The main street of Dhahran Hills passes by perfectly manicured baseball diamonds and football fields. Prefab houses—complete with freshly mown lawns and tire swings hanging from elm trees—overlook golden desert vistas. Women in shorts and tank tops jog down Miller Street and Lilac Road while kids play basketball on bougainvillea-lined cul-de-sacs. Teenagers congregate at the movie theater and bowling alley; their parents grab dinner at the Olive Garden.
This could be Phoenix or Palm Springs. But Dhahran Hills is located in Dammam, in Saudi Arabia's Eastern Province. It is the main compound of Aramco: the country's hugely successful national oil company, which turns 75 this month. Yet Dhahran Hills seems a world away from Riyadh or other Saudi cities, where men in white robes and traditional headdresses loiter aimlessly along clogged thoroughfares lined by dilapidated high-rises. Women—if they're seen outside at all in those towns—go about in black full-body coverings.
But Aramco has always been different. Since it was created by Standard Oil in 1933, and continuing through the company's takeover by the Saudi government in the '70s, Aramco has functioned as a state within a state, operating by its own set of laws and standards and maintaining a remarkable level of freedom from the fundamentalist Wahhabi clergy that dominates the rest of Saudi society. This freedom, and Aramco's impressive managerial efficiency, have helped it become the richest company in the world: a new study by McKinsey and the Financial Times put its net worth at $781 billion.
But the company's splendid isolation may be about to end. Saudi Arabia's reformist King Abdullah recently thrust Aramco into the spotlight by charging it with building a $10 billion Western-style university on the country's western coast.
It's a high-risk gamble. The project is part of Abdullah's attempt to wrest control of his country from the repressive clerics, using the one Saudi institution that's free of their influence. If the university succeeds, Aramco may become a key ally in the king's struggle and will likely be called on for other similar reform projects. But the company's involvement could also prove its undoing. For the school could turn Aramco—already suspect in many Saudis' eyes—into a prime target of the country's extremist factions, perhaps even ending its protected status. The implications will be profound for Saudi Arabia—and indeed, for the world, since the company supplies 26 percent of the world's oil.
The differences between Aramco and the rest of Saudi Arabia run deep. The corporation has its own print and broadcast media, as well as its own intelligence services and security force. It maintains its own lobbyists in foreign capitals, and its employees often act as intermediaries between the king and Western leaders. The company also sends thousands of Saudis to the United States every year for education—creating an elite that, on their return home, have formed a progressive (if tiny) core within Saudi society.
Aramco's lax social atmosphere has allowed it to attract the best talent from around the world; 15 percent of its workers are foreign, mostly at the upper echelons, with tens of thousands more foreign contractors. Perhaps more important, the company's independence has also kept it free from the corruption, nepotism, red tape and inwardness that have hindered development in the rest of the country. At Aramco, women work alongside men and hold senior positions in key divisions like petroleum engineering; 1,000 Saudi women number among its ranks. Aramco also maintains Western standards of professionalism and meritocracy—in marked distinction from most Saudi government offices and private businesses.
Western encroachment into Saudi society is generally resisted: the Internet is censored, satellite dishes are banned and even tourist visas for Westerners are forbidden. But the Wahhabi clergy—and, more important, the Saudi people—have been willing to overlook Aramco's brazen behavior until now because they recognize the company's centrality to Saudi Arabia's existence; providing nearly 75 percent of government revenues, the company singlehandedly keeps the country afloat. "The Saudis have always understood that this is the goose laying golden eggs and they can't mess with it too much," says Gregory Gause, a Middle East specialist at the University of Vermont.
Aramco's executives recognize that this is a fragile bargain, and step carefully. The unspoken understanding is that, in exchange for its unprecedented independence, Aramco keeps its activities limited to the remote Eastern Province and within its compound walls. Any work outside the region has been strictly limited to necessary oil-producing projects, such as refining and shipping. Aramco has also refrained from Western-style proselytizing. Above all, it's tried to maintain a low profile.
