AS-82a HILE Cu?Y Public Disclosure Authorized

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized

APPROACH

TO THE

ECONOMIC DEVELOPMENT

OF

SAUDI ARABIA Public Disclosure Authorized

November 1,. 1960 Public Disclosure Authorized CURRENCY EQUIVALENTS SINCE JANUARY 8, 1960 1 U.S. $ = 4. 50 Saudi Riyals 1 = 0. 22 U. S. dollars APPROACH TO THE ECONOMIC DEVELOPMENT CF

IMDEX

SUM ERY i

I. ECONOMIC BASIS FOR DEVELOPMENT 1 The Country and its People 1 Production 2 Trade and Finance 3 Natural and Human Resources for Development 6 Financial Resources for Development 6

TI. APPROACH TO ECONOMIC DEVELOPMENT 8

III, INTERIM PROGRAM 13 Organization and Staff 13 Completion of Projects nao under Construction 14 Explorations and Pre-investment Surveys 15 New Projects 18 Power and Industry 19 Cost of Interim Program 20

IV, ORGANIZATION FOR DEVELOPMENT 22 Central Planning Body 22 Ministry of Water Resources 24 Ministry of Agriculture 25 Ministry of Communications 27

V. WATER RESOURCES 31 Principal Elements of Water Resources Program 31 Potential Water Resources 32 Rainfall and Runoff 32 Runoff and Shallow Groundwater 32 Groundwater 33

VI. AGRICULTURE 47 Agricultural Program 47 Agricultural Extension Service 50 Special Projects 53 Research 58 Marketing 60 Agricultural Credit 61

VII. COM1MUNICATIONS 62 Roads 64 Civil Aviation 66 Ports and Coastal Shipping 67 Railways 69 Telecommunications 70 VIIIo PaJER AND INDUSTRY 71 Power 71 Industry 72

APPEND1X: AGRICULTURAL PRODUCTION, IPIORTS AND EXPORTS 7

TABIES 80

MAPS -i -

SUNHARY

1. Saudi Arabia is most fortunate in having a sizeable recurring foreign exchange income that can be devoted to the development of the Kingdom and the welfare of its people. The financial position of the country has im- proved substantially during the past two years, is now viable and with the continuation of good management should be further strengthened0 There is a strong desire on the part of both the Government and the people to util- ize more fully the resources of the country to improve the standard of living. Saudi Arabia can prudently start a modest economic development program, accelerating it from year to year.

2, The mission suggests that Saudi Arabia be guided by the following general principles in its approach to economic development:

(a) Financial and economic stability should be maintained as an essential prerequisite to sound economic development.

(b) The Kingdom should begin with a modest development program and increase it progressively,

(c) Initial investments should be made in a relatively few projects of high economic priority that will disseminate maximum benefits to the largest number of people*

(d) Investments by the Government should be made in projects that private enterprise is not prepared to undertake.

(e) A competent staff should be engaged to plan and execute economic development works before they are started. This is the most important single factor for success in economic development,

(f) Public investment should be confined initially to:

(i) The development of wa-ter resources;

(ii) The improvement of crop and livestock production;

(iii) The improvement of communications facilities;

(iv) Education and health,

(g) The economic development projects should be carried out by the ministries concerned and not by the economic development planning organization.

3. The mission recommends that the Government carry out a two-year Interim Program during 1380/81 (1961) and 1381/82 (1962) that mould serve as a foundation for future investment programs of longer duration, - ii -

4. The mission recommends that the Interim Program consist of:

(a) The recruitment of adequate and competent staff on a broad inter- national basis to strengthen the existing staff available for the planning, coordination, execution' and operation of economic dev- elopment activities, In addition. the mission. recommends that the Government engage consulting engineering firms of international repute to prepare feasibility surveys, engineer projects, super- vise construction and, in some instances, advise on the operation of the major development projects,

(b) The establishment of a separate ministry to prepare and carry out a program for the development and conservation of the Kingdomls water resources. 1Tater is Saudi Arabia's most vital asset and of sufficient importance to the Kingdom to merit a separate ministry. Water concerns both urban and rural comrunities and requires strict regulation as well as-development; the administration of a water program is therefore, vastly different from the adminis- tration of agricultural development.

(c) A reorganization of the Ministry of Agriculture to carry out a more comprehensive program for the improvement of the rural welfare and eventually to ma1k the Kingdom largely self-sufficient in food and fibero Major emphasis should be placed, in the first instance, on improving and expancling the scope of operation, staff and facilities of the agricultural extension service which should play a major role in carrying out this objective.

(d) The establishment of a-Central Planning Body in the office of the Prime Minister to plan, cocrdinate and ensure the effective im- plementation of all economic development activities in the public sector. This body should consist of an Economic Development Board and a Secretariat, The Economic Development Board should consist of the Prime Minister, as Chairman, the ministers responsible for economic development subjects, and the Governor of the Monetary Agency. The Secretariat should prepare the development program for consideration by the Board, study the factors relating to the economic development of the Kingdom and assist in the coordination and implementation of the development program.

(e) The completion of the following projects now under construction:

(i) Qatif drainage and water control project;

(ii) Municipal wqater supply systems actually under way;

(iii) Riyadh-Khurais road;

(iv) Arafat-Taif road; - iii -

(v) Riyadh-Marat road;

(vi) Dammam port.

(f) The undertaking of pre-investment surveys and explorations in the following sectors:

(i) Water Resources: Improved water system and sewJage dis- posal system in Riyadh; water control scheme for Al Hasa; water resources project in the Qasim; a small dam at ; water evaluation in the Tebuk-Jawf-Sakakah area and of Wadi B-shah, 1Jadi Turabah, Al Aflaj, Wadi Dawasir and Wadi Fatima; improved water supply and sewage disposal system in Taif; and sewage disposal systems in , Jidc6ah, Hufuf and possibly Madinah.

(ii) Agriculture: Wadi Jizan irrigation project; drainage and dune stabilization'in Al Hasa; irrigation and drain- age projects for Qasim, Tebuk-Jawf-Saakakah basin, Al Aflaj ard Wadi Fatima if water evaluations confirm water poten- tial; and the fishing industry with a view to encouraging and promoting private enterprise.

(iii) Communications: Taif-Abha-Jizan and Riyadh..Qasim roads. feeder road from Jizan into the Mukaylah Valley, and the ports of Jiddah, Jizan and Yanbu.

(iv) Minerals: Iron deposits in Wadi Fatima; secondary copper sulphide deposit at Aqiq northeast of Mahdahd Dhahab; zinc and silver deposits at Al Amar; asbestos- chromite deposits at Jabel al Wask; copper deposits in the Belad Chamat; and the silver and lead deposit east of Qunfidhaho

(g) The starting of the following new projects, subject to project feasibility and adequate preparation, during the next two years:

(i) Water Resources: the Abha dam; the Qasim water project; the Tebuk-Jawf-Sakakah basin water project; improved water systems in Riyadh, Taif, Hufuf, Jiddah and Mecca; and sewage disposal systems in Riyadh, Jiddah and Hufuf,

(ii) Agriculture: I?adi Jizan irrigation project; Al Hasa drainage and dune stabilization project; and the irriga- tion, drainage and settlement project in the Tebuk-Jawf- Sakakah basin.

(iii) Communications: construction of Taif-Marat road; con- struction of Taif-Abha-Jizan road; improvement of Dammam- Qatif road; improvement of Riyadh-Qasim road; and con- struction of the ports of Jiddah, Jizan and Yanbu as may be determined in accordance with feasibility surveys. _ iv -

(h) In the social field, the expansion of the eduzcation program - with special emphasis on teacher training, technical training and vocatioinal agriculture - and the continiuation of the health programa

(i) Stimulation and encouragement of private enterprise with a view to meeting the pozer and industrial requirements of the Kingdom and regulation of poger and other enterpr-ses given monopolistic franchises in orcler to ensure adequate services at reasonable rates.

5, The mission's preliminary estimate of tne cost of the Interim Program in the next two years is of the order of SR 400 million (<,?89 million) of which approximately one-half will be expended in each budget year. The allocation for development ahd special projects in the current budget is SR 200 million (6fih million). I. ECONOMIC BASIS FOR DEVELOPMENT

1. Saudi Arabia is most fortunate in having a sizeable recurring foreign exchange income that can be devoted to the development of the Kingdom and the welfare of its people. The financial position of the country has im- proved substantially during the past two years, is now viable and with the continuation of good management should be further strengthened. There is a strong desire on the part of both the Government and the people to utilize more fully the resources of the country to improve the standard of living. Saudi Arabia can prudently start a modest economic development program, accelerating it from year to year.

2. The Country and its People. The Kingdom of Saudi Arabia is a large country of about o65,000 square miles that occupies most of the . It consists mainly of a narrow coastal plain along the , an adjoining mountain range extending the length of the country and a large plateau that slopes gently towards the Persian Gulfe The southern part of this plateau is the Rub-al-Khali, or the "empty quarter",o Com- munications over such a wide area are both difficult and expensive* Rainfall does not generally exceed 100 mm. (4 inches) a year except in the southwest where it is 250-300 mm0 (10 to 12 inches). Underground water is being used for cultivation in a nmber of areas throughout the Kingdom.

3e The Kingdom is sparsely populated with approximately 5 million people averaging only six per square mile. More than half of the population are nomadic or semi-nomadic Bedouin. Probably one-fourth reside in the principal population centers around the capital at Riyadh, the Red Sea port of Jiddah, the holy places at Mecca and Madinah, and the oil-producing region on the Persian Gulf. The remainder are engaged in settled agri- culture in the area of relatively heavy rainfall in the southwest and aroumd oases dotted over the country, with the notable exception of the Rub-al-Khali where only a very few Bedouin live. Only a small portion of the population is fully employed throughout the year. Considerable progress has been made in health and education during the past decade, but the illiteracy rate is still very higho

4. Saudi Arabia was established as a monarchy in 1932 with the Sharia, or Islamic law, as the law of the land. Royal decrees are issued on the advice of the Council of Ministers. There is a Majlis Shora, or Consultative Council, made up of representatives of various tribes and other groups in the Kingdom, which advises the Government on various legislative and other measures.

5. There are four provinces in the country - in the northwest with an area of 135,000 square miles, Asir in the southwest wmith an area of 40,000 square miles, Najd in the central plateau with an area of 650,000 square miles, and Al Hasa in the east with an area of 40,000 square miles. Provincial and district governors (Amirs) are responsible to the King and their field of activity is confined principally to internal security and administration. The country is largely governed by the central government in Riyadh. Considerable progress has been made in the establishment of ministerial secretariats but further improvement in goverDnental administration is one of the most urgent problems facing the country.

6. Production, Most of the people in the Kingdom are engaged in the original pastoral-agricultural economy which is still largely on a subsistence basis; they raise crops and livestock to meet their own needs for food and to some extent for clotlling and shelter, The principal crops grown are dates, wheat, , millet, various fruits and vegetables and alfalfa, and the more important livestock raised are camels, sheep, goats, cattle and donkeys FAppendix I 7. There are virtually no data to indicate the trend of agricultural production, but there are some indications that it may have decreased during the past decade.

7. In addition to the subsistence economy there is the monetized sector of the economy which is primarily based on oil, although it also receives some income (varying from year to year but averaging perhaps $30-35 million annually) from the traditional annual pilgrimage of Moslems to the holy places of Mlecca and Madinah which has long provided an important contact with the outside world. The origin of money incomes in the monetized sector is largely foreign exchange earnings. Also, this sector relies heavily upon imports of food and clothing since domestic production is insufficient to meet these needs.

8. The oil sector is comparatively new and provides the dynamic element in the economy of the Kingdomo Oil production has increased rapidly since World War II - from 60 million barrels in 1365/66 (1946) to 421 million barrels in 1378/79 (1959) /Table I 7. Oil revenues to the Governrent increased from $10 million to $308 million during the same period /Table 2-J. Production increased at an average annual rate of nearly 50% between 1361X/65 (1945) and 1371/72 (1952) but levelled off during the following 7 years at 4%, which was substantially less than the rate of increase in other Middle Eastern countries. Production last year, however, was 9% more than the preceding year.

9. The Arabian American Oil Company (ARAMCO) is by far the largest pro- ducer of oil in Saudi Arabia, producing 95% of the total production of 421 million barrels last year. It also processes 60-80 million barrels per year in its refinery at Ras Tanura /Table 3 7. Getty Oil Company started production in 1373/74 (1954); it produced 21 million barrels last year and contributed $12 million to the Governmentts oil revenues, The Arabian Oil Company (Japanese) has struck oil in the offshore Kuwait-Saudi Arabian neutral zone.

10. Local consumption of petroleum products has increased to more than 3 mi.llion barrels A year CTable 4J, despite the rather high price to consumers, which includes a large tax. Liquified gas is now being bottled and distributed in Saudi Arabia and facilities nearing completion that will permit the exportation of 400 barrels per day. Facilities are also being constructed for the utillization of some gas for the production of cement, - 3 - in the Eastern Province and consideration is being given to the utilization of additional gas for the production of power. A substantial volume of gas is being reinjected and is, therefore, available for future use but more than 200 million cubic feet per day are being wasted,

11 Expenditure of oi.l revenues has led, over the past decade, to a broad expansion in some other sectors of the economy, particularly in commerce, finance and construction. Such expenditures combined with relatively low labor mobility have induced a steep rise in wages in the major population centers where most of the oil revenues have been spent. Unskilled labor is presently earning as much as SR 6-10 ($132-2.20) per day in these localities -- a level well above that prevailing in other Middle East countries ,

12. This factor, together with others which will be discussed later in the report, has probably been a discouraging element in the development of local industry. Industrial enterprise is new in the Kingdom and the level of production is still quite low. All of Saudi Arabia's capital goods, most of her building materials, and a wide range of manufactured consumer goods, chemicals and pharmaceutical products are purchased abroad. Re- cently some relatively large industrial ventures have been undertaken. For example, the first Saudi Arabian cement plant, with a capacity of about 450 tons per day, is now in operation near Jiddah and a second cement plant is under construction at Hufuf with an initial capacity of 300 tons per day. A gypsum factory with a capacity of 30,000 tons per year is under construct- tion near Riyadh.

13. Trade and Finance. Oil is the dominant factor in Saudi Arabia's trade and finance / Table $J. Total receipts on current accopnt in recent years are estimated at approximately SR 1,688 million ($375 million) annually, of which about SR 1,350 million (O3O0 million) was from oil revenues, SR 112 million ($25 million) from the purchase of riyals by the oil com- panies and their staff for local expenditures, and SR 135-160 million ($30-35 million) from pilgrims. Half of Saudi Arabia's oil has gone to in recent years, about one-quarter to Asia and most of the renlainder to Canada and the United States CTable 6]7. Exports other than oil are negligible. l1. Imports amount to approximately SR 1,012 million ($225 million) an- nually, about one-third of which is for foodstuffs, one-quarter for machinery and transport equipment, one-eighth for textiles and the remainder for such miscellaneous items as building materials and pharmaceuticals JTable 7]7. Europe supplies Saudi Arabia with about two-fifths of its imports, the United States about one-fourth, and the Middle East and Asia one-sixth each FTable 8].

15. The margin between current earnings and imports leaves a substantial amount of income for such invisibles as travel and remittances abroad, both of which have presumably been very heavy. In recent months, however, the capital outflow has not been very large, and national reserves of foreign exchange have shown a material improvement. In any case, there - 4 -

is a clear need to provide better and more diversified opportunities for domestic investment; Saudi capital could play an important part in the development of the private sector of the Kingdomts economy.

16. Internal finances of the Government are closely related to the ex- ternal finances of the economy because oil revenues are very important to both. Last year 84% of total Governmient receipts were from oil revenues, 9% from customs duties, and 7% from various fees, registration dues and a tax on petroleum products.

