JEDDAH'S MERCHANT ELITE: THE ALIREZAS

C O N F I D E N T I A L SECTION 01 OF 03 JEDDAH 01892


E.O. 12356: DECL: OADR
TAGS: PGOV PINR EFIN ECON SA
SUBJECT: JEDDAH'S MERCHANT ELITE: THE ALIREZAS


1. CONFIDENTIAL ENTIRE TEXT


2. SUMMARY AND INTRODUCTION: THE ALIREZAS ARE JEDDAH'S
FIRST FAMILY AND AMONG THE MERCHANT ELITE THEY ARE
CLEARLY PRIMA INTRA PARAS. AT PUBLIC RECEPTIONS SENIOR
ALIREZAS ARE DEFERRED TO BY ALL BUT THE AL-SAUD. WHILE
PROBABLY NOT THE OLDEST OR RICHEST FAMILY IN JEDDAH,
THEIR LINEAGE, REPUTATION, CONNECTIONS AND TRADITION OF
PUBLIC SERVICE GIVE THEM A UNIQUE PLACE IN JEDDAH'S
SOCIAL AND ECONOMIC LIFE. THIS POSITION WAS ACQUIRED
OVER THE PAST 150 YEARS THROUGH A SERIES OF ASTUTE
ECONOMIC AND POLITICAL MOVES. THIS CABLE, WHICH
DESCRIBES SOME OF THESE MOVES, IS BASED ON NUMEROUS
CONVERSATIONS WITH FAMILY MEMBERS INCLUDING A TWO HOUR
MEETING WITH THE CURRENT HEAD OF THE FAMILY SHAIKH AHMED
YUSSEF ZAINAL ALIREZA. A SECOND CABLE WILL FOCUS ON THE
STRUCTURE OF THE FAMILY'S COMMERCIAL ACTIVITIES. END
SUMMARY AND INTRODUCTION.


3. THE ALIREZAS PROUDLY, IF SOMEWHAT UNBELIEVABLY,
CLAIM DESCENT FROM ONE OF ISLAM'S GREAT HEROS AMR IBN
AL-ASS. AMR WAS A MECCAN NOTABLE WHO BACKED THE PROPHET
MOHAMMAD, LED ONE OF THE FIRST MUSLIM ARMIES INTO SYRIA
IN 633 AND IN 639 DIRECTED THE ARAB CONQUEST OF EGYPT
WHERE HE REMAINED AS GOVERNOR FOR NEARLY 30 YEARS. IN
THE 8TH CENTURY ONE OF HIS DESCENDANTS MIGRATED TO
WESTERN IRAN - WHERE THE ALIREZAS REMAINED UNTIL ZAINAL
ALIREZA RETURNED TO JEDDAH IN THE 1840. ZAINAL, WHO WAS
ONLY 12 YEARS OLD AT THE TIME, WAS TAKEN IN BY THE ZAHID
FAMILY WHO HAD ALSO MIGRATED FROM IRAN. YOUNG ZAINAL WENT
TO WORK IN THE ZAHID TOBACCO AND CARPET IMPORTING BUSINESS.
AFTER SEVERAL YEARS, HE BEGAN TO IMPORT CLOTH AND
FOODSTUFFS ON HIS OWN AND MARRIED ONE OF THE ZAHIDS, THUS
BEGINING A TRADITION OF COOPERATION BETWEEN THE FAMILIES
WHICH CONTINUES TO THIS DAY.


