There was one mammoth obstacle to female employment - it was against the law. In conforming to the religious dictates of Wahhabism, Saudi law forbid women to be employed in any occupation other than teaching or nursing. But because there was such a desperate shortage of labor, a thriving pool of black market female labor quickly developed. Wages were high. Simple clerical work paid about $10 an hour (in 1978 dollars), with no taxes withheld. Yet the chief appeal of employment was not money but something to do. A job was an anchor of sanity.

Employers and their female employees played a constant cat-and mouse game with the Ministry of Labor, which patroled business establishments, rooting out women. There were also raids by the matawain, the religious police, who conducted their own searches to confirm that the Ministry of Labor was doing its job in protecting the morals of Saudi Arabia. As a result, harried businessmen unwilling to risk arrest were forced to hire couriers to scuttle between the office and secretaries safely ensconced in their apartments, equipped with typewriters and filing cabinets. Others put women to work on the premises and risked the consequences. So desperate were women to keep their jobs, they were willing to work under bizarre conditions. I knew one woman who worked in an office but typed at a tiny table in a closet. Outside the closet door an assortment of mops and brooms stood waiting to be thrown in for a screen if the authorities were spotted approaching the building. One business firm hired a Saudi to sit outside the door of its office to divert authorities while the women employees escaped through a back door. I had one friend who worked in an office building in downtown Riyadh where the door was rigged with a cord strung with bells. Employees of the office always shouted a password before they opened the door, jangling the bells. If the bells rang without warning, the woman dove out the window.

The raiding parties were not always fooled. A woman was caught from time to time. Nothing happened to her personally except that she was sent back to her compound. It was her employer and her husband who were responsible to the authorities. The employer was heavily fined and, for a woman caught more than once, her husband was summoned to court to explain his inability to control his wife. Owen Ford, a physicist at the King Faisal Specialist Hospital, was once threatened with deportation if his wife were caught working one more time.

My first job in Saudi Arabia was a legal one. The Saudi government had contracted with the U.S. Corps of Engineers to supervise many of the massive construction projects under way in the kingdom. The Corps was given a special dispensation to hire Western women in Corps office compounds, operating under a sort of extra-territorial status. The Corps paid only about 25 percent more than stateside salaries, much less than anyone else, but they never had trouble hiring people because of the fringe benefits. Local employees had access to a commissary that stocked directly from the United States. It had delectable things such as Oreo cookies and Fritos, unknown elsewhere in Riyadh. Best of all, a Corps employee could buy pork chops and ham. Not the least of the fringe benefits of Corps employment was the highly secret "tea ration." The Saudi government quietly allowed foreign missions, under a loose interpretation of diplomatic immunity, to bring in alcohol. Once a month, the Corps' female employees boarded the bus that took us to work carrying small suitcases, canvas tote bags, various heavy plastic sacks, or anything that was not transparent, to transport home the five bottles of liquor we were allowed each month. Under the U.S. government's understanding with Saudi authorities, the label on every empty bottle had to be soaked off and the bottle broken before it was discarded. To enforce the rule, Corps officials patrolled the housing compounds inspecting garbage.

My job at the Corps of Engineers was as a clerk-typist at the lowest grade in the United States Civil Service. I worked in the office of the supervising engineers for the King Khalid Military City, a new city with a projected population of seventy thousand and a price tag of $7 billion that was being built on the great empty plain between Riyadh and the border of Iraq. As humble as my job was, no one who was alert ever had a job in Saudi Arabia that was so menial that there was nothing to learn. Between typing government forms, I filed, and as I filed I discovered a whole range of interesting things about the forces at work in Saudi Arabia. There was the constant problem of where to recruit all of the labor needed to build a city; how to get visas for all the laborers that were recruited; where to find the technical expertise to install the equipment purchased abroad; how to keep foreigners in the country once they arrived. I noted the fear that went through the Saudi military every time political upheaval erupted in one of the countries supplying labor to Saudi Arabia, especially if that country were Moslem. I saw evidence of the Corps' unending battle with contractors to keep their costs realistic even under the unbelievably high cost of construction in Saudi Arabia. I heard discussions about the sensitive issue of allowing contractors to pay the bribes necessary to keep Saudi partners and government officials happy and still stay within the dictates of U.S. law, which the Corps of Engineers was supposed to defend.

After a few months with the Corps of Engineers, I had gotten my feet on the ground in the job market and decided it was time to move on. I had come to Saudi Arabia to learn. Raving absorbed what was of interest to me at the Corps of Engineers, I needed to find a job that took me out into the city of Riyadh and away from the insulated community of American government employees.

After several weeks of being passed from woman to woman in the network of the labor black market, I heard about a contractor who needed someone to handle his correspondence. I called the number I was given and the voice at the other end said he would be right over and "by the way, my name is Tom Krogh." When the bell rang and I opened the door, a tall man, not yet' middle-aged, stood before me. He had shoulder-length red hair, noticeably thinning on the top, and a great long beard that made him look remarkably like Michelangelo's Moses. Tom was an American who had grown up in various corners of Africa, where his father was an international contractor. One of the early pioneers, Krogh had been working in Saudi Arabia off and on since the late 1960s. A marvelous character, he epitomized the autonomous entrepreneur, the commercial soldier of fortune, whom Saudi Arabia drew like a magnet during the oil boom. Holding a graduate degree in psychology, Tom had the most extraordinary talent for out- maneuvering the Saudis that I ever encountered.

In 1978 Tom Krogh was making a small fortune in an area of construction that he called "crisis management." Among the major problems a foreign company setting up business in Saudi Arabia faced was that most supplies and equipment were blocked in the ports. Furthermore, the jammed ports caused construction delays on new facilities, which compounded the already severe shortages of office space, housing, electricity, communication lines - everything needed to make modern business function. Western companies with fat Saudi contracts were desperate to secure any kind of office and housing accommodations. Shabby structures, thrown up for Saudi landlords, were leased to Western companies, which took whatever they could get. Often these were nonfunctional as leased. At this point, Tom entered to scour the local markets for whatever was available and then modify the bits and pieces into some Rube Goldberg contraption that would make everything work. His genius was handsomely rewarded by grateful clients.

