http://www.nytimes.com/2001/08/26/world/leisure-class-to-working-class-in-saudi-arabia.html?pagewanted=all

Leisure Class to Working Class in Saudi Arabia

By NEIL MacFARQUHAR

Published: August 26, 2001

Correction Appended

JIDDA, Saudi Arabia— To coax skittish young Saudis into working on an assembly line churning out 300,000 packages of cookies a day, the managers at the National Biscuits & Confectionery Company have learned to maintain a certain degree of flexibility -- and patience.

One Saudi man objected to wearing overalls, embarrassed when acquaintances rolled down their car windows and joked that he should avoid police patrols looking for illegal immigrants. Another disliked the job title of laborer assigned to the roughly $6,000 per year entry job, wanting to tell his new bride he was a technician. A third insisted that he belonged in management, not production.

''A Saudi who is working on our factory floor came and said 'Why can't I become a supervisor? I graduated from college and I have a diploma and I am working among all these people from Nepal and Bangladesh and India,' '' said William Menzies, the New Zealander running the factory. ''That is a case of false expectations.''

It is an affliction that permeates Saudi society, rooted in the impression that a country with seemingly bottomless oil reserves would always be rich.

But the relaxed life is slowly vanishing. Saudi Arabia faces problems more typical of any other developing country, and young Saudis are confronting the fact that they will have to work at real jobs -- if they can find them.

It is a rocky transition for a country where the generation that came of age in the 1980's lived as if they had won the lottery. They garnered monthly stipends from the government for enrolling in college, and upon graduation were guaranteed a spot on the public payroll with hefty wages and a 10 a.m. to 2 p.m. workday -- basically a license to sit at home and do nothing.

''There is an Arabic word, itikali, when you always want someone else to do something for you,'' said Prince Abdullah bin Faisal, 51, a nephew of the king and chairman of the Saudi Arabian General Investment Authority. ''Like now, some Saudis don't want to take work. They became lazy, spoiled.''

Saudi Arabia has managed to lift virtually everyone out of poverty. But today, even with lofty oil prices, the petrodollars do not stretch as far, not least because they are being spread among more Saudi citizens.

The baby boom generation spawned by 1970's oil wealth is wading into a job market that can only generate one job for every two men. Prospects may only get worse considering that half the 14 million Saudis are under 18.

The tradition of ruling princes spending the country out of any problem (and please don't bother us with any silly questions while we're doing it) no longer functions smoothly. But no one envisions what can replace it.

As a result, the kingdom is an anxious country unsure how to open itself to the world at large, especially the West. Suddenly, it must find ways to relax its rigid traditions in order to make the economy grow. It needs jobs for a new generation whose parents napped contentedly beside the public trough. It needs to refurbish its once awe-inspiring infrastructure of soaring airport terminals, freeways and phone booths pitched in the middle of the desert. It needs power and water to reduce rolling blackouts and water rationing.

To some extent the future hinges on the unresolved question of how to pass down the absolute monarchy once all 44 sons of the founder, King Abdel Aziz al-Saud, are gone.

And now that the royal clan numbers roughly 7,000 princes, there are also questions about how much longer some members can treat the kingdom like their private club.

Since the discovery of oil, Saudi Arabia's wealth has existed in uneasy proximity to the country's ascetic Islamic foundations. Oil wealth allowed the Saudis to live suspended in a state of creative ambiguity.

The secular merchant class lives in its world and the fervently religious live in theirs. Where the interests of the two groups collide, the rules exist in shades of gray.

The insurance business -- suspect to the religious because they believe God wills accidents -- dwells outside formal laws, for example, because commerce depends on it. Women's driving, however, remains banned because convenience does not outweigh religious opposition.

''The thing that people overlook or don't know or pretend they don't know is that Saudi Arabia is not an ordinary Islamic country; it is the heartland of all Islamic countries,'' said Wahib Binzagr, 68, the unassuming patriarch of a Jidda merchant clan. His affluence is only noticeable in subtle ways -- like the gold studs used to close his white robe. ''But we have to choose whether we want to be isolated or part of the world as a whole.''

