Atlantic Council
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It may be the ultimate irony of our horrendous energy predicament. Amid all the talk and admonitions about “foreign oil” and alternative energy, it appears the Saudis and the other Persian Gulf oil and gas exporters are further along in preparing to diversify their economies for a post-petroleum world than the United States.

While we hotly debate about secondary, short-term issues like offshore drilling, the Arab Gulf oil exporters have been quietly taking advantage of one of the greatest transfers of wealth in history: Mid-East oil exporters income from the world’s oil addiction is projected to reach $800 billion in 2008. Unlike last time around in the 1970s, the Arabian Gulf states (when they are not busy buying stakes in US financial firms) are recycling much of their oil billions into investment in non-energy industrial development in the region, looking ahead to 2020 and beyond.

 

Revenge of the Gulfies

We have all seen the dazzling photos of futuristic towers and high-end resorts construction frenzy in Dubai, a would-be hybrid of Singapore and Las Vegas in the desert. But Bahrain, Qatar and Abu Dhabi are not far behind. Their broad vision (“Fly Emirates”) is to transform themselves into glittering high-tech transport/tourism/financial hubs taking advantage of their geographical centrality at the crossroads of  Europe and Asia.

Earlier this year, Dubai rolled out the world’s biggest airport (the size of London Heathrow and Chicago O’Hare combined), complete with a new city designed for nearly 800,000 people (total current pop. of Dubai: 700,000) located in the Jebel free-trade zone. Then there are the artificial islands dredged with imported sand and shaped like palm trees, creating hundreds of high-end beach front properties. Dubai is replete with megaports, IT parks, and would-be science centers.  Not to mention an accompanying $27 billion tourist complex, and an Internet City which only a few years ago was nothing but desert. And of course, Dubailand, an Arab version of Disneyland. And this is just for starters.

Dubai’s efforts are paralleled on a smaller scale by other of the emirates like Abu Dhabi and neighboring states of Bahrain and Qatar. Qatar, is trying to compete with Dubai as an international conference site, with posh facilities, media center (home of Al-Jazeera) and an instant world class university, Education City, by creating branches of key departments of prominent U.S. universities (e.g Texas A&M [engineering] , Carnegie Mellon [business], Georgetown [Foreign Service], and Cornell (medical)].   

The Saudis' $500 Billion Dream Future

Not to be outdone, Saudi Arabia’s King Abdullah and his close advisors, have been trying to realize a still larger vision: more than $500 billion is being invested to create six new megacities and a massive world class university seeking to turn Saudi Arabia into a major industrial power over the next quarter century.

If this is to be more than a pipedream or a bunch of enormous White Elephants, it will take a lot more than petrodollars. The Saudis have been engaging some of the top strategic business planners in the world. They seek to develop a competitiveness center, map out a business strategy, and build six complimentary, in theory, synergistic cities for more than five million people. They are focusing on energy-related (e.g.petrochemical, chemicals, and water-intensive industries like aluminum, transport, and knowledge industries (e.g. IT, biotech, computational sciences).

At the center of the plan is the $26+ billion King Abdullah Economic City, a planned “smart” high-tech environment with a megaport, industrial area, finance and business district and  educational and recreational zones on the Red Sea. One showcase of this venture will be the King Abdullah University of Science and Technology, a $25 billion project with a $10 billion endowment and a $100 million a year research partnership program to lure scientists and researchers from around the globe, with research institutes in biotech, materials science, engineering, environment,etc. To render it credible, the plan is to make it an independent institution early on. 

What Does it Mean? 

Whether these oil-rich Arab regimes can buy their way into the 21st century is obviously an open question. It is not clear whether this is the cutting edge of the Arabs finally shaking off ninety bad years (since the collapse of the Ottoman Empire) and coming to terms with modernity, or just a contemporary version of extravagantly throwing wealth around, as was done in the 1970s.

For openers, in order to have any chance of success, the Saudis and the Gulf states would need to unleash the labor and talent of the fifty percent of the population whose activities are greatly suppressed: women. Moreover, it would require developing a work ethic in cultures that have been largely rentier economies running on imported South and Southeast Asian labor. Those two things alone would constitute such sweeping change it would amount to almost a cultural revolution and a modernization of Islam in the Arab world.

But to raise serious questions about the viability and chances of success does not remove the stark reality that these petro-states appear fully cognizant of the path of history. They are off and running trying to create a future that a generation hence during a period that will likely be a transition to a post-petroleum based global economy by mid-century.

As we get hot and bothered in our presidential silly season over offshore drilling and ANWAR (perfectly reasonable ideas, but hardly solutions to the intertwined energy and enviroment question), the character of our discourse does not have, shall we say,  gravity commensurate with the magnitude of the problem.

We might do well to consider whether it is time take a deep breath and begin that quintessentially American act of properly grasping the sheer magnitude and the challenge of shaping our energy future with a vision, urgency and common purpose that we saw in the Sputnik generation, when science and engineering took off. Creating cost-competitive new, non-GHG producing energy technologies is the sine qua non for not only a graceful transition out of the petroleum-based economy, but for a sustainable planet. That OPEC oil exporters are already preparing for such a future ought to get our attention.

Robert Manning is a Senior Advisor to the Atlantic Council.  The views expressed here are solely his own, not those of any U.S. government agency.

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