Balancing
change and identity
Richer
than ever thanks to high oil prices, Saudi Arabia
is developing an economy that will meet the needs
of its rapidly expanding population. Its challenge
is to engage increasingly with the modern world while
retaining a national identity rooted in tradition
and religious values
Saudi Arabia is a land of mosques
and money, of vast empty desert and luxurious modern
cities with sleek skyscrapers, a place where religion
and consumerism coincide, where Mercedes cars are
advertised as gift items but women are prohibited
from driving.
It’s a very different
country, of course, from when Abdul Aziz Al Saud united
four-fifths of the Arabian peninsular into a single
kingdom approximately the size of western Europe back
in 1932. Saudi Arabia then was a poor desert state
sparsely populated by nomad tribes. Within six years,
however, American geologists had discovered oil beneath
the sands, and with the start of commercial production
during the Second World War the process of change
that produced today’s kingdom began.
Seventy-five years on, Saudi
Arabia is the world’s largest oil producer, its
state coffers overflowing with petro-dollars thanks
to high international prices, currently at around
$65 (£32) per barrel. Oil accounts for more
than 90 per cent of exports and almost 75 per cent
of government revenues. Proven reserves are put at
more than 260 billion barrels, which amounts to approximately
25 per cent of the world’s total.
Living standards have been
rising and through the internet, satellite television
and cell phones, the predominantly young and urbanised
population, which has a median age of 21, have access
to the world outside Saudi Arabia that their parents
could not have dreamed of.
And yet, while much has changed,
much remains the same. The birthplace of Islam, whose
ruler is the Custodian of the Two Holy Mosques, Macca
and Madina, is a deeply traditional, patriarchal society
with a political system based firmly on Islamic Sharia
law.
Saudi Arabia’s challenge in the 21st century
is how to retain its national Islamic identity while
endeavouring to meet the needs and satisfy the desires
of its citizens – particularly the young. What
gives urgency to the need for social and economic
development is the ticking time bomb of population
growth. Currently estimated at more than 27 million,
Saudi Arabia’s population is expanding at a rate
of 2.06 per cent annually, with huge implications
for areas such as employment, education, housing and
health.
That necessitates the development
of a wider range of economic activity than the current
dependence on the extraction of oil and gas, and it
means increased engagement with a globalised world.
With economic reform can be expected to come social
and political change – indeed it is already starting
to happen, particularly in areas such as education,
employment and business opportunities for women.
It would be unrealistic to
expect the pace of change to be anything other than
gradual, and finding acceptable ways of operating
in the secular world of modern commerce may require
imagination and innovation – a prime example
is the emergence in recent years of Sharia-compliant
banking products and services, now in demand across
the Islamic world and beyond.
Custodian of the Two Holy
Mosques King Abdullah bin Abdulaziz Al-Saud is a reformer
with his eye on the long-term future, who fully understands
the economic realities. Top of the list is employment.
The kingdom is heavily reliant on foreign workers,
with non-nationals making up a fifth of the population.
The official unemployment rate is between 9-12 per
cent – some observers put it higher – and
is attributed largely to a skills shortage among Saudis.
Saudi Arabia’s 2007 budget
– the largest in its history – puts the
emphasis on spending to create job opportunities and
boost economic growth. Thanks to a record budget surplus
of SR265 billion (£35 billion), larger sums
than ever before are being spent on education and
manpower training, health, municipal services, water,
agriculture and infrastructure. The huge oil revenues
of recent years are being used to reorient the economy
with the help of foreign investment.
At present, most of the population
is concentrated in Jeddah and Macca in the west, the
capital Riyadh in the centre and Dammam and Al Khobar
in the east. But construction has already started
on the first of six new mega-cities that will provide
jobs and homes for millions of people.
Over the last 20 years, the
pace of development has been extraordinary, and it
could be even greater over the next 20. As the kingdom
moves towards becoming one of the world’s most
competitive economies and extends the benefits more
widely to its citizens, it will need to continue to
balance tradition and modernity.
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SAUDI ARABIA PROJECT TEAM
Project Director: Bertrand Epaud
Project Coordinator: Aleksandra Pancevska
