Rid­ing the wave of in­ter­est in the new Saudi Ara­bia

US aca­demic turns au­thor just as world fo­cuses on re­forms in King­dom

Arab News - - BUSINESS -

The Philadel­phia-born aca­demic and au­thor, whose book “Saudi, Inc.,” has just been pub­lished amid much ex­pec­ta­tion, said she had been in­ter­ested in the Mid­dle East ever since she could re­mem­ber. “I’ve al­ways felt drawn to the desert. I just found it all so fas­ci­nat­ing.”

But that ca­sual wan­derer’s in­ter­est was gal­va­nized by the ter­ror­ist at­tacks on the US on 9/11, 2001, and sud­denly she found her­self right in the mid­dle of the hottest sub­ject of the day — the po­lit­i­cal, eco­nomic and cul­tural af­fairs of the most com­pli­cated re­gion on the planet.

“There was an ex­plo­sion of in­ter­est in the re­gion, and a lot more cour­ses and classes to choose from,” she told Arab News. She made the most of it.

She stud­ied his­tory at Prince­ton, spe­cial­iz­ing in what the univer­sity called “Near East­ern Stud­ies” be­fore go­ing on to post­grad­u­ate work at Bos­ton Univer­sity. It was there that her fo­cus con­cen­trated on the topic that was to form the core of “Saudi, Inc.”

A doc­toral dis­ser­ta­tion entitled “The United States, Great Bri­tain and the Mid­dle East­ern Oil In­dus­try” in­volved ex­ten­sive re­search in Amer­ica, in the UK and in the re­gion. It also gave her an op­por­tu­nity to get close to some of the peo­ple ac­tu­ally in­volved in the for­ma­tive years of the Saudi en­ergy in­dus­try, some of whom were still alive and happy to share their rec­ol­lec­tions.

“I found an in­cred­i­ble amount of source ma­te­rial in the US on the early days of the Saudi oil in­dus­try. The US was very good at keep­ing records of that time — in the State De­part­ment, in cor­po­ra­tions, and with pri­vate in­di­vid­u­als.”

The doc­toral the­sis even­tu­ally ex­panded into “Saudi, Inc.,” a fas­ci­nat­ing blend of busi­ness, his­tory and pol­i­tics, of­ten told through the per­sonal rec­ol­lec­tions of in­di­vid­u­als di­rectly in­volved in the events that made Saudi Aramco what it is to­day — the big­gest oil com­pany in the world, and one of the most ef­fi­cient.

The book achieves the feat of mak­ing busi­ness his­tory — which can of­ten be fairly dry and even dull — come alive through the eyes of the his­toric fig­ures who made it hap­pen. It opens with King Ab­dul Aziz bin Saud, the fa­ther of the King­dom, pre­par­ing for the as­sault on Riyadh in 1902 that was to lead even­tu­ally to the es­tab­lish­ment of the Saudi state.

Af­ter cap­tur­ing the city’s main fort, “he watched the sun set over the vast desert be­fore him and looked to­ward Makkah, many miles to the west, and many vic­to­ries away,” Wald wrote.

We meet Sheikh Ab­dul­lah Su­laiman, who rose from the poverty of the Nejd hin­ter­land to be­come min­is­ter of fi­nance to the new king, who had an ac­count­ing sys­tem that only he could un­der­stand and who stored the en­tire ex­che­quer of the King­dom in gold, cash and gems in chests at his fam­ily home.

We also meet Harry St. John Bridger Philby, the Bri­tish ex­pat who had earned the King’s con­fi­dence partly by con­vert­ing to Is­lam, and who played a cru­cial part in the ne­go­ti­a­tions be­tween the King­dom and Stan­dard Oil of Cal­i­for­nia, the Amer­i­can com­pany that snatched the Saudi con­ces­sion away from the Bri­tish.

To­gether, these and oth­ers led the project that, af­ter five years of frus­trat­ing and un­pro­duc­tive drilling, struck oil in se­ri­ous quan­ti­ties in Dam­mam Well Num­ber 7, kick-start­ing the modern Saudi oil-driven economy and lead­ing to the cre­ation of Saudi Aramco. Leg­end has it that the King told peo­ple he had been se­cretly hop­ing the Amer­i­cans would find wa­ter in­stead.

“The Amer­i­cans saw the Saudis as sim­ple and un­so­phis­ti­cated, but one of the themes of the story is how they al­ways seemed to end up giv­ing in to them. The Saudis usu­ally got their way,” said Wald.