4. ZAINAL WAS THE SECOND OF FOUR SONS AND BY 1860 HE WAS
DOING WELL ENOUGH TO BRING HIS YOUNGER BROTHERS, ABDULLAH
AND HUSSEIN, TO JEDDAH. HE WAS SOME 20-25 YEARS OLDER
THAN HIS BROTHERS AND TREATED THEM AS SONS. IN 1880
ZAINAL SENT ABDULLAH TO OPEN AN OFFICE IN INDIA SO THE
FIRM COULD PURCHASE COMMODITIES DIRECTLY FROM PRODUCERS.
THIS WAS THE FIRST OF SEVERAL MOVES WHICH BEGAN TO
SEPARATE THE ALIREZAS FROM OTHER JEDDAH MERCHANTS.
EVENTUALLY, THEY HAD PURCHASING OFFICES IN BOMBAY,
CALCUTTA AND KARACHI. EXPERIENCE IN BRITISH INDIA GAVE
THEM VALUABLE EXPOSURE TO THE ENGLISH LANGUAGE AND MODERN
BUSINESS PRACTICES WHICH THEIR COMPETITORS LACKED. IN
1893 THE FIRM SIGNED ITS FIRST FOREIGN CONTRACT AND
BECAME AGENTS FOR THE BRITISH MOGUL LINE WHICH HAD A
MONOPOLY ON SUBCONTINENT HAJJ TRAFFIC. IN ADDITION TO
MAKING THE FAMILY ITS FIRST REAL FORTUNE, THIS CONTRACT
MOVED THEM FROM THE ROLE OF TRADITIONAL MERCHANT TO THAT
OF SPONSOR FOR FOREIGN FIRMS.


5. ZAINAL RETIRED IN 1905 AND LIVED ON UNTIL 1927.
ABDULLAH RETURNED FROM INDIA TO MANAGE THE FIRM WHILE
ZAINAL'S SONS KASSEM, MOHAMMAD ALI AND YUSSEF REMAINED IN
INDIA. BACK IN JEDDAH ABDULLAH BECAME PRESIDENT OF THE
OTTOMAN TOWN COUNCIL. AFTER THE FIRST WORLD WAR, SHARIF
HUSSEIN OF MECCA APPOINTED ABDULLAH GOVERNOR OF JEDDAH.
IN 1924 WHEN THE FORCES OF ABDULAZIZ AL-SAUD BESIEGED
JEDDAH, ABDULLAH HELPED PERSUADE SHARIF HUSSEIN TO
ABDICATE IN FAVOR OF HIS SON ALI. WHEN THE SITUATION
CONTINUED TO DETERIORATE, THE LAST HASHIMITE SHARIF FLED
TO CYPRUS AND ABDULLAH ALIREZA SURRENDERED JEDDAH TO THE
AL-SAUD. SEEKING TO REASSURE HIS NEW SUBJECTS THAT
JEDDAH'S SOCIAL AND ECONOMIC ORDER WOULD NOT BE
OVERTURNED, KING ABDULAZIZ ASKED ABDULLAH ALIREZA TO STAY
ON AS GOVERNOR. SINCE THE HASHIMITES HAD TAKEN THEIR
TREASURY WITH THEM, ABDULLAH ALSO LENT THE KING 6,000
POUNDS TO MAINTAIN HIS GOVERNMENT IN THE HIJAZ. THE
FAMILY EMERGED FROM THIS EPISODE WITH ITS PRESTIGE
ENHANCED AND A NEW ROLE TO PLAY AS ADVISORS AND
FINANCIERS TO KING ABDULAZIZ.


6. WHEN ABDULLAH DIED IN 1932, MANAGEMENT OF THE FIRM
REVERTED TO THE SONS OF ZAINAL. KASSEM HAD BEEN ACTIVE
IN OTTOMAN REFORM POLITICS AND HAD REPRESENTED JEDDAH AT
THE OTTOMAN PARLIAMENT IN 190B. HE MARRIED A TURKISH
WOMEN AND DIED IN ISTAMBUL IN 1927. MOHAMMAD ALI IS
REMEMBERED FOR ESTABLISHING JEDDAH'S FIRST MODERN SCHOOL
IN 1903. KNOWN AS THE FALLAH SCHOOL, IT WAS INSTRUMENTAL
IN MAKING ARABIC, RATHER THAN TURKISH, THE LANGUAGE OF
INSTRUCTION. MOHAMMAD ALI FINANCED HIS SCHOOL AND OTHERS
LIKE IT IN MECCA, BAHRAIN, DUBAI AND BOMBAY WITH PROFITS
FROM THE PEARL AND JEWELRY BUSINESS HE ESTABLISHED.
SINCE MOHAMMAD ALI SPENT MOST OF HIS TIME IN PARIS AND
BOMBAY, MANAGEMENT OF THE FAMILY'S JEDDAH BUSINESS FELL
TO YUSSEF ZAINAL ALIREZA WHO WAS BY THIS TIME NEARLY 50.


