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Saudi king back home, orders $37 bln in handouts

By Ulf LaessingRIYADH (Reuters) - Saudi King Abdullah returned home on Wednesday after a three-month medical absence and unveiled benefits for Saudis worth some $37 billion (23 billion pounds) in an apparent bid to insulate the world's top oil exporter from an Arab protest wave.

The king, who had been convalescing in Morocco after back surgery in New York in November, stood as he descended from the plane in a special lift. He then took to a wheelchair.

Hundreds of men in white robes performed a traditional Bedouin sword dance on carpets laid out at Riyadh airport for the return of the monarch, thought to be 87.

Abdullah left his ailing octogenarian half-brother, Crown Prince Sultan, in charge during his absence.

Before Abdullah arrived, state media announced an action plan to help lower- and middle-income people among the 18 million Saudi nationals. It includes pay rises to offset inflation, unemployment benefits and affordable family housing.

Saudi Arabia has so far escaped popular protests against poverty, corruption and oppression that have raged across the Arab world, toppling entrenched leaders in Egypt and Tunisia and even spreading to Bahrain, linked to the kingdom by a causeway.

Significantly, Bahrain's King Hamad bin Isa was among the princes thronging the tarmac when Abdullah flew in.

King Hamad freed about 250 political prisoners on Wednesday and has offered dialogue with protesters, mostly from Bahrain's Shi'ite majority, who demand more say in the Sunni-ruled island.

Riyadh would be worried if unrest in Bahrain, where seven people were killed and hundreds wounded last week, spread to its own disgruntled Shi'ite minority in the oil-rich east.

"DAY OF RAGE"

Hundreds of people have backed a Facebook call for a Saudi "day of rage" on March 11 to demand an elected ruler, greater freedom for women and the release of political prisoners.

Saudi analysts said the king might soon reshuffle his cabinet to inject fresh blood and revive stalled reforms.

Saudi stability is of global concern. A key U.S. ally, the top OPEC producer holds more than a fifth of world oil reserves.

The king announced no political reforms such as municipal council polls demanded by opposition groups. Saudi Arabia has no elected parliament or parties and allows little public dissent.

Jeddah-based Saudi analyst Turad al-Amri welcomed what he called "a nice gesture" from the king, saying the measures were not unprecedented or prompted by Arab protests elsewhere.

But other Saudis were critical. "We want rights, not gifts," said Fahad Aldhafeeri in one typical message on Twitter.

"They are under pressure. They have to do something. We know Saudi Arabia is surrounded by revolutions of various types, and not just in poor countries, but in some such as Libya which are rich," said Mai Yamani, at London's Chatham House think tank. "Basically what the king is doing is good, but it's an old message of using oil money to buy the silence, subservience and submission of the people," she said. "The new generation of revolution is surrounding them from everywhere."

Mahmoud Sabbagh, 28, said he and 45 other young Saudi activists had sent the king a petition advocating more profound change, not just economic handouts. He listed the group's demands as "national reform, constitutional reform, national dialogue, elections and female participation."

Saudi Arabia holds more than $400 billion in net foreign assets, but faces social pressures such as housing shortages and high youth unemployment in a fast-growing population.

"Housing and job creation for Saudis are two structural challenges this country is facing," said John Sfakianakis, chief economist at Banque Saudi Fransi, who put the total value of the king's measures at 140 billion riyals ($37 billion).

He said some benefits were one-off and others were already budgeted. "The inflationary impact will not be significant."

G20 member Saudi Arabia has outlined spending of 580 billion riyals for 2011 in its third consecutive record budget.

Investment bank EFG-Hermes put the king's benefit package at 100 billion riyals, saying it could rally a stock market that lost 4 percent in the past week on unrest in Bahrain and elsewhere.

Ahmad al-Omran, who runs the popular Saudi Jeans blog, said on Twitter that the measures would benefit many people, but were equivalent to fighting the symptoms and ignoring the disease.

"People don't revolt because they are hungry. People revolt because they want their dignity, because they want to govern themselves. Money won't solve our issues. We need true political and social reform. We need freedom, justice and dignity."