Saudis, losing patience with US, flex oil-money muscles

Saudi Arabia has upped the ante in its test of wills with the United States. Its aim clearly is to persuade the United States that the Saudi-US relationship is not a one-way street, operating (as Saudis view it) primarily to the advantage of the US.

To date, the Saudis see themselves as having taken risks in pursuing a policy within OPEC most likely to be advantageous to the US -- by backing minimal price increases and maintaining Saudi oil production at a high and falls egregiously to meet the obligations of true friendship.

To make the point, Saudi Arabia has been playing a tough game with the United States in recent weeks in behind-the-scenes maneuvering at the International Monetary Fund. With its oil wealth, the Saudi kingdom now has clout in both the IMF and the World Bank, where once the US and its partners in the industrialized world had a monopoly in calling the shots.

In this latest game, which is over seating the Palestine Liberation Organization (PLO) as observers at the forth-coming IMF-World Bank annual meeting, the Saudis may have outmaneuvered the US. The showdown is expected late Sept. 19 at IMF headquarters in Washington.

Prince Fahd of Saudi Arabia, in what must have been a carefully timed interview with the Saudi Press Agency Sept. 18, said:

"US policy toward the Arabs will not alter through presidential changes, but through a strong united Arab stand. Only then the US President, whoever he may be, will be compelled to reckon with Arab power as he reckons with the Jewish vote in the elections."

Prince Fahd's remarks should be seen against the background of Saudi annoyance at:

* US efforts to block the PLO from obtaining observer status at the IMF-World Bank meeting.

* The apparent inability of the US to put a brake on Israeli attacks on southern Lebanon.

* The US decision to resume topping up its strategic oil reserve. In Saudi eyes, this breaches an understanding, the other side of which they have kept -- not cutting back their oil production.

* US foot-dragging over a Saudi bid to buy additional, admittedly offensive, equipment for the F-15 jet fighters on order from the US.

It is within the context of this overall Saudi irritation with the United States that the three latest Saudi moves have come: A slight oil price rise at the just concluded OPEC meeting in Vienna; Saudi extension of bilateral oil sales which so far have excluded US purchasers; and Saudi endorsement of the proposed merger of Syria with Libya.

Prince Fahd described the Syrian-Libyan merger as "a great step toward holy war for Palestine and restoring the strategic balance with [Israel] which was upset by Egypt's exit from the Arab battlefield."

The extent to which the Prince's words are rhetoric directed as much at radical Arabs (both on his borders and within OPEC) is arguable. It is true that the Saudi royal family probably needs the US as its ultimate protector almost as much as the US needs Saudi oil to keep its industries and its automobiles going. Yet equally arguable is how far the Us itself can go, because of this fact, in stretching Saudi or patience without it snapping.

The full political significance of the Saudi moves at this week's OPEC meeting -- particularly in acquiescing in the $2 a barrel increase in the prices of its own oil -- has yet to be assessed. But there is no gainsaying that it earnestness with which the Saudis (in partnership with oil-rich Kuwait) have been trying to teach the US that they can neither be taken for granted not snubbed with impunity.

It centers on the bid by the PLO for observer status at the joint IMF-World Bank meeting in Washington. For the past three decades, the chairman at these yearly meetings has had the power of decision, after consulting with the boards of governors, on who gets invited as observers. Last year, New Zealand was in the IMF chair and ruled against the PLO's attending as an observer. This year, Tanzania is in the chair and has ruled in favor of the PLO.

This was the cue for the US to intervene behind the scenes -- and in an improper way. in many third-world eyes -- to get the forth-coming meeting to change the rules about the admission of observers. In the meantime, the US proposed, only those observers acceptable last year should be admitted this year.

Accepting such a US proposal would exclude the PLO -- an exclusion, whatever its clinical merits, likely to redound to the political advantage of an incumbent US President running for reelection. Significantly, Prince Fahd, in his Sept. 18 interview criticized US presidential election campaigning as "auctioneering" in favor of Israel and against Palestinian rights.

There are reports that Saudi Arabia made a bid for a face-saving compromise but was rebuffed. In any case, both Saudi Arabia and Kuwait ended up saying that unless the PLO was admitted as an observer this yeaR, they would both withhold further loans from the IMF. The Saudis, of course, are significant providers of IMF funding.

And on the US proposal (which would have the effect of overturning the Tanzanian chairman's ruling), the Saudis have lobbied with all IMF-World Bank members not to vote in the postal ballot being conducted on it.

Initial responses indicated enough abstentions for the US to be thwarted. There was then a postponement of the deadline, at US request, until Sept. 19.