17. Government spending in excess of revenues is quickly translated into additional demand for imports since, as stated earlier, the monetized sec-tor of the economy is almost completely dependent on imports, There- fore, budget and balance of payments surpluses or deficits usually coincide. Consequently, serious budgetary and balance of payments problems arose when oil revenues that had risen from SR 214 million ($57 million) in 1369/70 (1950) to SR 1,271 million ($339 million) in 1374/75 (1955) suddenly levelled off at a somewhat lower level without a corresponding curtailment of expenditures.

18. The substantial Government deficits incurred in 1375/76 (1956) and 1376/77 (1957) were financed by borrowing both internally, primarily from the Monetary Agency, and externally. By May 1958 the Government debt to the Monetary Agency, which is responsible for the currency issue and holds the Kingdom's foreign exchange reserves, amounted to SR 678 million ($181 million). The expenditure of these loans by the Government weakened the balance of payments position, increased domestic prices and resulted in a steady depreciation of the exchange value of the riyal in the free market. The demand for imported consumer goods was high. This could not be adequately checked by exchange and import controls, and foreign ex- change holdings were only 14% of the total currency in circulation on January 20, 1957; the riyal depreciated from the official rate of SR 3.75 to the U.S. dollar to a free market rate of SR 6.2.

19. The Government, therefore, in 1377/78 (1958), with the help of officials of the International Monetary Fund, introduced a drastic stabi- lization program which provided principally that expenditures were not to exceed revenues and for a reform of the exchange system. Strict budgetary controls were established. This program was sound and its execution remarkably swift and effective. Whereas the Government had a deficit of SR 300 million ($80 million) in the first part of 1377/78 (1958), a surplus for debt retirement was realized by the end of that year. In the 1378/79 (1959) budget revenues were estimated to exceed ordinary expenditures by SR 305 million ($81 million), SR 145 million ($38 million) of which was allocated for development and SR 160 million ($43 million) for servicing the Government debt to the Monetary Agency. In 1380/81 (1960) a balance of revenues over ordinary expenditures of SR 440 million ($98 million) is budgeted, of which SR 205 million ($46 million) is earmarked for develop- ment and SR 235 million ($52 million) for debt service ETable 9_]. 20. The monetary effect of the debt retirement soon became apparent. Purchasing power of the private sector was also siphoned off by the new system which reintroduced a liberal import policy but made foreign ex- change available for such imports only at the free market rateo Profits fromn the sale of foreign exchange were also used to retire the Governmentts debt to the Monetary Agency.

21. These measures had a rapid effect on the balance of paymlents, parti- cularly since, as the rate of the riyal was gradually appreciating, flight capital wihich had left during the financial crisis began to return0 The Government debt to the Mionetary Agency was totally repaid by the end of 1959 and at the same time gold and foreign exchange holdings had increased from 14% to over 100% of the currency issue. Meanwhile, wholesale prices had fallen 15-20%. At this stage the Government established a new official exchange rate of $1 SR 4e50. This represented a devaluation of 16,7% from the previous official rate, Part of the budget surplus created as a result of revaluation, which is included in the 1960 budget figures mentioned above, was used to retire Government debt,

22. The stabilization program was further strengthened in 1379 (January 1960) when the Monetary Agency was made responsible for maintaining gold and foreign exchange reserves at least equal to the currency it issued. Since that date the Agency ts reserve holdings have substantially exceeded the note issue STable 10]7. Table 10 also shows that after the devaluation there was a pronounced decrease in the money supply, mainly due to the buildup of inventories and some outflow of speculative funds following the introduction of a fixed exchange rate for the Saudi riyal. Conse- quently at the time of the mission's visit, banks were not very liquid. Some of the banks, wJho during the period of high liquidity had made large commitments, found themselves in difficulties. In order to help tide over the period of emergency, the Monetary Agency came to the assistance of some banks on a selective basis, but, of course,its assistance was condi- tional on the observance of sound banking policies in the future. A larger than average number of pilgrims this year has, however, helped to reduce inventories, and this, coupled with some cash payments made by the Govern- ment to its domestic creditors, including banks, has helped in restoring bank liquidity to more normal levels.

23. The Monetary Agency has been gradually extending its control over commercial banks. In early 1958 they were required to submit statements of their financial position to the Monetary Agency every month, Since 1958 they are also obliged to maintain 15% of their total deposits as statutory reserves with the Monetary Agency. On the basis of the monthly returns, the Monetary Agency asks the banks to make necessary changes in policy. It is understood that the Agency is contemplating the issuance of a law for the establishment and control of banks, The mission believes that this would be a step in the right direction.

24. On balance the Kingdom's present internal and external financial position is satisfactory and should improve even further provided sound fiscal and monetary policies continue to prevail. 25. Natural and Hu-man Resources for Development. Aside from petroleum, Saudi Arabia does not have a great abundance of proven natural resources that are ready for exploitation. There is ample potentially fertile land but the low precipitation in most of the Kingdom prevents rainfed cultiva- tion and most of the settled agriculture is based on irrigation from limited groundwater resources, The Kingdom has various mineral deposits, but fur- ther exploration is required to determine whether production is commercially feasible.

26, The shortage of people with adequate training and experience is an- other factor limiting the early achievement of the Kingdom's development potentialities. Relatively few people in Saudi Arabia have had the advantage of an education and only a small number of them have any technical or vocational traininge Approximately one-fifth of the school-age males are now receiving an elementary education and schools are being established for girls. The shortage of skilled and semi-skilled labor in the Kingdom has necessitated the payment of large premiums for all skills, and both the private and public sectors have had to recruit skilled labor and technicians from abroado This situation also affects the standards of government administration. 'lhere is a serious lack of competent staff at virtually all levels throughout the government 0 Therefore, the Kingdom's effort to improve and expand its educational program deserves continued high priority.

27. Financial Resources for Development0 Most public revenues are in foreign exchange and, therefore, Saudi Arabia should not encounter foreign exchange problems to the same extent as other countries striving for rapid economic growth by a public investment program.

28. In the 1379/80 (1960) budget the Governaent provided about SR 200 mil:Lion ($44 million) for various projects CTable 11]7. Of this amount, some SR 40 million ($9 million) was for projects that are not directly productive.

29. Saudi Arabia may reasonably allocate a somewhat larger amount for development in each of the next two years than in 1378/79 (1960) and in- crease this allocation from year to year as more financial resources can be made available and as the country's non-financial resources are prepared for development.

30. It is very difficult at this time to predict whether or not Saudi Arabia's oil revenues will continue to show any appreciable increase. Based on experience in the first five months of 1960 there are indications that increased production will probably more than compensate for the price reductions in Middle East oil made early in August of this year. Prospects for future years are clouded by the substantial finds of oil in North Africa as well as the world wide surplus, Getty and the Arabian Oil Company may increase their production, but the latter may displace some of ARhAMCO's market since Japan, the foreign participant in Arabian Oil, is AIMviCOls largest customer. Nevertheless, the size of its reserves and the low cost of oil production in Saudi Arabia should ensure the Kingdom's participation in the future expansion of the market for Middle East oil which may be - 7 -

estimated at about 5% per year, lIowever, in view of price uncertainties, it would be advisable to program the countryts financial and development operations on the basis of the present level, or at most only a very modest rise, in oil revenues for the next few years.

31. The Government would be well advised to devote any lump sum or special payment which it may receive from the granting of new concessions for the exploitation of minerals, including oil, or for the transmission or handling of these minerals, in the first instance, to the retirement of the Govern- ment's outstanding indebtedness and reserve the remainder for future economic development m

32. There is probably little prospect of any increase in Government income from other sources in the near future. However, there is a good prospect that over the years the portion of non-oil revenues could be increased rather substantially. Wide disparities in the distribution of income and wealth in the Kingdom provide a sound basis for levying graduated taxes and duties that can provide substantial income to the Government without affect- ing the income of the majority of the people or impeding the economic growth of the Kingdom. Specifically, the Government may wish to give consideration at an early date to increasing customs revenues on luxury goods; the possibility of introducing a universal graduated income tax should be explored,

33. Recurring Government expenditures for education and health should continue to increase over the next few years but other Government expend- itures should be kept under tight control. It is also most important that the total Government expenditures be kept within the limits of total Govern- ment receipts. Some savings may be achieved by a more efficient adminis- tration. Additional savings will occur from the abolition of import subsidies on essential commodities (some basic foodstuffs and pharmaceutical products) for which SR 42,5 million ($9 million) was set aside in the 1379/80 (1960) budget,, Since prices have been generally decreasing in the Kingdom, there is no reason to continue this subsidy system with its administrative and budgetary drawbacks and its negative effects on the production of certain competitive home-grown crops*

34L The Government's plan to repay its remaining, mainly external, indebt- edness during the next four years is sound. When this debt is completely repaid the amount now allocated for debt service could be used for economic development, if at that time such funds can be effectively absorbed for this purpose.

35, The mission, therefore, considers that the Kingdom's financial position and prospects warrant the Government's proceeding with the Interim Program recommended in Chapter III. In addition, there appears to be sufficient flexibility in the Kingdom's financial position to merit proceeding sub- sequently with the orderly and balanced execution of the projects prepared during the Interim Programo - 8 -

II. APPROACH TO ECONOMIC DEVELOPMENI

36. The mission has suggested an approach to the economic development of Saudi Arabia instead of a detailed blueprint of a long range balanced and integrated development program. At the present time Saudi Arabia has few of the facilities required for the preparation and execution of an economic development program, such as basic economic data, project feasibility surveys and adequate administrative and technical staff. Therefore, the mission has taken an approach that should help lay a solid foundation upon which a more substantive economic development program can be built. Simultaneously some activities can be launched that would contribute greatly to the economic welfare of the Kingdom. Specifically, the mission recommends:

(1) Some general principles which it believes Saudi Arabia should follow in its approach to development (set forth in the following part of this chapter);

(2) The organizational set-up and staffing requirements of the principal government agencies that will be involved in economic development (Chapter IV);

(3) Pre-investment surveys necessary to evaluate the viability and economic priority of various development possibilities (Chapter III);

(4) Economic development projects now under construction that should be completed and new ones that should. be launched shortly (Chapter III).

(5) A program for the development and a survey of the Kingdomts water resources (Chapter V);

(6) A program for the improvement of rural welfare and for increased production of food and fiber (Chapter VI);

(7) Improvements in the field of communications (Chapter VII);

(8) The stimulation and encouragement of private enterprise in the fields of power and industry (Chapter VIII).

37. General Principles. The mission suggests that Saudi Arabia in its approach to economic development be guided by the following general principles:

(1) Financial and economic stability is a prerequisite to sound economic development. The financial progress made in the past two years should not be jebpardized by the development program. Indeed, the size and nature of the program should be such as lwould contribute to a further strengthening of the Kingdom's financial position. ._9 _

(2) Begin modestly with progressive increases, Thle program should be rel~ted to current and prospective financial, physical, managerial and other resources available for economic development. This would permit Saudi Arabia to build its development program on a sound and Systematic basis and to move fonward with a minimum of the inevitable delays and hazards inherent in economic development.

(3) Initial investments should be made in a relativel few top prior- it' projects that will disseminate maximum benefits to the largest number of peopleo In launching its development program the Govern- ment should avoid becoming involved in too many projects and pro- gramso It would be more beneficial to concentrate on a relatively few top priority projects that can be successfully managed and completed than have a much larger number started iTth few comple- tions. Incomplete projects are a financial burden, an adminis- trative problem and a disappointment to both the Government and the people. Extreme care snould be exercised to avoid over- extending the staff and facilities available for developmento

It is recommended that the public resources be concentrated, in the first instance, on those projects that will benefit the largest number of peopleg such as development of additional water supplies and the employment of veterinarians to prevent such tremendous losses of livestock as occurred this year in the north central part of the country,

The nature of Saudi Arabia's physical resources largely pre- cludes a major emphasis on grandiose and spectacular projectso There are a number of intriguiing possibilities that should be explored in due course but which are not sufficiently advantageous for the Kingdom to divert its attention at this time from the more important and urgent areas of economic developmento These possibilities include the utilization of part of the Kingdomts enormous reserves of cheap energy to desalinize water for the irrigation of some of its abundant fertile land. This is in the category of longer range projects but developments in this field should be wratched closely, particularly in relation to the cost of desalinizing water as compared to the cost of producing under- ground water0 The development of petrochemicals is possibly a more immediate prospect but should be left to private local and foreign enterprise with the necessary technical and managerial experience,

(4) Public investments should be made in economic and social overhead projects that private enterprise is not prepared to undertake. The Government shzould continue its policy of leaving the fields of power and industry to private enterprise which has already made significant investments and indicated an interest in making Ourth- er investments. Private enterprise has the initiative and the capital necessary to exploit the power and industrial opportunities of the Kingdbm if given a favorable investment environment and, consequently, there is no need at this stage for any substantial public credit to the private sector. The Government should - 10 - encourage and prbmote private paoer and industry by providing technical advice, incentives and basic communications and other facilities for rapid ancl sound graqth; it should also facilitate po,,,rer and industrial development by keeping Government regulation to the minimum consistent with the public interest.

Consequently the Government should confine its investments to economic and social overhead projects such as development of water resources, improvement of crop and livestock production, construc- tion of transport and communications facilities and the improve- ment of education and health,

A comtent staff should be engaged to plan and execute economic development works before such works are launched, This is the most important single factor for success in economic development. The Government has some able administrators and technicians on its staff, but these need to be substantially augmented. The proper planning, coordination and supervision of an economic development program are very complicated and difficult tasks re- quiring great skill and executive capacity. It will be difficult and time-consuming to recruit a qualified staff to assist the Goviernment in its economic development activities; nevertheless, it is exceedingly important that this be done before a substantial development program is launched. This staff should have the dual purpose of assisting the Government in carrying out its projects and. at the same time training Saudi Arabian counterparts to take over its functions and responsibilities as soon as possible.

Confine public investment initially to:

(a) The development of water resources. lWTater is the very life- blood of the Kingdom and its most important resource; its management during the next few years will determine to a very large extent the future growth and prosperity of Saudi Arabia. Much of the limited supply of water now available in Saudi Arabia is wasted and very stringent controls are urgently needed for the conservation of a resource vitally important to agriculture, industry and the very existence of the Kingdom. Geological and other studies indicate that Saudi Arabia has a substantial additional water potential which, if properly managed and controlled, can greatly en- hance Saudi Arabia's productive capacity.

(b) Improvement of crop and livestock production. The raising of crops and livestock is a direct source of livelihood for more than three-fourths of the people, most of whom are using centuries-old methods and techniques. The improvement of practices and the introduction of modern facilities could substantially increase their production. This would improve the standard of living of these people and indirectly have a - 11 -

favorable impact on the standard of living of the remainder of the Kingdom, In adclition, new areas can be brought under cultivation to provide an opportunity and incentive to the Bedouin to take up settled agriculture,

(c) Improved conmunications facilitiese Communications are fundamental to ec e development, Good and adequate ports are a prerequisite to the efficient and economic handling of goods enitering and leaving the country, and to the pilgrim traffic0 Roads are basic to the transporting of people and goods within the country and uniting the country into a more colhesive economic and social entity. The airlines play a particularly important role in Saudi Arabia by reaching remote areas that will not be accessible by road for a considerable time0 Telecommunications are essential to modern govern- mental and business transactions.