Not in Love With the Job

First, Being Hired; Second, Showing Up

Two unusual but telling pictures appeared recently on the front page of Saudi Arabia's main business newspaper. Each showed a young man wearing a somewhat outlandish costume, opening car doors and helping to carry suitcases into the Hyatt Regency Jidda. A young Saudi taking a bellboy job here is front page news. ''The major challenge now is the growth of the population -- you have a lot of young people growing up,'' said Abdulrahman al-Tuwaijri, secretary general of the Supreme Economic Council. ''You need schools, you need health care and you need jobs.''

''Saudization'' laws passed five years ago mandated gradually eliminating the need for millions of expatriate workers. According to the law, the number of local workers in any business had to increase five percentage points a year, which meant that by this year one-quarter of every company's employee roll was supposed to be Saudi.

It has not happened.

Some employers -- banks, with marbled, air-conditioned interiors and abbreviated hours -- exceed the new levels easily. But companies that deploy thousands of street sweepers employ virtually no Saudis. The National Biscuits & Confectionery plant here is considered exemplary; it has more than 50 Saudi workers, or 11 percent, though strict adherence to the 25 percent would require 110 Saudis.

''If I hire, on an annual basis, 200 Saudis, I find at least 150 will leave,'' sighed Muhammad H. Kadi, general manager for human resources at the factory and its sister companies.

Hiring Saudis is one thing; getting them to show up is another. Managers at the cookie factory found that 18 percent of the 80 workers brought from Nepal were absent during any given month, while more than half the Saudis did not come to work.

Still, managers sense that the aloof attitude toward work is receding. Per capita income exceeded $28,000 in the early 1980's, matching that of the United States. The population of native Saudis has nearly doubled since, to 14 million, while the per capita income has sunk below $7,000.

Young Saudis fear they will never attain the same standard of living as their parents. Prospective workers no longer ask first about status issues like the size of their office.

The pressure of marrying young, not to mention buying a house and car, is convincing many young Saudis that even a factory job is better than none at all.

Ten years ago unemployment was a nonissue. Now it is officially pegged around 18 percent, and is probably much higher among recent graduates.

The picture is not likely to improve. An estimated 100,000 young men enter the labor force each year while the public and private sectors generate about 50,000 jobs.

''It won't be long before this goes from being a concern to being a major problem,'' said Brad Bourland, chief economist for the Saudi American Bank.

The strain already shows. When the military college in Riyadh advertised 10 jobs last year, several prospective applicants were injured in the melee that resulted when more than 1,000 people showed up.

And this is even before the kingdom considers broadening job opportunities for women. Aside from the ban on women driving cars, the obstacles to hiring women in places like factories are considerable. The legal separation of the sexes mandates an entire separate production line, separate entrances and other facilities. For the moment only a small percentage of educated women work outside the home, mostly in medicine and education. But like their male counterparts, many women crave greater opportunity.

Officials remain sanguine for now.

''We don't, in the government of Saudi Arabia, admit there is unemployment, basically because there are the jobs,'' said Prince Sultan bin Salman, who is in charge of creating a tourism industry. ''There are six or seven million expatriates working in the kingdom. Many of those jobs can be done by Saudis.''

An Aging System

Dirty Secret Lurks Behind the Fable

Jidda, the city that styles itself as the bride of the Red Sea, harbors an extremely dirty secret. A toxic sea of raw sewage pumped from the city's septic tanks festers just inland, fed daily by at least 1,000 trucks dumping an additional 50,000 cubic meters of sewage. (About 20 Olympic-size swimming pools each day.) The fouled water then seeps into precious aquifers.

The fact that three-quarters of Jidda, a cosmopolitan port of some three million people, lacks a sewage system is merely the most pungent of Saudi Arabia's shortcomings.

The kingdom is rapidly outstripping the fabled infrastructure it bought with oil largess. The highways are still phenomenal, but the water, power and telephone systems all show their age. Big cities like Riyadh and Jidda endure rolling blackouts and water rationing, especially during peak summer demand when desert temperatures often hover around 109 degrees Fahrenheit.

''The economy can't grow enough anymore just by dumping all the oil revenue into it,'' said Mr. Bourland of the Saudi American Bank. ''It is not enough money to fuel growth for an economy of more than 20 million people.'' Ibrahim A. al-Assaf, the finance minister, says that Saudi Arabia needs to spend $100 billion in the next 15 years to keep up with electricity demand, and that water treatment needs $27 billion in the next few years.

