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Although the South Koreans are passing through a particularly painful phase of economic readjustment, including a sharp shift away from their previous export mania, the Seoul government has acted swiftly and with apparent success to reassure the Saudis of its commitment to the Kingdom's public housing program, in which South Korean construction firms enjoy a position of lucrative domination.

There seems little doubt that the Saudis have speeded up their capacity expansion programme to permit sustained output of 12 million b/d by next year. That does not mean they will actually produce as much initially, but there is plenty of pressure to increase output substantially. If they do, then they will have no choice but to spend a lot of money developing additional reserves.

President Giscard d'Estaing's five-hour visit to Riyadh at the end of his tour of the Gulf states and Jordan has been described as of special significance by Prince Saud, the Foreign Minister. But political agreement is not helping France's growing trade deficit with the kingdom, and French trade officials see few ways to reverse the trend.

Although anxious glances have been cast by the Saudis at recent Shiite demonstrations across the border in Kuwait and further north at the Iraqi-Iranian confrontations, the most sensitive area of insecurity appears to be within the kingdom itself. Ever since the Mecca siege last year, when more 500 people died and the following unrest in university campuses in the Eastern Province and the later demonstration of anti-monarchy groups in London, internal security has been stepped up dramatically.

The assassination of Anwar Sadat throws into immediate confusion and doubt almost all the current and various strands of political action and endeavour throughout the whole of the Middle East. The distasteful jubilation expressed in some Arab capitals over the murder of the President of Egypt is short-sighted as well as shameful. The targets of acts of unlawful violence may be individually selected but the resultant effects are indiscriminate, widespread, and evil. If the gun and the bullet become the sole arbiter of political issues in the Middle East, all the governments of the region are at risk and those who applaud such methods invite chaos and instability to their own countries.

US SECRETARY of State Alexander Haig this month visited Saudi Arabia on a Gulf and Middle East tour, but signally failed to allay fears that the United States was far more interested in deterring the apparent threat from the Soviet Union than solving the Arab-Israeli question. During his stay in Riyadh Haig was silent on the prospects for any revival of the Camp David process (perhaps tactfully) or any proposals concerning the "Palestinian issue" (less tactfully). With good reason, the Saudis are worried that Washington is prepared to allow the impasse in Arab-Israeli negotiations to continue so that greater attention can be devoted to Gulf security.

In the last issue of our sister publication "Gulf States Newsletter" (No.170) it was suggested that the final outcome of the Gulf Cooperation Council meeting in Taif, attended by the Foreign Ministers of the six member States, could be safely predicted in advance. And so, in the event, it has turned out. The Six agreed without difficulty on a number of issues already wholly acceptable to the Arab world in general, and avoided or skirted around most other matters of a controversial nature.

More than a year ago the European Economic Community produced its "Venice Declaration" on the Middle East in which the community supported the principle of Palestinian self-determination and required its members to play a "special role" in the region. Since then what became known as the European initiative has made little progress and showed few signs of achieving positive results. Now some fresh impetus has been given to the initiative by the EEC Foreign Ministers' decision to send Lord Carrington, the British Foreign Secretary and current president of the EEC to Riyadh for discussions on Prince Fahd's eight-point proposal for a Middle East peace settlement.

At the end of February, Greece's Foreign Minister Ioannis Charalambopoulos made a three-day visit to Saudi Arabia which showed the way Greece's new socialist government sees its relationship with the Arab world. So far, Greece had maintained an attitude towards the Middle East which, if not indifferent, was at least neutral. What the country and its government were more concerned about was, regarding the West, its integration in the Common Market and to the east, the deadlock on Cyprus and other Aegean islands.

On September 29 Dhu al Hijja, the month of the pilgrimage, begins. The Hajjis have been steadily growing in numbers in Jeddah over the last few weeks. Some locals have been predicting more than one million foreign pilgrims this year. Latest official figures indicate a 35% increase in pilgrim arrivals so ar. There were just under 813,000 last year down from the 1979/1399 four year peak of 862,500.

With the shelving of the Reagan Initiative, whether permanently or temporarily, the Arab states now have the time and opportunity to pause and take stock of their current political situation. Saudi Arabia, with Jordan and the PLO, was a critical element in the Reagan equation, as evidenced by President Reagan's telephone call to King Fahd when King Hussein announced his withdrawal from the peace negotiations.

The Gulf Co-operation Council (GCC) comes, on 25 May, to the third anniversary of its founding. Against a background of an Arab world marked by declared and undeclared wars, civil strife, hostility between individual states, ideological quarrels, political rivalries, attempted insurrection and ruinous policy differences, for the GCC to have survived at all is something for the six member states to celebrate.

There can be little doubt that when the British Prime Minister, Mrs. Margaret Thatcher, meets King Fahd the increasingly vexed issue of which Western country will supply 'Saudi Arabia with "ET" (Emerging Technology) multi purpose combat aircraft will be high on the agenda.

The reconciliation of old and new in Saudi Arabia is a common and constant theme throughout the country. The tug-of-war between tradition and modernity is not exclusive to the kingdom; it is manifest in many developing nations. The issue has a sharper focus and perhaps a larger impact in Saudi Arabia, where the pace of change has been spectacularly fast, widespread and pervasive.

The political limelight on Arab affairs, is presently centred on the current United -Nations General Assembly in New York, where the Arab delegates are involved in a flurry of diplomatic activity of which the prepared speeches in the debating chamber are only the tip of the political iceberg. Much of the dealing takes place in the UN corridors and meeting rooms of the Assembly building and the working lunches and dinners in the diplomatic missions. One gathering that did not take place was the traditional annual get-together of the Arab delegates, at which the co-ordination of Arab positions on the agenda of the current session is worked out.