The Kingdom and the Power

By James Kelly

Amid reports of dissension, a royal family learns to live with less

In the heat of a summer's day, the highway curving across the desert from the port city of Jeddah to Mecca blurs into a shimmering ribbon of black. As the temperature climbs into the low hundreds, mishaps multiply: the blacktop is so hot that rubber tires explode and send cars swerving. No matter what the season, however, the same message greets travelers only a few miles outside the holiest of Muslim cities. Non-Muslims, the blue-and-white sign warns in English, must now leave the road. Only Muslims are allowed to visit Mecca; others must take a circuitous detour around the city. Farther down the road, armed guards make sure that the stricture is observed.

The sign is a telling symbol of how cautiously Saudi Arabia deals with the outside world. Although its bountiful oil reserves and strategic location make Saudi Arabia vital to the West, the country can be exasperatingly difficult for a foreigner to read. Today the kingdom seems to deserve closer scrutiny than usual: the past year's drop in oil production has diminished Saudi Arabia's income, while rumors of dissension within the ruling House of Saud have proliferated.

The country, of course, still shines with promise. As family businesses go, Saudi Arabia is immensely successful. Within a single generation, the ruling House of Saud has transformed its desert kingdom from a nomadic backwater into an influential power with all the trappings of a modern nation. Most of Saudi Arabia's wealth, in fact, has been accumulated only in the past decade: with nearly a quarter of the world's proven oil reserves, the kingdom profited handsomely when petroleum prices quadrupled in the wake of the 1973 Arab-Israeli war. In 1981, for example, the country collected an estimated $110 billion in oil revenues, up from $2.7 billion in 1971. Government outlays rose accordingly: spending is now running about $80 billion a year.

As demand and oil prices have slipped, however, so have Saudi oil revenues. The best estimate for the fiscal year that ends next March is $65 billion. For the first time in 20 years, Saudi Arabia will have a budget deficit, estimated at about $10 billion.

The effect is already being felt. Payments to foreign contractors are being deferred by 30 to 60 days. Instead of paying 20% in advance to construction firms, the Saudis are proffering only 10%. The biggest casualty so far is the country's ambitious five-year development plan for 1980 to 1985. Once budgeted at $250 billion, the program is way behind schedule, and no new projects are scheduled for 1984.

Even so, most countries would be glad to have Saudi Arabia's troubles. The Saudis still have an estimated $150 billion in monetary reserves invested abroad. Many Saudi officials, moreover, consider the slump a blessing of sorts, for it allows the country a chance to pause. Says a U.S. banker in the capital city of Riyadh: "The Saudis are not going to run out of money. But they are going to watch what they spend and begin setting priorities."

Indeed, many Saudis believe that the days of Ozymandian construction should end and that the government should now concentrate on maintenance and services. "Remember, many things have already been built," says a Saudi industrialist. "We have built one port. Why do we need another? To prove that we have money? Teachers cost less than airports, and we need teachers more."

The average Saudi, moreover, has not yet felt the pinch. This is largely because many of life's necessities are subsidized by the government and thus kept at artificially low prices. Wheat and poultry are sold below cost, while gasoline costs only 21-c- per gal. Water and electricity are provided at bargain rates. The total subsidy this year: $3.27 billion, or $467 for each of the kingdom's 7 million people. Observes a Western official in Riyadh: "If ordinary Saudis had to pay commercial rates for food and other basics, it would make a big difference in their standard of living." The Saudi government is not contemplating any cuts in the subsidies. Instead, it plans to meet this year's deficit by drawing from reserves and cutting expenses.

That budget is the first for King Fahd, 62, who took over the throne after his half-brother Khalid died in June 1982. One of 45 recorded sons of Abdul Aziz, who founded the Kingdom of Saudi Arabia in 1932, Fahd came to the job with nearly two decades of top-level experience. During King Faisal's reign (1964-75), he served ably as Minister of the Interior. As Crown Prince during the tenure of the sickly Khalid, Fahd in effect ran the kingdom.

Yet so far Fahd's reign has been marred by nagging reports of friction between him and Crown Prince Abdullah, 60, his halfbrother, who is next in line of succession. Stories of conniving and aborted coups reached such a pitch last March that the Ministry of Information felt obliged to issue a one-sentence statement that, in effect, said: The rumors current in the kingdom are totally untrue. The denial only begat another rumor: the dubious story quickly spread that Abdullah opposed the ministry's announcement and may even have pulled a gun on Fahd during a royal argument.

Western diplomats agree that the reports of dissension are greatly exaggerated. There is, nonetheless, a longstanding rivalry between Fahd and Abdullah. The two men have polar personalities. Wide of girth and somewhat phlegmatic, Fahd was once fond of such pleasures as gambling and drinking, habits he has apparently given up. Nevertheless, he still enjoys lengthy visits to Spain's Costa del Sol, where he maintains a lavish home. The tall, robust Abdullah, on the other hand, is a man of the desert whose greatest passions are camel racing and falconry. Though Fahd is generally perceived to be more competent, it is Abdullah who brims with self-confidence. He is not afraid to make his views known even when they are controversial. The Crown Prince has, however, a bad stutter that sometimes reduces him to an embarrassed silence.

