TAIF, SAUDI ARABIA, AUG. 23 -- The deposed Sabah family of Kuwait, dispossessed by Iraq of its land, state and subjects, has set up a government in exile at a plush hotel in this royal Saudi mountain retreat.

The Kuwaiti government "is alive, well and functioning properly," said Crown Prince and Prime Minister Saad Abdullah Sabah at a press conference in the heavily guarded Al-Hada Sheraton Hotel.

The robed prince, glassy-eyed from exhaustion, said he is getting reports daily from within his occupied country and from its embassies abroad and that his government would deal from here with all economic, financial, political and military matters.

Several of his cabinet ministers and a flock of refugee officials sat nearby as if to underline Prince Saad's point that there is still a functioning government despite Iraq's annexation of their homeland. "With God's will, we'll be back home shortly in our country," the prince declared.

Emir Jabir Ahmed Sabah, the ousted ruler of Kuwait and Prince Saad's distant cousin, has not been available to journalists since the Aug. 2 Iraqi invasion and did not appear at today's news conference, which was attended by reporters from every major internatonal news agency and broadcast network.

Despite his fatigue, Prince Saad seemed defiant and determined to reestablish his country's independence at whatever the cost may be. "We Kuwaitis will never submit or surrender to threats, aggression or occupation," he said. "With the help of our friends, we will fight and fight and fight until we drive out the aggressors from our country."

He also seemed to signal readiness to commit some of Kuwait's more than $100 billion in foreign assets to help finance the massive U.S. military force assembling in Saudi Arabia to counter the Iraqi thrust. Asked about this, he replied:

"I can affirm very strongly that for the sake of our national sovereignty and independence . . . we will do everything. We are willing to sacrifice everything, not only our money and funds, but blood and everything for the liberation of our country."

Prince Saad said the Sabah family had emerged from the invasion nearly intact, with the Iraqis capturing only "about three, no more than four," of its approximately 600 adult male and female members. Only one senior family member had died at the hands of the Iraqis, the prince said. This was Fahd Ahmed Sabah, commander of a paratroop regiment, who was gravely wounded in the initial stages of the invasion and then taken off hospital life-support systems by the Iraqis, Prince Saad said.

The prince said that he and the emir -- who was at a beach villa the night the Iraqis attacked -- had been alerted in time to escape by car to Saudi Arabia, despite a concerted Iraqi effort to take them by surprise in helicopter assaults on their palaces in Kuwait City. He refused to comment on a report that it was Saudi King Fahd himself who telephoned the emir to warn him of the invasion.

Ali Jabir Sabah, son-in-law of the emir and marketing manager for Kuwait Petroleum Corp., also appeared at the news conference to give reporters what he said was a rough picture of the state of the Kuwaiti oil industry under Iraqi occupation.

Iraq, he said, had placed explosive charges at "almost every well in Kuwait" but had not yet connected them to detonators because production of about 200,000 barrels a day was needed to fuel power and water plants supplying the general population. So far, he added, the invaders had not tried to mine other key installations, such as oil and gas separation plants, which he said Kuwaitis were still running "for the people of Kuwait."

"Even if they would blow the fields up," he said, "we would come back to full production within a period of six months."

Ali Jabir Sabah said that Kuwait had arranged to purchase "on a regular commercial basis" 250,000 barrels of crude oil daily from Saudi Arabia to supply Kuwaiti-owned refineries in Western Europe and that it was still getting its 30 percent share of the 300,000 barrels pumped daily by the Arabian Oil Co. from fields on the Saudi-Kuwaiti border.