BANKER VIEWS GULF CRISIS WITH HISTORIC PERSPECTIVE

CAPE GIRARDEAU -- Paul Ebaugh remembers Kuwait as it once was: a British protectorate where pearls were the ingredient of trade before oil money transformed the country.

These days Ebaugh, a Cape Girardeau banker, is paying close attention to the Persian Gulf crisis, which was sparked by Iraq's invasion and conquest of Kuwait last August.

Ebaugh, who heads AmeriFirst Bank, served as president of Cape Construction Co. from 1955 to 1972. As president of Cape Construction, he traveled extensively throughout the Middle East in the 1950s and 1960s in efforts to secure contracts for pipeline construction.

Ebaugh's aging passport provides a visible reminder of trips to Lebanon, Syria, Iraq, Iran and Kuwait.

Ebaugh said he first visited Kuwait in February 1957 and made several other trips to Kuwait City over about a three-year period.

At that time Kuwait was still a primitive region; today's modern buildings weren't even on the drawing board.

"When I went there it was extremely primitive," Ebaugh recalled Tuesday. "There weren't any hotels to speak of. We stayed in a `hotel,' which was five or six rooms above the bazaar."

Modernization was just beginning at that time in Kuwait City. "When we got there in 1957 a huge mud wall surrounded the city. They were just beginning to tear it down."

Ebaugh said the oil industry was still in its infancy there. "Kuwait had just started in the late 1940s producing oil."

Before the oil business took hold, pearl trading was a key industry.

To do any business in Kuwait "you had to have a Kuwaiti partner," explained Ebaugh. Ebaugh said his company contacted a member of the al Sabah family, the ruling family of Kuwait. But, he said, his company never ended up doing any business in Kuwait.

It did, however, construct pipelines in southern Iran.

Kuwait became a British protectorate in the 19th century. In 1961 Kuwait became an independent nation.

In the 1950s and '60s, when Ebaugh was visiting the Middle East, Arabs in general had high regard for Americans.

"The reception that I had from everybody was terrific," said Ebaugh. "The feeling that I got from everybody was that they looked at the United States as kind of the mecca of the world."

Oil revenue transformed Kuwait City into a modern city and its citizens enjoyed a high standard of living in comparison with citizens in many neighboring Arab countries. Kuwait's rulers financed a wide variety of services for its citizens, including free education and housing.

"They took a tremendous amount of money coming in and made a giant welfare state for Kuwait," said Ebaugh.

Almost all of the domestic work was done by Palestinians and persons of other nationalities, Ebaugh said.

Ebaugh said the nation's high standard of living over the past couple of decades made Kuwait the envy of many in the Arab world. That feeling, Ebaugh maintained, may be a factor in the Persian Gulf crisis.

He said Iraq's conquest of Kuwait is "a real tragedy." But, he said, he believes Iraq will be forced out of Kuwait and the oil-rich nation will recover.

Kuwait's government-in-exile has billions of dollars in western banks. "They will have the money to spend" to rebuild Kuwait City, said Ebaugh.