To obtain overseas investment, the kingdom is using the leverage of its oil reserves and its natural gas deposits, considered fourth in the world behind Russia, Iran and Qatar. A gas deal signed this summer will reopen the country to foreign oil companies despite fierce opposition from the domestic oil giant, Aramco.

Eight companies will explore for gas on the condition that they spend part of their initial $20 billion investment on building plants for desalination and electricity.

Beyond that, Mr. Assaf, the finance minister, and other leading Saudi economic officials stress that Saudi Arabia intends to overhaul its entire economy with new foreign investment laws in the works, new tax laws, a new capital-markets law, new commercial laws and at least a stated goal of joining the World Trade Organization.

Joining the W.T.O., the finance minister said, would give Saudi Arabia the seat at the international trade table it deserves as an economic player.

Two months ago import tariffs were lowered to 5 percent from 12 percent, and foreigners are now allowed to own property outside the holy cities of Mecca and Medina. Saudi Arabia also hopes to expand its economy by creating a tourism industry and becoming a manufacturing hub for the region.

Many Saudis, however, find the kingdom long on reform announcements and short on bricks-and-mortar achievements.

Saudis and foreign investors alike bemoan the country's legendary sluggishness and protectionist habits. The trumpeted changes to lure foreign investors came with a long list of areas closed to non-Saudis. Called the Negative List, it includes oil exploration and production, wholesale and retail trade, printing, transport, fishing and some medical services. The finance minister calls it temporary. To the Saudi business community, the best opening for change is the possibility of joining the World Trade Organization, nudging the kingdom toward the kind of financial transparency it has long avoided. Saudi law, for example, is drawn solely from the Koran and the Hadith, the practices of the prophet Muhammad. Although there is wide latitude for interpretation, principles developed in the 7th century are sometimes in conflict with 21st-century needs. Take mortgages, for example. In the late 1970's, any Saudi could get an interest-free, $80,000 housing loan from the government in days. The amount remains the same, yet the waiting list now stretches 10 years.

The growing population craves housing, however, and home building could provide an economic lift. But Islam forbids interest, making mortgages difficult.

In addition, the religious establishment, which dominates the legal system, has a knack for propagating random edicts that can abruptly destroy any venture. For example, Pokémon, the children's game, became the target of a ban this year because it was said to encourage un-Islamic behavior like gambling, and was somehow considered Zionist to boot. It was whisked off store shelves, and the manufacturer had no means of redress.

Royals and Citizens

On the Lookout For Fresh Leadership

In the 1930's, King Abdel Aziz kept the treasury of his newly unified kingdom in wooden boxes, calling for bags of coins to dispense as needed. Many Saudis feel that the al-Saud rulers still treat the treasury that way, except now an estimated 7,000 royal princes camp at the front of the line.

''A lot of them have the mentality of 'I own this country and you are here to serve me,' '' said one Saudi economist.

During the oil boom years, the tacit understanding was that the government would pay for everything and the people would not ask questions. Now, an increasingly educated population surveys a country hobbled by its isolation, yet unable to make the far-reaching changes needed because of a certain stagnation at the top. ''They don't understand the concept of giving people their rights; we are their subjects,'' said an American-trained Saudi lawyer.

Crown Prince Abdullah, effectively running the kingdom for five years because King Fahd has been ill, has pushed to open the country by letting in foreign oil companies again and lowering barriers to foreign investment. But he can only take matters so far, since he is not yet king and is 77 years old. What's more, succession is complex. Just how Saudi Arabia will change depends on who will run the country.

Succession does not seem a major concern to most Saudis, but some worry about the kingdom's lineup of aging monarchs at the very moment it needs energetic, worldly leaders. King Abdel Aziz established the system of inheritance according to age and family consensus in the hope of avoiding fratricide. The one rule is that any king must be his direct descendant. King Fahd is the fourth son to hold the throne since King Abdel Aziz died in 1953. More than 20 other sons survive from among his 22 marriages.

There is no doubt that the proliferation of princes grates among the professional classes.

A waiter glides up to a senior government official settling onto a couch in a hotel lobby to tell him that it is permanently reserved for a local prince. ''Another prince?'' the official snapped, before regaining his composure. ''Please don't quote me on that,'' he said to a reporter.

