Kuwait has a bustling economy, a loyal population, a functioning government - but no territory.

The emirate's government-in-exile is using Kuwait's huge global financial resources to keep its national identity alive despite the Aug. 2 takeover by Iraq.But how long can Kuwait - with its dispersed population and scattered assets - continue to function financially as a sovereign nation?

Indefinitely, according to some Middle East analysts.

The oil revenues that made Kuwait so rich have dried up with the oilfields in Iraqi hands. And there is a worldwide embargo on the oil itself.

But long before the invasion, the Kuwaitis had plowed their oil earnings into a variety of investments, which now serve them well.

"They're earning money on their money," said Katya Maddison, an economic analyst with the London-based Middle East Economic Digest. "They're pretty stable for a considerable amount of time."

After the invasion, an asset freeze was clamped on Kuwaiti holdings by world governments to protect them from Iraqi seizure.

But within three weeks after the invasion, Kuwait's finance minister, Sheik Ali Said, said the government-in-exile had "plenty of cash" and was in full management control of its assets.

"The Kuwaitis have virtually an economy offshore now," said Stephanie Cooke, a financial specialist in the London office of Institutional Investor magazine.

"But in another sense their hands are tied because they're having to cope with this assets freeze. Although they appreciate it, it's making the day-to-day operations difficult.

"Every time they have to move assets around, they need the permission of several governments in terms of where the (financial) instrument is," she said.

Iraq has looted and ravaged Kuwait itself since the invasion. But many of Kuwait's most valuable properties are beyond Iraqi reach.

Kuwait Airways, which lost most of its planes to Iraq, planned to restart its operations Thursday from Cairo. The Kuwait Petroleum Co.'s Q8 service stations are still pumping gas in Western Europe.

The Kuwait Investment Office in London is gradually regaining control of its monumental portfolio, estimated to total $100 billion, and the Kuwaiti government has pledged to stand behind the obligations of Kuwaiti banks.

"The very fact that they're able to operate Kuwait Air and Kuwait Petroleum Co. continues the country's identity," said Maddison. "The very fact that the name Kuwait is still there, I'm sure, is a major irritant to the Iraqis."

Unlike other conquered nations - for example, the European countries overrrun by Adolf Hitler in the 1930s and 1940s - Kuwait has reconstituted itself outside its own borders with its governmental hierarchy and its assets largely intact.

The investment income from Kuwaiti assets abroad is generally estimated to exceed the oil revenue from what its leaders say are the world's fifth-largest oil reserves.

Kuwait's rulers without a realm, the al-Sabah family, run their government-in-exile from the Saudi resort town of Taif, and its international business empire operates mainly out of London.

Policymaking is concentrated in the hands of the emir, Sheik Jaber al-Ahmed al-Sabah, and a few advisers. A bureaucracy under the prime minister and crown prince, Sheik Saad, handles day-to-day decisionmaking.

Both Kuwait Petroleum and the Kuwait Investment Office are controlled by the nation's top leadership.

Kuwait Petroleum, which operates its own refineries in Rotterdam, Skaelskoer, Denmark and Naples, has offset the loss of its own crude oil supplies with Saudi oil and purchases on the open market, according to the authoritative Middle East Economic Survey in Nicosia.

For a nation of only 640,000, with a territory smaller than New Jersey, pre-invasion Kuwait had enormous economic clout.

The Kuwaiti investment portfolio, originally put together as a hedge against the time when the oil ran out, has given post-invasion Kuwait a financial infrastructure that can be effectively operated from exile, said Rosemary Hollis, a financial analyst with the Royal United Services Institute for Defense Studies in London.

But she noted many Kuwaiti banks are still unable to operate because of the destruction of records in the occupied emirate.