Page last updated at 05:26 GMT, Wednesday, 11 June 2008 06:26 UK

New cities rise from Saudi desert

By Crispin Thorold
BBC News, King Abdullah Economic City, Saudi Arabia

Gate of King Abdullah Economic City
KAEC will have a large port, leisure resorts, schools and universities
King Abdullah of Saudi Arabia has a vision which if successful could soon transform the Kingdom's economy and society.

Six major developments will be built across the Kingdom over the next 15 years, the centrepiece being King Abdullah Economic City, 100km (62 miles) north of Jeddah.

The new city is rising from the sands of the Arabian Desert and when complete it will stretch over 150 sq miles (388 sq km).

The developers say that by 2020 more than one million jobs will have been created, in a city that will be home to two million people.

"This is on a scale unheard of before in the world," said Fahd al-Rasheed the CEO of Emaar, The Economic City, which is developing the site.

"[The King Abdullah Economic City] includes one of the largest ports in the world, an education zone, a resort zone etc. It is the size of Washington DC and is being built in 15 years".


With the price of oil showing no sign of weakening, the government of Saudi Arabia is planning for a future when the commodity will eventually run out.

You are not just talking about the economy and getting revenues - you are talking about creating job opportunities
Saad al-Dosari, Rabigh Refinery and Petrochemical Co
The revenues that are being generated are enormous - every day more than 11 million barrels of oil are pumped. At current market prices that is worth well over $1bn (510m) daily.

During the last oil boom, vast sums of money were spent by the government on projects that failed - Saudi Arabia famously tried to "make the desert bloom" with water-intensive agriculture schemes.

Now the Kingdom is trying to invest more sensibly in the future to solve several challenges:

  • Diversification of the economy
  • A booming population (40% of Saudis are under 15)
  • Growing unemployment
  • Improving skills and education amongst Saudis

"I think it is most important for Saudi Arabia to diversify," said Saad al-Dosari, the President and CEO of the Rabigh Refinery and Petrochemical Company, near Jeddah.


Inside the desert city

"You are not just talking about the economy and getting revenues. You are talking about creating job opportunities.

"You are talking about establishing an industrial infrastructure for the future generations".

Expatriate labour

The new industries will include the production of aluminium, steel, fertilizer and petrochemicals.

An army of foreign workers, mostly from South Asia, are building the infrastructure that is needed and the accompanying residential areas. The labourers are cheap and are prepared to do jobs that Saudis refuse to do.

King Abdullah at recent Mecca conference
King Abdullah is seen as a reformer in a conservative political establishment
For decades Saudi Arabia has been dependent on skilled and unskilled expatriate labour, but in recent years the government has been trying to get more Saudis into work with employment schemes like Saudisation. They have had mixed success.

Take the water bottling plant run by the Delta Marketing Company in Jeddah.

Just 12% of the workforce on the factory floor is Saudi, including 40 women. In the whole company, a fifth of the workers are Saudi, which meets the government quota but is still low by international standards.

"Low-educated Saudis have very few choices," said the Water Division manager, Nidal Abdul Kareem, who is Jordanian.

"[They can] work in the unskilful work with low salaries and compete with the expats. Or they can stay at home without work and some of them unfortunately like to stay at home without work. Sometimes you feel strange that they don't like to work."

Foreign influence

Despite the difficulties Saudi Arabia is undoubtedly in the process of enormous change, which is being fuelled by the oil boom and globalisation.

Work on KAEC
The construction programme is taking place on a massive scale
New shopping centres are being built, like the enormous Red Sea Mall in Jeddah. Satellite television and music from the West are also having an impact on the youthful population.

There will be several universities in the new economic cities, which reforming Saudis believe could be the catalyst for social freedoms.

"This is part of a Kingdom-wide change in philosophy whereby we are improving education systems," said Mr Rasheed.

"In KAEC we will have a global education system that aspires to have students graduate at a global level in terms of their understanding of the world, how they view the world and how they want to be a part of it."

In Saudi Arabia you need to read between the lines. Most reformers quietly suggest that the cities of the future will be much freer than the rest of the country.

But will women be able to drive in the new cities? Will men and women be able to mingle freely in the developments as they do in the West or in many other Middle Eastern countries?

No one including the King seems prepared to answer those questions directly just yet.

Reform is coming but in a country with a strong religious establishment it will be a gradual and slow process. The King Abdullah Economic City seems likely to be at the forefront of the change.

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