(d) Education and health. Education and health hnave a direct bearing on the capacity of the people to produce and on their economic c-llIt-being,, Appropriate education and healt;h programs should be given high priority and aceelerated to the maximum extent possible. Particular attention should be given to vocational education, especially agriculture,

(7) Economic development projects sholuld be carried out by the minis- tries concerned and not by the econr.;. c developmnent planning organization0 The engineering ancl p:-eparation of specifiLc pro- jects, as well as their execution and operation, are a part of the normal responsibilities of the ministries to which the pro- jects are assigned. Therefore, it is desirable that the necessary staff for this work be built up at the earliest possible oppor- tunity, The ministries, hownever, should keep the central planning body fully informed of the progress made in the execution of the rrojects, including expenditures.

The central planning body recommended in Chapter III should. have responsibility for:

(a) Planning and cbordinating all economic development activities in the Kingdom, including Government policyj writh respect to development in the private sector. Such planning and co- ordination would include all new capital investments in projects currently uncder wqay as well as in new projects; for example, new expenditures for the civil airlines or for the railwfays or for the agricultural extension service would be included. The central planning body would also coordinate the execution of economic development activities in the several ministries to prevent unnecessary duplication and to ensure the related projects are fully integrated, - 12 -

(b) Folloirng up on the progress of the implementation of all economic developmient activities to ensure completion of the development program on schedule with maximum results, mini- mum investment and in the shortest time feasible.

(c) 'Maintaining a continuing assessment of the Kingdom's re- sources, recommending their apportionment and relating development programs to changing circumstances. - 13 -

III. INTERIM PROGREAM

38. The mission recommends that the Government launch its economic develop- ment program with a 2-year Interim Program to be carried out during 1380/81 (1961) and 1381/82 (1962). Such a program would be a significant step in the economic development of the Kingdom. The mission suggests an Interim Program along the following lines:

(1) Establishment of Ministry of Water Resources. The mission recom- mends the establishment of a separate ministry to carry out a water resources program and to regulate the conservation of the t Kingdom s most vital asset0 The development and regulation of water are closely related to agriculture in Saudi Arabia, but substantively are vastly different and, therefore, should be sep- arated from the present Ministry of Agriculture, Wrater requires an entirely different approach and setup from agriculture since it has to be regulated and controlled as well as developedo Also, water concerns both urban and rural communitieso In addition, the paramount importance of water resources justifies the estab- lishmient of a separate ministry.

The mission recommends that the Ministry immediately under- take an assessment of the water potential in the Kingdom and of the rate at which it can be safely used to ensure water for succeeding generations, engineer a program for exploration and production in accordance with sound water conservation principles, recommend a water conservation poli?y and regulations for its implementation, and conduct a program for the education o£ the public in sound water conservation practices.

It will, of course, be necessary to ccordinate fully tl-e economic development activities of the Mini.stry of Water Resources and of the Ministry of Agriculture and thn mtission recommends that this be accomplished through the proposed central planning body.

(2) Reorganization of the Ministry of Agriculture. The mission re- commends that the Ministry of Agriculture be reorganized to prepare and carry out an agricultural program which would improve the rural welfare, would endeavour to maic, the Kingdom self-suf- ficient in food, and eventually in fiber, and would largely be built around:

(a) An expanded and improved extension service and farm demonstra- tion program;

(b) An expanded and improved experiment station and research program;

(c) A newly created agricultural economics department; (d) A newly established agricultural credit facility;

(e) Special projects, such as Wadi Jizan; and

(f) A program for the encouragement and promotion of a private fishing industry.

(3) Central Planning Body, The mission recofimends that a central plan- ning body be established in the Prime Minister's office to ensure the effective planning and coordination of economic development activities carried out in the various ministries. It is recom- mended that the staff of the existing Economic Development Com- mittee be transferred to this central planning body,

(4) Recruitment of Adequate and Competent Staff. The mission recolnmends that theovernment recruit competent and experienced staff on a broad international basis to augiient the existing staff available for the central planning body, the Ministry of Water Resources and the Ministry of Agriculture. The mission also re- cormmends that this staff be recruited and assigned to work as coordinated teams in the three organizations. In addition, the mission recommends that the Ivlinistry of Water Resources engage the services of an engineering consulting firm of international repute to assist its technical team in the preparation, engin- eering and supervision of its water program, It is also recom- mended that the Ministry of Agriculture engage engineering consulting firms of international repute from time to time where appropriate, such as in the engineering and supervision of the Wadi Jizan project. The mission recoimmends that the Ministry of Communications engage engineering consulting firms of interna- tional repute, or a comparable technical team in the case of telecommunications to prepare feasibility studies, and to engineer and supervise the construction of its projects. All of the projects in the Meinistries of Water Resources, Agriculture and Communications requiring major construction work, such as roads and the Wadi Jizan project, should be carried out through qualified contractors engaged on the basis of international com- petitive biddingo

(5) Completion of Projects now under Construction. The mission recommends that the Government complete t'Le following high priority projects now under construction:

(a) Water Resources:

(i) Qatif drainage and water control project;

(ii) Mlunicipal water supply systems under construction; (b) Communications:

(i) Riyadh-Klurais road construction;

(ii) Arafat-Taif road construction;

(iii) Riyadh-Marat road construction;

(iv) Dammam port construction;

The mission understands that the justification of the Miadinah- Tebuk road, at this time, is based on non-economic considerations. The mission strongly recommends that the Government should not reconstruct the Hejaz railway and considers the Madinah-Tebuk road to be a preferable alternative. The Tebuk area appears to be one of the largest potential agricultural producing areas in the Kingdom and this road would connect it with a large consuming area.

(6) Explorations and Pre-investment Surveys. The mission recommends that the Government initiate as a part of the Interim Program the following explorations and pre-investment surveys:

(a) Water Resources: Ground water exploration and development program with emphasis on the following:

(i) The engineering of an improved and expanded water system in Riyadh (including a chlorination plant, an improved distribution system, and the drilling of a test well west of Riyadh) and of a sewage disposal system, It is recommended that the amount of water that can be produced on a continuing basis in the vicinity of Riyadh be scientifically determined before proceeding with any new projects or works in the vicinity of Riyadh which would require any sizeable amount of water.

(ii) The engineering of an expanded and improved water supply system in Taif.

(iii) The engineering of sewage disposal systems in Taif, Mecca, Jiddah, Hufuf and possibly Madinah,

(iv) The engineering of a water control scheme for Al Hasa, including the drilling of a deep test well through the Wasia sandstone,

(v) Exploration and engineering of a water resources pro- ject in the Qasim area. Exploratory drilling to determine the amount of water that can be produced year after year in the Qasim area is most important and exceedingly urgento It is recomraended that no - 16 -

further water be produced in the area until scientific evaluations indicate that additional water can be produced continuously since it would be unwise to make large investments in irrigation and other works unless there were reasonable prospects that sufficient water would be available for many years;

(vi) Exploratory drilling, evaluation of water production potentialities, and, if investigations indicate, the engineering of a water production and irrigation pro- ject in the northern Najd from the sandstones of Hail into the Jawf-Sakakah basin west to Tebuk. The geo- logical information available indicates substantial potential in this areag

(vii) The engineering of a small dam and a water distribu- tion system for Abha5

(viii) Exploration and water evaluation of Wadi Bishah;

(ix) Exploration and water evaluation of Wadi Turabah;

(x) Exploration and water evaluation of Al Aflaj;

(xi) Exploration and water evaluation of Wadi Dawasir; and

(xii) Exploration and water evaluation of Wadi Fatima.

(b) Agriculture: The agricultural part of the Interim Program will center mainly around the building up of adequate staff with which to improve rural welfare through increased crop and livestock production, There are, however, several specific agricultural projects for which pre-investment sur- veys are required, as follows:

(i) Complete the preparation of the Wadi Jizan irr.gation project. The Food and Agriculture Organization of the United Nations made considerable investigations in connection with this project about 5 years ago which indicated that it is technically and economically feasibleo An engineering consulting firm of inter- national repute should now be engaged to determine its economic feasibility in light of revised cost estimates and, if still feasible, engineer the project and prepare specifications as a basis for obtaining inter- national competitive bids on the construction of the project. This appears to be one of the most urgent projects in the Kingdom and should be proceeded with as expeditiously as possibley

(ii) Drainage and dune stabilization in Al Hasa; - 17 -

(iii) Prepare irrigation and drainage projects in Qasim, Tebuk-Jawf-Sakalcah basin, Al Aflaj, and WaIdi Fatima if scientific investigation confirms substantial, continuous water production potential;

(iv) Carry out necessary investigations and prepare & pro- gram for the encouragement and promotion of an effective private fishing industry;

(c) Communications:

(i) Prepare feasibility and preliminary engineering studies of the Taif-Abha-Jizan and the Riyadh-Qasim roads and of a feeder road from Jizan into the Mukaylah valley;

(ii) Prepare engineering and economic feasibility studies of the ports of Jiddah, Jizan and Yanbu and engineer the ports in accordance with the findings of the feasibility studies,

(d) Exploration of Mineral Resourceso The Directorate General of Petroleum and Mineral Affairs in the Ministry of Finance and National Economy has been mapping and evaluating mineral deposits during the last five years in conjunction with the basic mapping of the countryo The mission recommends that the geologic mapping and evaluation of deposits be continued and that a particular search be made to find additional asbestos deposits that may be used In the production of cement-asbestos pipe required in connection with the water development program.

The results of the geologic mapping and evaluation of deposits indicate that an exploratory drilling program should be carried out in connection with the following specific deposits to determine whether they are cormmercially exploit- able:

(i) Oolitic iron deposit of Wadi Fatima;

(ii) Secondary copper sulphide deposit at Aqiq northeast of Mahdahd Dhahab;

(iii) Deep drilling of the Al Amar deposit for zinc and silver, and the geophysical anomalies found near the Idsas contact-metamorphic iron deposits;

(iv) Jabal al Wask asbestos and chromite deposit;

(v) Ain-Khathamah copper deposit in the Belad Ghamat; - 15 -

(vi) The silver and lead deposit east of Qunfidhah.

As a part of this program it is recopumended that additional areal geologic mapping be made of the sedimentary iron de- posits in the Median mountains in northwest Saudi Arabia and that airborne geophysical surveys be made of selected areas with outcroppings of deposits.

It is recommended that the Government ask for interna-- tional competitive bids on the exploitation of any of these deposits that further exploration indicates to be commercial- ly feasible,

The Government may wiish to consider approaching the Special Fund of the United Nations for assistance in the further exploration of the deposits indicated above since this type of pre-investment survey is, in principle, eligible for such aid.

(7) New Projects. The mission recommends that, subject to project feasibility and adequate preparation, the following new projects should be started, and some completed, during the next two years.

(a) Water Resources:

(i) Construct dam and water distribution system at Abha;

(ii) Improve and expand water supply systems in Riyadh, Taif, Hufuf (including improvement of the flow of water in the springs), Jiddah and Mecca;

(iii) Construct sewage disposal systems in Riyadh, Jiddah, and Hufuf;

(iv) Qasim water project;

(v) Tebuk-Jawf-Sakakah basin water project.

(b) Agriculture:

(i) Construct Wadi Jizan irrigation project if revised feasibility survey indicates it to be economically desirable;

(ii) Carry out Al Hasa drainage and dune stabilization project;

(iii) Construct and carry out irrigation, drainage and settlement project in Tebuk-Jawf-Sakakah basino - 19 -

(c) Communications:

(i) Construct Taif-Marat road;

(ii) Construct Taif-Abha-Jizan road;

(iii) Improve Dammam-Qatif road;

(iv) Improve Riyadh-Qasim road;

(v) Construct ports of Jiddah, Jizan and Yanbu as may be determined in accordance with feasibility surveys and engineering studies

(8) Education and Health, The mission was impressed with the progress in education that has been made in recent years and recommends that increased emphasis be placed on education in accordance with the financial resources available and the ability of the Ministry of Education to effectively utilize such funds. The mission re- commends that the Ministry of Education make full use of the technical assistance available from the United Nations organiza- tions in carrying on its expanded program. Special emphasis should be placed upon teacher training, technical training in the trades required in the Kingdom and vocational agricultural educa- tion. The serious shortage of technical training is evidenced by the large number of skilled workers being brought in from abroad, and by the very large differential in wages between the unskilled and the skilled laborer. The extension and improvement of the existing vocational and technical training facilities are urgently required. Another essential educational need of the Kingdom is instruction in the public schools in the rural areas in the principles and practices of an improved agriculture and addi- tional facilities for the training of agricultural workers. It is also most important that teacher training facilities be expanded to provide teachers for the existing public schools in order to relieve the dependence upon teachers from abroad, and for new public schools which inevitably are being held back pending the availability of additional teachers.

The mission was also impressed with recent progress in the improvement of the health of the people of the Kingdom, and recornmends that the health program be increased in accordance with the availability of funds and with the ability of the Ministry of Health to carry out an expanded program.

(9) Power and Industry. The Government's decision to leave the fields of power and industry to private enterprise is sound. The role of the Government, therefore, will be to create an investment environ- ment which would stimulate and encourage private enterprise to provide the power and industry considered appropriate to the needs of the Kingdom, and generally to regulate power and any other enterprises which are given monopolistic franchises in order to - 20 -

ensure that the public would get adequate services at reasonable rates and prices0 It is recommended that a program along these lines be formulated as early as possible and some suggestions are set forth in Chapter VIII.

(10) Continuing Assessment of Resources for Development. The mission recommends that the proposed central planning body make a detailed and continuing assessment of the Kingdom's resources available for economic development and during the Interim Program formulate the program to be carried out in subsequent years. This assessmelnt would include a careful analysis of Saudi Arabia's economic and financial position and prospects and the preparation on a year by year basis of a financial program for the Kingdom, including estimates of financial resources that would be available for al- location to public capital works and current operations.

(11) Central Statistical Organization, The mission reco:nmends that the proposed central planning body establish a central statistical organization for the collection and compilation of information relating to the economy and to development, in cooperation with statistical units in the Ministries of Finance and National Economy, Water Resources and Agriculture, and in the Monetary Agency 0

(12) Photogrammetric Mapping. The mission recobmends that the Direct- orate General of Petroleum and Mineral Affairs of the Ministry of Finance and National Economy prepare topographic quadrangle (contour) maps as an aid in the preparation of development pro- jects. Maps on a scale of 1 to 100,000 should be prepared initially for the areas to be explored for development and followed up by maps of 1 to 50,000 for areas on which projects are to be built. Aerial photographs already taken would serve as a basis on which these maps could be prepared and it is recomnmended that a photogranmetric company of international repute be engaged to assist in this work.

39. Cost of Interim Program. Preliminary indications are that the cost of the Interim Program, including contingencies, in the ne.xt two budget years will be of the order of SR 400 million ($89 million) of which approximately one-half will be expended in each of the budget years. The municipal water and sewage disposal systems recommended for several municipalities will benefit those municipalities exclusively and are the type of project which is usually financed entirely, or at least partially, by- the municipalities. The Government of Saudi Arabia may, therefore, wish to consider whether it would pass on a part of the cost of these projects to the municipalities concerned. In any event, the mission recommends that the cost of the Interim Program to be borne by the Government of Saudi Arabia be included in the budget in a lump sum, except for projects now under construction, and be apportioned for specific exploration and pre-investment surveys and for the construction of new projects in accorcance with the investigations and re- coimendations of the proposed central planning body. - 21 -

40. The carrying out of this Interim Program will entail a tremendous effort on the part of the Government and the Kingdom generally, and will require continuous perseverance in order to achieve success. Indeed, the Kingdom will have made an excellent beginning if it succeeds in carrying out most of this Interin Program during the next two years, - 22 -

TV. ORGANIZATION FOR DEVELOPNENT

41. The success of Saudi Arabia's economic development program will depend very largely upon the establishment of the right kind of organizational get-up, and upon the recruitment of a sufficient number of competent and experienced administrators and technicians in Saudi Arabia and abroad.