When I went to work for Tom, he was problem solving for a major Western communications company with a multibillion-dollar contract with the Saudi government. The company had taken possession of a building for its Riyadh offices before discovering that it had no electrical supply. When showing the building, the sly Saudi owner had hung an electric bulb from a long extension cord that he ran out the door, down the street, and around the corner to the nearest building on the last street served by Riyadh electricity, and plugged it in. The housing compound the company had leased for its employees had snakes in the plumbing, air conditioners choked with dust, and a swimming pool with no source of water. Tom installed generators, fished the snakes out of the pipes, cleaned the air conditioners, and daily hauled in water in big Mercedes trucks to fill the pool.

Although I was hired to write contracts, I became a jack-of-all-trades while in Tom's employ. To avoid the visa hassles, he did not import his own labor. Rather, at sundown, he and I would bounce around Riyadh in his four-wheel-drive vehicle, a Pepsi case filled with cash on the seat between us, picking up laborers from their regular jobs to come work on Tom's projects (illegal under Saudi law). An immensely kind man, his reputation preceded him. He paid wages far above the regular scale and treated his workmen with respect. Soon we would have filled the car, delivered that group to the job site, and gone out again.

As well as Tom got on with his laborers, he was always having difficulty with his Saudi partner, whom he managed to change frequently. He called me one Thursday and told me he was going to have a showdown with the current partner at three o'clock that afternoon and he wanted me to go with him. I protested and said that he could not take a Western woman to a business meeting with a Saudi. He chuckled. "That's the point," he said. When he picked me up, I was properly attired for meeting a Saudi man and nervous as a cat. No sooner had I gotten into the car than Tom said, "I have just appointed you as my lawyer." I looked at him in disbelief and cried, "Your lawyer! I don't know anything about law and certainly not Saudi law. You're out of your mind." He just smiled and said, "Don't worry Just write down in legal language what I tell you to."

When we arrived at the meeting, the Saudi partner was there with his attorney, who claimed to be on the faculty of Riyadh University. The pair looked at me quizzically and then Tom introduced me as his attorney, who was there to negotiate on his behalf. The Saudis were dumbfounded. Seizing the moment, Tom took the initiative in the negotiations. Three hours later, we left. I had said nothing except to read out their points of agreement, which I had translated into a facsimile of legal jargon, and Tom had emerged with a new contract containing all his major demands.

Saudi Arabia in the late 1970's was like a giant boom town in which everyone was outrageously wheeling and dealing Saudis and Westerners alike. Fantastic amounts of money were being spent as the Saudis, just emerging from their feudal past, seized the things their new found wealth would buy. There had not been a rags-to-riches story like this since the Crusades awakened Europe from the Dark Ages and Venice, Genoa, and Florence became suddenly wealthy from Middle East trade. I was there and I was seeing it all. The next step was to report what I saw. Of course, this meant breaking another of Saudi Arabia's rules, that of censorship. At the same time as I was working at the Corps of Engineers and bouncing around Riyadh in Tom Krogh's truck, I was smuggling newspaper stories out of Saudi Arabia and publishing them under my new name, Michael Collins.

While I was working at the Corps of Engineers, I became acquainted with a delightful woman from California, whose husband worked for the Stanford Research Institute of Menlo Park. SRI had a team of economists in the country who were doing studies in preparation for Saudi Arabia's Third Development Plan, a five-year blueprint for economic and social development. As the preliminary work was nearing completion, the various sections written by different economists had to be edited to a common style to be published as the final plan. SRI's choice for senior editor was a woman from the company's headquarters in California. The Saudis rejected the choice because she was a female. Her replacement was not due in the country for several months. Meanwhile, the initial editing had to go on. I was approached about the job by my friend's husband, who knew from social gatherings that I had done some writing in the United States and that I also knew the basic terminology of development economics. Would I be interested in applying, being aware that, as a woman, I might be turned down? he asked. I wrote a resume', submitted it to SRI, and got the job. I won out for several reasons. Having a woman as assistant editor, whose name would not be connected with the plan, was more palatable to the Saudis than having a woman as senior editor. The planning minister, somewhat of a revolutionary in his thinking, was a strong advocate of using women in the work force. But more than anything else, I was already in the country and housed, and therefore much less expensive than someone who had to be brought in from the United States or the United Kingdom. I went to work in Saudi Arabia's Ministry of Planning as an employee of SRI, not the Saudi government - a firm distinction demanded by the Saudis.

It is a credit to former King Faisal that Saudi Arabia even had a central planning unit before the oil bonanza hit in 1973. Yet even the far-sighted Faisal, in his grand plans for his kingdom, had to contend with Saudi Arabia's climate and topography and a population fiercely resistant to change.

Saudi Arabia is the largest country in the world with no major rivers and few streams. The Rub al-Khali, which encompasses the southeastern one-fifth of the kingdom, is the most arid desert on earth. Before oil was produced in sizable quantities, life was sustained by farming the oases and by herding animals - camels, goats, and the Nedji sheep, a breed that can live on as little as thirty liters of water a year. In the early twentieth century, eastern and central Arabia had little to trade with the outside world. Their exports consisted of dates and Arabian horses, in great demand by the British for use by its Indian army. Taxes on camel caravans moving goods from ports on the Arabian Gulf to the Levant provided a little revenue for Abdul Aziz during the early days of his kingdom. Camel trading with the caravans supplemented the meager subsistence of the Bedouin tribes. The tax on pilgrims making the hajj to Mecca provided Abdul Aziz's paltry treasury its major source of income. None of these produced much. The Saudis existed from hand to mouth.

Even though oil production accelerated after the Second World War, Saudi Arabia remained a backward, agrarian economy. Slavery was not abolished until 1962, and the first paved road connecting Jeddah to Riyadh was not finished until 1967. Of the Saudis employed in 1970, 727,000 were engaged in agriculture, 91,000 in trade, and less than 17,000 in oil production or associated refining. In spite of twenty-six years of oil production prior to 1970, its impact on the way people lived was minimal. Only about 40 percent of all people employed worked in jobs that could be considered even remotely associated with a modern economy, and of this number many were expatriates. But as oil production continued to increase, bringing in ever-growing revenues, King Faisal recognized that Saudi Arabia must expand and modernize the structure of its economy. Therefore, in 1968, he created the Central Planning Organization, the forerunner of the present Ministry of Planning. It was under its direction that Western economists from SRI drew up Saudi Arabia's first five-year economic development plan for the years 1970 to 1975.