Abdullah would like to be more closely involved in running the kingdom, but Fahd is reluctant to give way. At present the Crown Prince is First Deputy Prime Minister and commander of the national guard, a 35,000-strong force that serves as a kind of personal army for the royal family. The King reportedly believes that Abdullah should resign his military post before taking on added responsibilities. Abdullah, for his part, has privately complained that Saudi Arabia should not spread its resources too thinly but concentrate its aid in the Arab world, especially Syria. He has also criticized Riyadh's acquiescence to U.S. policies, which he feels favor Israel.

Nonetheless, Saudi watchers discount the possibility that Abdullah would try to usurp Fahd's power. "He is not a conspirator," says a U.S. expert. "A coup would not fit his character or his situation, nor is he capable of it." There is a general feeling among the several thousand Saudi princes that the stability of the monarchy must be preserved at all costs. Observes a U.S. official in Washington: "Their privacy works against anything as risky to organize as a coup."

Nor does the monarchy seem to face any serious threat from the population. Oil wealth has trickled down fairly well. Medical care and education are free, and any Saudi is eligible for an interest-free mortgage of up to $100,000. According to the State Department, the sort of Islamic fundamentalist revolt that toppled the Shah of Iran is not likely to sweep Saudi Arabia. The royal family came to power in alliance with the leaders of the country's dominant religious sect and still enjoys close ties with the clergy. The takeover of the Sacred Mosque at Mecca in 1979 by a fanatical band of Muslims is now dismissed as an isolated incident. Though an estimated 2 million of the country's 7 million inhabitants are foreign workers, the Saudis keep a close watch on potential troublemakers.

Fahd's first year in power has puzzled many Western analysts. He has kept a low profile, spending only a few months in Riyadh. Fahd apparently prefers the more relaxed atmosphere of Jidda, the summer capital at Taif or his private desert camp 160 miles north of the capital. He meets regularly with his Council of Ministers, but he has yet to act on a proposal made during Khalid's reign that the King set up a consultative assembly and publish a constitution.

Under Fahd, Saudi foreign policy remains as cautious as ever. Critics contend that the Saudi government is essentially timid and reactive, afraid to take any step that might make an enemy. Observes a Middle East analyst: "They don't want anyone to be angry with them or to become the object of propaganda or subversion." U.S. officials sometimes complain that Saudi Arabia does not use its generous subsidies to countries like Syria and Iraq as economic leverage to exact concessions. The Reagan Administration is particularly disappointed that Fahd has not exerted more pressure on Syrian President Hafiz al-Assad to withdraw his more than 40,000 troops from Lebanon.

Presidents Carter and Reagan shared at least one miscalculation: both overestimated what the Saudis could deliver. Washington, in fact, may have done the Saudis a disservice. By going to Riyadh so often with pleas for help, the U.S. unduly inflated the Saudis' notions of their importance. Says a sympathetic Middle East expert in Washington: "It is a delusion to count on them for what they cannot give."

The Saudis themselves say that they have never pretended to be the decisive voice in the Middle East. They argue that the self-interests of countries like Syria cannot be bought; if Washington needs proof, Saudi officials point out, it should look at how unsuccessful the U.S. has been in using economic leverage on Israel. "We do not buy influence with money," says Prince Saud al-Faisal, Saudi Arabia's Foreign Minister. "We work for a collective Arab position regarding peace, not a Saudi one. When an Arab country refuses some condition, it is usually for a reason, not just because it is being hardheaded or extremist."

Strolling through the cavernous new airport at Jidda or gazing at the fingers of skyscrapers poking up into the sky over Riyadh, a visitor can easily forget how swiftly Saudi Arabia has developed. Until 1953 the country had no national currency. Slavery was abolished only in 1962. It was not until 1967 that a paved road connected Riyadh and Jidda. Observes a U.S. diplomat in Jidda: "Anybody over 40 years old in this country can remember when people had to make their own shoes."

The apparatus and practices of a modern nation, indeed the very idea of being a nation at all, are new to Saudi Arabia. No other country in modern times has advanced so far so quickly. A rapidly growing bureaucracy has yet to demonstrate that it has either the flexibility or the competence to handle the complex problems of a nation that has undergone unparalleled growth. As the decline in oil revenues forces the country to focus its priorities, the Saudi government can be expected to devote more time than ever to domestic affairs. The most serious question faced by one of the wealthiest countries in the world is whether the complex decisions that must be made today are within the capabilities of a government unaccustomed to the daily exercise of great power. The answer is of importance far beyond Saudi Arabia's own borders. --By James Kelly. Reported by William Stewart/Riyadh and Johanna McGeary/Washington

With reporting by William Stewart, Johanna McGeary This file is automatically generated by a robot program, so viewer discretion is required.