Saudi Arabia Looks Past Oil in Attempt to Diversify, NY Times, 12/13/2005

The ultimate oil state is seeking to shift its economy away from oil. Saudi Arabia may be experiencing its third oil boom in three decades but it is also undergoing an economic revolution that its leaders hope will finally insulate it from the oil producer's curse: the next price collapse.

The Saudi kingdom remains the 600-pound gorilla of the global oil market. Given its vast reserves, Saudi Arabia can keep pumping oil for the next 70 years. Oil, along with Islam's holy cities, Mecca and Medina, provides the country's rulers with wealth, power and influence. Oil sales account for 40 percent of the economy and about 90 percent of government revenue. But that reliance on a volatile commodity - with big booms but also big busts - is also a problem that the royal family is determined to overcome.

The nation's leaders, of course, have made similar vows before to translate their vast oil wealth into a more diversified economy. Will this time really be different?

There are signs that it may be. Unnoticed by many outsiders, the Saudi private sector has flourished in recent years, thanks to structural changes started by King Abdullah in the late 1990's when he was crown prince and oil prices were at $10 a barrel.

"There's a gold rush in Saudi Arabia right now," said Mohammed al-Sheikh, a Saudi lawyer associated with the White & Case law firm here in Riyadh, the capital. "You can feel it everywhere in the economy. Everyone wants to invest here."

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"The diversification of our national income and our economy away from oil is key to our well being," said Abdullah Alireza, a minister without portfolio and a member of the Supreme Economic Council. "It's absolutely key."

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