Saudis Direct Vast Wealth Toward `New Arab Order'

Riyadh expected to aid states on the basis of loyalties during Gulf war

SAUDI Arabia has emerged victorious from the Gulf war with added diplomatic weight, but its leaders will not be throwing it about unduly, according to Western and Arab diplomats here. ``The Saudis do have more authority than before ... they have improved their standing,'' says one European diplomat. ``But they are an inward-looking people, and I do not expect them to try to jostle their way to the forefront of the Arab diplomatic stage.''

Riyadh is expected, however, to use its enhanced self-confidence in international affairs to choose more carefully who benefits in the future from its largess.

``Especially when oil prices are so low, and money is getting more scarce, it has to be used more wisely, and its use has to be tied to the interests of the donor country,'' cautioned a Gulf diplomat here.

Saudi Arabia finds itself in an enviable position both economically and politically.

``Riyadh has come out of this virtually undamaged,'' a Western diplomatic source says. ``But look elsewhere. Kuwait in flames. Iraq destroyed. Iran exhausted from its eight year war. Jordan broke. Syria mired in poverty. Sudan in civil war. Egypt in debt. Israel living on US charity. For the future, Saudi Arabia emerges untouched, well developed, and with immense resources. This is very, very important.''

War takes financial toll

Though the war did no physical damage to the country aside from a couple of buildings destroyed by Iraqi Scud missiles, it has taken a financial toll, at least in the short term. Saudi Arabia contributed around $48 billion to the Desert Shield/Desert Storm operation, nearly half of its annual Gross Domestic Product, and was forced a few weeks ago to take out a $3.5 billion internationally syndicated loan for the first time in nearly 20 years.

Its massive oil reserves clearly give the country the potential to restore its finances, but fewer supplicants will be given a chance to share in that potential, diplomats say, as Riyadh reconsiders its past aid policies in light of loyalties shown during the Gulf war.

First indications can be seen in the $15 billion fund the six members of the Saudi-dominated Gulf Cooperation Council - Saudi Arabia, Bahrain, Qatar, United Arab Emirates, Kuwait, and Oman - set up last December to aid friendly countries. That fund, says one GCC country official, ``is to help our new partners in the new Arab order to finance the new order,'' and so far its only projected beneficiaries are Egypt and Syria, the bulwarks of the Arab coalition forces aligned against Iraq.

How the money will be disbursed, over what period of time, and to what specific ends are questions that remain to be resolved. GCC officials say they expect other Arab and Islamic states could well contribute troops to the new security arrangements now being drawn up, and thus also benefit from the fund. But certain countries seem doomed to be frozen out for their failure to join the anti-Iraq coalition.

Yemen and Sudan, both of which have enjoyed substantial sums of Saudi aid in the past, can expect to see no more for the foreseeable future, having backed Baghdad, Saudi officials and foreign diplomats say. Tunisia, Algeria, Morocco, and other nations that sat on the fence will also find it hard to convince Riyadh they deserve continued assistance.

PLO poses problem

The Palestine Liberation Organization, which openly supported Iraqi President Saddam Hussein, and Jordan's King Hussein, who went nearly as far, pose more complex problems for Saudi strategists. Riyadh cut all funding to the PLO last year, and officials say they are seeking ways of channeling money instead to grass-roots Palestinian projects in the occupied territories. But they see their real enemy to be PLO Chairman Yasser Arafat, whose downfall they would be pleased to see.

At the same time Riyadh is not championing any rival to Mr. Arafat, and ``most officials, when they think about it, will probably decide that there is no option but the PLO and Arafat'' to represent the Palestinians, the European diplomat says.

Similarly, although the Saudi royal family feels deeply betrayed by King Hussein, the alternatives to his rule - radical Palestinian or radical Islamic - are even more distasteful to Riyadh.

``I think that the Saudis recognize that the survival of the Hashemite monarchy is in their best interests, even if they have to swallow hard before saying so,'' says the European diplomat.

``King Hussein always counts on the fact that he is an indispensable neighbor to everyone,'' a Gulf official adds. ``I think he can probably go on doing so.''

Diplomats here see the Saudis' decisive handling of the Gulf crisis, biting the bullet of Western military intervention, and actively rallying Arab members of the coalition, as the culmination of a decade of quiet but increasing activism on the international stage. With world attention focused on efforts to secure an Arab-Israeli peace treaty, a resolution to the Palestinian problem, and stability in the Gulf, ``there is no way Saudi Arabia can avoid having a high profile,'' says the diplomat. ``They will be central players.''

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