RICHEST OIL STATE SAUDI ARABIA GAINS MORE INTERNATIONAL INFLUENCE

Press, Volume CXV, Issue 33794, 17 March 1975, Page 16

RICHEST OIL STATE SAUDI ARABIA GAINS MORE INTERNATIONAL INFLUENCE

f By

R H. C STEED

in the "Daily Telegraph-")

(Reprinted by arrangement

Barring another war in the Middle East, it now seems that ‘ e world will somehow find ways of adjusting, however painfully, to the huge re-distribution of wealth and power resulting from the extortion and blackmail of the oil producers.

As from the start of the crisis, much depends, on a fortuitous combination of circumstances in the primitive desert kingdom of Saudi Arabia — area one million square miles, population six million to seven million, including about two million foreign Arabs who play an indispensable part in many key sectors.

What matters is that Saudi Arabia has not only the most oil in the world, but also, at 15 cents a barrel production cost, by far the cheapest. While others are depleting their reserves, worrying increasingly about “conservation,” and driven to make a fast buck for the (next couple of decades while the going is good. Saudi (Arabia is still finding oil three times as fast as she is 'producing it, and that without looking very hard. i Others, like. Iran, with large populations and scope now for rapid industrialisation, will very soon indeed be spending more on internal development than they are earning on oil revenues. Yet Saudi Arabia, despite the most lavish expenditure on development, welfare and external aid, is still left with a budget surplus far greater than total expenditure.

She can raise or lower the price and output of oil with relatively little regard for the immediate economic consequences for herself. This brings us to the human factor in the Saudi equation. King Feisal. As Imam, Commander-in-Chief, Foreign Minister and tribal chieftan of this puritanically fundamentalist Islamic theocracy, he is now one of the most important rulers in the world.

The deluge of dollars resulting from a ten-fold increase in production in the last 10 years and a five-fold increase in price in 1973 have brought unwelcome pressures for traumatic change at home and unsought responsibilities abroad. King Feisal’s elder brother Saud, whom he displaced as King in 1964, proved unequal to the challenge on the far smaller scale of those days. Foreign policy King Feisal has faced it with the Koran as his compass and with the firm paternalistic hold on internal affairs that he inherited from his father the great Ibn Saud. His foreign policy has always been dominated by a religious abomination of atheistic Communism and fear of Russian imperialism. Saudi Arabia still has no relations of any kind with Russia or her satellites. With clear logic he has seen that this implies friendship with the West for strategic as well as economic reasons. This applies particularly to America, both as the main champion against Russian expansion and as a congenial partner in the development of his country’s oil wealth. As for Israel, Saudi Arabia has always given full moral support for the Arab campaign, backed increasingly by immense financial aid. At the end of the 1973 war the Saudis for the first time took a few casualties. They now have a brigade in Jordan and another in Iraq.

King Feisal, now 70 and far from robust, is increasingly obsessed with the desire to worship in liberated East Jerusalem before he dies. As custodian of the Holy Cities of Mecca and Medina he has special claims to the religious leadership of the Arab world. At the same time be doubtless makes the most of all this as a safeguard against subversion and aggression by envious “progressive” Arab States, President Nasser did his best to

engineer his overthrow and get him assassinated. Things are very different with President Sadat, but the future risk is always there from one quarter or another.

King Feisal must have had very mixed feelings about the 1973 oil embargo, but he decided that his own convictions and his whole credibility with the Arab world, to say nothing of the danger of internal trouble, assassination and sabotage by Palestinian terrorists, left him no alternative but to join in. Price restraint

As for the price of oil, while being as hard a bargainer as any Arab and not over-sensitive to the distant sound of Western pips squeaking, he has certainly exercised a decisive restraining influence.

If he had his way the present freeze on oil prices now being hotly debated by the oil producers at the O.P.E.C. summit in Algiers (which he did not want and did not attend in person) would continue well into next year before being indexed for inflation.

Of course, the supplydemand situation now developing as a result of the mild winter and other factors play an increasing part in all this. Saudi Arabia has continued unfalteringly with an ambitious expansion programme, and now has an

immediate capacity of some 25 per cent above current production.

The decisive factor, however, is that Saudi Arabia’s potential is so great and easily accessible that, under pressure, production could be rapidly increased far beyond present plans — probably doubled in a year or two.

This explains why, however ironically, it is Saudi Arabia that Dr Kissinger is, by clear implication, talking of invading in the event of “strangulation” of the West resulting from another oil embargo. The Saudi forces resisting attack, however ineffectually, would be largely American-equipped and trained.

A contract is being negotiated for the United States to train the 26,000 strong National Guard, whose job it would be to sabotage the 6000 miles of desert pipeline. The Saudis have made preparations instantly to put wells and other installations out of action in a way that would take some six months to repair even under ideal conditions.

• Two thousand American oilmen with Aramco and I thousands elsewhere in the ■ country would be imperilled (as hostages. Iraq would probably take the excuse to achieve her ambition of (grabbing Kuwait. If the i United States tried to forestall her the Russo-Iraqi alI liance would come into oper'ation. So the prospect of , Congress, with Vietnam ! fresh in its memory, sanctioning such an adventure i seems remote. America's N.A.T.O. allies (would certainly be aghast at i such an undertaking. It al] seems to be a matter of psyI chological judgment — i whether the threat will act ias a deterrent by reminding (ail concerned of the dangers lof another Middle East war. (or whether it will rather ( arouse resentments and look Hike an empty Sluff. ( King Feisal needs no reI minding. He played a major (part in President Sadat's disengagement from the Rus■sians — among other things Iby cutting off money for (Russian arms. i His seat will be a hot one I until the end of his days. So ( will that of his successor. I This looks like being Prince | Fahad, 54, a half-brother, ; Minister of the Interior, pro(Western, with a high reputation for ability. ! He has hinted in speeches abroad at the creation of a Consultative Council. This is something against which Feisal has set his face. While he admits a few brilliant meritocrats like Sheikh Yamani into the inner circle of power, his rule and his control of the country remain based on some 5000 princes from various branches of the Royal Family. They are distributed in key positions all over the country, in the administration and in the armed forces. Many of them are men of great ability, and all are held together in a remarkable network of family loyalty.

Even so, there was trouble in the air force in 1969 in which some of the princes were involved, as a result of which many awkward gaps were left among the pilots. King Feisal’s additional insurance against a “radical young officers" rebellion is the loyalty of his Bedouin and the National Guard, which is entirely separate from the army and is now being equipped with tanks and artillery. It is even being hinted that the return of the brigades from Jordan and Iraq may be a possible source of worry.

No less than a quarter of the country’s huge budget is spent on armed forces of one kind or another. Clearly, in the years ahead the problem of channelling and controlling the remarkable evolution now going on in the country, notably in education, will match that of Saudi Arabia’s foreign relationships in complexity and danger.