THIS IS A generous country. Forgiving too.

What other government do you suppose would even consider 1)giving a $72 million loan guarantee to a Saudi billionaire so that he could 2)construct a Louisiana plant to produce an alcohol fuel that is 3)even more expensive than the Saudi oil for which it was 4)originally meant to be a cheap substitute?

This is one of those events that transcend mundane argument over propriety and economics. To be sure, there is plenty in the arrangement that will excite the ordinary sorts of controversy. Sen. James Exon, for example, has already criticized the proposed plant for being located in Louisiana rather than in his home state of Nebraska. Someone else in Congress is surely bound to note that the whole system of subsidies for alcohol fuelsis absurdly out of whack with economic realities.

Officials in the federal Energy Department and in Louisiana are said to be enthusiastic about the project because it should create new markets for the surplus molasses that Louisiana farmers -- thanks to Agriculture Department programs -- produce. But they do not explain how that limited benefit justifies a combination of federal and state tax breaks that, even without the loan guarantee, would reimburse the producer, a firm owned by Saudi arms dealer Adnan Khashoggi, for considerably more than its cost in producing a molasses- based fuel. Nor do they answer the inevitable question why it makes sense, even at much lower government cost, to subsidize production of high-cost substitutes when world oil markets are glutted.

These arguments, however, do not go to the heart of the arrangement, which, to our mind, lies in its Rube Goldberg perfection. Measured against some Platonic standard of absolute absurdity, what more suitable recipient of a government-backed guarantee for the development of petroleum alternatives than the flamboyant, globe-trotting Mr. Khashoggi?

How fitting, moreover, that this entrepreneur should operate through a Cayman Islands corporation called "Triad International" about which swirl allegations of kickbacks arranged between U.S. arms firms and foreign officials. Finally, how just it is -- on some wackily warped scale of retribution -- that the award should be made at a time when, thanks to the conservation and production efforts spurred by reactions to OPEC excesses, the subsidized production is completely unneeded. Say what you will about the U.S. position in world markets, in the production of schemes like this, America is No. 1.