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Foreign Work Force Eyes the Door

Saudi Arabia's shaky economy is dependent on expatriates, many of whom have decided to leave in the wake of the latest suicide bombing.

November 15, 2003|Richard Verrier | Times Staff Writer

RIYADH, Saudi Arabia — This desert kingdom has been good to Paul Rouhana.

The Lebanese sales manager came to Saudi Arabia more than 20 years ago, fleeing his war-torn homeland for the opportunity to work in a country that assured security and a steady, tax-free paycheck to support his wife and two children back home.

But this week, after his brother's family was nearly killed in a suicide bombing on the other side of this sprawling city, Rouhana said he planned to leave Saudi Arabia when his employment contract ends in March.

"I'm afraid," said Rouhana, 47, a resident of Yamama Village, a compound with low-rise, sand-colored houses, tennis courts and a swimming pool. "A lot of us are planning to leave."

Foreign workers like Rouhana, who is among 300,000 Lebanese in the country, are the backbone of Saudi Arabia' s economy. From Bangladeshi cabdrivers to Egyptian doctors to American engineers, they account for two-thirds of the nation's work force.

In the wake of last Saturday's suicide bombing in Riyadh, which killed nearly 20 and injured 122, many expatriates are having second thoughts about remaining in the kingdom that has become so reliant on them. Some have already fled, some are making arrangements to leave, and others are weighing their options.

Saudi and U.S. authorities have blamed Osama bin Laden' s Al Qaeda terrorist network for the attack on the Muhaya compound near the city's diplomatic quarter.

Rouhana's brother, a manager with an advertising firm, was away when the attackers struck, but his wife suffered minor cuts. The couple's two young children escaped unhurt.

It was the latest assault on Saudi Arabia' s large expatriate community. In May, a trio of suicide bombings at Western residential compounds in Riyadh killed 35 people, including the nine assailants.

The compounds are oases from the strict Islamic rules that govern Saudi society, where alcohol is banned and women must wear veils.

Although theories abound as to why the attackers chose to target a compound housing mostly Muslim Arabs, including many children, analysts say one of the goals was to frighten the foreign workers and investors and thereby weaken the Saudi economy.

Though the effect of the attacks is difficult to predict, they came as the Saudi government was seeking to diversify its economy and open its doors to foreign investment, economists and business leaders say.

"People will think twice before investing here," said Usama Kurdi, former head of the Union of Saudi Chambers of Commerce and Industry.

But Saudi officials expect the economic damage to be short-term.

"Some people might get the jitters and leave, but they will come back. Only time will tell," said Prince Abdullah ibn Faisal ibn Turki, chairman of the Saudi Arabian General Investment Authority. "After the Kuwait war, people said everyone will pack up and leave. There was no mass exodus."

The Saudi economy has proved remarkably resilient in the last year, despite the war in Iraq. Bank profits have surged thanks to higher oil prices and increased domestic spending by Saudi princes who cut back their overseas investments after the Sept. 11 terrorist attacks. The real estate market is booming. And the nation' s stock market has made double-digit gains.

"If you look at the performance of the economy in the last 10 months, the signs are a lot more positive than you would think," Kurdi said.

But there are underlying, longer-term problems facing the Saudi economy. After the boom years of the 1970s and '80s, the kingdom has seen a decline in oil prices, big deficits and high unemployment.

To lessen its dependence on oil and create more jobs -- particularly the white-collar jobs that Saudi youths expect to get -- the government has taken several steps to lure new investment through privatization of public services such as water and power and reduced corporate tax rates.

Since 2001, the Saudi Arabian General Investment Authority has approved investments worth $12 billion, though only a fraction of that has trickled in.

Just this week the government approved a $2-billion gas deal among Royal Dutch Shell, TotalFinaElf and Saudi Aramco, granting Western oil firms rights to the country' s vast energy reserves for the first time since the 1970s.

But the kingdom has been slow to attract other Western investors.

"9/11 has been a hard sell for foreign investment," said one Riyadh-based American executive who asked not to be identified. "Clearly, the world has moved against them right when they tried to transform foreign investment."

Economists say the Riyadh attacks aren't likely to have much effect on the big investors who are already here, such as Shell, ExxonMobil and Bechtel.

"They know this region and find it safer than many other areas they operate in," said Prajapati Trivedi, senior economist for the World Bank in Riyadh.

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