CAIRO -- Last winter, Kuwait's emir turned a deaf ear when thousands of Kuwaitis demonstrated to demand that he restore their suspended parliament, lift press censorship and resume governing according to the nation's 1962 constitution.

Instead, Sheik Jabir Ahmed Sabah sent in riot police and then held special elections in June for a new National Assembly that had neither fiscal nor legislative powers.

This domestic strife may seem like a tempest in teapot when viewed against Kuwait's Aug. 2 invasion by Iraq. But it illustrates larger questions raised by the massive U.S. military deployment to defend its Arab allies in the Persian Gulf: If the Iraqi threat is removed, will the gulf emirates initiate democratic reforms? And what role might the United States play in that?

During decades of friendly relations with these oil-rich countries, Washington has never been an outspoken advocate of their democratization. Conservative gulf leaders, who tolerate little outside interference or domestic dissent, have provided stability in a volatile and strategically important region. And apart from Kuwait, their populations have not agitated for political change.

Even before Iraq's invasion, this U.S. stance drew some complaints. "America is only concerned about democracy in Central and Latin America," said a Kuwaiti newspaper editor, who asked not to be named. The Americans "haven't done anything in the gulf. Where were they in 1986, when the Kuwaiti government dissolved parliament?"

Now, however, some observers say that the new U.S. security relationship with its Arab allies -- one that Secretary of State James A. Baker III has suggested may evolve into a long-term alliance -- means that Washington may have to become more involved in influencing the political future of Arab states, particularly those in the gulf.

"If the United States is going to continue to have a benign role in the region," said Egyptian political analyst Said din Ibrahim, "they have to encourage democratization and lobby for it with the regimes they helped protect and save."

Ibrahim argued that the U.S. military intervention has given it political "responsibility" as well as leverage to exert "gentle pressure" for reforms after the crisis, with the gulf states and "whatever regime prevails" in Iraq.

With the Arab world now staring at a potentially disastrous armed conflict, debate about democratic reform has been suspended. Many Arab observers say it is too early to say how the crisis will affect possible democratization of the region.

"It will all depend very much on the political and economic results of the crisis," said Mansour Hassan, a former Egyptian cabinet minister. "How is it going to settle down? If you get a worsening economic situation or a humiliating political settlement, that is not really a right environment for a budding democratic movement."

But others say that however the crisis plays out, pressure for democratization will build. "It is going to be a serious one, and it will not be confined to the gulf states, but also to Iraq," said Ibrahim. "The dilemma of the Arab middle class is that it is forced into a choice between two equally evil, objectionable systems: the dictatorial, brutal and despotic {ones such as Iraq's} and the archaic, reactionary ones like that prevailing {elsewhere} in the gulf."

Before Iraq threw the Middle East into turmoil, the region was on a bumpy, uphill path toward democratization. Inspired by events in Eastern Europe and goaded by mounting economic hardship, Arab students, businessmen and intellectuals were predicting that liberalization would come, but they saw little to suggest that its progress -- in an area heavily weighted with dictators and hereditary monarchs protected by powerful security police -- would be smooth, quick or always manageable.

These Arabs said that despite official censorship in many countries, ideas and events elsewhere were having an impact here. In addition, they said, a projected doubling of the Arab population over the next generation will make authoritarian and paternalistic governments less viable.

Moreover, severe economic problems and mismanagement, which have resulted in unemployment, foreign debt, housing shortages and inadequate educational facilities, are threatening the popularity and legitimacy of Arab governments even among those citizens who care little for politics -- as demonstrated by riots over price increases in Jordan in April 1989.

Some Arab leaders, including Syrian President Hafez Assad and Iraqi President Saddam Hussein, were responding to dissatisfaction with vague rhetoric about "change" and with halfway measures designed not to break up the monopoly on power held by a small circle at the top.

The two notable exceptions were Jordan and Algeria, which in the last year initiated genuine change and held elections widely regarded as free and fair. But their experiences also set off alarm bells because those who profited most were Islamic fundamentalists, whose religious-based platforms appeared no more tolerant of social and intellectual diversity than are those of the secular regimes they seek to replace.

Fears of similar gains by Islamic extremists have been a major factor in slowing further political liberalization in Tunisia and Egypt.

