For Kuwaiti Exile Regime: Phones, Faxes, Nightmares : Gulf crisis: From a mountain hotel, officials manage global assets and seek to lead a scattered people.

From a luxury resort hotel perched high in the arid mountains that rise up from the Red Sea, the government of Kuwait goes about the business of running a country in exile.

By day, the desert wind whines eerily through the vaulted lobby, while white-robed security guards with machine guns in shoulder holsters roam past the reception desk. Government aides carry reports from the Defense Ministry, on the mezzanine level, to the prime minister’s reception room, on the fifth floor. Reports arrive by facsimile from Kuwaiti embassies in London and Washington. The telephones ring relentlessly.

By night, Kuwait’s Cabinet ministers gather behind closed doors for hour after hour of meetings, then wander upstairs to a long, white-clothed table to dine on whole roasted lamb and spiced rice.

Aides turn on CNN or Egyptian soap operas in a room off the main lobby. After dinner, Sheik Saad al Abdullah al Sabah, the crown prince, puts on tennis shoes under his long white dishdasha and leaves the hotel. His driver takes him to a spot not far from the hotel, and he walks back in the silent desert night.

Rarely does anyone see the emir. Sheik Jabbar al Ahmed al Sabah, when he is at the hotel, spends most of the time closeted in his fifth-floor suite, walking up and down on the balcony that looks out over the majestic Sarawad Mountains.

“I think there must be no more tiles left on the floor of the balcony: He just walks back and forth,” a member of the royal family said. “You never see him sitting anymore. He’s either walking or standing. Since right after the crisis, he didn’t want to talk to anyone, he doesn’t want to hear anything. He won’t read the newspaper, he has someone read it to him. He doesn’t say anything. He just keeps walking.”

If there is an air of unreality to this remote bureaucratic retreat, it is because there is an element of the fantastic in trying to govern a country whose population is scattered across Saudi Arabia, to other countries in the Persian Gulf, and to Cairo, London and Paris; a country that has been invaded and annexed by Iraq, and whose financial assets around the globe, estimated at $100 billion, must be harnessed to support day-to-day needs and a military buildup.

“Kuwait is a country that now consists almost entirely of hotel rooms,” said one diplomat in Saudi Arabia, which has become host to the largest population of Kuwaitis outside Kuwait.

At least half of Kuwait’s native population has fled the country, and half of those people, perhaps 150,000, are in Saudi Arabia. Hotels in Dammam, Dhahran, Khobar and Riyadh are filled with Kuwaiti families. High-rise apartment buildings in Riyadh, Jidda and Dammam are being renovated to house thousands more.

Kuwaiti children are enrolling in Saudi schools. Kuwaiti government branch offices throughout the country offer a monthly stipend for Kuwaiti families that averages $810 a month. All this, including medical care and educational expenses, is costing the Kuwaiti government nearly $150 million a month.

Cabinet ministers are spread all over the world, making diplomatic contacts with foreign governments and keeping the Kuwaiti treasury afloat. The oil minister has negotiated to purchase crude oil, mostly from Saudi Arabia, to supply Kuwait Petroleum’s 6,533 retail gasoline stations and three refineries in Europe.

The finance minister is helping oversee Kuwait’s investments in auto manufacturer Daimler-Benz AG, chemicals manufacturer Hoechst AG, Britain’s Midland Bank PLC, San Francisco’s Santa Fe International Corp. and plantations in Malaysia. The defense minister is organizing military recruiting centers in Saudi Arabia that have signed up more than 3,200 Kuwaitis in the past 10 days.

In Cairo, Kuwait Airways is preparing to resume regular passenger service to New York, London, Bombay, Bangkok and Kuala Lumpur with the eight Boeing 747s and 727s that were outside of Kuwait when the Iraqis invaded Aug. 2.

“Cairo to New York in eight hours and back to Kuwait any minute,” says one of the advertisements scheduled to begin running in the Arabic-language press this weekend. “Until we’re able to welcome you home, welcome aboard,” says another.

“We are living a dilemma, but we are trying to be up to the situation,” said Housing Minister Yahia al Sumait. “We know this is not what the Kuwaitis deserve, but under the circumstances, we have tried as much as we can to give the Kuwaitis outside the country enough so that they maintain their dignity as Kuwaitis, and their pride, but where they also would not forget their brothers inside Kuwait.

“Of course we are guests here, even as a government. This is a very serious and devastating thing to happen. We have been hurt in every sense of the word. Our people have been scattered all over the world. Everybody is looking for his brother or his son or his father. We pray day and night for this to end.”

In Taif, the sense of surrealism is magnified because it is the maelstrom of the Kuwaiti nightmare, a hotel full of fallen princes and their professional public relations aides who work round-the-clock to document their nightmares in the hope that the rest of the world might help end them.

Blown-up photographs of Iraqi President Saddam Hussein line some of the hotel corridors, next to similar blow-ups of Adolf Hitler. Press releases document Iraqi atrocities inside Kuwait: tales of soldiers killing innocent civilians in their homes, slaughtering animals in the Kuwait city zoo, turning the ill and the mentally incompetent out of hospitals and into the streets.

Kuwaitis trade stories of the invasion, of how it was when they escaped, what the Iraqi soldiers did, how afraid they were.

“You know, we are not used even to firecrackers--firecrackers are forbidden--and now we see bombs coming out from tanks?” a government official said. “It was like a dream. Planes and tanks. I saw so many people paralyzed on the streets. They don’t believe what’s going on. Tens of helicopters, like butterflies in our skies. Just imagine yourself there.”

At this point the man, the head of a government department, pressed his fingers to his eyes and refused to go on.

Sheik Jabbar al Mubarak al Sabah, a member of the ruling family and director general of civil aviation in Kuwait, said: “You don’t understand how it is here, because your hand is in the water. Mine is in the fire. Since I came out from Kuwait, I don’t remember that I slept before 5 or 6 in the morning. Whenever you lie there and look at the ceiling, things come to your mind, and other things become connected to that thing.

“Even if you sleep, you think about driving a car. Suddenly you see a mountain, you start thinking about the mountain, then you start to think about trees on the mountain, the birds, the river, it keeps going like this, you see? And this happens to me on a daily basis.”

When a listener seems not to understand, he talks about a doctor friend of his who left Kuwait recently and went to Egypt.

“He locked his door,” he said, “and he grew his beard, and he did not come out, he just lay on the bed looking at the ceiling. He did not talk to anybody. I don’t know. Probably he saw strange things. I know if we go back to Kuwait, I think they should bring hundreds of psychiatrists.”

As the rest of the world debates the wisdom of military action against Iraq, and appears bent on holding out for a diplomatic resolution as long as possible, Kuwaiti officials fear that their country is slowly disappearing with every Iraqi family who moves into Kuwait city, with every telephone pole, computer, diagnostic machine and video recorder hauled back to Baghdad, with every Kuwaiti killed for fighting against the Iraqi occupation.

“We are impatient,” the housing minister said. “Every day we receive information from inside Kuwait, the more impatient we are. Of course, all those leaders of the free world talk about peace, because they know what war is. If you have a wound, you try to cure it by all kinds of medicine, but if the only kind of medicine that will work is a hot steam, then that must be it.

“If it can be done without war--please. But the question is, how long? Those leaders talk about war and they know what it is, but Saddam (Hussein), this man doesn’t want to speak wisdom. He doesn’t care what happens to Kuwait, to Kuwaitis. Yes, I am impatient. But you have to forgive me for this.”