Saudi Arabia Facing a Double-Barreled Gun

By John Greenwald.

The two F-15 fighters thundered down the runway of King Abdul Aziz Air Base and rose steeply into the skies above the gulf. The flashy maneuver, conducted last week for visiting American Vice President George Bush, displayed the impressive might of a Saudi Arabian air force that has been largely trained and equipped by the U.S. Yet the show of strength was also a reminder of the dangers that confront Saudi Arabia, a fabulously wealthy kingdom that sits atop the largest proven oil reserves on earth. Faced with plunging revenues at home and increasingly ominous military threats abroad, the Saudis are passing through anxious times. Declared King Fahd ibn Abdul Aziz last month in a nationwide address: "We are surrounded by the most critical conditions we have ever faced."

Indeed, the Saudis find themselves staring at a double-barreled gun. While their policies caused the drop in oil prices from $28 per bbl. to $10 per bbl. over the past six months, that decline has cut deeply into the kingdom's revenues. Compounding its woes has been the continued collapse of a building boom that transformed the desert nation (pop. 6 million) into a land of superhighways, high-rise offices and shopping malls. At the same time, recent successes of Iran in its war against Iraq (see following story) have made the security-conscious Saudis extremely nervous. By invading Iraq's Fao Peninsula last February, the Iranians established a menacing threat to Saudi Arabia and its equally vulnerable gulf neighbors. The danger was underscored last week when an Iranian helicopter gunship fired a missile into a Saudi oil tanker in gulf waters, leaving four crewmen missing and seven wounded.

The threat posed by Iran has led the Reagan Administration to propose selling the Saudis $354 million worth of air and sea missiles. The White House last week sent formal notice of the sale to Congress, and now faces an uphill battle to head off expected disapproval of the deal. For his part, * Bush last week stressed Washington's commitment to Saudi Arabia during his eight-day tour of the gulf region. The Vice President repeated the Administration's determination to maintain the free movement of oil and proclaimed that the U.S. does "not want to see Iranian expansion result in a change in the balance of power in this area."

So frightened are the Saudis of foreign intrusion that they have embarked on a substantial military buildup. Growing concerns about the safety of its oil fields have led the kingdom to boost defense outlays every year since the Iran-Iraq war started in 1980. Allocations for defense and internal security are now Riyadh's largest single expenditure. They totaled $17.7 billion last year and represented nearly a third of all government spending.

That is a heavy burden for even so rich a country as Saudi Arabia, especially since its great wealth has begun to shrink. From a peak of $113 billion in 1981, Saudi oil earnings dropped to $28 billion last year. Uncertainty over petroleum prices and revenues prompted Fahd last month to take the unprecedented step of postponing approval of the country's new budget until summer. To the Saudis, accustomed to decision making by royal decree, the delay was a sign of indecision and uncertainty at the country's highest political level.

But Fahd clearly plans to keep the Saudi welfare state intact. He pledged last month to continue free education and medical care for all citizens and to maintain generous subsidies for such services as transportation, communications and electric power. Says Planning Minister Hisham Nazer: "The government is committed to providing every Saudi citizen with a minimum standard of living. But once he is healthy and educated, it is the individual's responsibility to improve his condition."

Most Saudis owe their prosperity to the vast amounts of money the government has poured into development projects over the past decade. While some of these, like the $3.4 billion international airport at the capital city of Riyadh, are attractive and useful, others seem destined for white elephanthood. One 1,800-acre complex dubbed the "diplomatic quarter" features a lavish sports club complete with a wave machine that creates surf in a vast swimming pool. Though the club is intended to house 7,000 diplomats and their families, skeptics question whether it will attract a third that number.

The government has found many ways to spend money. To ensure ample supplies < of grain, Riyadh has paid growers six times the world price for their output. But since the kingdom consumes only about half the nearly 2 million tons that farmers produce annually, Saudi Arabia has a grain glut. Efforts to raise livestock have been troubled. The Saudi Arabian Agriculture and Dairy Co., which opened in 1980, managed to breed 15,000 cows over the following five years. But the $100 million total cost was so great that the firm had to refinance its debts.

