JIDDAH, Saudi Arabia — Saudi Arabia has been making headlines these days for its opposition to the US-led negotiations with Iran over its nuclear program. Should Iran genuinely halt its nuclear program and take advantage of reduced sanctions to gradually reintegrate peacefully into the region, there could be a significant geopolitical realignment in the Middle East. Compounding Saudi fears is the rapidly diminishing Western need for its oil reserves as the US taps massive shale gas deposits, in addition to many countries seeking to transition away from oil. Combined with the continued instability surrounding it — from Egypt to Syria and Iraq — the Saudis are rightly paranoid about a scenario of diminished strategic relevance.
Yet, there is another story emerging from Saudi Arabia, one barely visible to those who travel only to Riyadh or the eastern military and oil compounds such as Dhahran and Dammam. On my first visit to Jiddah, the country’s commercial capital located in the far west on the shore of the Red Sea, I witnessed a thriving business environment and huge expansion of infrastructure both to create jobs and diversify the economy, and to manage the millions of annual visitors performing the hajj. Flights into Jiddah are packed with Arab and Western business travelers, even in the low season for pilgrims to nearby Mecca.
Like other Arab countries, Saudi Arabia faces a demographic crisis. Its population has grown from 3 million in 1950 to 30 million today — with half the population below the age of 25. The country needs to double its housing capacity from 4 million to 8 million units by 2020. Around Jiddah, one can see the effort underway at a pace unmatched in the Arab world. The relatively mellow seaside oasis is now a bustling city of over 3 million residents and a hub for an archipelago of new urban developments stretching hundreds of kilometers north and south.
One particular project stands out as best reflecting Jiddah’s unique model: King Abdullah Economic City (KAEC). Inside a rigid monarchy, KAEC stands out for being a fully private undertaking funded by an IPO, attracting major business investors and residents into a hybrid city that combines a special economic zone of targeted industries and neighborhoods capable of housing upward of 2 million residents. In late November, KAEC played host to the CityQuest summit of the New Cities Foundation (of which I am a trustee). Touring the facilities, the scale of ambition already being executed became clear. According to Fahd al-Rasheed, CEO of KAEC, “This is the first true full privatization of an integrated city at scale. We aim to become a global logistics hub and regional manufacturing center for industries ranging from pharmaceuticals, consumer goods, automotive assembly and plastics.”
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