A new reality for Saudis

RIYADH, Saudi Arabia — During the oil boom of the 1970s, Persian Gulf countries spent lavishly to transform their desert backwaters into shimmering modern cities, living high with the help of a huge foreign work force filling jobs citizens suddenly could afford to avoid.

Today, oil prices are at 20-year highs, but the world’s largest oil producer, Saudi Arabia, is using part of the extra billions pouring in to make the kingdom run without all the imported help.

The government wants to put Saudis to work — to ease the unemployment and the boredom that some people say leads youths into Islamic extremism — but it will have to change attitudes that evolved out of the first spending spree.

“In our society, men want to sit in comfortable, air-conditioned offices and order people around,” said Suhaib al-Hussaini, 23, a computer engineering student. “They don’t want to go to the field and work with their own hands.”

Oil-producing countries, many of which had drawn up this year’s budgets based on expectations that oil prices would dip to $19 a barrel, are instead selling their oil for $55 a barrel and surpluses are piling into the billions, whether registered in riyals, dinars, dollars or euros.

During the 1970s and early ‘80s, producers across the Middle East spent their oil bonanza to make life easier for their people.

In Saudi Arabia, the government built roads, hospitals, schools and airports and provided free or heavily subsidized health care and education. It began sending tens of thousands of students a year to colleges abroad, mostly in the United States.

The spending spree began to wane in the mid-1980s, when oil prices fell and Arab birth rates soared.

With today’s windfall, governments are spending much more cautiously, building up their foreign currency reserves and carefully weighing development projects for need. In several countries, there are calls to spend the extra cash on education, health and infrastructure or on civil servant pay raises.

Some people worry the money will be squandered.

“Even if we had all the world’s oil riches, we won’t see any of it because of the extent of corruption in our country,” said Aidarous Nasr, an opposition lawmaker in Yemen, one of the region’s poorest nations and a producer of about 400,000 barrels of oil a day.

For Saudi Arabia, which pumps 9.5 million barrels a day, foreign currency holdings grew by $17 billion from January through the end of August. And that was before oil prices surged above $50 a barrel.

Still, the government’s only apparent extra spending has been a two-month bonus for security forces, which are involved in a major crackdown on Islamic militants, and a boost in funds for vocational training centers.

Crown Prince Abdullah has said most of the surplus will go to paying off the government’s debt, which totals $176 billion. But he also pledged to spend billions on infrastructure, education, housing and health projects as well as on loans to low-income Saudis to boost their employment prospects.

“It’s pretty clear they’re not going on a spending binge,” said Brad Bourland, chief economist at the Saudi American Bank. “The character of what the government is doing with the unexpected oil revenues is much different than during the first oil boom.”

Bourland said the rise in foreign currency reserves suggests the Saudi government is banking much of the windfall and investing in foreign securities.

The increase in spending on training young Saudis will help vocational centers and colleges nationwide increase capacity by 250 percent over the next seven years, said Saleh al-Amr, vice governor for development in the Organization for Technical Education and Vocational Training.

Omar Bafaqih and Mohammed al-Muhaidib, both technical college students, are happy to see more government aid for the vocational centers. But investing the money may be only half the battle in displacing the foreign work force that came with the last oil boom.

“When I quit university to enroll in the technical college, people said I was a loser,” said Bafaqih, 26, an electronics student who shocked his family by pursuing technical training. “It wasn’t easy, but I made it.”