The agreement, signed in Paris during a visit by Kuwaiti Defense Minister Sheik Jaber al-Hamad, promotes bilateral cooperation in military renovation concerning information, exchange and military assistance.
It also comes amid strong Kuwaiti interest in the purchase of advanced Rafale combat jets from France.
"Obviously," said Jaber after meeting with his French counterpart Herve Morin, "we would be proud to have the Rafale in the heart of the armed forces in Kuwait."
Jaber, also deputy prime minister of the emirate, told reporters he was awaiting terms of the deal from Paris.
"The offers will be submitted to the constitutional and legal institutions to make a decision," he said, adding that Kuwait "will soon see this plane (Rafale) within Kuwait's armed forces."
The Rafale, Dassault Aviation's newest multi-role combat jet, has been spearheading France's arms industry, which has been desperately trying to find exporters despite robust lobbying by senior French officials.
The aircraft is only in service with the French military and marks the main competition of U.S. aviation rivals Lockheed Martin and Boeing. The European Eurofighter is a competing force.
The defense accord is the latest sign of France's growing influence in the Gulf.
Earlier this year President Nicolas Sarkozy pushed for the sale of 14 to 28 Rafale jets during the first visit of a French leader since 1991. He then said he expected the deal to be completed by the end of the year.
Months later, in April, the French military, which had come to the aid of Kuwait in its fight for liberation in 1991, held joint military maneuvers with their Kuwaiti counterparts in the emirate's desert.
The last military deal signed by France and Kuwait was in 1992.
"France has decided to regain its place and to play a full role to secure the stability and security of this strategic region," Morin was quoted as saying by local media after his talks with his Kuwaiti counterpart.
Morin insisted France could break the traditional reliance that Gulf nations have on the United States for arms.
"Countries in the Gulf know that they can find in France a second partner, one which is a friend of the Americans but which has its own vision of security and stability," he said.
Analysts, however, disputed whether the French were trying to set themselves up as an alternative strategic partner to the United States in the Gulf region or were using this angle to push their sales pitch for the new Rafale jets, introduced eight years ago.
"Sarkozy has taken charge of placing Rafale everywhere. He will sell it wherever he can. It's not about being interested in Kuwait; it's business first," Assaf Kfoury, the general manager of Tactical Report, a Lebanese provider of intelligence on Middle East energy and defense, was quoted as saying by The National Newspaper.
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