Until now. Ever since King Abdullah came to the throne three years ago, his government has been slowly implementing progressive reforms to counteract the extreme Wahhabi doctrine that many blame for fostering terrorism at home and abroad and for squelching innovation. Abdullah also knows he must modernize the country's moribund economy. Almost 75 percent of Saudi citizens are under the age of 30, and a third of these young people are unemployed—a dangerous source of social unrest, dissent and potential terrorism.
To tackle these threats, the king has begun gradually challenging the old grand bargain of Saudi politics, which granted the Wahhabis a free hand in exchange for the clerics' support for the House of Saud's legitimacy. Many of Abdullah's changes are already apparent, from increased criticism of the religious police in the state-controlled press to drastic reform of the Kingdom's legal system, emphasizing the independence of judges. The most visible sign is the king's annual National Dialogue, a public forum held since 2003 to which he invites a wide variety of Saudi intellectuals—including dissidents and even people previously imprisoned for their palace criticism. The religious establishment is pointedly excluded.
Abdullah may be moving too slowly for Western human-rights advocates, but he knows that pushing too hard could create a backlash—for the Wahhabis still have significant support within the royal family and among the population. The king's solution has been a strategy of circumvention, using outside forces to drive his progressive vision. "Abdullah realizes he can't make swift changes," Gause says, "so he uses a strategy of working around established institutions."
One example of this strategy has been Abdullah's drive for WTO membership, which has forced the country to open markets to international competition, cancel monopolies, drop some parts of its boycott of Israel and institute significant transparency measures for both public and private institutions. As Robert Lacey—author of "The Kingdom," the definitive book on modern Saudi history—explains, "you do what you can to reform the system, but sometimes you have to take shortcuts—go right around the obstacle. You have to find a secular organization to do that."
That's where Aramco comes in. Forcing the company from its self-imposed exile in the Eastern Province, Abdullah has tasked it with setting up a radical new institution—the King Abdullah University of Science and Technology (KAUST)—that he hopes will "serve as a bridge between people and cultures … and benefit all of mankind," as he said at the school's groundbreaking in October. Abdullah plans to use the university to propel reform and improve learning in a country that had no Ministry of Higher Education until 1975, that spends less than a quarter of 1 percent of its GDP on scientific research (compared with 2.6 percent by the United States) and that, as recently as 2003, had only eight universities for a population of more than 22 million (by comparison, Israel, with a third the population, has 35). "You're talking about a country where people who still don't believe in evolution or that we went to the moon," says Thomas Lippman, author of "Inside the Mirage: America's Fragile Partnership With Saudi Arabia" and a scholar at the Middle East Institute.
Abdullah has more than tripled the country's education budget to more than $15 billion annually and authorized the opening of more than 100 new universities and colleges in the past four years. But there's only so much that can be done within a system firmly controlled by the Wahhabis, who care more about churning out imams than educating scientists and businessmen. The clergy were given an even stronger hand by King Fahd after fundamentalists seized the Grand Mosque in 1979. This explains why the current king chose to give KAUST to Aramco. "The king had a vision, and he said to me, 'Ali, you build that university'," says Ali al-Naimi, Aramco's chairman and the minister of Petroleum and Mineral Resources. "Giving it to Aramco means the university will not be run by social-retrograde personalities from the Wahhabi establishment and students won't be spending their time studying glosses of the Qur'an," says Lippman.
Indeed, the new school will be nothing short of revolutionary. Men and women will study side by side and with teachers of both genders—a first for Saudi Arabia. The curriculum will be designed by Western consultants rather than religious authorities, and KAUST will host students and faculty from around the world. The idea is to turn the campus, located on the Red Sea less than two hours from Mecca, into a veritable oasis, free from most of the restrictions that apply to the rest of the country. The university's budget will be controlled by an independent international board of trustees and the school will be advised by administrators from Cornell, the Imperial College of London and the U.S. National Academy of Sciences. KAUST has already awarded fellowships to visiting professors from MIT, Oxford and Caltech and signed student-exchange deals with Stanford and Texas A&M. And its massive endowment—supplied by the king personally—will instantly make it the sixth richest university on the planet.