The first plan concentrated on building a basic infrastructure for Saudi Arabia and laying the foundations for an educational system. Resources were directed to the urban areas: Jeddah, al-Khobar, and Riyadh. The approximately 440,000 working Saudis living in rural areas who had low incomes and followed a traditional lifestyle would be unaffected. Since these people had none of the skills needed to build a modern state and the government was fearful of treading on their religious fundamentalism and way of life, the political decision was made to leave the rural areas alone. Even primary education by-passed the rural areas so that by 1974, 70 percent of the total Saudi population was illiterate, and only 13 percent could be considered "educated."

The great body of water that separates the Arabian Peninsula from Iran has commonly been called the Persian Gulf in the west. The Saudis have always insisted that it is the Arabian Gulf. Since the oil boom and the 1979 Iranian revolution, the name Arabian Gulf has grown in usage, particularly in the western press.

When the plan was completed, it called for a total expenditure of SR 41.3 billion, or $9 billion over the five years from 1970 to '975. The gap between the assumptions the plan was based on and the reality of a world short of oil soon became evident.

In the second year of the First Development Plan, King Faisal and his oil minister Sheikh Ahmed Zaki Yamani recognized the growing importance of imported oil to the economies of the industrialized countries. In 1971 Faisal demanded changes in Saudi Arabia's one-sided agreement with ARAMCO. Under this agreement, Saudi Arabia was paid 50 percent of ARAMCO's profits in exchange for its crude oil. Wanting a better deal and sensing latent power over ARAMCO, Faisal dispatched Yamani to the Organization of Petroleum Exporting Countries (OPEC). Since 1960 OPEC, a loose, impotent alliance of oil producers, had been exploring ways to force the oil companies to accept its members' direct participation in the ownership and, thereby, in the profits of the companies. Afraid of outright nationalization, ARAMCO agreed to give Saudi Arabia 20 percent participation in the company in early 1972.

With part ownership of the oil company and ever-increasing sales of Saudi oil, by the end of 1972 Saudi Arabia's earnings exceeded the kingdom's ability to absorb the money. Budget allocations rose 70 percent over the preceding year. In fiscal year 1972-73.* the budget was raised by another $3.8 million, but not all of the allocations for either year were spent. The economy was so under developed that it was impossible to disperse money in these quantities through the existing system, so excess revenues were turned into gold and foreign reserves.

In October 1973, the forces of supply and demand for oil and the political goals of Saudi Arabia and the other Arab oil producers merged in the oil embargo against countries friendly to Israel. Production was cut to support Egypt's war against Israel, and a world that had become subservient to OPEC's oil proved its willingness to pay for it. Saudi Arabia's revenues skyrocketed. The rural population, no longer con tent to stay outside the economy, began to migrate to the cities. Between 1963 and 1974, Riyadh's population jumped from 159,000 to 667,000, Jeddah's from 147,000 to 560,000, and smaller cities like al Hufuf, Taif, and Medina doubled in size.

* Saudi Arabia's fiscal year runs from I Rajab to 30 Jumad II of the Hijran calendar See Chapter 4

The kingdom launched the Second Economic Development Plan in 1975 with a whole new set of opportunities and problems. In a country caught up in the euphoria of its newfound wealth, an alternative development strategy that emphasized low production to conserve re sources, slower economic growth, and more limited social change had few advocates. Although Saudi Arabia had the money to make every citizen a ward of the state, King Faisal was ideologically opposed to diverting oil revenues into a grand welfare scheme. The enrichment of citizens as an end in itself was not, in his eyes, the goal of development; rather, he believed all Saudis should be assured an adequate standard of living, with anything beyond that the reward of individual effort and achievement.

The second plan sought to vastly broaden the development of the physical infrastructure and to seriously tackle problems of education, health, and housing. Specifically, the plan sought to relieve port congestion and build highways and airports to promote the movement of people and goods.

The problem of port congestion was a nightmare. In the autumn of 1975, 130 ships were waiting at anchor in Jeddah on the west coast, and Dammam on the east coast. By the end of December, there were 200 ships sitting in ports, facing delays of months to reach the docks to unload. Not only were these delays frustrating, they were costly. Shipping lines imposed surcharges on their freight bills of 50 to 250 percent to take cargo to Saudi Arabia. Additional demurrage charges of $3,000 to $5,000 were frequently billed to shippers. By 1976 port congestion was adding an estimated 40 percent to the cost of imports. Moreover, progress on whole construction projects stopped for lack of supplies while laborers sat collecting their wages.

When I was traveling in Italy several years after the great port jam, I met an Italian seaman named Phillip who told me about being stranded aboard the ship Portia in the port of Jeddah. The Portia, carrying Carrara marble and expensive French perfume, lay at anchor in the oppressive, humid heat and stark ugliness of Jeddah from October 1976 to June 1977. In eight months, Phillip left the ship only twice - it was too expensive. The local Saudis were enterprising enough to turn a handsome profit from stranded seamen, charging $io each way for the boat from ship to shore and $20 for the round-trip taxi ride to town. Once he reached Jeddah, there was nothing to do. Verging on madness from boredom, Phillip tried to quit but could not because under the terms of his visa he was forbidden to leave Saudi Arabia before his ship. The Italian ambassador had no authority to intervene in his behalf since the ship sailed under the Panamanian flag. The Portia was eventually unloaded and Phillip never went to sea again.

The ports were finally unclogged by the creation of the General Ports Authority under the direction of Faiz Badr, one of the true heroes of the period. The greatest secret of his success was that, as a Saudi, he was able to deal more effectively with the inner workings of Saudi Arabia than the Western management companies that he replaced. A major problem of the ports was that once cargo was unloaded, it sat on the docks while merchants and contractors scrambled to secure the ground transportation to move their goods. But more often, importers were just overcome by inertia. Badr gave his compatriots a deadline and threatened to auction off their goods if they were not moved from the docks on time. This would never have been tolerated from a Westerner.

