constitution was approved on November 11, 1961, outlining Kuwait's system of governance as a "fully independent Arab State with a democratic style of government, where sovereignty rests with the nation, which is the source of power".
A few months after independence, the ruler of Kuwait, Sheikh Abdullah Al-Salem, gave instructions for the formation of a popular committee to draft a modern constitution for independent Kuwait.
Two months after the formation of the committee, public elections were held to elect members for the first national assembly in the country. Government departments were reorganized so as to be able to implement the overall development movement and its plans. Most of the cabinet members were chosen from among the elected members of the national assembly which comprised fifty members.
According to the constitution, the national assembly has absolute power to draw the legislative policies and control over the executive authority. A few weeks later Kuwait joined the Arab League.
Following the Declaration of Independence, a newly-born state would normally seek to join the international community as a first step towards the recognition of its independence. This aspiration can be materialized by becoming a member of the United Nations.
On 6 July 1961, Kuwait applied formally for membership in the United Nations. Also on that day, the United Kingdom submitted a draft resolution by which the Security Council would call upon all States to respect the independence and territorial integrity of Kuwait and urge that all concerned work for peace and tranquility in the area.
Assembly act favorably on Kuwait's request. The Assembly, at its fourth special session, endorsed the recommendation by acclamation on 14 May 1963, thereby admitting Kuwait as the Organization's 111th Member State.
Kuwait also became an important player in the international family of nations, and with its wealth it became a major foreign aid donor. The Kuwait Fund for Arab Economic Development is active throughout the Arab world and beyond. Kuwait independently supports projects in non-Arab, non-Muslim nations as well, and has given as much as eight per cent of its annual gross national product in foreign aid.
The country was instrumental in the formation of the Gulf Cooperation Council in 1981, through which the states of the Gulf maintain regional security, stability, and progress.
Abdullah’s reign was so central to the evolution of modern Kuwait that when he died in 1965, the date on which he had ascended the throne in 1950 (February 25) was designated National Day. Previously, Kuwaitis had celebrated their national holiday on the date of the dissolution of the Anglo-Kuwaiti agreement.