But to some the unhurried system of succession is delaying decisions by senior princes who worry that one mistake might hurt their standing. In addition, they sometimes appear to be creating personal fiefdoms with an interlocking network of personal loyalties.

Prince Abdullah used to run the national guard, a job now held by one of his sons. The defense minister, Prince Sultan, made one son, Prince Khalid -- former commander of the Persian Gulf war forces -- his deputy. The same holds true for Prince Nayef, the interior minister, who at 65 is considered third or fourth in line.

But royals deny that anything is preordained. ''There is no acquired right in this issue and there will not be any,'' Prince Nayef said in a rare interview. ''I want to stress that they were chosen as normal citizens, not as members of the royal family and the sons of this one or that one.''

With Abdel Aziz's sons dying off, Prince Nayef said, the move to the next generation could come either through a family vote or by a future king picking a member of the next generation as crown prince.

Educated Saudis would prefer a more formal system of government. One reason business leaders back World Trade Organization membership, for example, is that they hope it will force the country to eliminate whimsical rulings. (And royal whim is one reason no Saudis want to be quoted by name when discussing their rulers.) Having one-quarter of the world's oil reserves has always allowed them to make their own rules.

''Money is spent on palaces, not think tanks; we have 300 palaces in Jidda alone,'' said a former member of the 120-seat Consultative Council, which the king appoints. It was designed to give greater public participation in decision making, but the king sways the agenda. ''We need to clarify who owns the country, the people or the king,'' he added.

For the moment, nobody knows what awaits when Saudis earning a living surely start wondering aloud about the way they are governed. Members of the younger generation are prone to want change.

One indication of that came at 11 p.m. on a steamy summer weekend, during rush hour along the wide pedestrian quay circling the marina of Durrat Al-Arrus, a Red Sea beach resort town north of Jidda.

Saudi young men, some bristling out of their muscle shirts, sauntered past young women wearing stretch jeans. A few women dared let their hair float free; occasionally they even broke Saudi law by driving.

The scene would be tame elsewhere, but it is shockingly risqué for keep-it-under-a-robe Saudi Arabia. A young man with a ponytail said the resort felt like a foreign country. He and his friends said they wanted changes but did not want Saudi Arabia to ape the West. They shook their heads no when asked if they wanted someplace to dance in Durrat al-Arrus, for example. They abhor the idea of their sisters mingling with men who are strangers. But they do seek a greater sense of personal freedom.

''Ten years ago we really used to suffer, but in another 20, a lot of things will change,'' said the young man with the ponytail. The others around him all nodded.

The Perils of Plenty

Articles in this series are examining how sudden wealth from natural resources can bring unexpected problems for countries struggling to come out of poverty. The first article, last May, looked at whether Chad can escape the corruption often associated with oil riches. Later articles will look at other problems as political and economic systems elsewhere react to newfound wealth.

Photos: Abdel Aziz al-Saud, founding monarch of Saudi Arabia, left, in a photograph from 1934. Young Saudi men in the Red Sea resort of Durrat al-Arrus, north of Jidda. A new generation of Saudis would like changes, but not necessarily to be just like the West. (Mahmoud Mahmoud/Agence France-Presse); (Associated Press)(pg. 4) Chart: ''When the Party Is Over'' Saudi Arabia is adjusting to an era of greater stringency. Even at a time of reasonably high oil prices, petrodollars do not stretch as far as before, and many young Saudis are taking jobs they would not have accepted a few years ago. Chart shows oil revenue trends with total revenue and revenue from oil from 1974 to 1999. Chart shows gross domestic product from 1975 through 2001. Chart shows midyear population for 2000 and measures population in thousands. No data available for 1991 (Sources: Ministry of Finance and National Economy, SAMA's annual reports, World Bank, Embassy of the United States of America in Saudi Arabia, U.S. Census Bureau, International Data Base)(pg. 4) Map of Saudi Arabia highlighting Jidda: In Jidda, Saudis have joined expatriates in workplaces from factories to hotels. (pg. 4)

Correction: August 29, 2001, Wednesday A front-page article on Sunday about growing unemployment and other social changes in Saudi Arabia misstated the country's population. It is 22 million, not 14 million.