The costs that port congestion added to goods and materials was only one of the factors that accounted for the exorbitant expenses of doing business in Saudi Arabia. The early development projects car ried extremely high prices because each site had to build its own infra structure. KFSH, for example, had its own power plant and water purification system. To build the King Khalid Military City, a functioning town had to be created to service construction crews before work on the actual city began.

As a result of the harsh climate and the shoddy workmanship of the time, most buildings seemed temporary. The average life span for a building in Saudi Arabia in the 1970's was seven years: buildings constructed in 1973 were being replaced in 1980. Consequently, Riyadh lacked a feeling of permanence. It was as though the city could slip right back into the desert if the pace of construction slowed.

Trying to integrate utilities that were in place when the building boom began required the expenditure of huge sums of money. Riyadh spent $208 million standardizing its electrical system before expansion could even begin. In 1978, so many new drivers drove into electrical poles that the government was forced to spend another $400 million to put the lines underground to keep the electricity that was available flowing.

Costs were also increased by the rush the Saudis put on nonessential projects. The elaborate conference center in Riyadh, built to host inter Arab meetings, was built and furnished in eleven months.

And there was always the problem of over-consumption. Dan had two electron microscopes in his department, with no one who knew how to use them. The Saudis were constantly drawn to the technically sophisticated or the outwardly glamorous while ignoring the substantive, such as personnel or maintenance, that make things work.

To circumvent lurking economic traps, contracts were bid at high enough levels that delays, shortages of critical materials, visa problems, unavailable labor, transportation delays, high salaries demanded by Westerners, harsh penalty clauses in contracts covering completion schedules, commissions to Saudi agents, and the government 5 own failure to pay its bills on time could be covered and still ensure the contractor a handsome profit.

All of these factors, plus the vast amounts of money being thrown into an infant economic system, resulted in high rates of inflation. The government's official figures claimed inflation in fiscal 1975-76 was 31.5 percent. No one inside or outside the government actually be lieved that it was that low. Estimates by bankers and diplomats put the figure somewhere between 40 to 50 percent and as high as 70 percent if rents were calculated in To lessen the impact on the average Saudi citizen, the government subsidized flour, rice, sugar, lamb, milk, milk products, vegetable oils, and medicine. Taxes were all but eliminated when customs duties were removed from most imports, the excise tax on petroleum was abolished, and road taxes ended. The causes of inflation were perhaps unique to the Saudi economy. Real income was dependent on Saudi Arabia's ability to import goods and services rather than on its ability to produce many goods and services other than crude oil. To control inflation, spending under the Second Development Plan was slowed substantially by either drawing out the completion dates on projects or eliminating them altogether. Revenues from oil sales were kept abroad, the money released into the Saudi economy as it could be absorbed.

Foreign labor increasingly emerged as the problem that would be the most difficult to solve. In 1975 foreigners were working in all economic sectors, particularly in services, construction, trade, and finance. What disturbed the social planners was that while this large number of foreigners was working, segments of the Saudi population remained severely underemployed. One of the early adjustments in the Second Plan was a drive to limit expatriate manpower to a growth rate of 1.2 percent annually, rather than the 7 percent officials estimated.

The Second Development Plan spent $3.61 billion between 1975 and mid-1980. Additional expenditures on behalf of the Ministry of Finance and special road, railway, and electric projects reached an other $2.45 billion. The results were spectacular.

Electricity had been provided for 4. I million people. Seven thou sand elementary and secondary schools were built, putting 1.1 million Saudi boys and girls in school. Desalination plants were producing 73 million gallons of drinking water a day in a country that had sought water long before it sought oil. The ports had been cleared and now had a capacity of 22.7 million tons a year. Two hundred thousand housing units were built. To diversify the economy, the government had pumped $25 billion into the non-oil private sector and achieved a growth rate of iS percent. Employment grew at an annual rate of 4.8 percent.

By 1980 the average Saudi family had an income that ranged between $588 and $2059 per month, not including the value of the government's various social welfare programs. In the Second Development Plan, the urban population benefited the most from economic growth. Wealth was spread by insuring that companies with part or total Saudi ownership won government contracts.

The number of Saudi millionaires grew rapidly, mainly among those who were engaged in some kind of private business activity when the economy boomed in the 1974-77 period. But the easiest way to be come a millionaire was to engage in buying and selling land. It was unusual for the value of a plot of land bought one day to more than double a week later. Those who owned the land were usually members of the royal family or non royals who were close to the al-Sauds through marriage or through favors extended to it in years past. The Saudis who benefited the least from economic growth were the Bedouins. As the Second Plan wound down, there was little but praise for the economic managers. The Second Development Plan built Saudi Arabia's basic infrastructure. The Third Development Plan had to make it work.

I arrived at the Ministry of Planning as work on the Third Plan was nearing completion. The ministry was housed in a squat, modern two- story building on University Street in the Maalaz district. Its importance in the bureaucratic hierarchy was announced by a fountain and palm trees at the entrance.

One of the early adjustments to my sex that SRI was forced to make was how to get me to work. For a while I was driven by a rather lovable old curmudgeon named Ellis Conrad, who had spent seven bitter years in Saudi Arabia as a development economist. Every morning on our way to work, he fretted about his irregular heart beat, haunted by the specter of a colleague who had dropped dead at Ellis's dinner table on his first night in Saudi Arabia. When we arrived at the ministry, I was delivered to the rear of the building to scurry in the back door before anyone saw me. As I hurried down the long, narrow hall to my office, clutching my long skirt above my ankles, my eyes darted from side to side, watching for any Saudi who might unexpectedly emerge from one of the doors. When I reached my office, I slid in, closed the door, and locked it. I shared quarters with Mira, an Egyptian translator. Upstairs were three female secretaries - a Lebanese, an Egyptian, and an Indian - hidden in their own cubicles. Mira and I stayed locked in our office for the day, from 7:30 A.M. to 2:30 P.M. The only time either of us could leave was to go to the rest room, which was back down that long hall. The procedure was to open the office door just far enough to get my head through, look up and down the hall to make sure no one was there, dash to the rest room, and dash back, locking the door once more behind me. Under no circumstances was I to cross the bright red carpet that ran through the lobby and up the main staircase, bisecting the second floor. On my side of that for bidding carpet was the office of the assistant deputy minister, who knew of my presence in the ministry; on the other side was the office of the other assistant deputy minister, who was vehement in his opposition to women being anywhere but in seclusion at home, and was, evidently, kept in ignorance about the presence of women in his ministry.

