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King Abdullah takes up the reins as economy booms

International markets reacted to the death of Saudi Arabia's monarch King Fahd by raising oil prices sharply to more than $61 a barrel.

But the bout of real nervousness did not last long. For the succession had been long established and western diplomats had been well briefed about what would happen. King Abdullah had in any case been the de facto ruler for more than a decade following Fahd's stroke-induced incapacitation.

However, the new ruler is in his eighties and diplomats believe that there will be a period of up to a decade in which real power is wielded by the older generation of the Saudi royal family. The major test for stability in the kingdom will come when a successor from the younger generation has to be chosen – that will determine whether the gradual modernization and opening up of the kingdom is maintained.

The main challenge facing King Abdullah remains security. The concrete blocks to protect government buildings, large corporations and all the banks against bomb attack demonstrate the threat from fundamentalist terrorists to both expatriate workers and senior Saudis.

The big worry now is what the Saudi authorities refer to as blow-back – the number of young men who go to Iraq to train as bombers and then return to the kingdom to carry out terrorist attacks – and there is growing anger at what the government believes is the failure of US president George W Bush and UK prime minister Tony Blair to listen to these concerns.

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