7. WHEN YUSSEF DIED, ABDULLAH'S SONS MOHAMMAD AND ALI
TOOK OVER THE FIRM. MOHAMMAD WAS EDUCATED IN INDIA. ALI
WENT TO BERKELEY IN 1940 AND BECOME ONE OF THE FIRST
SAUDIS TO STUDY IN AMERICA AND RETURN WITH AN AMERICAN
WIFE. DURING THE 40S AND FIFTIES THE TWO BROTHERS AGAIN
DEMONSTRATED THE FAMILY'S ABILITY TO SPOT OPPORTUNITIES
AND CAPITALIZE ON THEIR FOREIGN EDUCATION. THE ALIREZAS
BECAME THE SAUDI REPRESENTATIVES FOR WESTINGHOUSE,
GOODYEAR, PEPSI, FORD AND FOR A WHILE GM. THEY
EVENTUALLY SOLD THE GM DEALERSHIP TO THE ZAHIDS.


8. MOHAMMAD ABDULLAH AND ALI ABDULLAH WORKED CLOSELY
WITH PRINCE FAISAL WHILE HE WAS VICEROY TO THE HIJAZ AND
LATER FOREIGN MINISTER. ALI BECAME A MINISTER OF STATE
WITHOUT PORTFOLIO AND EVENTUALLY SAUDI AMBASSADOR TO
WASHINGTON. MOHAMMAD MOVED FROM PRESIDENT OF THE JEDDAH
CHAMBER OF COMMERCE TO MINISTER OF COMMERCE. AFTER
FINANCE MINISTER ABDULLAH SULIMAN, HE WAS THE SECOND
COMMONER TO EVER HOLD CABINET RANK IN SAUDI ARABIA.
MOHAMMAD LEFT THE CABINET BECAUSE OF PROBLEMS WITH KING
ABDULAZIZ'S YOUNGER BROTHER ABDULLAH BIN ABDULRAHMAN WHO
WAS A POWER AT COURT DURING THE REIGN OF KING SAUD.


9. DESPITE HIS PROBLEMS WITH "UNCLE ABBY", MOHAMMAD
ABDULLAH ALIREZA REMAINED THE LEADER OF JEDDAH'S
MERCHANTS AND A STRONG SUPPORTER OF THE AL-SAUD WHEN THEY
WERE THREATENED BY NASSERISM. IN THE EARLY 60S EGYPTIAN
PLANES WERE BOMBING SOUTHERN SAUDI ARABIA FROM BASES IN
YEMEN AND DROPPING ARMS TO TRIBAL DISSIDENTS NORTH OF
JEDDAH. CAIRO'S VOICE OF THE ARABS WAS CALLING FOR A
POPULAR UPRISING AGAINST THE AL-SAUD. MOHAMMAD ALIREZA
COUNTERED THIS PROPAGANDA BY ORGANIZING A MAHRAJAN - THE
TRADITIONAL GATHERING OF THE TRIBES TO SWEAR LOYALTY TO A
LEADER. DURING THIS LARGE DEMONSTRATION HELD IN DOWNTOWN
JEDDAH MOHAMMAD ABDULLAH ALIREZA REPEATED HIS FATHER'S
GESTURE BY HANDING PRINCE FAISAL A GOLD KEY TO THE CITY.


