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Saddam Hussein says yet again that he is quite happy to open up all his nuclear facilities for UN inspection. The United States says it does not believe him (yet again) and this time threatens military strikes against known nuclear plants. There is an unavoidable sense that Iraq's potential nuclear capability is being used by both sides as a useful source of tension and confrontation – for Saddam Hussein to rebuild his image as an Arab leader capable of standing up to US bullying, and for the President Bush as an excuse to take another, perhaps this time fatal, blow at the seemingly irremovable Iraqi leader.

The true state of affairs in the higher levels of authority in Saudi Arabia is very hard to discover and even more difficult to confirm. The government's presentation of its activities and achievements is almost always euphoric, usually self-congratulatory – and often unrealistic. In its unremitting efforts to convince the Saudi people of the absolute success of all its endeavours, the Saudi regime unwittingly erodes the very credibility it constantly seeks to establish for itself.

Exasperation with sluggish progress towards a single currency, and a lack of political commitment to the GCC project, has persuaded Kuwait to concentrate on its on national interests. While its GC...

From boom to almost bust, Gulf equity markets have stumbled to dramatic effect. The socio-political consequences could be as signicant as the economic impacts, in emerging markets like Saudi Arabia.

The British government's decision not to allow negotiations to go ahead on a possible sale to Iraq of more than 50 British-made Hawk jet training aircraft will disappoint the Iraqis and frustrate British business hopes of an entry into Iraq's significant defence market. Negotiations between British Aerospace (BAe), the makers of the Hawk aircraft, and Iraqi officials had been in progress for some time (issue No.362 of Gulf States Newsletter, 15 May.) As well as talking about an initial order for 50 aircraft, Iraq also wanted a joint venture with BAe for local production of the Hawk and an oil buy-back arrangement administered by oil major Royal Dutch Shell.

Poor King Fahd, literally and metaphorically. The most recent estimates of Saudi Arabia's foreign reserves put them at no more than $40bn, a third of the level they reached ten years ago. Declining oil prices (in real terms) have taken their toll in the last decade and financial prudence has now obliged the government and state-owned companies to resort to borrowing from the kingdom's commercial banks.

The Nuclear Non-Proliferation Treaty (NPT) Review Conference that opened in New York on 17 April has seen a remarkable de facto convergence of interest between Egypt and Iran, two Middle Eastern powers otherwise at loggerheads. Both have been, albeit for different reasons, opposing Western attempts to push through an indefinite extension of the Treaty which expires this year.

Generational change remains off the agenda, as the Saudi leadership moved with unusual speed to confirm Ibn Saud sons Salman and Ahmed as crown prince and interior minister after Prince Nayef’s death. Quick decision-making was needed to counter mounting demographic and geopolitical pressure

Algeria's call for an Arab Summit Conference to discuss Egypt's return to the Arab League was generally welcomed by the Gulf states as well as Tunisia, Jordan, Iraq, Sudan and Mauritania. However, the widening repercussions of the Achille Lauro hijack have now made it most unlikely that a summit conference dealing with the question of Egypt could be held.

Nine days after the Amir of Kuwait, Shaikh Jaber al Ahmad, dissolved the 50-member National Assembly, following the resignation of all the government ministers, the Prime Minister, Shaikh Saad al Abdullah, has formed a new cabinet.

The last few weeks has seen a marked escalation in Saudi-Iranian tension. Regionally the two powers are facing off in Syria, while Riyadh has accused Iran of meddling in its eastern region. The US has revealed dramatic details of a plot to kill the Saudi ambassador in Washington Adel Al-Jubair (see box, below), once again pointing the finger at Iran. But is it just a war of words and accusations, or is there more at play?

Rarely do GCC disputes get more public, and it will take more than warm words from Riyadh to win back the Al-Nahyan into the currency union fold. For Abu Dhabi, bank location is the deal-breaker.

The Clinton Administration’s Gulf policy of dual containment was further weakened by the election of President Khatami in Iran. American failure to get positive support from the UN Security Council for the imposition of additional sanctions on Iraq (UNSCR 1134) highlighted the growing isolation of the Americans. Now, as the Administration seeks to squirm Out of applying the provisions of the Iran-Libya Sanctions Act (ILSA) against Total, calls are increasing for a rethink of the policy. These issues were discussed recently at a conference in Doha convened by the Qatari Centre for Strategic Studies, the IISS and Gulf 2000.

As the Arab efforts to secure the withdrawal of the Israelis from the Lebanon gathers pace and some glimmerings of a common policy begin to evolve, Saudi Arabia is in the vanguard of the attempts to reach a solution. Prince Sultan, the Minister of Defence, affirmed that the situation in the Lebanon is the main concern of the Saudi leaders. King Fahd, within weeks of his accession to the throne, is personally involved in the issue, putting his prestige and standing to bear in direct personal contacts with the principals involved.

The U.N. Security Council failed to meet its target date for “smart sanctions” in Iraq. GSN reports on the latest manoeuvres and examines Baghdad s suspension of oil exports.