What next in Begin-Saudi battle for Reagan's favor; Saudis ask 'gesture'

Saudi Arabia appears confident that its determination to keep oil prices low will be rewarded by an American political gesture toward the Palestinians. Hard-line statements by Saudi Oil Minister Sheikh Ahmad Zaki Yamani -- in effect blocking attempts to convene an extraordinary OPEC meeting later this month -- are said by Kuwaiti officials to have been at least partially influenced by President Reagan's performance during talks Sept. 9-10 with Israeli Prime Minister Menachem Begin.

Sources within the Organization of Petroleum Exporting Countries admit that Saudi Arabia's attitude makes an OPEC meeting on oil prices to be held before the scheduled December Abu Dhabi conference "highly unlikely." These sources say that Saudi Arabia's refusal to discuss a raise of its base rate beyond the present $32 per barrel "leaves no room for compromise."

Diplomats see Saudi Arabia's intransigence on oil prices as a means of giving the US time to respond to the Saudi initiative. A failure by the US to reward Saudi moderation in terms of a resolution of the Middle East conflict and of battling for low oil prices would result in Saudi Arabi feeling abused and betrayed -- an attitude that could influence the Saudi position during the December conference.

Several OPEC oil ministers, however, hope to take the opportunity of an oil seminar at Oxford, England, this week to try to iron out their differences.

Kuwaiti Oil Minister Sheikh Ali Khalifa traveled to London Sept. 9 to set up a private meeting and has been in contact with his colleagues in several OPEC countries. Sheikh Yamani and Libyan Oil Minister Abdul-Salaam Zaqar have also arrived in Britain.

But in an apparant attack on Saudi strategy, Iraqi Oil Minster Tayeh Abdul Karim told a Kuwaiti newspaper Sept. 12 that Arab oil states should reconsider their investments in the West. "These funds only serve the interests of some industrialized countries, particularly the United States, which makes no secret of its enmity toward the Arab world and supplies with Israel with the tools of death and destruction," Mr. Kerim was quoted as saying.

Sources close to the Saudis say that they are prepared to weather the storm. They claim that "Reagan had the upper hand with Begin." They believe that President Reagan's position was strengthened by the fact that Mr. Begin did not wish to make an enemy out of the US President -- a statement that holds out hope for Mr. Reagan's capability to pressure Israel in the future.

But "joint moves by the United States and Israel for greater military cooperation make a swift and positive gesture toward Saudi Arabia all the more incumbent," says one ranking Arab diplomat.

Saudi newspapers strongly attacked th e latest plans for closer US-Israeli military cooperation. Said the Jeddah-based Arab News: "One needs to further evidence to prove US collusion with the enemy, Israel -- a collusion which ironically ignores US interests in the region and at the same time encourages Israel to widen its aggression against the Arabs." An Nadwa, published in Mecca, added: "Reagan's new slip outpaces all crimes committed against the Arabs by his predecessors in the White House."

Diplomats believe that the Saudis' privately are less upset by the joint US-Israeli moves, but need on endorsement of Saudi Crown Prince Fahd's Mideast plan to counter growing anti-US sentiment. Prince Fahd's peace plan offer tacit recognition of the state of Israel in return for a Palestinian state.

The Saudis attribute great importance to the Sept. 12 meeting between the Prince and US Secretary of State Alexander M. Haig Jr. in the Spanish resort of Malaga. At the NorthSouth summit in Mexico, Prince Fahd and President Reagan will have an opportunity to sound each other out. Only after that will the Saudis consider setting a date for Prince Fahd's visit to the US. Said one prominent Arab politician: "Continued US insensitivity to Saudi needs and a failure for the Fahd visit to Washington to materialize is all that is needed for the writing to be on the wall."