1[2. The organization for development should provide that the fundamental decisions regarding economic development, such as the scope, composition and pace of the development program, are made by the highest level group of' policy makers in the Government concerned with economic development. The organization should also provide for sufficient delegation of responsi- bility and authority to permit the expeditious and effective implementation of these decisions.

43. Economic development requires a large number of persons with highly specialized skills and abroad administrative experience. The Government of Saudi Arabia has a number of officials wqho could assume important roles in the administration of the economic development program. They wqould, how- ever, have to be strengthened by additional staff recruited from abroad. The economic development staff should be recruited and assigned with a view to obtaining a harmonious and coordinated team in each of the fields of major public investment, aind in the general area of planning and coordination of economic development, The staff recruited abroad should assist the Govern- ment directly in the planning, execution and operation of development pro- jects but they should, at the same time, train their Saudi Arabian counter- parts with a view to transferring their responsibilities' to them at the earliest opportunity. In present circumstances, however, this will require a considerable period of time.

4h4 The mission recognizes that it will not be possible, at the beginning, to have the full staff recommended below. It is important, hcwever that some 40 persons from abroad be recruited to form the minimum teams of specialists required in the several organizations to successfully launch the Interim Program, It is also recognized that it may be necessary to make amendments in the suggested organization from time to time as changing circumstances indicate.

45. Central Planning Body0 The mission zecommends that the Goverrmnent establish inthte Prime Minister's Office an organization to plan, coord inate and ensure the effective implementation ol the economic development program. This organization should consist of:

(1) An Economic Development Board,- The Board should be composed of the Prime Minister as Chairman, the Minister of Finance and Nat- ional Economy, the Minister of Water Resources 2 the Minister of Agriculture, the Minister of Communications and the Governor of the Monetary Agency. The Mlinisters of Comrirce, Education and Health should be invited to participate as full members of the - 23 -

Board when matters relating to their ministries are under con- sideration. It is suggested that the Economic Development Board establish an Advisory Council composed of about 10 of the leaders of the principal interests-of the Kingdom (such as Bedouin, cettled farmers, merchants, bankers, industrialists and contract- ors) to advise on broad policies affecting economic development and specific matters relating thereto. The Board should:

(a) Determine broad basic policies with respect to the scope, composition and pace of the Kingdomts economic development efforts.

(b) Study and ap:rove and/or amend the economic development program prepared by the Secretariat of the Economic Develop- ment Board.

(c) Consider and recommend to the Council of Ministers economic policies considered necessary to carry out the economic development program.

(d) Approve plans submitted by the various ministries for the implementation of specific projects included in the economic development program.

(e) Recommend to the Council of Ministers the yearly budgets required for the carrying out of the economic development program and approve from time to time specific allocations of budgeted funds to the ministry or ministries concerned with the carrying out of these projects.

(f) Generally supervise the economic development program in order to ensure its effective and expeditious implementation in a well coordinated manner.

Planning is a continuing responsibility and, therefore, the Economic Development Board should meet at frequent, regular intervals, say once a month. The Board should assess the prcgress of the economic development program-and consider any modifications at regular intervals, say quarterly, and at such other times as special problems are reported by its Secretariat.

(2) A Secretariat. The Economic Development Board should have a highly quaified Secretariat to assist it in fulfilling its responsibilities. The Secretariat should be supervised by a full- time head who should report directly to the Board. The Secretariat should work closely with the technical personnel of the various ninistries concerned with economic development and special working parties should be formed from time to time as may be necessary to consider special problems and projects involving two or more of these ministries. The principal functions of the Secretariat would be to: - 24 -

(a) Prepare analyses and appraisals of the financial, physical and human resources available for economic development, including an evaluation of the economic and financial position and prospects of the Kingdom.

(b) In light of these appraisals, prepare a balanced and inte- grated economic development program on the basis of an evaluation of programs ancl projects prepared by the various ministries, giving maximum encouragement to private invest- ment consistent with the public interest.

(c) Analyse periodic reports prepared by the ministries on the progress of economic development projects.

(d) Recommend to the Economic Development Board any action con- sidered necessary in connection with the implementation of the economic development programc

(e) Coordinate technical assistance for economic development, including the hiring of foreign staff,

(f) Assist the various ministries responsible for carrying out economic development projects in the estqblishment of pro- gramming units to help prepare the ministriest development programs and projects and to report on the progress made in carrying out development projects, including reports on expenditures.

It is suggested that the Secretariat have a planning section that would prepare basic economic studies and forecasts and formulate the broad outlines of the economic development program including the level of investment and its general direction, another section to coordinate the implementation of the economic development program, a third section to coordinate technical assistance and serve as liaison with organizations providing technical assistance, and a fourth section to collect and compile information relating to the economy and to develop- ment. The Secretariat can be relatively small since it is most important that strong staffs be built up in the ministries concerned with economic development,

116. Ministry of Water Resources. The mission recommends that the proposed Ministry of lTater Resources establish:

(1) A Department of Water Conservation. This Department would:

(a) Prepare and recommend a broad national policy and program uxith respect to the development and conservation of the Kingdom's water resources.

(b) Prepare and recommend regulations for the effective control of water usage in accordance with sound conservation prin- ciples, - 25 -

(c) Inspect and police the use of' water in accordance with the regulationsadopted by the Government.

(d) Levy charges for, and co]lect revenues from the users of, water produced by projects financed from funds provided by the Central Governmentf

(e) In conjunction with the Agricultural Extension Service, carry out a general educational program to acquaint the principal water users and the Kingdom generally with sound water conservation practices,

(f) Establish regional Water Resources Boards, with local repre- sentatives included as members of the Board, to ensure that local circumstances will be fully taken into account and to encourage maximum local participation in carrying out sourd water conservation principles.

(2) A Department of 1-later Evalutation and Development. This Depart- ment would:

(a) Explore those areas of greatest promise to 6etermine the extent of underground water availability.

(b) Prepare and carry out specific plans for the production and use of such water.

(c) Analyse and determine appropriate works for the control of surface water, including dams and other flood control works.

(d) In conjunction with the municipalities concerned, engineer and construct appropriate water works and sewage disposal systems,

(e) Study groundwater geological conditions for further areas to be developed.

47. Ministry of Agriculture, The Ministry of Agriculturej after the trans- fer of the water resources function to a separate ministry, should be re- organized along the conventional lines of research, education and related agricultural services, such as credit. In normal circumstances it would be desirable to begin with agricultural research and follow with an extension service and other educational means of disseminating the results of the experimentation to the Bedouin and the farmers. In present circumstances in Saudi Arabia, however, it is advisable to place major emphasis in the first instance on the extension service wlhich can bring to the rural community those basic techniques and practices which have been found in other simi- larly situated countries to give the greatest promise of increased produc- tion. - 26 -

The mission recommends that the Ministry of Agriculture consist of the following departments:

(1) Ag-ricultural Extension Service 0 This would be the key to the success of the Ministry of Agriculture in the early years and it should be given precedence in assigning personnel and resources. The headquarters of the extension service in Riyadh should have several sections that would plan arid direct the field work in various specialties inclu-ding irrigation and drainage, crops, horticulture., livestock, farm implements and home economics,

The existing Agricultural Units of the I4inistry of Agricul.- ture ane a good beginning in the direction of establishing an effective agrimultural extension service in the field. The exist- ing units, however, need to be reorganized., augmented with a sub- stantial number of qualified staff and provided with additional funds. It should be the goal of the extension service to gradually establish a local unit in each of tne major agricultural producing areas; this should be done as soon as personnel and funds can be made available, In addiuion, newt;units should be established in those areas wihere newly produced water will sustain a substantial amount of additional agriculture. The Director of these units would be a general agricultural extension agent. The- Director and basic staff should be supported by veterinarians and, ~There appropriate and where personnel and funds permit, by various other specialists.

(2) Agricultural Research Department, Very close association of this Department with the Agricultural Extension Service is essential, It is recommended that the Research Department commence function- ing with the following sections:

(a) Livestock Section. This section would study the control of pests and diseases, the Lnprovement of breeds and better range management; the livestock stations and laboratories would come under this section,

(b) Crops and Horticulture Section. This section would test seed and experiment with fertilizers, crop rotation practices, tools and work methods, and the green manuring of crops; the proposed experiment stations in the Qasim area, the Qatif region and the Jizan region would be included under this section. Facilities for applied research through field trials should be available at each station.

The work of both sections should be closely, integrated.

(3) Special Projects Department. This Department will be the next most important to the Agricultural Extension Service for some time. It would consist of a small staff, including experienced engineers, which would primarily prepare terms of reference for serve as liaison with, and generaLly supervise the work of - 27 -

consultants who would prepare the projects and supervise their detailed execution. The staff would also engage contractors for the construction of projectso The principal work in connrection with special projects would be carried out by the consultants and the contractors. It is rem mmended that the Government give con- sideration, where indicated, to retaining the consultants to supervise the operation of the project for a reasonable period of time after its completion and to simrltaneously train the necessary Saudi Arabian staff for its continued operation.

(4) Agricultural Economics Department 0 The mission recommends that the Agricultural Economics Department be organized with the folloving sections:

(a) Statistical Section. The staff of this section would collect and compile the necessary's tatistical and otller information on which to properly plan, coordinate and supervise a sound arc! reasonable agricultural development program.

(b) Agricultural Economic Research and Planning Section. The staff of this section would analyse and evaluate the informa- tion collected and prepare such special forecasts and studies as may be required to plan and carry out the agricultural r ogramr

(c) Marketing Section. This section should begin as a small unlit and be expanded as funds and staff become available, and as the effectiveness of the marketing program is accepted by the producers, businessmen and consumers0 It should be staffed. aith personnel who have had experience in the marketing of products now produced in Saudi Arabia and under similar conditions. In particular, the staff should be oriented toward the encouragement of private enterprise to the maximum with a minimum of government supervision and interference. It should also provide market intelligence for the Agricultur- al Extension Service.

48. Agricultural Credit, The establishment of an organization to provide agricultural credit to Bedouin and farmers for agricultural purposes should take account of the recommendations of the special team that has been recommended to advise with the Government on agriculturaL credit matters.

49. Ministry of Communications0 The mission considers that the Ministry of Cormmunications is quite well organized to carry out the functions presently assigned to it. The mission, hw.ever, has several suggestions foi- further improvement and for the transfer of additional functions to it, as follows:

(1) Department of Roads, The mission endorses the present divisicn of responsibilities and tasks in the planning, design and con- struction of roads in the Kingdom. The authoritr of the Road Department in these fields is well established and should be - 28 -

maintained. Coordination with the central planning body and the Ministries of Finance and National Economy and Agriculture shouLd be further developed and, thus, become more beneficial to all parties concerned. Consulting engineers should be used as suggest- ed in Chapter VII and the system of public bidding should be main- tained, although it would be advantageous to increase the number of projects on which foreign contractors can also bid when the volume of work grows to the point that this becomes advantageous to the Kingdom.

(2) De _artment of Civil Aviation. The mission recommends that the Department of Civil Aviation be transferred from the Ministry of Defense to the Ministry of Communications. The activities of the Department of Civil Aviation have to be based on economic and technical rather than military considerations and reouire contact with national and international agencies and business establish- ments. These are commercial activities which can be more appro- priately carried out by the Ministry of Communications which deals in related problems in other fields of transportation.

The Department of Civil Aviation merits support from the Government in its endeavors to develop airport facilities in the Kingdom. Defense interests are also involved but civilian and military activities and jurisdictions should be separated where.- ever possible.

The volume of traffic has only a small influence on the type or size of the basic facilities of airports. Capital investment and cost of maintenance and operation should, therefore, be borne by the public sector although landing fees do provide some reven- ues. The construction, operation and maintenance of adequate airfields in Saudi Arabia will have to be a public responsibility for a long time; indeed, revenues collected from users will be unlikely to cover the cost of maintenance and operation.

The Saudi Arabian Airlines, either as presently organized or if set up as a corporate entity, should be regulated by the Department of Civil Aviation. The preparation and implementation of the programs recommended in Chapter VII will necessitate an increase in the number of technicians advising the Government. It is suggested that the Government obtain these additional technicians from the organizations with which they have existing arrangements - the International Civil Aviation Organization and Trans World Airlines - in the interest of economy and in order to minimize the possibility of conflicting advice.

(3) Department of Ports and Coastal Shipping. The mission strongly recommends that all matters relating to the development, mainten- ance and operation of the ports be centralized in one government organization. The logical location of a Department of Ports and Coastal Shipping would be in the Ministry of Communications. This Department would be primarily responsible for planning, - 29 - construction, maintenance and operation of all ports including their facilities and approachesg with the exception of the PAMACO port of Ras Tanura, The Department itself would not necessarily perform all of these functions, or take over facilities which are at present owned and maintained by local authorities, but it would regulate theme This Department should have adequate powers to enforce the execution of measures affecting life and property, The Department should refrain from operating the ports directly with its own forces an6 slould, wherever possible, encourage private enterprise to load and unload vessels under a contract supervised by the Department.

The Department's clirect operations shouild be even more restricted in Jidcdah and nammam where public Port Authorities should be created to operate and maintain the ports. Each of these Authorities should be headed by a Board on wh.ich the major private and public interests in the community are represented. The Port Authorities would be financially independent., with their own budget and revenues. In these cases, the responsibilities of the Ministry of Comrunications would be limited to the approval of major construction works recommended by the Port Authority concerned and to the general supervision of port charges and services. The establishment of such Authorities at this time appears to be most appropriate because of the expiration of the contract for the operation of the port in Jiddah and because of the drastic reorganization required by the changed layout in the port of Dammam.

The mission recommends that the Port Authorities in Jiddah and Dammam be authorized to establish rates sufficient to cover operating and maintenance costs, debt service, depreciation and a reasonable return on the capital invested. This would ensure the financial independence of the two Port Authorities, which is fundamental to an efficient and businesslike operation.

The establishment of independent Port Authorities in Jiddah' and Dammam will require considerable administrative, operational, accounting, legal and other arrangements requiring expert knao- ledge and wide experience in modern port management, The Governo- ment would be well advised to seek the counsel of the port consultants recommended in Chapter VIII in connection with this matter.

The Government's port consultants should. also be engaged to study coastal slhipping and develop measures for its further growth. On the basis of the results of this study the Government should then deter-mine whether the Department of Ports and Coastal Shipping- rather than the Coastguard, iwould supervise and control shipping, except those aspects of control relating to defense. - 30 -

Department of Railways. It is recommended that the Railways obtain the services, through the United Nations Technical Assistance Board or some other such source, of technicians in railway account- ing to establish a modern accounting system0

The efficiency of the railways is to some extent reduced by the necessity of followinc regular governmental procedures, and the Government may aplpropriately consider estqblishing the railways as a public corporation or under an independent board,

Department of Post; Telegraph and Telephone. The efficiency of the Department of Post, Telegraph and Telephone is also impaired by inadequate governmental administration and accounting procedures, The mission recomnends that the Government consider wh.ether the Department of Post, Telegraph and Telephone should not be establish- ed as a public corporation or as a corporate entity along lines *iich !ould attract private investment, In any evenbs the mission recommends that the Department's accounting procedure be improved to fully reflect current costs and operations. Also, it seems desirable that the Office of the Director General should be transferred to Jiddah, which has become the center of the countryfs telecommunications system and which would be more accessible to the many technicians with which the Department has to deal, - 31 -

V. IWATER RESOURCES

50. The most important and urgent need facing the Kingdom is a compre- hensive water program that would develop, effectively utilize and conserve a resource vital to the very existence of the nation in such a way as to ensure continuing supplies for the present and future generations. The availability and cost of water will largely determine the economic develop- ment of the country and the well-being of its people.

