The Saudis believed that the failure to resolve the grievances of the Palestinians was the primary reason for political instability and conflict in the Middle East. The Saudi position in 1992 was generally the same as the one set out by Fahd in an eight-point peace plan he proposed in August 1981. The key points called for an Israeli withdrawal from the West Bank and the Gaza Strip, Jordanian and Egyptian territories where the majority of the inhabitants were Palestinian that Israel occupied as a consequence of the June 1967 War the dismantling of exclusive Jewish settlements created by Israel in these territories since 1967 the eventual establishment of an independent Palestinian state consisting of the West Bank and Gaza Strip, with East Jerusalem--part of the West Bank from 1948 to 1967--as its capital and just compensation for Palestinians dispossessed of their lands and homes during the establishment of Israel in 1948. Fahd's proposals represented the mainstream consensus that had evolved among most Arabs and Palestinians by the early 1980s. The Saudis were convinced that the Fahd Plan was a workable solution they felt extremely disappointed that neither Israel nor the United States gave the plan serious consideration.

During the 1980s, Saudi Arabia was the principal financial backer of the PLO. For Riyadh, this support was both a moral and a pragmatic imperative. Saudis sincerely believed that the Palestinians had suffered a grave injustice and that all Arabs had an obligation to provide assistance. On a more practical level, the Saudis acknowledged that conditions in the refugee camps helped to breed Palestinian radicalism they thus perceived monetary aid to Palestinian leaders as a means of maintaining a moderate influence within the Palestinian movement. The PLO's public support for Saddam Husayn during the Persian Gulf War shocked the Saudis. The government retaliated by cutting off its aid to the PLO. As of early 1992, the Saudis remained bitter about the failure of the Palestinians to support them during the war, and relations with the PLO had not been normalized.

Data as of December 1992