BATTLE ROYAL ON THE GULF

By SCOTT MACLEOD/DOHA

A visitor is led through splendid rooms of marble and teak, thick carpets and crystal chandeliers. This is the Diwan--seat of power in the oil sheikdom of Qatar--and the guest arrives at the inner sanctum to find hushed courtiers awaiting the moment His Highness, the Emir, will favor the chamber with his presence.

But when Sheik Hamad bin Khalifa al-Thani, 44, enters through a side door, he ignores formalities, proffers a friendly handshake, and talks frankly with a journalist for two hours--acts normally taboo in cloistered Arab monarchies. He breezily inquires, "Can you come to lunch Saturday?"

Change is stealing into all the desert kingdoms of the Persian Gulf, but nowhere else has it proved as beneficial--though fraught with palace intrigue--as in tiny, thumb-shaped Qatar (pop. 500,000). Eighteen months ago, Hamad, trained at Britain's Sandhurst Military Academy, was merely an heir apparent. Then he staged a bloodless coup that ended the 23-year reign of his father Sheik Khalifa bin Hamad al-Thani, 64, who had developed an unseemly fondness for liquor and opulent palaces. Since then, Qataris have witnessed one of the bitterest Arabian family spats in memory, involving cash and arms, ritual and reform. Only last week did a cease-fire seem to take hold. Khalifa appeared to renounce his claims, and Hamad agreed to let his father return from exile and become Qatar's elder statesman.

The trouble in Qatar and the other oil sheikdoms, of course, goes far deeper. Quite apart from perennial fears about Iraq and Iran, the region faces a potentially fatal combination of declining economic growth, rising democratic opposition and mounting Islamic extremism. The gulf is the West's economic lifeline, and a serious threat to the flow of oil would jeopardize millions of jobs in industrialized countries. While Hamad's cautious reforms, like his cool handling of his family feud, have proved generally popular at home, they are eyed with nervousness and suspicion in the tradition-bound region, which includes Saudi Arabia, a strategic U.S. ally.

The other five Arab oil rulers, average age 69, are concerned that Qatar's policies may fan a desire for change within their own realms. Some of the friction comes from the new Emir's refusal to follow the lead of Saudi Arabia--by custom, elder brother to the small oil sheikdoms. And, sniffs a neighboring prince, "overthrowing his father in this way...Let's just say it was not well received."

From the capital of Doha, a glass-and-steel city whose residents once survived on pearl fishing, Hamad has scheduled municipal elections and loosened restrictions on the press, near revolutionary moves in the ultrapatriarchal gulf. He has angered neighbors by receiving a minister from Iraq and a minister plus a battleship from Iran--every other sheik's two worst enemies. He has also tried to outdo them in pleasing the U.S., offering the Pentagon a base on his soil and, until Benjamin Netanyahu came to power, moving faster to normalize relations with Israel.

Hamad is unapologetic, though he insists he does not mean to provoke. His aim, he explained to TIME, is simply to strengthen the monarchy's support at home and expand its relations abroad. As the gulf states' populations grow and modernize, he says, the patriarchal system will be insufficient. "If you do not allow the people to participate in government, you are only creating problems for yourself," the Emir says. Alluding to violent Islamic campaigns in Saudi Arabia and Bahrain, he adds, "In some gulf countries, the problems have already started."

Despite Qatar's long and friendly relationship with the U.S., Hamad does not endorse Washington's "dual containment" policy of isolating Iraq and Iran. He believes Saddam has learned a lesson from his defeat in Desert Storm and will not threaten his neighbors again. He also doubts Iran's mullahs are the dangerous revolutionaries depicted by U.S. officials. He suspects some of his fellow rulers inflate the external threat as an excuse to crack down on internal opposition. "If the people are asking for democracy," he says, "I don't want to see us shifting the blame on Iran and Iraq."

Undoubtedly, some of Hamad's maverick views can be explained by generational differences. As Khalifa's eldest son, he was designated the heir and named Defense Minister in 1977. When his father grew increasingly distracted after the 1991 Gulf War, Hamad unofficially took over day-to-day governing. Khalifa began spending much of the year on the French Riviera. In early 1995 Khalifa suddenly returned to Qatar to install as Prime Minister a more favored son, Abdul Aziz. Hamad decided the move threatened his own position, as well as the $10 billion development of Qatar's natural-gas reserves he was supervising. After weeks of consultation with family and tribal leaders, he summoned them to the Diwan one morning in June 1995 and announced that he was, as he puts it, "taking over." Khalifa was conveniently in Switzerland.

The son called his father to inform him of the move, but the ousted Emir refused to get on the phone. Instead, with moneybags bulging, he began touring Arab capitals where his claim to be the "true Emir" was received with open palms. The result was a swirl of plots allegedly financed by a purported $8 billion Khalifa had stashed in foreign bank accounts and supported by neighbors, including Saudi Arabia. By February a countercoup was under way. According to Qatari officials and Western diplomats, soldiers and policemen were hired to assassinate senior officials, possibly including Hamad. Unfortunately for the ex-Emir, some of the plotters disclosed everything.

The next move was Hamad's. He sought court orders freezing his father's bank accounts and proceeded with suits to recover the funds. That quelled the plotting and evidently ended Khalifa's dream of returning to power. After the announcement last week of the reconciliation, part of a deal to restore the missing billions, Hamad quickly moved to cede some of his power in favor of a broadened authority. He indicated he would relinquish the post of Prime Minister and turn the office into one safeguarded by the constitution. He also appointed his son Jassem, 18, the new heir apparent. A recent Sandhurst graduate, Jassem displaces two elder brothers, including a fundamentalist.

Not all Qataris are thrilled with Hamad. Some resent his efforts to stop doling out free college education, housing, foreign holidays and high-paying jobs that require no work. "In the past we spent too much on luxury and life-style," Hamad says. "We have to change our mentality." When one of his sons took unauthorized leave from his army post, he was dismissed on the spot. "Modernization is not just roads and television, but a way of thinking," says Mohammed Musfir, editor of Rayah, Doha's daily newspaper.

But can even a modest reformer prevail in a deeply conservative region? Qatar has a defense agreement with Washington, but the U.S. may not protect an Emir who is cozy with Iran and Iraq. Qatari traditionalists and some Western analysts believe it is naive to push democratic values in a society where many customs have remained unchanged since the Middle Ages. Over lunch, Hamad did something that still seems unthinkable to many. He introduced one of his three wives, Jassem's mother, who was modestly dressed in an ankle-length suit rather than in the customary robe. As she spoke of improving the educational system, she seemed more akin to Hillary Clinton than the veiled wives of Arabia. Indeed, next week she undertakes an unprecedented task: an official visit to the U.S., unaccompanied by her husband.

The Emir is counting on the popularity of his policies to pull him through. But he's not pushing a personality cult. One morning last summer, he was riding to work when he noticed billboards across Doha praising the first anniversary of his accession. When Hamad got to the Diwan, he issued instructions: Drop plans to celebrate the coup anniversary. "As for myself," the Emir said, "I plan to go fishing."