51. Major emphasis should be placed on the national welfare in preparing the water resources program. It should be nation-wide in scope and should largely be built around:

(1) Evaluation of water supplies already developed.

(2) Development of additional water supplyc Geological and hydro- logical studies indicate that existing supplies can be augmented substantially by additional production, some in existing irrigated areas such as Al Hasa and Jizan but also in new areas such as the Tebuk-Jawf-Sakakah region, as discussed below. In this connection, the experiments and developments being carried on in other countries on the desalinization of water should be followed very closely. The cost of desalting water is very high at present but it would be advisable to make comparative cost estimates from time to time to determine the relative advantages of drilling ground- water compared to desalting brackish and sea water, particularly in the Eastern Province where abundant cheap fuel is available.

(3) Conservation of all water for maximum effective use. The supply of water in the Kingdom in relation to fertile land is extremely limited and should be utilized in the most productive and effect- ive manner. It is also most important that the rate of water production be related to the rate of replenishment and to the supply of storage water in order to ensure continuing supplies for future generations and to preclude the necessity of abandoning large investments because of insufficient water. IUiuch of the water now produced in the Kingdom is wasted or used for purposes of very little benefit to the economic growth and prosperity of the nation; thus, it would be possible to substantially increase the productive area under irrigation with the water now being produced. The mission, therefore, strongly recom;mends the pre- paration and the implementation of a practical and effective national water code which would regulate and control the develop- ment and use of Saudi Arabia's water resources throughout the Kingdom for the benefit of all of its people. This code should establish the principles on which water would be developed and used, and should provide ample means of supervising and enforcing strict adherence to tihis code by everyone. It should also provide the basis on which to charge for water developed by the Governmernt - 32 -

in new areas. In view of the desirability of promoting agri- culture and of the rural economy participating in the wealth derived from the Kingdom's oil resources, it is suggested that the Government consider excluding the capital costs in setting such rates; thus, the charges for water would be based on the cost of operating and maintaining the new water-producing facilities.

(4) Flood control. In order to replenish and utilize the groundwater storage facilities with which the Kingdom is richly endowed, floods should be allowed to flow over the gravel channels and in most large wadis stone revetment walls parallel to the channels are needed to protect farms and bui]dings.

52. Potential Water Resources: Saudi Arabia's water resources consist of surface water resulting from the runoff of rainfall and underground water produced by the penetration of rainfall in past times into the water table. The principal areas of water potential on the basis of present geological and hydrological studies are as followxs:

(1) Rainfall and runoff. Saudi Arabia lies within one of the world's largest deserts and annual rainfall is 100 mm. (Lt inches) or less throughout most of the country. The only region of higher rain- fall centers on the mountain crests of the southwestern part of the Kingdom, The long narrow belt along the crest of the Asir and Hejaz range from the border north to the highlands west of Taif has a rainfall of as much as 300 mm. (12 inches) annually in certain localities; this is the only region in the Kingdom where surface storage of water is feasible. Abha, the capital of the Asir, has a good damsite in Wadi Abha immediately west of the town where a small dam about 10 meters high would provide a water supply for the town and perhaps add to irrigation supplies, mostly with a view to extending the growing season. The cost of the Abha dam is small and the benefits are considerable, therefore, it is recoimmended that such a dam be engineered and constructed as soon as possible.

(2) Runoff and shallow groundwater. Surrounding the belt of higher rainfall is a peripheral zone where streams (wadis) flash floods out into the desert and add to the groundwater storage; and thus, water development in this area involves both surface and groundwater. The two principal water potential areas are:

(a) al Yemen. The southern Red Sea coastal plain extend- ing from the lava barrier at Al Birk south to the Yemen border contains six large wadis carrying flash floods, mostly during late summer. Cultivation with direct rainfall occurs on the large areas along the lower banks of these wadis and on the divides between them.

The surface water, as measured by the M1inistry of Agri- culture, shows substantial runoff; many floods wash out the - 33 -

crude irrigation dikes and often obliterate villages. The spate-breaker type of dai seems well suited here and the early design and construction of such a dam on 1Jadi Jizan are reconmmended, Eventually Wadi Baysh, the largest perennial stream in Saudi Arabia, may be harnessed to contribute materially to the economy of the country. An important factor in the development of this potentially rich agricul- tural region is the construction of an access road and port.

The coastal plain is underlain at depth with Miocene sediments, ipcluding an evaporite series above which are deposited coalescing alluvial fans known to be as much as 60 meters thick, Substantial groundwater supplies within the alluvial deposit are perennially recharged from underflow of the wadis and are essentially untapped0 The Jizar basin in the southern part of the plain is potentially a most important area of underground water development for agricultural pur- poses in the region, Wadi Jizan, a wadi of intermediate size and the site of an agricultural scheme planned by the Food and Agriculture Organization, was envisaged as a pilot area where test borings were made to determine the availability of underground water that would supplement irrigation by flood water. In general the alluvial deposits are unconsolidated with high permeability and water table conditions, cones of depression are sharp and local around wells but, as the allu- vial fill extends some 40 meters below sea level, the danger of salt water encroachment along the western side of the basin requires maximum development along the eastern, higher portions. A few test wells should be drilled far out on the plain and the water tested periodically for increased salinity.

(b) Tihamah Ash Sham. The coastal plain north of the Birk lava barrier has much the same type of potential as the Tihamah al Yemen but to a somewhat lesser degree due to the dying cut of the monsoon precipitation further north. Here there are six flood plains cultivated intermittently, and high in the valleys within the eroded mountain scarp extensive areas supporting agrarian communities are irrigated by the wadis supplemented by water from shallow wells. The construction of an access road and flood control works in the major wadis should be considered in due course.

(3) Groundwater. The development of groundwater can be expanded in areas where there are adequate subsurface reservoirs and where geo- logical conditions focus the meager rainfall from widespread catchment regions. Most, if not all of the suitable groundwater is from humid epochs of the past. The prime problem is to pro- perly evaluate the rate of replenishment and the amount of fossil water from ancient times that can be mined safely. The principal groundwater potential, on the basis of present studies, exists in the following three geological environments: - 34 -

(a) The largest undeveloped supplies lie in sandstones on the eastern flanks of the crystalline mountain ranges and younger sandstones in the north central part of the country [llap I7e These beds are several hundred meters thick and may have been buried with sweet water in them since they are essentially of non-marine origin, though indirect evidence indicates that they were flushed out, at least in part, and refilled with rain. The more humid epochs came on geological structural conditions where steep gradient and rapid sub-surface move- ment was possible, thus creating the supplies now beginning to be tapped,

(b) Fluch confined water has been found in secondary openings in the limestones in the Persian Gulf region and in the Rub-al- Khali, Considerable basic data on these aquifers has been collected and evaluated by ARAMCO0

(c) Groundwater also lies in alluvial deposits in the wadis, mostly in gravel-filled gorges. This water is apparently renewed from rainfall and remarkable underground collecting and storage systems are formed where the wadis converge. This type of groundwater is found throughout the Kingdom and a proper evaluation involves knowledge of local conditions as well as a study of geologic history.

53. All three of these geological environments pertain to the water supply in Riyadh and the latter two relate to the water supply at Al Kharj and Al Aflaj as follows:

(1) Riyadh. The derives water from three geologic sources as follows:

(a) The shallow limestone and overlaying alluvial fill beneath the city0 This was nearly depleted about 1955 when water from a collecting point at Ha'ir, and later from the deep Minjur sandstone, became available. At that time the effluent recharge from the city sewerage also became available. This water needs chlorination.

(b) The buried gravel charmel of Wadi Hanifah, This source is currently producing most of the municipal supply, both from wells at Riyadh and at the Hatir gathering station 30 kilo- meters downstream. This source is replenished by rainfall from the eastern slopes of the Tuwayq Mountains, the silt- laden floods flushing off the bare limestone slopes onto the buried channels. In mid-course of these streams there is neither substantial erosion nor deposition in the channels, a fortuitous circumstance which has allowed maximum infil- tration since the high velocity into the gravel prevents -he silt from sealing the channel floor. Wtater levels in wells in the gravel during and following a flood have been reported to rise as much as 10 or 12 meters at Hatir, whereas in the vicinity of a recently completed dam in Wadi Hanifah above Riyadh the rise in May of this year was reported to have been 6 meters. It is reported that 25 centimeters of silt have been deposited on the water floor behind the dam since it went into operation about 2 years ago. This has considerably decreased the groundwater recharge and, thus, reduced the amount of water available from the wells, The loss from groundwater recharge exceeds the amount stored behind the dam since surface storage is subject to considerable evaporation. Therefore, it is highly advisable not to have dams in the wadi over the buried channel. Tnstead, the floods should be allowed to flow, carrying the silt load, so that most of the water wfill settle into the long linear underground reservoir upstream from Hatir. Only rare floods of large size flow past Ha'ir, where water is also obtained from two other wadis that join Hanifah at this point, As the capacity of the pumping station is greater than the safe yield of the wells, the plan to extend a line to the next trans-Tuwayq wadi south, Shalib Nisa, is feasible and sound, This con- tingency was included in the initial plan of the Ha'ir pump- ing station, However, as the Shalib Nisa buried channel supplies water to the north end of the Al Kharj oasis complex, care should be exercized to keep such developmrent to a rini- mum and to make adequ4te pumping tests to project the rate at which the water table is lowered. The importance of this cannot be over-emphasized because a lowering of a few centi- meters at the Firzan dibbl (underground tunnel) some 40 kilometers downstream will radically decrease the supply at Salamiyah and Yamamah,

(c) Deep confined water in the Minjur sandstone. This has some objectionable characteristics which are, however, correctable. The supply appears to be large, though the water level is reported to be declining and urgently needs pumping tests to detenrine the aquifer coefficients as well as repeated chemic- al analyses to evaluate possible changes in quality0 Accord- ing to ARHANCO the water in this aquifer at Khurais, 130 kilometers to the east is salty; thus a salt water-fresh- water boundary exists somewhere east of Riyadh and is moving in the direction of Riyadh as freshwater pressure is reduced because of the removal of freshwater by pumping. It would be desirable to drill a well half-way between Riyadh and Lhe outcrop belt west of Dhruma along the west front of the Tuwayq mountains; perhaps it could be located along the sur- faced road in the area northeast of Muzahimiyah just below the western front of the Tuwayq mountain escarpment but north of the Dhruma depression and away from any saline shallow water. The depth of such a well should penetrate the IMinjur sandstone and, if properly located, will probably be of the order of 700 meters, The salt content should be one-half - 3-6 .

that of the deep water at Riyadh, though this can only be confirmed by testing, If such a well of small diameter is completed, a record of water level by repeated measurements or by a recording gage will materially aid in the evaluation of the yield of the water-bearing formation and could point to a more satisfactory source for the Riyadh municipal supplye

In addition, the mission also recommends chlorination of water for the municipality, a sewage disposal and treat- ment plant, and limiting the further expansion of Riyadh, particularly with respect to industrial plants using large quantities of water, until scientific studies have adequately determined that the water supply is sufficient to permit further expansion, The limited water available in the vici-. nity of Riyadh should be used exclusively for muni:ipal purposese

(2) Al Kharj. The Al Kharj area derives water from two sources - from the alluvial deposits in the wadis and sandstone where the sand- stone belts cross the wadis, and from a cavernous zone in limestone- anhydrite beds. The latter is by far the larger supply but as the water is saturated with calcium sulphate it can be used only for irrigation where drainage is good and preferably where the soil can be flushed occasionally by water from the other source, Water levels have declined in both, the greatest decline occuring in the drilled wells down Wadi Sahba' to the east of the experi- mental farms. At Ain Dhila, the water in the open hole farthest from the pumps (Ain Umkhisa) is about 10 meters lower than when pumping began 15 years ago. This shows that the lowering of the water table is spreading by the removal of water from some of the caverns but this does not seem likely to be serious at the present pumping rates. If substantial amounts of water were drawn from Shalib Nisa for the Riyadh supply, the water levels will doubtless be lower and in time, in the alluvial deposits and the sandstone in the northern part of the Al Kharj oasis complex, the first effect of this will be a substantial decrease in the flow of the groundwater tunnel at Firzan where a lowering of a few inches wili decrease the supply for Yamamah and Salamiyah.

The proximity of Al Kharj, and Wadi Sahba' to the east,to the relatively cheap fuel shipped in by rail will make water pumping economically feasible at depths lower than would normally be the case.

(3) Al Aflaj. The oasis at Al Aflaj derives water from open holes similar to those at Al Kharj and in the same geologic environment. Water levels have declined through the years and substantial ex- pansion of irrigation water will depend on pumping. The water is rich in calcium sulphate and should be used only for irrigation. The northern part of an artesian aquifer in the Dhruma formation probably underlies Al Aflaj and it should be test-drilled under - 37 -

careful geologic control. This formation yields a high pressure flow,with total dissolved solids of about 1,000 parts per million, farther south where it was encountered in the search for oil and should be reserved for drinking and municipal supply if it is found to be of as good quality at Al Aflaj.

54. The water potential in each of the three geological environments is as follows:

(1) Sandstones on the eastern flanks of the crystalline mountain ranges and the younger sandstones in the north central part of the country.

(a) Tebuk. A small oasis on the old Hejaz railroad from Madinah to , Tebuk, as the principal Amirate in northwestern Saudi Arabia, has in recent years begun some expansion fol- lowing the drilling of shallow artesian wellso Lying within and on a confining bed of the great sandstone basin extending from the Jordan frontier to the Qasim, there is much water beneath the reported 17 to 70 meter depths o-? the flowing wells in the vicinity of the town, The pressure head is low and will soon be dissipated if the wells are allowed to flow unrestricted, as at present. However, deeper wells with proper casings, screens and well-head fittings (together with proper well spacing) can support a much larger agrarian com- munity. The rainfall is low and there is a danger that water production may exceed the rate at which the sandstones are recharged with rainfed water with the result that water will mostly be taken from storage, This area should be test- drilled with rapid portable rotary rigs, obtaining electric logs, sandstone core samples and drill stem tests down to the basement rocks. Depths to be anticipated are of the order of a few hundred meters, depending on the location and the nature of the crystalline surface below the sandstone. Following the drilling of one or two test holes at Tebuk, consideration should be given to drilling widely spaced wells in the vast region to the east and southeast for test purposes with a view to screening and completing them as stock-wells after- wards* These should extend to and perhaps into the Nefud, Test drilling in the eastern part of the Great Nefud could most expeditiously be done from the Qasim and should perhaps follow the testing of the Qasim. -Wi,ells completed in non- flowing aquifers could be equipped with windmillso

(b) Al Ula - Medain Salih. Al Ula, an ancient oasis on the Hejaz railway, lies on the edge of the sandstone basin extending from the Jordan fronibtr to the Q_aim. Water eomQs out of the base of the thick Paleozoic sandstone and flows onto the gardens growing above the crystalline rocks, The sandstone dips north and east and rests on an impermeable crystalline floor and may be compared to a spout on the rim of a great basin, the sandstone being saturated with water below the rim - 38 -

and spilling over at a low point to form an oasis. Water stands in shallow wells in the sandstone. At Medain Salih some 20 kilometers north and at an altitude 100 meters higher, water stands in shallow wells in the sandstone where there must be as much as 300 meters of sandstone below. A sub- stantial portion of the sandstone is most likely saturated with water, Test drilling followed by evaluation and pro- duction wells may revive again this ancient Nabatean center.

