DHAHRAN DIGEST 7

C O N F I D E N T I A L SECTION 01 OF 02 RIYADH 005314

SIPDIS

SIPDIS

DHAHRAN SENDS
PARIS FOR ZEYA, LONDON FOR TSOU

E.O. 12958: DECL: 07/05/2016
TAGS: ECON EPET SOCI PINR PGOV SA
SUBJECT: DHAHRAN DIGEST 7

REF: RIYADH 4180

Classified by Consul General John Kincannon for reasons 1.4
(b) and (d).

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Population and Poverty Numbers
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1. (SBU) Dr. Abdullah Al-Kadi, director of Al Bir, the
largest charitable organization in the Eastern Province (EP),
estimated to the CG that there were 3.7 million residents in
the EP, of whom 20 percent (740,000) were expatriates.
Al-Kadi, a U.S.-trained architect and urban planner, has
constructed a poverty line for use in Al-Bir's work. By his
definition, a family of five with a monthly income of 2,800
riyals (USD 745) is considered poor. Al-Kadi estimated that
8 to 9 percent of Saudi EP residents were below the poverty
line. Al-Kadi has invested heavily in Al-Bir's data
gathering and information technology capabilities and has
developed an impressive geographic information systems-linked
database on each household that receives or has received
assistance from Al-Bir. Separately, Nabih Al-Ibrahim, a
Saudi Aramco engineer and elected member of Qatif's municipal
council, estimated to PolOff that the population of Qatif was
650,000. (Note: Accurate EP population figures are
impossible to come by, and estimates of the Shi'a population
are politically charged. Al-Kadi's and Al-Ibrahim's
estimates seemed as objective and data-driven as any we have
heard. End note.)

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The EP Boom: More Pipes and More American Companies
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2. (U) At a recent conference in Khobar, executives from
Saudi Aramco and Sabic provided the following estimates of
the scale of manpower and materiel needed to service their
companies' upcoming megaprojects:
--The companies together will require 200,000 construction
workers in the next three years, half of them just for laying
pipe.
--The companies will require at least 25,000 engineers per
year from 2006 to 2010, in comparison with about 10,000 in

2005.
--Ongoing and approved Sabic projects for 2006 to 2009 will
require 570,000 metric tons of structural steel, 2.1 million
cubic meters of concrete, and 32 million meters of electrical
and instrumentation cable.


3. (U) In the last month, several new deals indicate that
the participation of American companies in this boom may be
increasing. New contract announcements include a deal
between GlobalSantaFe and Saudi Aramco by which GlobalSantaFe
will provide four jackup rigs for four years starting in
2007; the awarding of the oilfield services component of
Aramco's Khurais megaproject to Halliburton; and a deal
between Flowserve Corp. and Al-Rushaid to build a pump
repair, manufacturing, and training facility in Dhahran.

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Security Shortcomings at a Desalination Plant
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4. (C) During a meeting at the Al-Khobar desalination plant
with Saleh Al Zahrani, Director General of the Saline Water
Conversion Corporation in the EP, CG observed what to a
layman's eye seemed like substandard security protection for
four of the plant's eight conversion units. In the quarter
mile between the access road and the units were only a low
concrete barrier (consisting of intermittent blocks of
concrete) and two relatively light chain link fences. It
seemed that a group of vehicles could drive unchallenged
along the access road, explode a breach through the concrete
barrier, ram through the two fences, and reach the units, at
which point they could effectively cut in half the amount of
desalinated water to the cities of Dammam and Al-Khobar with
well placed explosions. The attitude of the Al-Zahrani was
not reassuring either. Asked by the CG whether he had
considered the units' vulnerabilities, Al-Zahrani said that
local manager for industrial security reported to SWCC's
industrial security unit in Riyadh, not to him. "Up to now,
God is protecting us," he continued, noting ruefully that the
"bad guys are always smarter" than whatever security measures
are in place. According to Al-Zahrani, the Khobar plant
supplies 60 percent of the EP's drinking water. He noted
that SWCC's plant in Jubail, which he said supplies more than
half the drinking water for Riyadh and Qassim, enjoys a

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greater setback from the nearest road and is correspondingly
better protected.

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Railroad Executive Privatizing Himself Out of a Job
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5. (SBU) Khalid Al-Yahya, President of the Dammam-based
Saudi Railways Organization (SRO),described SRO's ambitious
and simultaneous expansion and privatization plan to the CG
on July 1. The core of this plan, according to Al-Yahya, is
the construction of a Riyadh-Jeddah line, the main strategic
goal of which is to create a "land bridge" stretching from
Jeddah to Dammam, thereby making Jeddah an attractive
unloading point for sea cargo bound throughout Saudi Arabia
and the Gulf region. "Jeddah is just 50 miles off a major
sea route," Al-Yahya noted, "but the Gulf is a dead end." He
estimated that transporters could save 8 to 10 days on
shipments from Europe to Kuwait if they could unload
containers in Jeddah and ship them by rail across the Arabian
peninsula. Al-Yahya explained that privatization is an
essential part of the expansion plans: interested consortia
must bid on a package that combines taking majority ownership
of the existing SRO operations (passenger and freight
operations on the Dammam to Riyadh line) with construction of
the Jeddah-Riyadh link and a Dammam-Jubail link, and
operation of the freight concession (the passenger concession
would be given to another company to improve incentives for
passenger capacity). Al-Yahya said he expected the winning
consortium will be selected in mid to late 2007 and that the
Jeddah-Riyadh link would be operational three years after
that. He expressed regret that U.S. companies were not
involved in any significant way in any of the four consortia
that pre-qualified. Finally, Al-Yayha also mentioned two
other major rail projects, a Mecca-Medina high speed rail
link (for which SRO is involved in the discussions) and the
Maaden project, which the Public Investment Fund is managing.

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A Socialite Starts up a New Forum in Dammam
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6. (C) Najib Al-Zamil, a well-known columnist and socialite
related to the Al-Zamil business family, described to the CG
his new Al-Zamil monthly forum that would concentrate on
"improving economic development and government services,
things everyone can agree on." (Comment. Approximately
fifteen Shi'a civic fora have sprung up in Qatif in the last
1-2 years; the Al-Zamil monthly forum is one of the two Sunni
fora in the EP of which we are aware. End comment.)
Contrasting his forum to others in Qatif and elsewhere,
Al-Zamil continued, "We don't want to discuss intellectual or
political issues. It takes to long for anything to happen in
those areas." He noted that another reason for sticking to
non-controversial topics is the family business: "Everyone
buys our air conditioners, and we don't want to offend any
customers." The featured speaker at his first forum was
Dhaifallah Al-Otaibi, Mayor of the Eastern Province; the
forum was covered prominently in Al-Youm, the EP's daily
newspaper. Al-Zamil noted that he was in the process of
trying to register his forum with the Ministry of
Information, and that he was confident of at least tacit
government approval. (Comment: As the forum movement
develops, it will be interesting to compare the paths of
forum's like Al-Zamil's, which are closer to the
establishment and likely to be less controversial, with those
of Shi'a activists or secular activists like Ali Al-Dumaini.
End comment.)

(APPROVED: KINCANNON)
OBERWETTER