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KUWAIT, Jan 18 (Reuters) - A Kuwaiti man has been arrested on suspicion of spying for Iraq, a Kuwaiti Interior Ministry official said on Saturday, in the latest incident to inflame tension between the two Gulf War foes. The Interior Ministry said Mohammad Hamad Fahd al-Juway'id, a 40-year-old sergeant in Kuwait's National Guard, had monitored the movements of senior Kuwaiti officials and given Iraq secret security information which could aid terrorist attacks. "Undoubtedly this criminal act will be punishable after reference of the detainee to the competent authorities according to standing regulations and laws," a ministry statement said.

Kuwaiti officials have said they believe Iraqi spies and sleeper cells are active in the country. Iraq invaded Kuwait in 1990 and occupied the country for seven months before being driven out by U.S.-led forces in Operation Desert Storm.

With Iraq facing another U.S.-led attack unless it proves it has disarmed weapons of mass destruction, Kuwait has stepped up security and told citizens to be vigilant.

Kuwait said in November it had broken up a cell linked to Osama bin Laden's al Qaeda network. Officials said the cell had been planning a car bomb attack on a hotel in Yemen.

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