Judul : Despite Saudi Arabia’s modernizing reforms, the oil city of Dammam remains the country’s economic heart
link : Despite Saudi Arabia’s modernizing reforms, the oil city of Dammam remains the country’s economic heart
Despite Saudi Arabia’s modernizing reforms, the oil city of Dammam remains the country’s economic heart
Like a giant river stone, the Ithra Center for World Culture rises into the pale blue desert sky above Dammam. According to its official description, the futuristic building complex is a center of knowledge, art and culture. It houses an exhibition on traditional basket weaving in Saudi Arabia, a cinema and a library that is as sparkling clean and modern as an Apple Store.
Opened in 2018, the facility is considered one of Dammam's main attractions. It is intended to attract visitors from elsewhere to this city in eastern Saudi Arabia. As yet, however, few tourists are finding their way to Dammam. This is in part because, at first glance, the city has little to offer: Faceless concrete blocks tower over wide highways here, the air is hot and humid, and a pale sky looms over the palm-lined promenade by the sea.
All goes back to oil
Nevertheless, as the center of the huge country's oil industry, Dammam remains the true heart of Saudi Arabia. To this day, the black gold, which lies beneath the ground in massive quantities, still finances virtually everything in the kingdom. It is extracted by the state-owned oil company Saudi Aramco, one of the largest and richest companies in the world. Just a few kilometers outside Dammam, the company even operates its own town for its employees.
However, if Saudi Arabia's powerful Crown Prince Mohammed bin Salman succeeds in his plans, the importance of Dammam's oil industry will decline in the future. The prince wants to make his country independent of its most important export product. He dreams of a Saudi Arabia where technology companies are developing the breakthroughs of the future, green energy is being generated in huge plants, and millions of tourists are relaxing in megaresorts that have yet to be built on the Red Sea.
At every opportunity, Saudi Arabia presents itself as a superpower of the future. On the sidelines of U.S. President Donald Trump's state visit two months ago, the kingdom organized an investor summit. In the luxurious halls of the convention center in Riyadh, each of bin Salman's megaprojects had its own pavilion. At the stall dedicated to his futuristic city Neom, visitors could put on 3D glasses and take a tour of The Line, the planned smart city intended to be housed in a single very long building.
War is a nightmare scenario
However, despite all these ambitious plans, Saudi Arabia is facing considerable challenges. Bin Salman has succeeded in liberalizing his country's ultraconservative society, even to the point of integrating women into the labor market. Yet from an economic perspective, his ambitious Vision 2030 agenda is faltering. The country is having trouble attracting foreign investment. In addition, the kingdom has been hurt by the current low global oil price. The Saudi sovereign wealth fund, for instance, saw a 60% drop in profits in 2024.
Added to this are the recent political tensions. The 12-day war between Israel and Iran deeply worried those looking on from Saudi Arabia. «For Riyadh, the war between these two archenemies brought a nightmare scenario to life,» says Saudi Arabia expert Sebastian Sons from the Bonn-based Center for Applied Research in Partnership with the Orient, or CARPO. «For economic reasons, but also for reasons of security policy, it is absolutely essential for Saudi Arabia that the region remains reasonably stable.»
However, the country's challenges extend beyond the strictly political and economic realms. Despite significant progress, Saudi Arabia still lacks well-trained workers, says a Saudi entrepreneur who wishes to remain anonymous. «The government has done a lot in recent years to send young Saudis abroad to study. But our school system is still inadequate.» The entrepreneur notes that firms in the country frequently still have to rely on workers from abroad.
«We don't stand a chance against the state»
As we speak, the entrepreneur is sitting in a banquet hall in the capital city of Riyadh, about 400 kilometers west of Dammam, where a wedding is taking place. Only men are present. Although Saudi Arabia’s society has opened up in recent years, men and women are still often separated at this kind of celebrations. Saudi men in traditional white clothing crowd around drummers and swordsmen, while the groom and his father sit on a bench and accept congratulations from the guests.
On the sidelines of the celebration, attendees exchange news and talk about their businesses. The entrepreneurs largely say they support the crown prince's policies to open up the country. They say that bin Salman has finally given the country the push into the future that it needed. At the same time, however, they complain that the huge government projects are forcing private businesspeople out of the market. «We hardly stand a chance against the combined financial power of the ministries or the PIF,» says one of them.
The PIF – or Public Investment Fund – is Saudi Arabia's sovereign wealth fund. The fund, which has over $1 trillion at its disposal and thus constitutes one of the world's largest such war chests, currently finances almost every major investment being made in the kingdom. The planned new city of Neom is being funded out of its coffers, as are the glamorous pop concerts put on by state entertainment czar Turki Al-Sheikh and the soccer clubs of the Saudi Pro League, where superstars such as Cristiano Ronaldo now play.
The most powerful company in the country
Even many of the tech startups that are supposed to turn Saudi Arabia into an IT superpower receive their funding from the PIF. This makes the fund something like the nuclear reactor of Saudi Arabia's economy. However, the PIF can afford all these investments for only one main reason: Its accounts are fed by the kingdom's oil money, which is in turn generated by the petroleum fields of the state-owned oil company Saudi Aramco in the far east of the country, near Dammam.
«Saudi Aramco is definitely still the most powerful, important and influential company and the engine of investment in Saudi Arabia,» says Sons. However, the oil company is also trying to diversify, and is today increasingly investing in green technologies such as blue hydrogen produced from natural gas. With such projects, the giant corporation wants to prepare itself for the post-oil era.
Saudi Aramco is a closed empire. The company premises on the outskirts of Damman are not open to unauthorized persons. The oil company has only recently started publishing annual figures. Founded after World War I largely as a venture by U.S. oil companies, Saudi Aramco is today the crown jewel of the House of Saud. Thanks to the income generated by the company, which was progressively nationalized over the years, Saudi Arabia was able to make the leap from a poor desert country to becoming one of the richest countries in the world in the 1970s.
Economy driven by oil
In 2016, bin Salman announced plans to partially open the oil company to investors. However, the move was repeatedly delayed before shares in the company were finally listed on the Riyadh stock exchange in 2019. A few months earlier, an Iranian drone attack had paralyzed significant portions of the country's oil production facilities. The strike once again demonstrated how vulnerable Saudi Arabia's most important source of income is. Accordingly, the war between Israel and Iran brought back painful memories in Riyadh.
The Ithra Center for World Culture in Dammam was itself financed by Saudi Aramco as well. The facility's basement houses a separate exhibition dedicated to the history of the company. Yellowed photos from the 1950s show propeller planes at the nearby airfield in Dhahran. At that time, Saudi Arabia resembled a developing country: dusty, empty and impoverished. Today, the Dhahran airfield is used exclusively by the military. Commercial flights depart from Dammam’s King Fahd International Airport, a state-of-the-art international hub.
Of course, the country is changing and new industries are emerging, says an Uber driver on the way there. His name is Ahmed, and he spent years working for the American construction company Bechtel, which has been profiting from the oil boom here for decades. «In Dammam, almost everyone still works for companies that have something to do with the oil industry,» he says as he steers his car along the highway, which is shimmering in the heat. «The big investments are being made in Riyadh. But the money is still being made here.»
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