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Saudi Cash-Flow Crunch Prompts Doubts Over Pending US Weapons Sales

POST GULF WAR

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AS American manufacturers scour foreign countries to boost export sales, one of the United States' prime overseas markets is in distress.

Saudi Arabia - oil producer, investor, creditor extraordinaire, and the largest offshore outlet for high-priced US military equipment - is showing the weakest balance sheet in decades.

Entering its 11th year of budget deficits, the Saudi government owes tens of billions of dollars to domestic and foreign creditors.

Official coffers are low: International Monetary Fund (IMF) estimates put the country's financial reserves at $5.9 billion last year, a sharp drop from $11.7 billion in 1991.

With oil prices sinking to their lowest level in five years, analysts both inside and outside the kingdom say the world's top oil producer has poor prospects for reaping the profits necessary to comfortably fund domestic needs, pay for costly imports, and service its debts.

Some Saudi watchers - concerned that the kingdom will curb its imports of expensive American-made weaponry and imperil US jobs in the process - worry that the special US-Saudi Arabia commercial relationship, cemented during the 1991 Gulf war, may be cracking.

Since 1991, the kingdom has placed some $35 billion of US military goods on order - a so-called ``wish list'' drawn up by defense planners in Riyadh when they recognized an unprecedented American public support for arming US allies in the Gulf.

According to Saudi and American industry leaders, the timing could not have been better. The Pentagon's pared-down requirements have dampened domestic demand and US sales to third-world markets have been contracting. Backlog in US arms requests

Struggling to keep production lines rolling, many in the US defense industry have regarded the Saudis as a lifeline.

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