US embassy cable - 91JEDDAH1892

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