By Angus McDowall
DUBAI (Reuters) - Saudi Arabia on Wednesday awaited the appointment of the new heir to King Abdullah, widely anticipated to be veteran Interior Minister Prince Nayef.
An Allegiance Council of the ruling family, set up by the king in 2006, is expected to approve a new crown prince after a three-day mourning period for Crown Prince Sultan which ends on Thursday.
The council is one of the reforms introduced by Abdullah to ensure a smooth succession, and has the power to step in if anything should befall the octogenarian ruler before his heir can be named.
"There is an institutionalized mechanism in place," said Hossein Shobokshi, a Saudi columnist. "The Crown Prince had been deteriorating for some time so they haven't been caught by surprise. It should be extremely orderly.
"We had been waiting for this development and things will be announced from a protocol point of view after the mourning period is over."
The desert kingdom dominates oil markets, has great influence over Sunni Muslims through its guardianship of Islam's holiest sites in Mecca and Medina, and faces turbulence among its neighbors and a regional rival in Shi'ite Muslim Iran.
Abdullah accepted the condolences of visiting leaders from his seat during Tuesday's funeral, wearing a surgical mask barely a week after a back operation.
Among the mourners who went forward to greet the king after the prayer recital was Iran's Foreign Minister Ali Akbar Salehi. A U.S. delegation headed by Vice President Joe Biden is expected in Riyadh on Thursday.
Prince Nayef was later shown on television meeting the king of Jordan and top officials from the United Arab Emirates.
Nayef, born in 1933, is sometimes described by Saudi liberals as an anti-reform conservative who is likely to take a cautious approach to social and political change, while emphasizing national security in foreign policy.
He was quoted soon after the September 11, 2001 attacks on the United States as doubting that any of his compatriots had been involved. It turned out that 15 of the 19 hijackers were Saudis.
Some diplomats and analysts say the man who has served as interior minister since 1975 may show a more pragmatic side as crown prince -- and eventually as king.
King Abdullah, who is in day-to-day charge of Saudi Arabia despite his old age and back trouble, must also name a new defense minister -- a post held by Sultan for nearly five decades.
One possible candidate is Prince Khaled bin Sultan, a son of the late crown prince who headed Saudi forces during the 1991 Gulf War and has been a deputy defense minister for 10 years.
The job could also go to Riyadh governor Prince Salman, seen as the next most senior royal after the king and Prince Nayef. Analysts say it is possible Salman will be named second deputy prime minister, a job usually given to the prince considered third in line to rule.
The funeral for Sultan, who died of colon cancer in New York on Saturday, took place in Riyadh's sprawling Imam Turki bin Abdullah mosque.
King Abdullah was chief mourner at the mosque, where Saudis in red-and-white headdresses were crammed among the pillars behind the Grand Mufti as he led prayers.
(Editing by Andrew Roche)