Inside Report (2)

US officials are cautiously hopeful about efforts begun by Saudi Arabian Crown prince Fahd to mediate the five-year war in the Western Sahara between Morocco and the Algerian-backed Polisario guerrillas.

This is the first time since the war for control of the mineral-rich, formerly Spanish-controlled territory began that the Saudis have gambled their prestige in the Arab world on a solution.

The Saudis have an important financial stake in the iron mines of Mauritania, included in the war zone. Also, Morocco's King Hassan II has close ties with the Saudi royal family, which pays the tab for US military aid to Hassan. The US is concerned about its future imports of natural gas and high-grade oil from Algeria.

Washington observers expect a major Moroccan drive against the Polisario bands soon if Fahd's efforts at mediation do not succeed.m