Abdullah's larger goal in turning KAUST over to Aramco is clear. So is the symbolism. The university "will lead to a transformation of society," says al-Naimi, the Aramco chairman. "Life on campus will be free; scholars can dream, think and innovate with a lot of freedom." As Sadad al-Husseini, a former executive vice president of Aramco, explains, "The king is a man of few words—he likes his gestures to do his talking. On the spectrum of Saudi institutions, Aramco clearly falls on the liberal side. The king is saying that he is on that side, and he wants that side to take on a significant role in the country." Aramco CFO Abdullatif al-Othman says, "Sometimes to introduce change in society, you need to have a model. The king wants KAUST to be a model others will follow."
Vast funds and a royal imprimatur don't guarantee success, however. Aramco has been involved in infrastructure projects before, but most of those have been directly related to oil or to the company's own needs in the Eastern Province. This will be its first totally non-oil-related venture. And KAUST's location in Thuwal, a port less than 80km from Jidda, will be Aramco's first major outpost in the western half of the country.
Bringing foreigners and foreign ideas into the Saudi heartland is sure to provoke a backlash. "Aramco over time has gotten good with God by greatly reducing the number of infidels working there," Lippman says, referring to efforts to "Saudify" the company in the 1980s after the government took control. "But this university is explicitly going in the opposite direction—it is setting out to bring in infidels, and a lot of them. This is very provocative." The school's zealous egalitarianism will be especially controversial. "I can't stress enough how important gender issues are for the religious factions in society—it really is the third rail of Saudi politics," Gause says. "This is a very emotional issue that will be a flash point once this university opens."
Beyond the symbolism, KAUST's Western-style curriculum is sure to have a profound impact on those who study there. "If you are really going to have a science university that doesn't have a designated purpose—of producing people to do x job or x assignment, the way most Saudi universities are now—that will presumably produce scientists that [will] follow where their research takes them," Lippman says. "Sooner or later, even in the sciences, that will put them against the establishment."
All this comes at a particularly delicate time. In recent years Aramco has started to come under threat from conservative Saudi elements, including some within the company. "There are an increasing number of people at Aramco who are offended by what goes on there," says one member of the Shura Council, the king's powerful consultative body. "You can't screen against these people, and they are changing the face of Aramco." The problem, explains Lippman, is that "the people working at Aramco now, in their mid-30s, came to adulthood in the Saudi Arabia unleashed by King Fahd, who turned the social life of the country over to the fire-and-brimstone absolutists. I would not underestimate the counterforces who are willing to take quite radical measures to prevent alien ideas and unwanted social measures from entering their society."
Liberals are hoping the new university project will advance their cause in the country at large, and inside Aramco as well. "We're in a very patriarchal society that believes strongly in centralization," said al-Husseini, the former Aramco VP. "The challenge is to maintain Aramco's trademark level of dialogue—which has been eroded—and revitalize the tolerant, open, transparent culture."
Aramco tried something similar before, however, and it died in controversy. In the 1960s, Aramco was commissioned to open the King Fahd University of Petroleum & Minerals, an attempt at a Western-style institution for engineers and scientists. But its progressive elements were overturned in 1977, when the school was put under control of the Wahhabi Education Ministry—which fired the female professors and most of the Western staff and mandated religious classes for all students. "You can't hide behind a sand dune along the Red Sea and make a secret university there," says a former administrator at King Fahd University. "Many people in Aramco are frankly scared to death of the Wahhabis. Aramco is not happy about being put in the line of fire, and if King Abdullah is using Aramco to stave off the Wahhabi fundamentalists, that will spell trouble."
Indeed, it would be foolish to bet against the Wahhabis in this current struggle, given that their fundamentalist education system is constantly producing more conservative Saudi youngsters. Abdullah, moreover, is 83, with no clear liberal successor. Still, that may help explain why he's willing to make such a dangerous bet with the country's most precious resource. This might just be the last chance the king gets to institutionalize his progressive legacy and improve the future of his troubled land.