There was a certain degree of game playing among both Saudi officials and the Western consulting companies working for the ministry about whether the women they employed were there or not. This created a constant air of tension for the women. I was dumbfounded when I was summoned one day to a meeting of the staff of Western consultants with the assistant deputy minister, the one on my side of the building. I carefully checked my clothing to make sure my arms and legs were covered. At the last moment, I borrowed a scarf which I wound around my neck to fill up the gap in my blouse. When I entered the large conference room, the chair at the head of a huge table was empty. The deputy minister had not yet arrived. I hugged the backs of the high, ornate Spanish style chairs as I crept along to the very end of the table and slithered into the last seat. No one acknowledged my presence. Finally, the deputy minister arrived, and the meeting proceeded as if I were not there. After about thirty minutes, the minister grew bored and left. The meeting ended and I returned to my office without having spoken to a soul, still not sure why my presence had been requested.

Life at the ministry moved on smoothly until the approach of Ramadan, the Moslem month of fasting, when Saudi Arabia goes into an annual spasm of religious fervor. Suddenly rumors flew through the halls and offices that the labor minister had called the planning minister to warn him to remove all female employees from the building because there was to be a raid. The secretaries, the translator, and I were hastily packed up and moved to a villa several blocks from the ministry, where SRI housed its staff on temporary assignment in Riyadh. There we were stowed behind the locked steel gate in the cement-block wall that surrounded what appeared to be an ordinary house in a residential neighborhood. Our working accommodations were comfortable enough, but the separation from the men we worked with complicated things enormously. I was particularly frustrated. As I edited what the economists had written, it was vital that I understood exactly what they were saying. If I had a question, my only means of contacting them was by telephone. Most of the time the telephone either did not work or was not being answered by the Saudi who ran the switchboard at the ministry because it was prayer time, or tea time, or simply was not convenient. When I was finally able to ring through, the person I needed to talk with usually had to come see me, which meant leaving the air- conditioned comfort of the ministry to drive to the villa in his oven- hot car. Before being admitted, he would have to ring a prearranged code on the bell at the gate.

Both the Lebanese and Egyptian secretaries I worked with soon left, to be replaced by two Western women, English and Canadian. Mira, the translator, left also and was replaced by a tall, thin Syrian girl named Hessa. Unlike any of the previous Moslem women, Hessa arrived at work swathed in a veil and an abaaya. She was a devout Moslem, who every day rose from her desk at prayer time, did the ritual washings in the bathroom, then covered her head with a black scarf, spread out her abaaya, faced Mecca, and knelt for prayers while the activity of the office continued around her. Then we found out that her father worked for the Ministry of the Interior, the parent organization of the secret police. Although all working women lived with the vague fear that they would be caught, the anxiety was largely subconcious until forcefully aroused into raging paranoia by seemingly suspicious events. Toward the end of Hessa's first week at SRI, when we were all still eyeing one another, a high beeping sound went off in her purse. She quickly shut it off and went on with her work. That was it - we knew she was spying on us. We would be sent home and our husbands hauled into court at any moment. The atmosphere in the villa was so tense that the Westerners were afraid to talk to one another for fear of what Hessa's recording device might be picking up.

Early one afternoon, Adele, the Canadian secretary, stopped typing and said, "I smell something burning." At that moment, a voltage regulator, installed to protect electric typewriters from frequent and strong power surges, burst into flames. As the cheap, dirty carpet where the regulator sat smoldered, we frantically searched the villa for a fire extinguisher, but failed to find one. Shirley, the English secretary, cried, "Let's call the fire department!" Fear crossed Hessa's face at the same moment that I realized that we could not call the fire department because the fire department would bring the police. The only thing to do short of letting the villa burn down was to race upstairs to the men's kitchen and grab every container we could find and then fill them with sand to smother the flames. The three Westerners plus Hessa, who was looking less and less like an Interior Ministry spy, formed a fire brigade line. Scooping up the sand in the garden in saucepans and a flour canister, we passed them hand to hand until the fire was out. Glowing in the camaraderie of our triumph, I asked Hessa why she had looked so frightened when Shirley had suggested calling the fire department. She said, "I was afraid the authorities would catch me working!" The mysterious electronic gadget in her purse turned out to be a small clock given to her by an aunt.

Though confined to my cubicle in the Ministry of Planning or concealed behind the locked gate at the villa, I had a view of Saudi Arabia that was panoramic. The reams of paper crossing my desk from almost every ministry gave me an inside look at the government's structure, philosophy, development strategy, and spending priorities at the height of the oil boom.

Saudi Arabia's Third Development Plan, to span the years 1980 to 1985, was perhaps the most ambitious ever undertaken by a country. The Third Plan was in preparation when Saudi Arabia was at the peak of its confidence. Oil production was 8 to 9 million barrels a day, the price of the benchmark Saudi Arabian light crude was $26 a barrel and climbing, the fallout of the Iranian revolution had not hit with its full impact, and there was little concern about a major oil glut on the horizon. In this atmosphere, Saudi Arabia was prepared to move on into the next phase of its development.

The Third Plan was a $234.4 billion scheme to complete the process of Saudi Arabia's progression into the industrialized world. To cover the financial requirements of the plan, oil policy would allow petroleum reserves to be lifted at a rate that would generate sufficient revenue for development. In other words, oil production would follow revenue demands. It was projected that Saudi Arabia needed to produce 5 million barrels of oil a day to sell at $18 per barrel to pay for the Third Development Plan, a level of revenue easily achieved under conditions current at the time.

