RIYADH, SAUDI ARABIA -- The Saudi government, emboldened by the large deployment of foreign forces protecting its desert kingdom, has launched a confrontational campaign against Arab states -- particularly Yemen and Jordan -- that have failed to break completely with Iraqi President Saddam Hussein.

Saudi Arabia's expulsion of 50 Yemeni and Jordanian diplomats last weekend, along with the cutoff of Saudi oil supplies to Jordan, were the opening shots in a political and economic war that has since gained momentum and poses a threat to the already weakened economies of Yemen and Jordan, according to Western officials here.

A Western ambassador returning from Sanaa, the Yemeni capital, said the government there has retaliated by refusing to accept Saudi currency in many transactions.

Saudi authorities, in edicts over the past week, have told the 1.5 million to 2 million Yemenis working here that they will have to go home within a month unless they can find a Saudi citizen to sponsor their continued presence, a step that will require perhaps hundreds of thousands to leave.

The edict raises the specter of a forced exodus back to a homeland that cannot provide jobs for its population of 12 million, according to Western officials.

Western embassies here have expressed alarm that the Saudi campaign might touch off anti-Saudi violence that has long simmered on the peninsula's southern flank, where Yemen is located. Yemeni tribal chieftains have a fierce warrior tradition in a heavily armed nation that outnumbers the widely dispersed Saudis. The Yemenis historically have been poorly treated in the Saudi work force and Saudi rulers have sought -- through cash endowments -- to keep Yemen's tribes divided in an effort to thwart any military threat.

Yemeni President Ali Abdallah Salih, who succeeded in uniting North and South Yemen earlier this year, harbors long-standing grievances against the Saudis over their intrusion into Yemeni politics.

One Western diplomat called the Saudi edict "warlike" and suggested that Riyadh would not have taken such a provocative step were it not for the presence of more than 100,000 Arab and foreign ground troops in the kingdom.

"The problem with Saudi policy is that they act with passion sometimes," said one European envoy. Another added, "They might create a situation that might come back to haunt them."

Saudi Arabia's tough, new public diplomacy was exemplified by this week's sharp rebuke of Jordan's King Hussein by Saudi Arabia's ambassador to Washington, Prince Bandar bin Sultan, whose opinion-page assault on Jordan in major U.S. newspapers was unprecedented in Saudi diplomacy.

The Saudi withdrawal of special privileges from Yemeni workers forces thousands of Yemeni shopowners and businessmen to find Saudi partners within a month or close their business. "It's going to be a buyer's market," one Western diplomat said.

"Yemen is facing an enormous cataclysm if, in fact, hundreds of thousands of workers do leave here," a senior European diplomat said, noting that Yemen's chronically weak economy, already struggling to cope with the unification of the governments in Sanaa and Aden earlier this year, could collapse under the strain.

The Saudi edict sparked unrest in the Yemeni quarters of Riyadh and Jiddah, where pro-Iraqi protests were reported by diplomats after the Aug. 2 invasion of Kuwait. There have been unconfirmed reports that Saudi security forces have arrested a number of armed Yemenis in the Eastern Province, where a large concentration of U.S. military forces is now deployed.

In Riyadh's Yemeni marketplace, a hinterland of brightly lit stalls under a tin-roofed arcade, the grim reality of the Saudi edict was visible in almost every shop this week.

Muhammad Ahmed, 41, said he had been selling Arab garments in the market for 17 years. "In 23 days, I will go to Yemen," he said. "All the people here will go and, God willing, we will find work."

Other shopkeepers expressed hope that the Saudis would reverse their decision. One young man from a rural village southeast of the Yemeni capital smiled and said he was not worried about finding a job at home, but he groaned that it would likely be a menial job in agriculture.

On Monday, the Saudi cabinet warned that Arab countries that have taken "negative stands toward the gulf crisis" are damaging their interests.

A senior U.S. diplomat here said Saudi Arabia, Kuwait and the four other states in the Gulf Cooperation Council are coordinating sanctions against Jordan, Yemen and, to a lesser extent, other Arab and Islamic countries that have refused to join the Arab majority confronting Iraq.

Saudi and Kuwaiti officials have told the Bush administration that while they are willing to contribute billions of dollars to countries such as Turkey, Egypt and Syria to help ease the economic impact of the trade embargo against Iraq, they are not willing to provide such assistance to Jordan until Hussein makes a clear break with Baghdad.

In an interview, Kuwaiti Crown Prince Saad Abdullah Sabah, who had been the emirate's prime minister before the invasion, said, "We are upset and annoyed about Jordan's policy. I tell you, he {King Hussein} made many mistakes and very soon he will discover that."

Kuwait has stopped sending free oil to Yemen, even though Kuwait's oil empire in Europe could easily have accommodated continuation of this subsidy. Iraq also had provided Yemen with free oil, but Western pressure and U.N. economic sanctions shut down the Iraqi subsidy, leaving Yemen to use its own oil production for domestic needs instead of selling it for important revenue on the world market.

All Western diplomats questioned here said that members of the Saudi royal family have expressed a deep-seated conviction that a plot -- known in diplomatic circles as "The Plot" -- existed between Saddam, King Hussein and Yemen's president to conquer Saudi Arabia and carve up Saudi territory among them.

The Saudis have said that the lack of evidence notwithstanding, they believe King Hussein fostered hopes that Iraq would restore his family's Hashemite dominion over the Hejaz region in western Saudi Arabia, which includes the holy cities of Mecca and Medina.

They have cited as circumstantial evidence Hussein's speech before Jordanian legislators in which he said he would be honored if they referred to him as "Sherif Hussein," the title his great-grandfather bore as ruler of the Hejaz.

An American diplomat here said Saudi officials claim to have evidence that Hussein began his fixation with the Sherif Hussein title weeks before the Iraqi invasion during private conferences with his court ministers.

Yemen's booty, according to "The Plot," would be the verdant and mountainous Asir province in southwestern Saudi Arabia, claimed as a traditional part of Yemen since ancient times when it was ruled by the Queen of Sheba.

Members of Hussein's court dismiss "The Plot," but the king has done little in public to identify with the plight of Kuwait, Saudi and Kuwaiti officials contend.

Hussein "knew very well that this declaration would not be received well here, so why did he say it?" a European diplomat asked. "For the Saudis, this is proof."

Referring to "The Plot," an American official who has had broad contact with the Saudi royal family in recent weeks said, "It is not true, but it is widely believed -- and perceived reality is sometimes more important that reality itself."

One Western envoy said he doubted that the Saudi economic sanctions were intended to topple either Hussein or Salih.

"This is an exercise in behavior modification rather than an implacable enmity with the Hashemite monarchy," the envoy said. "It is emotional, but underneath is the cold calculation that if the king does what is necessary, he will find people willing to resume the subsidies."

Yemen's vote in the U.N. Security Council this week in support of extending the embargo against Iraq to air shipments is not likely to win a quick reversal of the Saudi sanctions, Western officials said.

"The vote is not as important to the Saudis as the fact that Salih has inflamed the Yemeni people against the Saudis -- and they want him to get his heart in the right place," a Western official said.