(c) Al Jawf-Sakakah Region0 The areaeast of the Jordan frontier and WXadi Sirhan is struoturally a deeper part of the great basin whose shallower rim regions were described above for Al Ula and Tebuk. Shallow flowing wells have been drilled recently at the oasis of Al Jawf. The water flows into an area southeast of the oasis where there is no drainage. Sakakah also derives water at shallow depths from sandstone with interbedded clay layers0 The low rainfall and the shallow wells at these oases imply little opportunity for development and hope can, therefore, lie only in the direction of drilling and testing the deep artesian sandstones, kll the meager geologic information available indicates that there is water in them. An AM4ICO well at Wadi Artar is believed to have penetrated a sandstone from a depth of 580 to 223 meters. The water rose to within 260 meters of the surface and contained 660 parts per million of total dissolved salts. The deeper and older sandstones crop out at higher altitudes and, therefore, the deeper confined water will doubtless rise nearer to the land surface than 260 meters and may, in low areas, flow. This area should be tested early in the program, perhaps after Qasim and the sandstone region north of Hail which is discussed below are evaluated. A rotary rig capable of drilling to 1,200 meters is required. Samples, including cores, drill stem tests, and an electric log would be needed in the first drilling phase, followed if need be, by pumping tests.

(d) The Qasin. In an area of about 75 by 120 kilometers square located 350 kilometers northwest of Riyadh, high-pressure artesian water is encountered by drilling to depths of up to a thousand meters. The variable quality of the water, to- gether with plans for extensive development in addition to the reported 210 deep wells already drilled, urgently require an early evaluation of the water-bearing beds. The water comes from sandstone beds which extend from some aistance south of the Qasim northwestward beneath the A; Jawf-Sakakah basin and includes the artesian water at Tebuk. Within this vast area the water is largely confined and will doubtless yield flowing wells where the surface of the land is low enough. This is the most important water source in the north- ern part of Saudi Arabia where rainfall is extremely low. Hlost of the water has accumulated from past geologic ages and - 39 -

large scale production will exceed replenishment. The mission considers an early evaluation imperative so that the supply will not be exhausted and/or ruined by saline encroachment '. particularly because of the extensive agricultural develop- ment already begun.

(e) Wadi Dawasir. The oases lie along the wadi channel which drains most of the highlands in southwestern Saudi Arabia. The depressions of WIadi Dawasir from Al Kamasin to As Sulaiyil are far enough into the desert so that the alluvial deposits in the wadis carry brackish water for the most part, However, deep drilling into the Wajid sandstone in the western oases and the Dhruma sandstone in the eastern oases will supply large quantities of flowing or near-flowing water, most likely potable according to test-drilling accomplished by ARACO in their oil exploration activities to the east. The testing should be done under strict geologic control and planned so that the quantitative estimates of the aquifer coefficients can be expeditiously made for evaluating safe yield, Possi- bilities for important developments are good*

(2) Secondary openings in the limestones in the eastern and southerr part of the country are as follows:

(a) Qatif. This large and important oasis on the Persian Gulf is supplied by artesian water flowing from wells and springs in limestone. Their pressure head has declined about one- third since first measured in 1366 (1946) and wells along the western edge of the oasis are reported to have ceased flowing. Lack of drainage facilities and of control has water-logged the soil, requiring two remedial measures - construction of drainage ditches and repairing and/or sealing the flowing wells and springs. The first is being handled satisfactorily. The second measure, not yet started, requires a careful well inventory and detailed descriptions, both surface and sub- surface, for each well or spring preliminary to the necessary repair work. Many wells have been inadequately completed in the aquifers and it will be necessary to pump concrete to completely fill some of them. As the wells are privately owned, assurance should be given each owner that he will bene- fit by such action and that there will be adequate water to irrigate his land. The Government is wise to begin the drain- age program first but a beginning should be made on the repair and sealing of the wells and springs as soon as beneficial results are apparent to the local farmers.

The low altitude aerial photographs of the Qatif oasis receiitly made by ARAMCO could be used to prepare a large scale photomosaic needed to adequately plan the Qatif water control project. A new contour map showing up-to-date conditions should be made as a guide for the drainage plan and for the - h10 -

well program, with stereoplotting instruments and photo identification of bench markso A complete well inventory and piezometric map of the oasis are an important first step. A photograncnetric company should be hired to prepare the maps and local well contractors, working under the supervision of trained Government engineers and geologists, could carry out the well repair0

(b) Al Hasa. The large oasis complex around Xufuf has much the sar,me problems as Qatif0 The water supplies come mainly from large springs which derive water from Nliocene and Eocene limestone and only recently has well drilling begun in a serious wayg Yields from the springs are reported to be de- clining somewhat and the drainage and salinity control pro- blems are present, especially in the eastern part of the oasis. Irmmediate arrangemaents should be made to provide drainage facilities and thereby preserve the tremendous investments already made. As at Qatif, large scale and accurate photo- mosaic, contour, piezometric, and soil maps are needed to adequately plan and execute a constructive water development programs

ARAviCO has found fresh artesian water in the Wasia sand- stone at depth beneath Haradh and there is reason to believe that fresh water may also exist in this formation beneath Hufuf. Currently ARANMCO is preparing a report on the water- bearing possibilities of the Wasia sandstone and if this report indicates a reasonable chance of fresh water, a test hole of the order of 1,000 meters deep, or whatever is needed to penetrate the formation, could be planned with a view to developing a subsidiary supply.

(c) Rub-al-Khali. Many of the wells ARARCO has drilled in the Rub-al-T.hali have been completed as water supplies. The com- pany is currently engaged in compiling and analyzing this information, which will be of great value for planning future water development. IWater has been found mostly from relative- ly shallow depths in Tertiary formations and is often potable in the western Rub-al-Khali. The water found in the region south of Al Hasa and west of an anticline extending south from the Qatar Peninsula is, however, mostly brackish or salty. Large supplies of more or less sweet water under high artesian head have been found in southeastern Rub-al-Khali south of the Trucial States. This water found in Eocene limestone, most likely comes from the western slopes of the mountains and the northern slopes of the Dhufar coast of southeast Saudi Arabia. Much of it appears to be suitable for irrigation but remoteness and harsh climatic conditions make development costly and hazardous; its development should not be considered until higher priority projects have been completed, - 41 -

) The gravel-filled gorges and the alluvium deposits in the wadis are as follows:

(a) Hail. The prospects for development of water at Hail are not very good. Hail is situated on granite and the water comes from sand and weathered granite where Wadi Hail passes through a constriction formed by igneous dikes. Rainfall is low, probably less than 100 mmi (4 inches) to judge from the sparse vegetation. Underground storage capacity is small and the mission considers it inadequate to support any further ex- pansion, Better utilization of water from existing wells, with perhaps a few wells strategically placed to create a minimum influence on other wells, should offset somewhat the greater consumption needed for further improvements in the standard of living of the present population0

(b) Viadinah-Khaybar-Yanbul Wakl Region. The northern Hejaz is notably deficient in rainfall, the native vegetation incicat- ing an annual precipitation of perhaps a centimeeter or ]ess. WTater supplies come from combinations of geologic and physio- graphic circumstances which allow gathering of the rainfall into favorable underground col]s ction sumps Miadinah owes its supply to an ancient wadi system now buried under lava which filled a valley above a narrow throat in crystalline rocks where the town is located. A sraall dam recently constructed east of the airfield tends to prevent normal seepage into the gravels under the lava and exposes the water for long periods to an extremely high evaporation rate, Such dams are incon- sistent with sound water conservation practices, A well in- ventory and piezometric surface map of the water in the wells in and around the town are needed to locate and evaluate the supply. Test drilling on the lava field through the crystal- line basement should, if carefully done, find supplies to furnish a municipal system that would supplement the existing well sources within the environs of the cityo

A situation similar to ladinah yields water at Khaybar, 150 kilometers north. W4ater flows from springs in the lower layers of porous lava resting on old clayey alluvium. Re- clamation of saline soils by drainage ditches and flushing, malaria control, (and minor repairs to ancient dams in the vicinity) would substantially improve the Dorompects of in- creased production.

Yanbut Naki gets its uter from a wadi which drains the northern and eastern paopes of Jebal Radwa west of Madinah. A bed of conglome-ate in the va ley tends to confine water below a series of ancient dibbula, and here, as at Wadi Fatima which is discussed below, the water becomes breckish down- stream. The port of Yanbul al Bahr receives its supply via a pipeline from Yanbiu' Nakhl, the supply coming from a source - 42 -

developed to interfere as little as possible with the water supply for the date gardens. As a potential port for lqadinah, the supply will need expansion and careful drilling in the lower portion of the wadi to utilize water downstream from the date gardens but above the brackish zone. Test drilling, mapping of the ancient dibbula (most are in disrepair), and a piezometric map with the boundaries of the ancient channel defined can produce an accurate evaluation of the total quan- tity 0 Here the ultimate supply is much less than in Wadi Fatima and no substantial expansion should be plannedo

(c) The Mecca-Jiddah-Wadi Fatima Area, Water supply for Mecca comes from two sources - Wadi Fatima, north of the religious capital, and Ain Zubaida, an ancient dibbl east of the city, Water is piped through two parallel cast iron and steel lines from Wadi Fatima, This wadi. also supplies water to Jiddah through two lines which tap the wadi below the AIecca supply. A third larger line of spun concrete is under construction, About 14,000 cubic meters per day is reported to flow by gravity to I''ecca from 'Wadi Fatima and Ain Zubaida. A similar amount also flows by gravity to Jiddah and gives the estimated 100,000 population a daily per capita consumption of 0..1 cubic meters (37 gallons), approximately one-sixth the rate of consumption in industrialized citieso Distribut-on is in the early stages of development. As in all Saudi Arabian munici- palities, it is distributed mostly through watering points and then by donkey cart to the homeso Rates are high for large consumers, about SR 3 ($oc66) per cubic meter and SR 6 (@l.32) per cubic meter if delivered by truck. People with limited means and small water requirements can get cheaper water through donkey cart delivery. The supply is erratic and in- adequate, particularly during the pilgrimage season. There is urgent need for substantial improvement in the des-gn and operation of the water supply system and for the installation of chlorination facilities, The system is operated by a pri- vate company and should be regulated by the Government to ensure an adequate and continuous supply of water at reason- able prices.

Expansion beyond the current water needs requires a care- ful study of Wadi Fatima and other possible sourcesc Tn the case of Mecca, the mission believes that test drilling in wadis southeast of the town will lead to an additional supply, particularly in the upper part of Wadi ad Darmm, which is located in a great shear zone that extends over the Hejaz mountain crest in the region of greatest rainfall. The test- ing can best be done by drilling a few hundred feet with an exploratory rig, preferably of rotary type with heavy drilLi.ng mud at Wadi ad Dam where high pressure can be anticipated. There is much underflow at Wadi Fatima which becomes brackish in the lower end of the wadi because capillary rise and - 43 -

evaporation tend to accumiulate the salt. The problem is to obtain this water before it becomes brackish. Two methods are available - a groundwater dam constructed by sheet piling and/or groutiing with an impermeable membrane or by install- ing wells to pump the water down to levels that will dewater to bedrock, Ihe latter method will eventually decrease the yields from the ancient dibbula which have their source up- stream from the most feasible area to dewater0 A groundwater curtain would have to be constructed where there is no oppor- tunity for seepage as, for instance, where the floor and walls of the valley are relatively impermeable crystalline rocks. Such a curtain involves highly skilled and expensive cons- truction but it would have the advantage of creating, if successful, a groundwater reservoir whose capacity would be measured and whose water level would furnish a continuing record of available watero The time does not appear distant when either method will require pumping and dewatering of the gravel, and when the farms in the wadi will need to be sacri- ficed for municipal supply.

In this connection, the Government could make a beginning towards resettlement by test drilling at Haddat ash Sham, Usfan, and Khulays, all north or the wadi in other watersheds. Also, the oolitic iron beds in Wadi Fatima and the tributary wadis of Shumaysi and al Kur will, if mined, require dewater- ing. The water at these tributary wadis aind in Wadi Fatima itself may be brackish (they are downstream from the munici- pal supplies) but suitable for irrigation, so that the farms could be moved to that area, There is also an iron deposit in a depression above Jumum, the lower source of the Jiddah supply, and dewatering would be more satisfactory than a ground water curtain if drilling proved this deposit. The sale of water to the Jiddah Water Company might make the exploitation of this deposit economically feasiblea

(d) Taif, The summer capital is chronically short of water; it is situated far enough north to get very little of the suamer monsoon and, therefore, depends largely on local winter rain- storms. The vegetation in this area indicates that the raLn- fall is of the order of 18 centimeters (about 7 inches) a year. Furthermore, the subsurface structure is such that it does not readily give up its water so that well yields are small rega2dt- less of size and depthe The principal supply for the towni comes from the two dibbula which terminate in a gravel bench near the Akrima dam, a construction designed to increase the supply to the tunnelso Occasional violent rains make this dam a possible hazard to the town; the safety of the foundation and spillway should be examined by a competent firm of engin- eering consultants0 - 44 -

The plan to bring water to Taif from WIgadis Liyyah, Tham- la and Busal is, in principle, sound, although the mission feels that the first step is to drill some test wells where these wadis come out of the hills and spread onto the plain of Al Jarado The location of test wells is of prime import- ance in order to utilize the alluvium for storage and to obtain the maximum runoff. Shallow wells drilled a short distance into basement rocks below the wadi alluvium would suffice, as deep drilling at Taif is a hopeless undertaking. Concurrently., stream and rainfall gaging stations should be established on the wadis so that the possibility of surface storage dams can be evaluated. As the rainfall is greatest in the headwaters of Wadi Wejh which drains the southwestern promontory above Taif and as the records at the Akrima dam on the wadi indicate interiattent storage with silting, the mission would expect less favorable conditions in the wadis to the southeast, Nevertheless, there are large floods which recharge the alluvium and this storage is greatest where the wadis come onto the plain.

Strategically placed wells can obtain all the surplus runoff without the tremendous expense of dams and at the same time avoid the problems of siltation and water purification; such a step would not invalidate dams at a later date. The size of forest beds behind the ancient dams in the vicinity of Taif indicates that silting of reservoir capacity occurred after relatively few floods. The design and construction of a pipeline could begin as soon as water quantity can be evali- ated in the test wells. Ultimately, such a line may be ex- tended to the Wladi Turabah watershed to the southeast. he proposal to create a water district board and the water in- ventory studies are sound and should be implementede

Doubtless, there is a supply of water in a fault zone on the crest of the mountains along Wadi lvHura west of Taif but perhaps this supply ought best be reserved for IHlecca as it can be tapped at the base of the mountains and tested there. Such a development would also utilize more of the storage than the alternative of wells on top of the range.

(e) Wadi Turabah. This wadi drains the high country southeast of Taif, flows north around the north end of a lava field, then turns back to the southeast where it is lost in the sands of Uruq Subay'. A well drilled at the north end of the lava field discovered a gravel fill where the wadi has cut a deep channel into the underlying crystalline rocks, This under- ground water is adequate to supply the needs of the Taif muni- cipality and for a substantial amount of irrigation., the soil derived from volcanic ash east of the Harrat Hadan and west of the mid-course of the wadi is riche For these reasons a careful study of the wadi and a test drilling program utilizing shallow churn rigs should be considered in the near future.

(f) Wadi Ranya. iadi Ranya drains a segment of the Hejaz plateau, and the water becomes brackish east of the oases located along the lower trunk channel0 This water would be utilized a'u Ranya by drilling shallow test holes to locate the boundaries of the buried channels, followed by careful pumping tests to evaluate the total amount that may be salvaged, then locating production wells.

