Last February, according to Kuwaiti and Jordanian officials, Iraqi President Saddam Hussein sent 55 automobiles as gifts to prominent Jordanians, including Mercedes-Benzes for cabinet ministers and Toyota Corollas for several newspaper columnists who had written lyrical poems praising Iraq and Arab unity.

The Iraqis made a similar offer of 40 Mercedes-Benzes and other cars to Egypt's diplomatic and journalistic elite last year, Egyptian diplomats and journalists said. But President Hosni Mubarak ruled the Egyptians could not personally accept the gifts. So newspapers took some of the cars and allowed the journalists to drive them. The rest of Saddam's fleet went into the government motor pool.

Welcome to the real world of Middle East politics, where the exchange of elaborate personal gifts has over the centuries become embedded in the culture as a way of rewarding friends and forming political alliances.

Other nations have similar practices. In the United States, political action committees contribute lavishly to candidates, while in Japan and other Asian nations, politicians and business associates commonly cement their relationships with expensive gifts. The CIA, like most spy services, has long used covert gifts and payments as an instrument of foreign policy.

But the political marketplace has become especially large and active in the Middle East since the oil boom began two decades ago. And it has played an important but little-discussed role in the events surrounding Iraq's invasion of Kuwait.

"You should never underestimate the importance of falous {money} in Arab politics," one Western diplomat said.

An example of how the money game has been played during the Persian Gulf crisis can be found in Egypt. Mubarak told a group of visiting U.S. congressmen last month that 48 hours before the Iraqi invasion, Saddam telephoned to offer him $25 million to buy wheat for the Egyptian people with the promise of another $25 million within a month. Mubarak indicated to the congressmen that he considered the call an attempt to buy Egypt's support or silence in the event of an Iraqi move against Kuwait.

Mubarak refused the Iraqi offer and instead emerged as the leader of the Arab coalition opposing Saddam's invasion. He has since received pledges of financial support from Saudi Arabia, including an initial offer of $100 million in August and an additional $500 million this month, according to Western and Arab sources.

Iraq has become an aggressive player in this political marketplace in the last few years, as Saddam's regional political ambitions increased.

But the masters of political gift-giving, Arab political analysts say, have been Iraq's main rivals -- the Saudis -- whose largesse has helped finance the Palestine Liberation Organization and national budgets of Syria, Jordan and Lebanon.

Saudi Arabia's policy of gaining goodwill by spreading a portion of its wealth has caused Arab political commentators over the years to quip that the Saudis have augmented their foreign policy with an "insurance policy" that seeks, in effect, to buy the friendship and loyalty of potential foes.

Saudi generosity ranges from budget subsidies for friendly rulers to personal gifts such as the Rolex watches many Arab journalists say they have received.

The Saudis make regular payments to political allies around the Arab world, in what amounts to a kind of under-the-table foreign aid. One example, according to Arab and Western sources, is the regular payment of stipends to chiefs of Bedouin tribes in Jordan and Yemen that have kinship links to Saudi tribes.

Lebanon, where the Arabs have fought many of their political battles over the past 20 years, has been a special recipient of money from the Saudis and other interested Arabs. The new Lebanese political framework, brokered in Taif, Saudi Arabia, a year ago, is widely believed to have cost the Saudis millions of dollars in subsidies to politicians and journalists.

Iraq has moved forcefully into this money game over the past two years, since it emerged from its war with Iran in 1988. Kuwaiti and Western sources cite numerous examples of Iraqi largesse.

According to two Jordanian politicians, Saddam gave members of Jordan's royal family fancy cars -- including a Porsche and a Ferrari. Asked why they were accepted, a politician in Amman explained: "They were like Christmas gifts and gifts are not returned in this part of the world unless there is some kind of feud."

Saddam sent millions of dollars recently to Sudan to help the almost bankrupt military government there buy weapons to fight rebels in the south, according to several European diplomats and Arab sources. Meanwhile, Sudan's powerful National Islamic Front is believed by Western intelligence sources to have accepted some direct financial support from the Iraqi leader, the diplomats said.

Similar payments may have been made in Mauritania, where Saddam paid for setting up a television station several years ago while also helping to fund the Islamic leadership, according to the European diplomats and Arab officials.

Both Sudan and Mauritania joined Jordan and Yemen last August in resisting the Arab League majority that condemned the Iraqi invasion and called for Saddam to withdraw his forces immediately.

Tunisia's reluctance to join the Arab League majority condemning Saddam was deeply disappointing to U.S. officials. According to Kuwaiti officials, whose government has lent millions of dollars to the generally pro-Western country, Tunisia's leaders were promised by the Iraqis soon after they invaded and annexed Kuwait that these debts would be forgiven by the new, Iraqi-imposed government.

A Western diplomat whose government has kept track of these trails of money in the Middle East complained: "While we {Western and Arab governments} were paying for irrigation projects and other development, Saddam was making a big effort to bribe and buy his way to influence with cash, cars and gifts."

Correspondents Nora Boustany and Edward Cody, in Amman, Jordan, contributed to this report.