Basically the plan was a wish book put together by government ministers whose aspirations were restricted only by the rather arbitrary spending and labor ceilings imposed on them by the Ministry of Planning.

Although the plan was ambitious, there was no reason to question its basic philosophy. As in the previous two plans, government spending was consistent with the goals established for the overall plan, even though in both the First and Second plans some individual projects were more heavily funded or drawn out or eliminated altogether to adjust for changes in revenues or priorities. Economically, the plan was the vital link between the oil sector and the rest of the economy. Since all oil revenues accrued directly to the government, the only way that individual citizens could benefit from the oil boom was through the government's budget and spending decisions. Politically, the plan was crucial to the House of Saud, which depended on the generous distribution of oil revenues to keep its subjects satisfied.

Born in a time when all things seemed possible, the various programs that constituted the plan ran the gamut from the $30 billion petrochemical complexes at Jubail and Yanbu to a $1.9 million program to teach the Saudis how to mail a letter. When the plan was finished, it included something for everyone: highways, schools, airports, vocational training, housing, subsidies on food and utilities, desalination plants, and a morgue for every village. Inspired by nationalism, the government continued the process begun in 1976 of buying out the American oil companies that had founded and run ARAMCO for thirty years. There was even confidence that a projected oil glut in the mid- 1980s would not cause Saudi Arabia any problems. The vast reserves that Saudi Arabia was accumulating abroad would be tapped to prevent a severe disruption of the economy until the next oil shortage hit the globe shortly after 1990, when Saudi Arabia would once again dominate the world's oil markets.

Regardless of the Saudis' buoyant mood, there were severe limitations on planning. The inertia and inexperience of most government ministries left Western economists with incomplete data at best. The air of intrigue and secrecy that characterized all government agencies made frank discussions of priorities impossible. In most ministries, the Saudis themselves did not know what needed to be done, when it needed to be done, or if it should be done at all. Moreover, there was no basic data on which to base assumptions and projections. The problem of gathering population statistics is an example of how underlying cultural factors made planning in the kingdom so difficult. Saudi Arabia has never had a census, nor will it in the foreseeable future. For security reasons, the government is extremely tight-lipped about the kingdom's sparse population. Preferring illusion to fact, the government overestimates the population while choosing to remain ignorant of what it actually is. Furthermore, there is among the Saudis a strong cultural tradition that closes a man's house to prying eyes, including those of prying census takers. And finally, the discipline needed to gather data on which to base statistics is wholly absent in the society and, there fore, in most government departments. Consequently, much of the data on which the Third Plan was built, as with the Second, was conjecture on the part of the Westerners trying to plan for the Saudis. Nevertheless, Saudi Arabia's ambitions, if not its planning, were impressive.

The Third Plan departed from its predecessors in several ways. While the first two plans concentrated on building an infrastructure, the Third Plan was to move on to industrialization, make agriculture self-sufficient, expand social services, limit the growth of the bureaucracy, and distribute the wealth of the country more evenly among the people. Looming over all of these goals was a determination on the part of those in power to limit the number of foreign workers in the country by putting the Saudis into the work force and mechanizing everything possible.

In the Third Plan, the government seriously sought to diversify the economy by expanding into industries that utilize the natural gas that is the by-product of crude oil production. Industrialization was in tended to maximize Saudi Arabia's advantage as the possessor of the world's largest oil reserves. Instead of producing only crude oil, the kingdom was to move downstream into refining and petrochemicals, processing gas either as an energy source or as a chemical feedstock, and developing energy-intensive industries such as metal smelting, as well as adding industries that are ancillary to oil production and its by products.

The cornerstone of Saudi Arabia's industrialization was to be the creation of two complete cities containing petrochemical plants, Ju bail, on the Arabian Gulf north of Dammam, and Yanbu, on the Red Sea west of Medina. Under the supervision of the Royal Commission for Jubail and Yanbu, created by King Khalid in '975' the sites by the Third Plan were being cleared and construction had begun. As relieving port congestion had been the major goal of the Second Plan, industrialization would be the superstar of the Third Plan. *

* What the Saudis have actually spent at Juball and Yanbu can only be surmised because of the various sources of funding, government figures that are notoriously unreliable, the modification of the oversil plans necessitated by sharply decreased oil revenues after 1982, and the large outstanding debts that the government still owes to contractors on the projects. At the time of the Third Development Plan, the final cost of Jubail alone was projected to be as much as $40 billion.

Jubail, on the east coast, was by the early 19805 the largest construction project in the world. Among its plants, the only non-oil-related industries were a direct-reduction steel mill, which would provide 850,000 tons per year of steel reinforcing bars for use by contractors in the kingdom, and an aluminum smelter. For the rest of Jubail, plans called for production of a variety of petrochemicals using ethane as a feedstock, as well as an oil refinery that would produce 250,000 barrels per day (bpd).

Yanbu, on the west coast, would have another 250,000-bpd oil refinery, geared to exports to Europe, a 170,000-bpd refinery for domestic needs, an ethylene-based petrochemical facility, a natural gas liquids processing complex, and an export terminal for the 1.4 million bpd of crude oil delivered to Yanbu via the cross-country pipelines from the oil fields in the Eastern Province.

Other pipelines that would link Jubail and Yanbu to the kingdom's oil fields and associated natural gas collectors represented the biggest infrastructure project of all. The natural gas collection system alone could use more than 3 billion cubic feet per day of associated gas, which previously had been disposed of by burning.

Construction of Jubail and Yanbu proceeded even though the environment for industry, beyond cheap energy sources, was bleak. The extra capital and operating costs required by the plants, the need to pay and house expatriate managers and technicians, and the constant problem of recruiting an adequate labor force tended to neutralize Saudi Arabia's advantage of access to plentiful and cheap oil and gas. Some experts predicted that these higher costs would cause Saudi Arabia's products to lose their competitive price advantage in world markets.

