* Private Kuwaiti citizens want to arm 12,000 fighters
* Freer political environment allows for campaigning
* Government donated humanitarian aid only
By Sylvia Westall and Mahmoud Harby
KUWAIT, June 26 (Reuters) - At a traditional evening meeting known as a "diwaniya", Kuwaiti men drop banknotes into a box, opening a campaign to arm up to 12,000 anti-government fighters in Syria. A new Mercedes is parked outside to be auctioned off for cash.
They are Sunni Muslim and mainly Islamist like many Syrian rebels who have been trying for two years to overthrow President Bashar al-Assad, a member of the minority Alawite sect, a branch of Shi'ite Islam. Shi'ites are also a minority in Kuwait.
"The world has abandoned the Syrian people and the Syrian revolution so it is normal that people start to give money to people who are fighting," said Falah al-Sawagh, a former opposition member of Kuwait's parliament, surrounded by friends drinking sweet tea and eating cakes.
In just four hours the campaign collected 80,000 dinars ($282,500). The box moves to a new house each day for a week. Sawagh estimates this type of campaign in Kuwait, one of the world's richest countries per capita, raised several million dollars during the last Ramadan religious holiday.
The fighting in Syria has stoked Sunni-Shi'ite tensions in the region, with Iran and Lebanese Shi'ite militia Hezbollah backing Assad, and Sunni-ruled nations such as Turkey, Saudi Arabia and Qatar backing the rebels.
Sunni-ruled Kuwait has denounced the Syrian army's actions and sent $300 million in humanitarian aid to help the millions displaced by the conflict in which more than 90,000 have died.
Arming the rebels is against government policy but U.S. ally Kuwait allows more public debate than other Gulf states and has tolerated campaigns in private houses or on social media that are difficult to control.
Kuwaiti authorities are nevertheless worried that the fundraising for Syria could stir sectarian tensions. Unofficial funding of Syria's opposition is also under scrutiny by the West in case it goes to al Qaeda militants among the rebels.
Some opposition Islamist politicians and Sunni clerics have openly campaigned to arm rebel fighters, using social media and posters with telephone hotlines in public places. Former MP Waleed al-Tabtabie, a conservative Salafi Islamist, posted pictures of himself on Twitter clad in combat gear in Syria.
Kuwait's minister for cabinet affairs, Sheikh Mohammad al-Mubarak al-Sabah, said what was happening in Syria was "heart-wrenching" and understood why Kuwaitis wanted to help.
"Human nature is such that you cannot control what people believe in and how they want to act," he said.
"What is happening in Syria just inflames the emotions on both sides. That's why we are trying to steer a middle ground."
SUITCASES OF CASH
Syria is blocked from international bank transfers from Kuwait because of sanctions, so former MP Sawagh visited the Syrian town of Aleppo last month with cash in his luggage for rebel fighters. He did not say how much he took.
"Our only rule is to collect money and to deliver this money to our brothers which are helping the Syrian people," said Sawagh, a member of a local group linked to the Muslim Brotherhood which is in power in Egypt and is influential in other Arab states.
Sawagh and others in his campaign also travel to Turkey and Jordan to hand over money to intermediaries.
"They have absolute freedom to spend this money. If they can recruit mujahideen for defending themselves and their sanctity with this money, then this is their choice," he said, referring to fighters who engage in jihad or holy war.
Washington is worried the money may help strengthen fighters with links to al Qaeda who are hostile not just to Assad but also to the United States and U.S.-allied Gulf ruling families.
It wants Western and Arab allies to direct all aid to Syrian rebels through the Western-backed Supreme Military Council.
A fiery speech by Kuwaiti Sunni Muslim cleric Shafi al-Ajami raised alarm earlier this month with a call for more arms.
"The mujahideen, we are arming them from here, and from the Arabian Peninsula, the Gulf states, Egypt, Jordan, Lebanon, Iraq and Turkey," he said.
The speech was laced with references to the sectarian nature of the conflict and unnerved authorities in Kuwait where Shi'ites make up an estimated 15 to 20 percent minority of the population. Parliament, the cabinet and the ruling emir issued strong rebukes.
"I do not hide from you feelings of anxiety about what emerged recently ... manifestations and practices that carry the abhorrent breath of sectarianism which should be denounced," Emir Sheikh Sabah al-Ahmed al-Sabah said on state television. Such acts could "lure the fire of fanaticism and extremism," he said.
Ajami spoke following a call by prominent cleric Sheikh Youssef al-Qaradawi, an Egyptian based in Qatar, for jihad in Syria after fighters from Hezbollah, the Lebanese Shi'ite militant group, intervened to help Assad's army.
The calls to holy war by several influential clerics in the region only encouraged more donations, Kuwaitis said.
"Women have also been donating their gold," said Bader al-Dahoum, a former Islamist opposition MP.
"After the fatwas (edicts), people are giving more."
The men at the diwaniya said one large Kuwaiti family planned to equip 28 mujahideen in Syria, estimating the cost at 700 dinars per fighter. Smaller families sponsor two or three, while a member of one of Kuwait's powerful merchant families donated 250,000 dinars.
Weapons supplied by Qatar and its allies include small arms such as AK-47 rifles, rocket propelled grenades, hand grenades and ammunition, according to a Qatari official. Qatar also provides instructions on battlefield techniques.
Campaigning for funds to arm the rebels makes certain politicians more popular in Kuwait, said Osama al-Munawer, a former opposition MP.
"I was a member of the National Assembly and people were blaming us - why don't you give them weapons?" he said.
"They said, food - they have it, but they need to defend themselves because the situation is very bad." ($1 = 0.2832 Kuwaiti dinars) (Additional reporting by William Maclean and Ahmed Hagagy; editing by Anna Willard)
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