(g) Wadi Bishah, Wadi Bishah, the largest tributary of Wadi Dawasir, supports a string of oases west of Dawasir where other tributary wadis join the main channel midway down its course. This drainage net carries most of the rainfall off the eastern slope of the western Asir, but because the tri- butary streams flow over crystalline rocks there in inadequate groundwater storage in most places for substantial development above the junction, Here, too, the floor beneath the wadi bed is composed of impermeable crystalline rocks into which the wadi has cut a defile now filled with sand and gravel, Water in this gravel is fresh for the most part though there appear to be pockets of brackish water, and is increasingly brackish downstream,

Development in Wadi Bishah should be aimed at using the gravels as a storage reservoir, the floods of long duration (but not perennial) supplying recharge. In the course through the oases and downstream the wadi is at grade so conditions are optimum for recharge, Strategically placed wells, without interference to the floods other than flood-protection revet- ments or raised. islands for the well pumps themselves, is not only the more economical but will produce more water than dams with siltation and surface evaporation. Careful delineation of the channel can be obtained from aerial photographs and test drilling performed by light churn drills. Sub-marginal land now being developed from wells dug into the crystalline rocks on the flanks of the wadi should be irrigated from wells drilled upstream wxith -screens set in the lower part of the channel gravels. Anticipated depth for wells in the gravels is of the order of 60 meters. Possibilities for extensive development are good.

(h) Wadi Niajrano This wadi flows into the hub-al-Khali north of the Yemen frontier. A peculiar spoon-shaped basin, because of the decrease in erosive power downstream, the wadi drains the northeastern edge of the sandstone plateau of the Yemen. There is a substantial valley fill of porous sand and gravel which retains much water above a crystalline throat and beyond which the floods pour into the fringe sandstones or evaporate in the western Rub-al-Klhali, A rather ambitious irrigation scheme could be developed in the wadi downstream from the date gardens and upstream from the crystalline throate Test drilling with small churn drills, water analyses , a plot of the piezometric surface and some carefully controlled pumping tests would evaluate the potential. - 47 -

VI, AGRICULTURE

55. Sound investments in agriculture at this time can contribute more to improving the economic and social conditions of the majority of the people of Saudi Arabia than investment in any other sector of the economy.

56o Saudi Arabia was largely a pastoral and agricultural subsistence economy until the discovery of oil. The welfare of the ruzral people, and therefore of most of the Kingdom, depended exclusively on the rearing of livestock on the natural grazing lands and the growing of crops in the oases and the limited rainfed farming region, The agricultural methods, techniques and practices were those that had been handed down from generation to gene- ration and did not permit the Bedouin and settled farmers to obtain maximum production from their efforts*

57. The oil industry and various works being undertaken primarily as a result of oil revenues, have, in recent years, attracted a considerable number of Bedouin and farmers to the urban centerso The increased popula- tion in the urban areas and the additional cash incomes have created new demands for food and clothinge Meanwhile, agricultural production has not increased and may have even decreased; the result is that the Kingdom is more and more dependent on imports to meet its food and clothing requirements. This is particularly true of the urban colnmunity and there are some indica- tions that even the Bedouin are consuming larger amounts of imported goods.

58. Agriculture and livestock production, however, are still major factors in the economy of the Kingdom and dominate the lives of more than three- fourths of the population. The cultivated area is probably of the order of 300,000 hectares and livestock (mainly goats, sheep, camels, cattle and donkeys) are being grazed over vast areas of the country. Dates are still a very important agricultural crop; Saudi Arabia is the fourth largest date producing country of the world. Other crops of importance are wheat, barley, sorghum, millet, maize, various fruits and vegetables and alfalfao Sesame and lentils are also grown, especially in the southern coastal regiont. There is also some production in the southern Asir. An estimated 80% of the total cultivated area is under irrigation, the balance - mainly in the Asir mountains - is rainfed.

59. Increased crop and livestock production would provide additional food and fiber for the rural people and the surplus would be available for the urban population. The cash income resulting from the sale of farm products would provide a new market for the merchants and the additional farm pro- ducts, particularly wool and cotton, could become the basis for industriese Saudi Arabia has an abundance of cultivatable land, much of which is quite fertile, and indications are that the water potential CMap 1]7 is sufficient to increase, over a period of time, the present level of production several- fold if its water and agriculture are properly organized and managed, IPiany of the agricultural products sold in the Kingdom, including perishable foods and vegetables, are imported from abroad over long distances and the prices are relatively high. It apje ars that the cost of production, including the _ 48 - development of additional water and cultivation of new land, is sufficiently low to make increased crop and livestock production economically attractive.

60. Agricultural Program. The objective of the agricultural program should be to improve the welfare of the rural people and thereby of the Kingdom generally. The emphiasis in the first instance should be placed on substan- tially increasing the quantity of crops and livestock produced. This should be achieved largely through:

(1) Intensification of Agriculture. Agricultural production could be increased substantially through a more intensive utilization of the land and a better use of water, For the most part, farrning practices, including irrigation and drainage, do not take account of recent advances in agricultural knowledge, techniques and equipment. Very little improved seed and fertilizer is being used. The importance of green manuring crops and crop rotation is seldom appreciated. The hand-tools and animal-drawn implements are es- sentially unchanged from those used several thousand years ago. There is very little knowledge of the water requirements for indi- vidual crops and of other factors affecting its use for farming purposes; consequently, there is a general tendency to over- irrigate. For example, it may be possible to increase the area under cultivation by as much as 15% from the existing water supp-Ly without any reduction in the yield of crops per hectare; an addi- tional area of this size could produce about 30,000 tons of wheat with the water now being wasted, which would represent a signi- ficant portion of Saudi Arabia's wheat and flour importse It is, therefore, most important that agricultural bechnicians determine the amount of water necessary for optimum crop growth and that irrigation projects be based on these determinationse Drainage is as important as irrigation. Inadequate drainage facilities are already resulting in water-logging and salinity in many of the oases and, consequently, crop production is greatly reduced. This pro- blem will be aggravated by a continuation of existing practices. The mission, therefore, recommnends that all areas now under irri-- gation be surveyed to determi;ne the type and extent of drainage facilities required and that adequate drainage facilities be incor- porated in all new irrigation works. Vegetables and melons for the local markets are likely to yield the highest return from the land, and the intensification and improvement of these crops would be of primary concern to the research and extension services0 Maximum incentives should be given to the growers such as premium prices for quality products.

(2) Integration of Livestock Production with Settled Agriculture. The agricultural economy is mostly pastoral; it is estimated that as many as two-thirds of the Kingdom's population may be nomadic and that only one-eighth is engaged in settled agriculture. Nevertha- less, the country does not produce enough livestock products to meet domestic demand. Livestock output is quite low, principally because heavy and prolonged grazing prevents the full development - 49 -

of grass and edible plants on the range and because of the hazards of climate and disease, The farmers engaged in settled agriculture produce little fodder and other crops thaT, could supplement the feed of livestock on the range because there is insufficient eco- nomic incentive. Bedouin, therefore, often lose a large portion of their flocks in a single season during very dry periods. Con- sequently, the mission reco,mmends that emphasis be placed in the agricultural program upon inc~entives for the settled fanrers to grow increqsing amounts of feed to supplement the range forage and that addition-il water sources be made available on the ranges. The livestock feed could be used to supplement forage resources during periods of emergency and also generally to fatten and improve the quality of animals used for milk and meat. The increased asso- ciation of the Bedouin with the settled farmer and a reliance upon a continuous source of feed should encourage the Bedouin to gra- dually take up settled agriculture. This would be particularly true if new land could be opened up to them and if they could be given sufficient incentives.

Another approach to the integration of livestock production with settled agriculture would be through mixed farming in which the rearing of livestock would assume an importance equal to that of growing crops, Some of the settled agriculturalists now maintain one or more animals for draft and food purposes and this practic7e could grow with proper encouragement and incentives.

The integration of livestock production with settled agri- culture will be a long range operation and should increase the output of both crops and livestock. It should also permit a better use of land and a higher rate of employment of the farmer through- out the year.

(3) Expansion of Cultivated Land, In addition, the area under cultiva- tion should be expanded as rapidly as scientific explorations confirm the availability of additional water and as soon as agri- cultural settlement projects can be prepared. Currently indica- tions are that increased agricultural production could permit the Kingdom in due course, to become largely self-sufficient in food and quite likely in fiber, mostly wool and cotton, It would also provide incentives for the Bedouin to take up the growing of crops and livestock in settled communities. The opening up of new land presents the Kingdom with challenging opportunities of establish- ing model farming communities based on modern agricultural know- ledge and practices.

61. The mission recommends that the Government adopt a well balanced agri- cultural program consisting of agricultural education, special projects, research, marketing and credit. Priority, however, should be given to the execution of an extensive educational program since this is the branch of the Government that extends into the rural community and determines the effect- iveness of the Government in helping the Bedouin and farmers to achieve increased production and improved rural economy. The principal agency in the agricultural education field should be the agricultural extension ser- vice which will provide advice and services to the Bedouin and the farmer. In addition, there are two other areas relating to agricultural education that merit immediate attention, as follows:

(1) The training of agricu.ltural workers for the agricultural extension ard research services and of teachers of vocational agricultural education in the public schools.

(2) The teaching of sound basic agricultural principles and practices to the children of the Bedouin and the faxmers in the 1)ublic school system.

Uncierstandably, these are matters that very closely and intimately affect both the DLinistry of Agriculture and the Ministry of Education and should be the subject of extremely close coordination and cooperation between tllem. Since the Ministry of Agriculture will need a large staff of trained agri- culturalists and since it is highly desirable that agricultural teachers have the opportunity of combining pracuical work with teaching, it is quite plausible that the training of agricultural workers and of vocational agri-- cultural teachers be under the jurisdiction of the Ministry of Agriculture. The teaching of vocational agriculture in the schools, however, is a miatter that clearly falls within the jurisdiction of the Ministry of Education but should be closely coordinated with the Ministry of Agriculture.

62, The principal elements of the agricultural program, therefore, should be: (1) Agricultural Extension Service. The agricultural extension ser- vice will be the most important organization in the Iinistry of Agriculture for many years. It would be the principal operating organization of the.iUnistry in the field as well as the orgarnza- ticn providing advice and service to the Bedouin and farmers, The two principal tasks of the agricultural extension service are:

(a) Advise and demonstrate improved agricultural practicesO, The agricultural extension worker must gain the confidence of the Bedouin and the farmers to effectively help them achieve a better way of life and this requires extension workers quali- fied by both education and experience in the field, They should be backed up by good technical units in the Ministry,1 Refresher courses on various specialties in the field of agri- culture would be of great value in the dissemination of new Imowledge and approaches to rural problems.

Advice to the farmers should aim at improving all phases of agricultural production and of processing, storing and marketing agricultural products. Special attention should be given to the improvement of those products that will yield the highest returns; this is most likely to be fruits and vege- tables in those areas that are close to larger consuming areas. - 51 -

One of the most important tools of an agricultural extension service is the frequent use of demonstrations. It is, there- fore, recormaended that the extension service be given suffi- cient facilities to demonstrate the ways and means by which agricultural production can be raised and the quality im- provedo The extension service should arrange to carry out demonstrations on the farms of cooperating farmers. This would greatly increase the scope of the a-ricultural extension service advisory work.

The welfare of the farm family can also be improved by the introduction of new household techniques which are often an incentive to increased agricultural production. Experience in many countries, including some countries in the lviiddle East, indicates that farmers became more interested in increasing their efforts in the farm enterprise when their wives learned improved household practices. Home economics, therefore, can play an important role in the improvement of the standard of living of the rural people of Saudi Arabia. The introduction of these new techniques often presents numerous difficulties but the results are more than worth the efforts involved. It is, therefore, recormmended that the Ministry of Agriculture co;mmence such a program in one or two selected communities and gradually expand the program on the basis of experience gained in these pilot areas. This program should, of course, be coordinated with the Ministries of Health and Education.

(b) Provide services to Bedouin and Farmers. The agricultural extension service should also provide services to the Bedouin and farmers, on crop disease and pest control, animal health control, and the introduction of fertilizers, improved hand- tools and animal-drawn implements.

One of the most urgently needed services in the rural economy is a sufficient number of veterinarians who could pro- vide adequate inoculaticns and treatment to prevent the tre- mendous losses occuring from time to time in various sections of the Kingdom because of diseases and pests* The veterina- rians should also provide advice and assistance in livestock breeding and the improvement of the herds. The extension service could render a most valuable service by the establish- ment of feed and fodder banks where feed produced in the settled agricultural areas could be stored for use by the Bedouin during periods of inadequate forage on the range. Simple structures could be built and operated tor the fumiga- tion of dates. Modest seed multiplication schemes could be operated to control the propagation and certification of a limited number of high yielding varieties of the major crops. Under sound technical advice, such services as these could rapidly improve the quantity and quality of fanr products, The mission strongly reco.;mends that the Ministry place major emphasis at this time on the introduction of improved hand-tools and simple animal-dmawnimplements rather than on highly mechanized, complicated and expensive far.m machinery. There are some areas in which some of the more complicated machines such as tractors, combines and threshing machines can be economically and satisfactorily utilized, particularly on a pooled arrangement basiso However, these are definitely exceptional areas. The primary need is for improved hoes: scytlhes and other hand-tools and for simple but more effective ploughs, small seeders, simple spraying and dusting equipment and other animal-drawn implementso These can be introduced with a minimum of disruption to the farmers and can be ex- ceedingly effective in achieving the objective of the agri- cultural development program. The overwhelming majority of the Saudi Arabian farmers are not yet in a position to use power equipment on their holdings primarily because of the smallness of holdings, the nature and type of products raised and the remoteness of most of the agricultural communities from reasonably priced fuel, spare parts and trained mechanics.

The views of the mission with respect to some of the areas with which the agricultural extension service will be dealing are as follows:

(a) Al Kharj. The Al Kharj project was established in 1357 (1937) as a model farm and was exceedingly well planned and laid out. The project consists of about 880 hectares in Wadi Kharj and about 850 hectares in Khafs Daghra. The principal problem facing the project is the lack of experienced management, which accounts largely for the substantial deficits being in- curred. Inadequate drainage in some parts of the project have produced an alkaline soil.

(b) Wadi Turabah. Part of Wadi Turabah is intensively cultivated by the settled population who largely grow dates. The re- maining cultivated area is devoted to closely spaced date palms and looked after by non-resident Bedouino The date gardens are usually too shaded for the interplanting of other fruit trees or vegetables and the only prospect of crop diversification is through wider spacing when date palms are replaced. There is a large natural vegetation in the wadi bed which provides good forage for livestock. 1iith the growing of fodder crops to supplement this forage, it is considered that the area could support a much larger livestock herd than at present. The installation of proper soil erosion works would permit the cultivation of short season crops after the floods recede.

(c) Taif. The area around Taif is well adapted to the production of a wide variety of fruits and vegetables which cannot be grown easily in most other parts of the country, WTater is not - 53 -

available in large quantities but the limited supply is of good quality. There is a long growinag season in the summer following the spring rains. These favorable natural condit- ions vould make this area an even more important source of fruits and vegetables if good cultural practices were follow- ed, such as the selection of better varieties, adequate spacing, the application of fertilizer, proper pruning and pest and disease control. A good profitable market for such crops as peaches, apricots, figs and vegetables could be developed, These products could be sold fresh in the nearby markets of Taif. Mecca and Jiddah and the fruits could be dried and transported throughout the Kingdom in substitution of imported fruits.