10. THIS WAS ALSO A PERIOD OF INTERNAL TENSION WITHIN
SAUDI ARABIA AS FORCES GATHERED AROUND EITHER KING SAUD
OR PRINCE FAISAL. IT WAS SIGNIFICANT THAT FAISAL GOT THE
KEY TO JEDDAH, SOMETHING HE DID NOT FORGET AFTER SAUD WAS
FORCED TO ABDICATE. FURTHERMORE, WHEN FAISAL BECAME KING
HE DECIDED TO MEET THE CHALLENGE OF NASSERISM HEAD ON.
HE BEGAN TO CREATE THE FIRST MODERN SAUDI ARMY. HE
CALLED FOR AN ISLAMIC CONFERENCE WHICH WAS INTENDED TO
CONFRONT ARAB NATIONALISM WITH ISLAM AND WHICH EVENTUALLY
LED TO THE ESTABLISHMENT OF THE ORGANIZATION OF THE
ISLAMIC CONFERENCE. HE FUNDED THE ISLAMIC DEVELOPMENT
BANK AND HE SENT MOHAMMAD ABDULLAH ALIREZA TO CAIRO AS
HIS AMBASSADOR.


11. MOHAMMAD SPENT SEVEN DIFFICULT YEARS IN EGYPT WHERE
HE OFTEN FELT THREATENED AND ISOLATED. ACCORDING TO HIS
SON, FORMER SAUDI DEPUTY FOREIGN MINISTER ABDULLAH
ALIREZA, ONE OF THE FEW OFFICIALS WHO WOULD CALL ON HIS
FATHER WAS THE AMERICAN AMBASSADOR LUCIUS BATTLE.
NEVERTHELESS, MOHAMMAD MADE PROGRESS IN NORMALIZING
SAUDI-EGYPTIAN RELATION, NEGOTIATING THE TREATY OF JEDDAH
AND ARRANGING THE WITHDRAWL OF EGYPTIAN TROOPS FROM YEMEN
WHICH THE SAUDIS, NOT SURPRISINGLY, PAID FOR. AS A
REWARD FOR HIS LONG SERVICE, MOHAMMAD MOVED ON TO BECOME
SAUDI AMBASSADOR TO PARIS WHERE HE HAD SPENT PART OF HIS
YOUTH WORKING IN HIS COUSIN MOHAMMAD ALI'S JEWELRY
BUSINESS.


12. AFTER THE DEATH OF ABDULLAH ALIREZA'S SONS,
MANAGEMENT OF THE BUSINESS MOVED ON TO THE GRANDSONS OF
ZAINAL. SHAIKH AHMED YUSSEF ZAINAL IS THE CURRENT HEAD
OF THE FAMILY. NOW NEARLY 70, AHMED IS ONE OF THE LAST
ALIREZAS TO HAVE SPENT MUCH OF HIS YOUTH IN INDIA WHERE
AFTER INDEPENDENCE PROHIBITIONS AGAINST FOREIGN OWNERSHIP
FORCED THE FAMILY TO LIQUIDATE ITS HOLDINGS. AHMED ALSO
MADE FREQUENT VISITS TO JERUSALEM DURING THE THIRTIES
WHERE HE WAS INVOLVED IN THE DIAMOND TRADE AND DEVELOPED
A DEEP AND OFTEN EXPRESSED CONCERN FOR THE PLIGHT OF THE
PALESTINIANS.


13. WHILE THE FAMILY'S BUSINESS RELATIONSHIPS HAVE
BECOME VARIED AND COMPLEX, ITS ASTUTE COMBINATION OF
BUSINESS AND POLITICS HAS REMAINED CONSTANT. LAST FALL
AFTER THE INVASION OF KUWAIT, BUT BEFORE OPERATION DESERT
STORM, THE ALIREZAS ANNOUNCED PLANS TO BUILD A 200
MILLION DOLLAR SODA ASH PLANT IN SAUDI ARABIA. THIS WAS
THEIR FIRST SIGNIFICANT NEW DOMESTIC INVESTMENT IN OVER
FIVE YEARS. WHILE THE PROJECT HAD BEEN UNDER
CONSIDERATION FOR MONTHS, THE TIMING OF ITS ANNOUNCEMENT
WAS INTENDED TO EXPRESS CONFIDENCE IN SAUDI ARABIA'S
LEADERSHIP AND FUTURE. THE ALIREZAS' OWN LEADERSHIP AND
FUTURE WILL BE DEALT WITH IN A SECOND CABLE.


GRIFFIN