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Kuwait's $100 million ad industry slowed down last week as tensions built between neighboring Iraq and the U.S.; jittery clients canceled some campaigns, but no marketers or agencies are fleeing the country yet.

"It's not exactly business as usual," said Julian Howard, general manager of McCann-Erickson Worldwide affiliate Al Siham Promoseven, Kuwait City. "We've just stopped a campaign for a local bank [Al Ahli] for its savings account because .*.*. people are withdrawing their money, not saving it."

Al Siham has one of the few clients that's spending more because of the threat of war: The Kuwaiti government's Committee for Missing Persons & POWs is stepping up a Kuwaiti newspaper campaign to raise awareness about 600 Kuwaiti hostages held in Iraq since the 1990 Iraqi invasion.

"Since there is a huge press corps in Kuwait and the trouble at this moment is to do with economic sanctions-which the POW issue is directly linked to-we have been busy doing PR, advertising, printing leaflets and everything else," Mr. Howard said.

"A lot of companies across the board have stopped advertising with immediate effect-electronics, consumer goods, investments, cars," said Mohammed Zaitan, general manager of the Kuwait City office of Publigraphics, a Middle East network in which Young & Rubicam and Dentsu have stakes. "Advertising volume has been reduced. Newspapers and outdoor media are suffering."

Moulinex last week canceled a TV and print campaign for kitchen appliances, created by Ogilvy & Mather affiliate Middle East Marketing & Communications.

Kuwait's 30 ad agencies have flourished in the past two years, after the '91 Persian Gulf War effectively killed ad spending in the country. Before that, Kuwait had been the second biggest Gulf ad market after Saudi Arabia.

During the seven-month occupation of Kuwait, the Iraqis ended commercial TV broadcasts, looted TV sets from homes, and destroyed printing presses and other communications equipment they couldn't lug back to Iraq.

TV and print ad spending in Kuwait through August reached $69 million, up 15% from the same period last year, said Raamzi Raad, exec VP at Middle East agency network Intermarkets, based in Dubai, United Arab Emirates. Ad spending in 1993 totaled $98.5 million for TV and print.

These days, ad agency TVs are constantly tuned to CNN International and radios to Radio Kuwait, but Mr. Zaitan said meetings and presentations are continuing normally.

The atmosphere in Kuwait is much more relaxed than during the August 1990 invasion, said Rami Ikbal, Middle East Marketing media director, "This time, we are more prepared. No one is leaving Kuwait. We have more confidence. Kuwait's army and government are prepared. The Americans came immediately."

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