UPDATE 1-Saudi king to bury Crown Prince, find successor

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* Successor likely to be another son of Abdulaziz ibn Saud (Adds detail, background throughout)

By Angus McDowall

RIYADH, June 17 (Reuters) - Saudi Arabia's King Abdullah prepared to bury his former heir, Crown Prince Nayef, on Sunday before naming a new successor at a challenging time for the world's top oil exporter and self-styled steward of Islam.

The crown prince's body arrived in Jeddah on Sunday a day after his death, where it was met at King Khaled Airport by a host of Saudi princes.

Among them was the most likely candidate to take the position to succeed the 89-year-old king is Prince Salman, 76, another son of Saudi Arabia's founder Abdulaziz ibn Saud.

The new crown prince will become heir to a king who is aged 89 at a time when Saudi Arabia faces a variety of challenges at home and abroad.

Although the Interior Ministry, which the late Nayef headed for 37 years, crushed al Qaeda inside Saudi Arabia its Yemeni wing has sworn to topple the ruling al-Saud family and has plotted attacks against the kingdom.

Saudi rulers are also grappling with unrest in areas populated by the Shi'ite Muslim minority and with entrenched youth unemployment.

The kingdom is also locked in a region-wide rivalry with Shi'ite Iran - the party at the airport included former Lebanese prime minister Saad al-Hariri, representing the Sunni Muslim political alliance that Saudi Arabia cultivates against Iran.

"We call on God to help King Abdullah choose the right person who can bear the burdens of this position at this difficult time we face both at the level of the Arab nation and that of the Islamic community," Prince Mishaal bin Abdullah bin Turki al-Saud told Reuters.

Salman, who is seen as a pragmatist with a strong grasp of the intricate balance of competing princely and clerical interests that dominate Saudi politics, was named defence minister last year.

The appointment of a new crown prince is not likely to change the kingdom's position on foreign or domestic policy but might influence the course of cautious social and economic reforms started under King Abdullah.

"Certainly they are going to continue to focus on the relationship with the U.S., and continue to make efforts to properly husband their abundant natural resources of oil," said Robert Jordan, U.S. ambassador to Riyadh from 2001 to 2003.

FAMILY COUNCIL

Although most analysts believe it is highly likely Salman will be chosen, the ultimate decision may rest with a family Allegiance Council called to approve King Abdullah's decision.

The Saudi succession does not pass from father to eldest son but has moved along a line of brothers born to Ibn Saud. A previous crown prince, Sultan, died last October.

Under rules drawn up by King Abdullah, the Allegiance Council has 30 days to approve the monarch's successor.

"There will be a meeting where the next crown prince will be decided. It has always been done in an orderly and organised manner. Prince Salman fits the profile in many ways," said Khaled Almaeena, editor-in-chief of the Saudi Gazette.

A source close to the royal family said Nayef had died suddenly in Geneva after receiving treatment for a knee complaint.

"A previous crown prince, Sultan, died last October.Under rules drawn up by King Abdullah, the Allegiance Council has 30 days to approve the monarch's successor."There will be a meeting where the next crown prince will be decided"He was thought to be 78.

Before the funeral, King Abdullah travelled to Mecca on Sunday evening from Jeddah, where the royal court and cabinet spend the summer, Saudi Press Agency reported.

Televison showed a host of princes in red-and-white headresses, including Salman and Mecca governor Prince Khaled al-Faisal gathered on the runway to escort Nayef's body to an ambulance.

Newspapers on Sunday mourned the death on their front pages.

Al-Jazirah's front page was entirely in black and white and showed photographs of the king and late crown prince. The English-language Saudi Gazette splashed a full-page picture of Nayef with the headline: "Unto God do we belong and, verily, unto Him we shall return".

Analysts say the most difficult decision in the succession will be when the line of Ibn Saud's sons is exhausted and a grandson must be chosen as crown prince.

Grandsons with the experience and qualifications to rule include Prince Khaled al-Faisal, the governor of Mecca province who is 71, and Prince Mohammed bin Nayef, the deputy interior minister, who is 52.

"The house of Saud will need to think about what would happen in the event the king became unwell, and there is no way on earth you would hand the crown prince role to a grandson in 48 hours time. You have to find an older prince," said Michael Stephens of the Royal United Services Institute in Qatar.

Only a few princes of the older generation have the experience deemed necessary to rule the Middle East's largest economy.

One of them, Prince Ahmed, is a full brother of Nayef and Salman, as well as the late King Fahd and the former crown prince, Sultan. He has been deputy interior minister since 1975 and is seen as likely to replace Nayef as full minister.

"The expectation is that Prince Ahmed bin Abdulaziz will take over the position of the interior minister after Prince Nayef passed away considering that Prince Ahmed has served as deputy interior minister for 20 years. I think he is the closest to take over this position," Prince Sultan bin Saud al-Saud told Reuters.

(Reporting By Angus McDowall; Additional reporting by Ismail Nofal in Jeddah and Isabel Coles in Dubai; Editing by Angus MacSwan)

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