The critics' arguments that Saudi petrochemicals could not find a market were met with scorn. The Saudis were smug if not arrogant in their conviction that Saudi Arabia could divert part of its petroleum resources into a petrochemical industry whose markets would be insured by the West's dependence on Saudi oil. Operating in the days of worldwide oil shortages, Saudi Arabia announced that it would use oil quotas to force industrialized countries not only to buy Saudi products but to transfer technology and invest in the Saudi industrial complexes as joint venture partners. The Japanese were a prime target of the policy After Mitsubishi Gas Chemical became a major backer of the methanol project at Jubail in 1980, it was announced that Saudi Arabia would supply Japan with 3,800 extra barrels of crude oil a day in 1981, with that amount increasing as work on the plant at Jubail progressed. Furthermore, a Saudi government official was quoted by the Saudi press as saying that foreign oil companies would be entitled to 500 barrels of oil per day for every $1 million they invested in Saudi Arabia. And it might not be long, Planning Minister Hisharn Nazer warned, before a reduction in the high cost of technology transfer would become a condition under which OPEC countries continued to supply crude oil to the industrialized nations. And in one isolated incident of hyperbole, Western countries were threatened with having to impose tours of duty in Saudi Arabia on their technically qualified citizens as a condition for continued oil supplies.

The success of Saudi Arabia's industries seemed almost guaranteed as long as the West was so dependent on Saudi oil. As with technology and investment, access to the industrialized world's chemical markets would be gained by linking future sales of crude oil to the sale of Saudi petrochemicals. Various government officials broadly hinted that crude oil supplies for the West might well depend on access to Western markets for the petrochemicals, fertilizers, refined petroleum distillates and liquid petroleum gases, which formed the backbone of the entire industrialization program.

The Saudis were less haughty about their agricultural program. With access to cheap fertilizers to be produced by its industries and large underground water reservoirs, Saudi Arabia had a surprising capacity to increase its agricultural yield and lessen its dependence on food imports.

Agricultural policy rested primarily on setting up large farms financed by private capital, which the government would provide with infrastructure and subsidies. Although large commercial farms were an important component in the agricultural plan, its core was the creation of a system of cooperatives among small farmers to increase production and cut costs. Prior to 1980, agriculture was producing I percent of the gross national product (GNP) and employing close to one-half of the population. Saudi Arabia's development strategy was to make agriculture more productive so Saudi manpower could be shifted from the agricultural sector to the new industrial sector.

The government provided every incentive for agriculture. Land was either free, as in the case of wheat farms, or could be bought with long-term, interest-free loans. For seed and equipment purchases, the government provided up to 50 percent of the cost, with interest-free loans available to farmers for the remainder of the purchase price. Pesticides and spraying equipment were provided free, as were veterinarian services. Irrigation water was heavily subsidized and the cost to farmers covered by more interest-free loans. The government then bought the farmers' produce at highly subsidized prices. For a while, the Grain Silos and Hour Mills Organization was buying farmers' wheat crops at double the price of imported wheat.

Dairy production was another of the priority agricultural projects. As one Saudi businessman engaged in the agricultural boom said, "You can even import livestock by plane and make money." And that is just what they did. Dairy farmers air freighted cows in from the United States at a cost of $2,300 per cow, which the Ministry of Agriculture paid. Because of the traffic in Holsteins, Trans-Med Airlines, operating out of Beirut, was, for a time, one of the most profitable airlines in the world.

Regardless of all the incentives, farming Saudi Arabia's desert was not easy. Just preparing the soil was arduous. Special plows that would turn up the soil from sixteen inches deep had to be imported. Interimco Projects Engineering from Ontario, Canada, introduced mechanized "rock pickers" to clear the rock-strewn fields. Water had to be delivered to the land either through irrigation channels or by pumping it from underground wells to large sprinklers on wheels that rotate around the fields in circles, spraying water at the rate of 1000 to 1250 gallons per minute.

With an average of only 10 centimeters of rainfall a year, Saudi Arabia gets most of its water from underground reservoirs called aquifers, which are filled with fossil water. Fossil water, up to ten thousand

years old, is like oil a nonrenewable resource. The Third Plan projected that by the year 1997 agriculture would be using almost all the

water available from deep aquifers, and by the year 2000, agriculture would be expected to consume 73.9 percent of all available water in the kingdom.

There were alternative water sources but all were expensive. The government has spent $5.29 billion on desalination plants since 1969, yet desalination even now supplies the kingdom with only 1 percent of its water. The Saline Water Conversion Corporation, the government agency responsible for the desalination plants, says that the real cost of desalinated water is about $2.00 per cubic meter. Depending on the section of the country, most agriculture is at least partially or totally dependent on desalinated water. But in this period of supreme confidence, the problem of water seemed manageable. Studies of cloud seeding and importing water by pipeline were commissioned. Water might be brought in by tanker. And there was talk of converting icebergs to usable water. While this seemed like one of the more outrageous stories of the oil boom, a hydrologist working for the al-Hassa Irrigation and Drainage Authority told me that the infamous plan for towing icebergs from the Antarctic to Saudi Arabia would actually produce sizable amounts of water for Saudi Arabia at a much lower cost than desalination.

Despite the problems, agriculture showed some success by the end of the 1970s. Totally self-sufficient dairy farms, primarily run by Irish expatriates, were doing everything from growing feed to bottling milk. Saudi Arabia was marching toward self-sufficiency in wheat, chick ens, and eggs. Date processing would one day send Saudi Arabia's dates, reputed to be the best in the world, into stores in California, where they would compete with California's own domestic date production.

The Saudis engaged in economic planning continued to look at the successes of their development plans and ignore the underlying problems. It seemed that little could go wrong. Even the riches of King Solomon opened to Saudi Arabia. The Mahd al-Dhahab gold mine northwest of Mecca, believed by historians to be the source of Solomon's gold, was being explored during the period of the Third Development Plan. Scheduled to open in mid-i 987, the mine is expected to produce approximately 120,000 tons of ore and two to three tons of gold bullion. Additional mineral surveys discovered gold in at least 150 other locations in the kingdom, as well as deposits of zinc and copper in commercial quantities.