“Ab­du­laziz had a long-term vi­sion and he brought in the Amer­i­cans to help him achieve it. To a large de­gree, he just let them get on with it, so it was a part­ner­ship, but al­ways sub­ject to on­go­ing ne­go­ti­a­tion. Both had what the other needed,” she added.

In 1970, amid a surge of na­tion­al­ist sen­ti­ment in the Mid­dle East which saw many Western oil as­sets ap­pro­pri­ated and na­tion­al­ized, the Saudis de­cided they too should con­trol their en­ergy des­tiny, and a 10-year process be­gan that ended with 100 per­cent Saudi own­er­ship and the cre­ation of the modern Saudi Aramco. “In the end, the Saudis got what they wanted, but they did it in a way that main­tained the Amer­i­can part­ner­ship. That was very im­por­tant for them,” Wald said.

One man who played a key role in these events was Ali Al-Naimi, se­nior Aramco ex­ec­u­tive and later Saudi en­ergy min­is­ter. “He un­der­stood back then that Aramco had to be more than just an oil com­pany. It was about more than just drilling holes in the desert. The role it plays in the Saudi economy and so­ci­ety would not have been pos­si­ble un­der Amer­i­can own­er­ship,” she said.

The book is pub­lished just as Saudi Ara­bia is go­ing through the big­gest changes since the dis­cov­ery of oil, with the Vi­sion 2030 strat­egy un­der Crown Prince Mo­hammed bin Sal­man and the forth­com­ing ini­tial pub­lic of­fer­ing (IPO) of Aramco.

The in­tense global in­ter­est in the King­dom has put Wald’s ex­per­tise very much in de­mand. She re­cently be­came a non-res­i­dent scholar at the Wash­ing­ton, DC-based think-tank The Ara­bia Foun­da­tion, in ad­di­tion to her teach­ing at Jack­sonville Univer­sity in Florida, where she lives. She also writes opin­ion col­umns for Forbes On­line and for Arab News.

Her views on the big is­sues of the global en­ergy busi­ness are punchy. On the pos­si­bil­ity of a per­ma­nent al­liance be­tween the two big­gest oil pro­duc­ing blocks, the OPEC and Rus­sia, she is skep­ti­cal. “I don’t think it is re­ally pos­si­ble to do a deal be­tween them for 10 or 20 years. These peo­ple eval­u­ate mar­kets on a monthly ba­sis and no­body knows what they will be like over that time frame.

“But there could be an on­go­ing but looser frame­work for co-op­er­a­tion be­tween OPEC and Rus­sia, per­haps as­sessed in steps of six months or a year. We have seen, for ex­am­ple with Iran in OPEC, that the oil busi­ness can tran­scend pol­i­tics,” she added.

On the burn­ing ques­tion of the day — the mar­ket venue that Saudi Aramco will choose for the In­ter­na­tional phase of its IPO — she is cer­tain. “If they want what’s best for the com­pany, they’ll go for the New York Stock Ex­change. But I re­ally don’t know where they will choose. Maybe mul­ti­ple list­ings in ad­di­tion to Tadawul will be the way they go,” she said.

She has been a reg­u­lar vis­i­tor to the Mid­dle East over the years, but made her first visit to the King­dom a few months ago, a trip she hopes will be the first of many. “I’m hop­ing to come back as a tourist. There is so much I want to see out­side of the busi­ness en­vi­ron­ment. I’m sure a lot of Amer­i­cans, many of whom like to go to ex­otic places, will want to check out the new Saudi Ara­bia.”

Her book looks set to spark and a wave of in­ter­est in the King­dom in the US. “Aramco is a great com­pany, and if peo­ple look past the oil busi­ness they will see that it has funded the en­tire Saudi state for most of its his­tory, gen­er­ates a big profit and makes enor­mous cap­i­tal ex­pen­di­ture. I hope my book can help the world to un­der­stand that,” she said.

Ellen Wald be­gan work­ing on her “Saudi project” 10 years ago, but she could not have known that she was go­ing to catch a wave of in­ter­est in the af­fairs of the King­dom just at the time of the big­gest trans­for­ma­tion in its near 100-year his­tory.

A man and his camel pic­tured near an early Saudi oil well in the 1940’s. Oil pro­duc­tion in the King­dom started with Dam­mam Well No. 7 which be­gan pro­duc­ing com­mer­cial quan­ti­ties of crude oil in 1938.

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