From Algeria to Iraq, from the Sudan to Syria, Kuwait is envied by many Arabs not just for its oil wealth but for its lively parliament.

In a part of the globe dominated by authoritarian regimes, this city-state stoutly defends the rule of law with a devotion sometimes considered suspect by neighbors fearful of the spillover effect of Kuwait's democratic institutions.

Critics note that only a tenth of Kuwait's citizens -- and only 3 percent of its 1.8 million population -- are entitled to vote. And they suggest that only Kuwait's welfare state riches allow this latter-day Athenian democracy -- complete with a Helot class of Palestinians, Asians and other expatriates -- to flourish.

"But when you see Sheik Abdullah Salim Sabah, the crown prince who is also the prime minister, having to raise his hand in parliament to be recognized by the speaker," one former skeptic said, "then you begin to become a believer."

Kuwaitis make no secret about the limits imposed on the 50 members of parliament. "You can criticize the prime minister," one of his fellow ministers said, "but you cannot criticize the crown prince."

What he meant is that the only formal taboo is attacking the legality of the Sabah dynasty which has ruled here since the 18th century, when Kuwait was a poor fishing, shipping and pearl diving town.

Theoretically, the legislators -- and Kuwait's refreshingly lively press, which boasts five Arabic and two English language dailies -- are forbidden to criticize other Arab countries.

But even with militarily vulnerable Kuwait lined up solidly with Iraq in the Persian Gulf war against Iran, a surprising amount of comment on the conflict and the rest of the current disarray in the Arab world finds its way into the parliamentary record and into the press.

Diplomats and political scientists are convinced that despite its formal limitations the very existence of parliament helps maintain the rule of law not just for Kuwaiti citizens, but also for foreigners here.

"There are no Amnesty International complaints about Kuwait," one diplomat noted. "No horror stories about torture and atrocities."

A Kuwaiti intellectual recalled that newly independent Arab states in the 1950s, '60s and '70s had sacrificed parliamentary democracy to national development or equal distribution of wealth, often with disastrous results.

"In practice, that meant military dictatorships," he added, "and that the Arab world was reliving the tyranny of the Ottoman Empire which ruled so much of it for four centuries."

He preferred to describe the Kuwaiti system as "political participation," noting that no formal political parties are allowed and that the ruling emir has the constitutional right to dissolve parliament -- and has done so once in the past -- for up to four years.

"But the important thing is that there is no single party proclaiming the final truth," he added. "The trick is to persuade people that the government is not a dragon to be frightened of, even if in the final analysis I think the government has all the power and gets its way."

Judging by the hotly contested campaign preceding the February elections -- and the quality of debate inside parliament -- the new legislators are afraid of no one.

Along with many independent candidates, the elections returned to office both the Islamic fundamentalists who were the surprise winners in the 1981 balloting, and Dr. Ahmad Khatib and two followers of the Arab Nationalist Movement. Khatib, Kuwait's most influential opposition force since parliament was founded in 1963 and the man credited with forcing nationalization of the oil industry on the government a decade ago, was defeated in 1981.

Although at face value nationalists and fundamentalists are ideological adversaries, such is the tolerant spirit of Kuwaiti society that they appear to cooperate and in any case are considered very much part of the establishment.

The quality of both government and parliament has improved greatly, according to Kuwaitis. Seven of the 16 ministers in the present government are university graduates and so are many members of parliament, 28 of whom are new.

The other day in front of packed visitors' galleries, the members of parliament subjected the ministers to close questioning. They were grilled on issues varying from why a minister had resigned to complaints about potholes, police stations and the sewage system to dire warnings that parliament would step in if the government did not soon announce its program for the four-year life of the legislature.

Topic A remains the government's failure to work out a satisfactory solution for the crash of the Suq Al Manakh stock market three years ago. The issue involves at least $12 billion in bad debts, or more than a year's oil revenues.

Also high on the agenda are women's rights. "The problem," said one Kuwaiti professional man whose wife is a leading campaigner for giving women the vote, "is that Saudi Arabia and other Arab gulf countries don't like the idea of Kuwaiti women having more political rights than their men."

Although important officials insist that Kuwait's neighbors accept the parliamentary system, in fact they fear that such open debate is seen as threatening these authoritarian, feudal regimes.

During the election campaign many Saudi visitors attended the nightly debates among candidates.

"My friends all along the gulf, in Jordan and further afield are all fascinated," a university professor said, noting the increasing numbers of educated middle-class Arabs.

"We are sitting here hoping that nothing will harm our parliament in the future," a Kuwaiti intellectual said, "Just hoping the experiment will work."