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SAUDIS DRAW A LINE IN THE SAND: WEALTH HAS LIMITS

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After a sandstorm of spectacular growth and affluence, the kingdom of Saudi Arabia has begun to realize that its wealth has limits.

Saudi citizens and the royal family remain fabulously rich, sitting atop one of the world's largest treasures: a third of its oil supplies. But the era of easy indulgence and construction at any cost has given way to soul searching, even morning-after angst, as the archetypical Arab oil state digs in for a period of readjustment, cost-cutting and economic slowdown.Reacting to years of low oil prices and the high cost of the Persian Gulf War, the ruling House of Saud is turning off the tap of plenitude and benevolence from the top. The government is issuing no new contracts. It is cracking down on waste, devising unprecedented subsidy cuts for water and electricity and planning a phase-out of the expatriate workers who make up a fourth of the kingdom's 17 million residents.

"At one time in Saudi Arabia, everything was a priority," Oil Minister Hisham Nazer said. "Now we have to scale back, we have to select priorities. Adjustment is needed, whatever it takes."

Austerity is an unlikely theme for a country of palatial grandeur, where shopping malls boast 53-inch Sony television sets, auto-massage chairs and portable toilets for Bedouins traveling high-tech through the desert.

But ministers now jump to their feet to turn down their air conditioning, ridicule the number of neon light fixtures in their offices and wonder whether cooks elsewhere earn less than Filipinos in Saudi Arabian kitchens. Power is cut off for an hour in all ministries, and industries are instructed to shut down production during peak hours of power consumption.

The magic wand of resources that turned sand into stone through the 1970s and 1980s, producing hundreds of hospitals, 2,500 factories, 23,000 schools and thousands of miles of roads is being restrained.

The government is spending less, large contractors are making less, and there is not as much subcontracting.

"We are seeing it happen," said an economist with Saudi Arabia's National Commercial Bank. "No new projects. Old projects are retendered. We are asking contractors to bid again, to lower prices.

"It is a question of volume," he explained. "We used to build two schools every three days. What if we build two schools every two weeks? What if we delayed some oil exploration, dropped some road expansion plans for now?"

If the habits of executives accustomed to jetting around the kingdom are any indication, business leaders too are accepting the idea that small is beautiful. Many still board private jets with lush interiors. But private flying has decreased by 30 percent, and Jet Aviation, which operated 40 aircraft 10 years ago, now manages 25.

"People have less money and are more conscious of what it costs," said a spokesman for Arabasco, which runs the Boeing 727s and Gulf Stream aircraft. "The infrastructure is almost complete. There is no need to fly so many executives around."

"This is the beginning of an economic slowdown, belt-tightening and fiscal contraction and people feel it," observed a Saudi banker.

The goals of development plans have begun to change. The new one emphasizes defense, but its second priority is to "rationalize" spending and upgrade administrative efficiency. In plain Arabic, that means to save.

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