CONFIDENTIAL
BACKGROUND
1. Saudi Arabia has recently assumed major importance
a) On the world scene, as the dominant partner in
OPEC and as an increasingly important financial power.
b) In the Arab world, as paymaster of the "confrontation
states" in the Arab/Israel dispute and as arbiter (by virtue
of her financial strength) in Arab quarrels
c) For the UK, as our largest Arab market (our exports may
be worth up to £500m this year), supplier of over 20% of
our oil imports and a major holder of sterling, as well as
having with Iran a preponderant influence in the Arabian
Peninsula/Persian Gulf region which is of vital interest to us.
2. In spite of the rapid development of Saudi Arabia over the
past 12 years power is still held within a very small circle.
Policy in all matters of importance is determined by the Head of
State, King Khalid, and by Crown Prince Fahd in conjunction with
the nominated Council of Ministers which is dominated by the more
able members of the Saudi Royal Family but includes an increasing
number of Saudi Arabia's new breed of technocrats.
3. As mentioned above King Khalid has undergone two operations
on his hip in the Wellington Hospital in London. He has just left
hospital and is to convalesce, initially at least, in a large house
in Hampstead ("Beechwood") which the Saudis have bought for the
purpose. Although King Khalid appears to be making a good recovery
there is doubt over how much longer he will continue to reign. If
and when Prince Fahd succeeds him he is likely to wish to rule
rather than to reign.
4. The late King Faisal held strong prejudices and was reluctant
to take decisions. Despite this he had enormous prestige both in
the Arab world and outside. Since his death in 1975 the Saudis
have conducted a more positive foreign policy particularly in the
Arab/Israeli dispute, intra-Arab problems (especially Lebanon) and
the security of the Gulf and the Arabian Peninsula. They have also
played a significant role in world oil and financial matters.
/Saudi Arabia
CONFIDENTIAL