The level of activity on the mammoth construction projects (where so much of the wealth of both the entrepreneurial class and the foreign business interests was made) was phenomenal. When the government was experiencing large budget surpluses, there was a strong incentive to increase spending. As a result, the number of projects proposed in the kingdom's budgets exceeded the number that were carefully planned. Projects were almost always more elaborate and costly than needed.

The amounts of money being both profitably invested and totally squandered were staggering. When I was adding up the figures for Sandia Airlines' expenditures for equipment purchases, route expansion, and added operating costs during the Third Plan, I had to send out for a new calculator with more places on the display panel to total the projected losses.

Who devised and executed some of the expenditures was always a mystery. Street work in Riyadh, for instance, was never-ending. The street that ran in front of the King Faisal Specialist Hospital was first paved in 1975. In the following years, it was dug up for electrical lines, repaved, dug up for sewers, repaved, dug up for storm sewers, repaved, dug up for curbs and a center median, repaved. When I left Riyadh in 1984, it was being dug up again to redesign the storm sewers. Every time Riyadh was hit by one of its rare rainstorms, the street flooded because the drains had been set in the sidewalk, ten inches above the street. Road construction was so constant that the inevitable joke appeared: "Saudi Arabia built 100,000 kilometers of roads last year. The kingdom now has a total of 20,000 kilometers of paved roads."

This building, tearing up, and rebuilding served a necessary political and economic function during the booming seventies. Members of the royal family all had concessions on various development projects or public works. Princes owned construction companies and building supply establishments and often were labor brokers or represented equipment companies exporting to Saudi Arabia. Government development activity kept them rich. But the mechanism reached beyond the royal family and the enormously rich merchant princes such as Adnan Khashoggi and Gaith Pharon. Distribution of Saudi Arabia's vast wealth was based on the "trickle down" mechanism. Every Saudi who was engaged in business either as an owner or an employee participated. In the rapidly expanding economy, the employee became rich by taking his commissions from suppliers, whose cost he passed on to his employer, who in turn passed on that cost plus his profit to the golden goose, the government of Saudi Arabia. The system worked well in distributing wealth as long as the boom continued. Those in power believed that the system was serving its purpose of developing an integrated, modem economy. They believed that once the boom eased, the free enterprise system that had been so carefully nurtured during the years of plenty would, in turn, invest in the non-oil sector of the economy, creating its own economic base from which to continue to prosper. But the economy was diversifying, not by private investment, much of which was being sent to foreign bank accounts, but by government spending. Diversification was being subsidized by government, funded by oil revenues, and sustained by government purchases of its output, the cost of which reflected the existing system of commissions within every business organization. Paradoxically, even the government's attempts to trans form farming in Saudi Arabia by extending loans and grants to small farmers with the object of aiding their mechanization and modernization were instrumental in the preservation of a subsistence-based traditional rural sector. Loans and grants taken by farmers were spent on consumption, not investment. Government loans became income to farmers. They alleviated the need to work, and the farms themselves were allowed to stagnate or decline further. The government had no choice but to continue to spend to keep the domestic economy intact. But of all the problems plaguing development planning for Saudi Arabia, the problem of labor was the most serious. As early as 1980, the director general of the Western Region Labor Office for the Ministry of Labor and Social Affairs believed that between 70 and 75 percent of the total work force was non-Saudi. The unofficial but more-often quoted figure was that the labor force contained one foreign worker for every Saudi in the adult population.

It was originally thought that foreign manpower demands would level off in the Third Plan period. This assumption was based on the fact that more Saudis were being educated and could move into technical and administrative positions and that the relatively labor-intensive construction industry would run out of things to build. It was with the decision to press ahead with the industrialization of Saudi Arabia that all of the previous assumptions died. The increasing emphasis on industry required both people to build factories and people to work in them. Huge numbers of foreigners would be needed for construction of the petrochemical complexes at Jubail and Yanbu alone.

No matter what the estimates of manpower needs were in 1980, they were bound to be higher when the various projects then being constructed actually went into operation. The Second Development Plan envisaged a total foreign work force of 812,000 by 1980. But by 1980, some estimates placed the number of foreign workers already in the country at close to two million. As an indication of the number of foreigners compared to Saudis in the economy, the usual small industrial plant functioning in 1980 likely did not have a single Saudi employed. Most plants were managed by Westerners and staffed by Oriental laborers, who were increasingly becoming a factor in the work force.

Unfortunately, a significant reduction of foreign manpower proved impossible no matter how much the planners wanted it. The number of workers required simply to keep what the Saudis had already built functioning was enormous, yet new projects continued to be completed that demanded even more manpower. For instance, the total personnel required to maintain the vital desalination plants of the Saline Water Conversion Corporation was estimated to rise from 1240 people in 1980 to 5269 people by 1985. The mammoth new Riyadh and Jeddah international airports would need an additional i8io people when the two facilities became fully functional. But even this figure was deceptively small since it did not include employees of contracted companies, airline and military personnel, passport and customs control, or maintenance. The same held true in sector after sector of the economy. Saudi Arabia simply did not have enough of its own people to meet its manpower needs. When the government tried to mechanize, it only produced another problem - maintenance. Alarmed by the country's insatiable appetite for labor, the government decided to limit as much as possible the number of expatriate employees. The reduction of foreign manpower came to rank along with industrialization and agriculture as a major goal of the Third Development Plan. The Ministry of Planning adopted two criteria for judging every development project:

cost in dollars and cost in manpower. Of the two, the cost in manpower was of greater concern. The fear was that at some point the foreigners could no longer be contained and would spill out their corrupting influences on Saudi life.

In its development planning, the House of Saud sought to give Saudi Arabia the facade, if not the substance, of a modern country. Under the direction of Western consultants and Western contractors, every thing from sewers to universities, from a banking system to a sophisticated telecommunications system, was built from scratch. Saudi Arabia was being remolded by the Westerners hired to develop the country to the Westerners' own perceptions of modernization. In advocating the wisdom of their plans, Westerners often pushed for changes in Saudi society that they deemed necessary to enable the country to support the advances made by economic development. Some of the Westerners' plans, such as the expansion of female education, cut to the heart of the Saudis' most sacred traditions. And all was being done under the auspices of the House of Saud.