The Saudis are placing their hopes for industrial growth in showcase projects like Jubail, a $20 billion new city that rises like a shimmering mirage above the turquoise waters of the gulf. Mile after mile of silver pipes snake across the sands at Jubail, and block after block of beige-colored bungalows fill its residential sector. From Jubail's plants come chemicals and fertilizers as well as iron, aluminum and steel. Planners expect the community to grow from the 30,000 residential workers it now houses to 300,000 by the year 2000.

The Saudis' proposed purchase of U.S. missiles is the latest in a long line of controversial American deals. The kingdom bought 60 F-15 jets in 1978. When the Reagan Administration took office in 1981, it overrode strong congressional opposition and approved the purchase of five surveillance aircraft equipped with Airborne Warning and Control Systems. The first of them is scheduled to arrive this June. Congress blocked an order for an additional 48 F-15s last year, forcing the Saudis to turn to British and European jets. Now Riyadh views its missile request as a litmus test of American support.

To enhance its security on the ground, the kingdom has fashioned a force called Peninsular Shield with its five partners in the Gulf Cooperation Council. Together with Kuwait, Bahrain, Qatar, Oman and the United Arab Emirates, Saudi Arabia has assembled a 5,000-man force stationed in King Khalid Military City near the border with Kuwait. Built in typically opulent Saudi style, the complex can hold 70,000 troops. But its ability to withstand attack is questionable at best. Says one military analyst: "If the Iranians were not distracted by Iraq, the odds would be heavily in Iran's favor to overwhelm the Gulf Cooperation Council."

Another source of concern is the stalemated effort to reach a Middle East peace between Israel and its Arab neighbors. Fahd remains a staunch backer of Yasser Arafat and the Palestine Liberation Organization as the sole spokesmen for the Palestinian people. Despite the collapse of oil prices, the Saudis continue to provide hefty financial support to several other Arab states and the P.L.O. At their meeting last week, the King and Vice President Bush agreed on the need for stability in the region, but they differed on how to promote an Arab-Israeli peace.

Domestically, the ruling House of Saud faces some rising discontent from a middle class that remains shut out of political power. In what remains a largely feudal society with a complex system of consensus building, the technocrats and businessmen who emerged during the boom years lack modern forums in which to vent their views sufficiently. Many young Saudis, particularly those educated in the West, are increasingly frustrated by their elders' refusal to allow them any governmental voice.

While some segments of the middle class chafe under their restrictions, the kingdom's religious leaders constantly call for closer adherence to puritanical Islamic rules. Many of their strictures are directed at women. One recent decree banned them from riding alone in taxis or hotel limousines. In Riyadh and Jidda, black-robed women must board buses through the back door and sit separately from men. In some parts of the kingdom, a husband can divorce a wife simply by repeating "I divorce thee" three times.

But many women are striving to push their way into the 1980s. A growing number are refusing to wear a veil in public, and some run businesses and are entering professions and occupations in which they work side by side with men. At King Saud University, female students still attend classes on a separate campus and listen to lectures from male professors over closed-circuit TV. But beneath their veiled garments, many are outfitted in tight skirts, spike heels and snug-fitting tops and resemble nothing so much as Brooke Shields look- alikes. The coeds are becoming more aggressive at the dating game. They bring photos of their brothers and cousins to school to exchange with their classmates and provide telephone numbers when interest is shown.

Despite its myriad problems, the House of Saud remains firmly entrenched and popular. In a kingdom in which 5,000 princes have a vested interest in preserving the political system, the chances of major change seem remote. Nonetheless, Fahd is sometimes criticized as indecisive and too subservient to religious authorities. The health of the 64-year-old King, a diabetic who craves sweets, smokes cigarettes and is overweight, is a matter of concern. So is the condition of Crown Prince Abdullah, 62, the first in line of succession, who is reportedly scheduled to have coronary-bypass surgery.

Many Saudis view the end of the oil boom as a return to quieter and perhaps even better times. The sudden great wealth created social tensions that should be relieved in a less affluent period. "Those times before were not normal," says one Saudi businessman. "They were not real." A longtime British resident offers a similar perspective: "Patterns of life are traditional here, and the entire fabric still fits very well together. The system has been in place for 200 years, and people feel very comfortable with their government and their religion. What alternative has been offered?" Yet that may be too simple. While the Saudis clearly will not swallow all foreign ways whole, they are just as clearly a country in transition from feudal to modern times.

With reporting by DEAN FISCHER/RIYADH