Among the prosperous countries of the oil-rich gulf area, there has been little talk of democratizing. Saudi Arabia's King Fahd, for example, has given no indication that his absolute rule needs fine-tuning or a popular mandate. The king has spoken of appointing a consultative council since 1982 but has never acted on the proposal.

If Iraqi forces are withdrawn, Kuwait's internal politics are likely to become a focus of world attention.

Before the invasion, the small desert emirate was the most democratic state in the gulf, albeit a flawed democracy. It was the only gulf nation with a constitution guaranteeing participatory democracy. Despite state censorship, it had a lively, independent press that reflected its sophisticated, highly educated population. And Kuwaitis long have been used to speaking out against their rulers without fear of going to prison.

But there were major problems: the emir's disregard for the constitution and a proliferation of royal family members in the civil service and in government contracting.

In addition, citizenship, which brought generous financial benefits as well as voting rights, was sharply restricted. Many native-born residents who were not able to provide documentary proof that their ancestors resided in Kuwait before 1920 were denied citizenship, as were thousands of expatriate workers, mainly Palestinians, who had lived in Kuwait for decades.

In this, Kuwait was like the other sparsely populated gulf states, which also depend on expatriate labor. "The problem is not just one of democracy," said Egyptian political writer Makram Mohammed Ahmed. "It's a problem of population. . . . There are many restrictions {in all gulf states} about nationality because they think nationality is connected to the distribution of wealth. Why didn't they try to find a radical solution to the nationality problem like Canada and the United States, to attract people -- to have a real state with a real population?"

While President Bush and Arab leaders aligned against Iraq have said that Kuwait's legitimate government headed by the emir must return as part of any settlement, some U.S. lawmakers have questioned this stand, saying Kuwait's restored government ought to be newly elected. Various Arab proposals for resolving the crisis also have included an internationally supervised poll in Kuwait as a way to entice Saddam, who has vowed never to let the royal family return, into reversing his annexation of the emirate.

Among Kuwaitis, there seems to be consensus that the emir must return as a necessary first step to a new political order. This sentiment was expressed both by those inside Kuwait in the first weeks after the invasion and by others now living in exile. They included activists in last winter's democratic movement, who have rallied around the royal family since the invasion to concentrate on freeing their country from occupation.

These Kuwaitis said the emir should return, firstly, because they want Kuwait's future political system to be based on its 1962 constitution. This assigns the emir a legitimate role as head of state while making the assembly the ultimate authority. Even at the height of last winter's protests, no one called for the royal family's ouster.

Secondly, some Kuwaitis see the emir as a guarantor of stability and a defense against their country's falling into chaotic political divisions, as has occurred in Lebanon. If he does not return, "everyone will be fighting in Kuwait to get power. Maybe the army will run the country, like Libya, Syria and Iraq," said an exiled Kuwaiti who has been critical of the royal family.

"I believe he should go back, or else you won't have stability in Kuwait, even though I don't agree with what he has done for the past four years," he added. "We want the legitimate government back, regardless of the mistakes they have made."

Finally, the Sabah dynasty has become a symbol of continuity and cohesion in Kuwait since its merchant families chose the first Sabah to rule them in 1756.

But Kuwaitis say they will not accept the emir's past disregard of their desire for greater freedoms. And many say they will demand explanations for why he did not prepare his people for the invasion or alert his military forces when Iraq massed troops on the border. Such feelings are especially strong among Kuwaitis still inside the country, who predict that the royal family will face angry questioning if it comes home.

The image of the royal family also was smudged by its hurried departure, even though many Kuwaitis acknowledge that its members probably would have been killed if they had stayed. "We have seen them naked. In three hours they were out of the country," said an exiled Kuwaiti. "We're angry, sick to death."

As far as is known, only one royal family member, the emir's younger brother, Sheik Fahd Jabir Sabah, actually fought the invaders, losing his life in the process. On the other hand, some younger family members are active in the underground armed resistance to the occupation, and Iraqi authorities are searching for royal kin still inside.

Many Kuwaitis say they have no problem with elections, as long as they are held according to the constitution. But, said exiled Kuwaiti newspaper editor Muhammad Rumaihi, "we would like to have an election in Baghdad as well. The Iraqi people are now under a police state, and what Saddam Hussein has done is {create} the graveyard of human rights and democracy. If there were tolerance in Iraq, a good number of people would be saying 'No, this is wrong.' "