ABSTRACT
The chaos surrounding the 1988 budget illustrated the economic and financial crisis plaguing the kingdom and the regime’s growing confusion in handling it. Consequently, the kingdom’s oil policies were increasingly linked to budgetary needs and constraints. The kingdom’s external environment seemed to have improved considerably in 1988. A more balanced view, however, would interpret the Saudi moves on the Soviet, Chinese, and British fronts as aimed at improving the kingdom’s positionvis-a-vis Washington rather than at abandoning the centrality of the US in Saudi foreign policy. Non-oil revenue fell considerably with the cancellation of the new taxes, surcharges, and customs duties, and because of a decline in the kingdom’s investment revenue caused by falling overseas assets and interest rates worldwide. The kingdom would only consider quota readjustments if market forces changed or if demand increased. One school argued that the kingdom should refuse entry to Iranian pilgrims, or severely reduce their numbers.