(2) Special Projects0 In order to expand and improve the area under cultivation and thereby promote the rural welfare, the Ministry of APriculture should establish an Office of Special Projects w*hich would be responsible for the engineering, operation and carrying out of special projects sponsored by the Governmentc This work should, of course, be closely coordinated with the agricultural extension service and should make full use of thcir field staffo The more important and urgent projects to be carried out after confirmation of their technical and economic feasibility and after proper project preparation are:

(a) 1Wdi Jizan Project in Tihamah al Yemen. The southwestern coastal plain has great potential for agricultural production and could be easily developed into the principal farm pro- ducing area in the country, provided a satisfactory water control system can be establishedo

The plain is divided into tidal flats, alluvial plains and wadis. The deposit of fine textured alluvium from the various wadis has confined the tidal flats to a small strip of land along the coast. Between these tidal flats and the Asir mountains is a large alluvial plain. For the most part,

this land is level or gently undulating. Some coaser soil5 gravels and cobbles are encountered as the plain beccmes steeper on the slope to the east. liumerous wadis emerging from the mountains spread out in broad open valleys in the plain. Most of the irrigated farming in this area is practic- ed in these wadis. Considerable dryland farming is carriecd out in the extensive plains. Dryland farming is a very risky enterprise, even in the southern portion of the region where rainfall is the heaviest. Reasonable harvests are rare si-nce they depend on adequate rains coming at the right timeo

Irrigation farming in the wadis is of considerably more importance. Although less erratic, irrigation farming alsc involves a great element of risk since the runoff is not well regulated. The farmers divert floods, which usually follow precipitations of any magnitude in the watershed, to the land which they have already prepared for planting. These divers- ions frequently are constructed of fine sand and silt washed down by the wadis and do not permit satisfactory regular irrigation of the whole area. The water coming down the wadis is first diverted to the lands nearest the watershed. Aftier this area has received one or more irrigations, the water is passed on to areas further down: The irregular and often torrential floods frequently obliterate these simple and unstable sand dikes, At other times, there is only enough water available to irrigate the upper section of the wadi. Upstream communities have priority over those down- stream. Communities farming on recent -wadi branches have no water rights at all0 The fields consist of small usually rectangular plots betWeen 500 to 1,00 square meters each and no drainage facilities are provided.

The crops are usually planted in July and August after the land has beEn thoroughly soaked. The main crop is sorghum, but some millet and a small amount of sesame and vegetables are also grown0 The region is an important pro- ducer of livestock, including cattle, sheep, goats, cam.els and poultry.

The Food and Agriculture Organization of the United Nations has studied the coastal plain, parti-cularly the southern part, and concluded that the first irrigation development scheme should be carried out in Wadi Jizan. The principal reasons for this choice were a catchment area of the desirable size, proximity to the town and potential harbor of Jizan, good quality soil, favorable conditions for the control of floods, and an indigenous, industrious and settled farm population accustomed to irrigation, FAO pro- poses that the Wadi Jizan pilot project be followed by similar projects in the five other major wadis.

Wadi Jizan has 23 villages with an estimated population of 42,000 inhabitants who presently cultivate less than 10,000 hectares (25,oo0 acre-s). FAO estimates that this cultivated area could be increased to more than 20,000 hectares (50,000 acres) with the installation of spate-brealcer and other water control facilities0 This could be supple- rented by irrigation from ground water which would further increase the cultivatable area to more than 25,000 hectares (about 60,000 acres),

This rroject would permit a more intensive production of crops already produced in the area and of new crops such as beans, tomatoes, bananas, oil crops, various fodder crops and cotton. Cotton proved to be a very successful crop urder comparable conditions on the southern coast of the Arabian Peninsula and, if successful in Wadi Jizan, could provide an important source of cash income. An indigenous source of cotton may also stimulate a textile industry. The conditions in Tihamah appear to be particularly adapted to the product- ion of extra-long staple cottono World market prices for this product are, at present, probably somewhat higher than may be expected in the long run, but the quantity of this commodity that Saudi Arabia would be able to put on the world market, even after the full development of the Tihamah, vnuld be too small to affect the supply of this staple or world market prices,

The FAO studies indicate that the ratio of benefits to costs of the 1Wadi Jizan project is most favorable, Lhe mission, therefore, recommends that the Government engage a firm of consulting engineers to complete the preparation of the project, including the general design of the necessary water control wyorks and the preparation of up-to-date estim- ates of cost and benefits. If this study confirms the con- clusions reached by FAOQ it is recommended that the Ministry retain the same firm of consulting engineers to prepare specifications and invite bids on an international competitive basis for the construction of the project and to supervise the carrying out and the initial operation. In this connection, the mission suggests that the Government consider the establishment of a special board for the purpose of advising on the carrying out and operation of the project, Considerat-on might be given to membership on the board from- the Ministry of Agriculture, the Ministry of Water Resources, and one or two representatives of the local area.

(b) Al Hasa, Al Hasa is the largest date growing area in the countryO, The date palms are frequently manured0 Irrigation water is obtained from free-flowing springs, much of which is wasted during the winter months. The water is often reused by flouing the water into groves at a lower elevation. This repeated use of irrigation water without purification results in an increasing salt content as it flows onto the groves at lower levels. The uncontrolled waters from the springs ofton result in over-irrigation and the wiater table is sufficiently high to be injurious to the fruits and vegetables interplant- ed among the date palms. An improved drainage system is, therefore, urgently needed and the mission recommends that this project be undertaken at the very earliest possible opportunity.

The mission also recommends that the sand dunes en- croaching on the villages and on the irrigated land be stabilized immediately. Considerable experience has been gained in Saudi Arabia and adjoining countries in the stabil- ization of sand dunes and this experience, together with good technical management and abundant local labor, should be utilized to stabilize the dunes that have destroyed sizeable investments and threaten to destroy others. This is a Froblem that should be approached jointly by the agricultural extension service and tne local communities concerned. It is far more economical to preserve the investments already made than to rebuild the substantial works that wDuld have to be abandoned.

Most of the land is owner-operatedO, The oil industry has attracted many of the young able-bodied men airay from the farms and wages are, therefore, high, However, the intro- duction of more cash crops and better farming practices and management should result in a profitable agriculture,

(c) Qatif. The Qatif oasis is one of the most important date growing regions in the country, The date palms are closely spaced and the little interplanting with other fruit trees is not very successful. Fruit thinning is not generally practiced, pruning is confined to the removal of dead leaves and manuring occurs at three-year intervals0 The dates are irrigated mainly oy artesian wells at intervals of only 3 days in the summer-and 10 days in the winter, Most of the wells are not provided with valves and the groundwater level has risen dangerously high. Large tracts of the cultivated area are already water-logged and many more are in danger of beconm ing water-logged in the near future. The combination of the high water level and the high surface evaporation has aepos- ited salt on the surface of most of the remai ning area* Some of the artesian wells are no longer flowing freely and some of the groves are suffering from drought where no pump- ing facilities are available. Many date groves have now been abandorne d

The Ministryt s drainage program is sound and should be expedited. In addition, emphasis should be placed upon the growing of cash crops.

Most of the farms in the area are operated by tenants who have in recent years had to receive higher portions of the total production because of the rising wage scale in this oil area. With proper drainage and good management, however, the prospects are quite good for commercial agriculture,

(d) Abha and Khamis Mushayt 0 Climatic conditions are good for crop production and the introduction of higher yielding varieties of various crops could increase the importance of agriculture in the area. The annual rainfall amounts to some 300 mm0 (12 inches) which is supplemented by runoff water from adjacent slopes, The cultivated area consists of a series of terraces from the top of the narrow valleys between the hills down to the plateau. Many of these terraces have been in use for hundreds of years and are well laid out The main crops are wheat, barley and sorghum but fruits and - 57 -

vegetables are also giown. A small amount of the cultivated land is irrigated from wells and the reconstruction of the dam in Wadi Abha may provide additional water for irrigation.

(e) Fish and Other Seafood. Seafood can be a much more important item in the diet of the people of Saudi Arabia than it is at present. Most of the fish and other seafood are consumed fresh in tho area in which they are caught, usually on the day of catch. Some fish is kept for short periods on ice and some fish is dried for inland sales. The canning and freezing of fish has not yet been developed.

There is considerable potential for development in the fishing industry in Saudi Arabia. Even though there are several thousand fishermen on both thG Red Sea and Persian Gullf coasts, the industry is still in the early stages of development. Fishing activities are restricted in part by the type of vessel, the gear and equipment being used, but principally by the lack of marketing facilities such as those required for preservation and transport.

Studies on fish and other seafood in the Red Sea and the Persian Gulf warrant further investigation by an independent expert in this field. It is recoinmended that the results of these studies be made available to the private sector for further development, and that the Government provide the necessary incentives to get the industry properly established. The Government should consider withdrawing the exclusive franchise given for the exploitation of the fishing industry in the territorial waters of the Red Sea which has not worked well, unless satisfactory progress is made in a reasonable period for the development of the industry in that area. Franchises carry obligations as well as privileges and should be forfeited if not implemented in the public interest.

There are a number of additional areas which might well become the basis of special projects if scientific explorations confirm present indica- tions of water potential. The more important of these areas are:

(a) Tebuk-Al Ula-Jawf-Sakakah Basin. Aside from the Tihamah al Yemen region, the most promising agricultural area in the Kingdom is the Tebuk-Al Ula-Jawf-Sakakah basin. The absence of agriculture on any substantial scale in the area would permit the Government tn plan the development and settlement of the area on a model basis in accordance with modern techniques of irrigation, drainage and agriculture. The planning, carrying out and operatign of a project of this magnitude and complexity present great obstacles and problems but also challenging opportunities in the Kingdom.

(b) Th_Q_asim The Qasim is one of the more impoirtant agricultur- al regions of Saudi Arabia and the prospects for further development appear to be very gocd. The standard of farlning in both the principal agricultural centers of Buraydah and Unayzeh is fairly high. The Qasim is the second largest date growing area in the country with one of the highest yields in the Kingdom, 'Vfheat, barley and alfalfa are grown between the date palms. Various fruits and vegetables are important pro- ducts and the region could meet, to a large extent, the fruit and vegetable demand in Riyadh, particularly with improved road co;unections. Further irrigation and drainage work should, however, await the results of the exploration activities carried out in connection with the water resources program.

(c) Al Afla.j The water potential and quality of the soils indi- cate that the cultivated area at Al Aflaj may be restored to the important agricultural center that the remains of old canals and tunnels indicate it once was. Fftrther irrigation and drainage work should, however, await the results of the exploration activities carried out in connection with the water resources programo

(d) Wadi Bishah. The agricultural area of WTadi Bishah is not very large, but it is renowned for its high quality dates, Various other fruits are interplanted in the date groves. The pros- pects appear bright for a considerable expansion of the culti- vated area if exploration confirms the availability of water currently indicated,

(e) Wadi Najran. The prospects for a substantial expansion of the cultivated area in Wadi Najran are quite good. Ihe wadi is subject to frequent floodings during the summer and early autumn. In addition, there is an ample supply of underground water. Flood control and irrigation works would permit the growing of substantial crops of dates, sorghum, wheat, alfalfa, fruit and vegetableso The wadi is in an isolated area and the marketing of produce in excess of local needs should be carefully considered in determining the extent and type of further development.

(f) Wkladi Fatima. The prospects for expanded agricultural pro- duction depend on the availability of additional water for irrigation, which appears questionable. If the supply of water permits, this area could become an important center for the production of fruits, vegetables, poultry, and hay to meet the demand in the nearby markets of Jiddah and Mecca,

() Research. Research in agriculture and animal husbandry is essen- tial to the achievement of the objective of the agricultural development program; it, however, is primarily beneficial to the long range aspects of the program rather than the short range. There is, nevertheless, some laboratory and control work which should be carried out by the research department which is of pri- mary importance to the success of the agricultural extension ser- vice in both the short and the long run. The mission recommends that research in the field of agricul- ture and horticulture be aimed in the initial stages at investi- gation of:

(a) The suitability and requirements of various crops and varie- ties to the principal producing areas;

(b) The optimum use of irrigation water;

(c) The response of various crops to fertilizers; and

(d) The merits of various crop rotations, with particular view to the integration of livestock with settled agriculture0

The mission recommends that the IMinistry of Agriculture esta- blish several experiment stations where research on these subjects can be carried out and demonstrated. These stations should be lo- cated in an area that would represent a regional type of agricul- ture and horticulture and the mission specifically recommends that one station be located in each of:

(a) The Qasim area;

(b) The Qatif region; and

(c) The Jizan region.

Consideration should also be given at a later date to the establish- ,nent of an experiment station in Tebuk if sufficient water is pro- ven in the area to warrant large-scale agricultural operations. These experiment stations should become the main centers of agri- cultural research but simplified experiments could be carried out on the demonstration farms of the agricultural extension service. This would permit testing under diverse conditions and have the advantage of permitting the research workers to come in close cc)]n- tact with the extension workers. As soon as comparative research on yields and other characteristics of different local and imported varieties has indicated that a new variety is superior in a certain region, the research department should provide sufficient quanti- ties of seed to the local agricultural extension service to start a seed multiplication scheme for dissemination to the farmers.

Crop and livestock disease and pest control, at this time, are more a matter of control than of scientific research. Therefore, the principal need is for a small laboratory that would assist the agricultural extension service specialists, such as veterinarians, in the proper identification of diseases and pests and to advise them on methods of control.

The ever-increasing market for livestock products makes re- search on the improvement of both the quality and quantity of - 60 -

livestock a matter of great importance. The long process of na- tural selection in Saudi Arabia has produced sheep and goats on the range and cattle, sheep and goats in settled agriculture of a very hardy type that is fairly resistant to adverse climatic con- ditions and inadequate fodder and forage supplies. Nevertheless, considerable improvement could be achieved by research on manage- ment practices, feeding.and breeding, including cross-breeding with imported animals, and mixed farming. A grave salinity problem is being encountered in the soil of the livestock breeding station at Madinah and the Government would be well advised. to consider transferring the station to a more suitable location in the neer future.

The improvement of Saudi Arabia's animal husbandry hinges mainly on the problem of feeding but the development of the live- stock industry is dependent to a large extent on animal health control.

Thorough investigations should be carried out on the technical and economic aspects of fattening local sheep before marketing,.

Research on agricultural machinery should be concentrated for quite some time on the adaptation and effectiveness of various simple hand-tools and animal-drawn implements0 i) Agricultural Statistics. The preparation of a sound agricultural policy and of a program to implement it requires a good agricul- tural economic and statistics organization to collect and analyze information concerning the rural sector of the economy and its relation to the remainder of the Kingdom. This organization, which should be established in the agricultural economics department of the Ministry of Agriculture, should set up the machinery to collect the necessary information and, in the meantime, prepare estimates on the more important factors in the rural economy.

() Marketing. Additional agricultural production will present new marketing problems. Three of the more pressing are those relating to the processing of livestock products, the handling and packing of dates, and the storage of grain.

There is considerable scope for improvement in all aspects of trade in livestock, and of slaughterhouses, the processing of hides and skins and the handling of by-products. For example, the animals arriving in Jiddah for slaughter or trans-shipment are usually confined in poor facilities with inadequate food, water and shade for two or three days or more, The animals have usually lost 5 to 10% in weight in shipment and lose in the Jiddah stockyard a further 10% or more. These losses substantially increase the price of meat to consumers which could easily be eliminated if adequate provisions were made to maitain the animals in good condition. Most slaughterhouses are poorly equipped and inefficiently operated. - 61 -

Cold storage facilities are insufficient. Full use is not yet being made of the by-products, Hides and skins are not well preserved and, therefore, sell at large discountso It is recommended that the Government and the municipalities work together in improving the handling and slaughtering of livestock.

Improved date harvesting, processing and packing are essential to making date cultivation more profitable, Perhaps the most im- portant aspects are fumigation of dates in the field and in the community warehouses and better packing techniques, Also, the by- products could perhaps be made a valuable source of livestock feede This is another area in which private enterprise could relieve the Government of substantial expenditures and a difficult adnrini.stra- tive task.

Thousands of tons of wheat and other grains are lost each year as the direct result of inadequate and poor storage facilities* The Government has given consideration to the construction of a grain storage silo at the port of Jiddah and another at the port of Dammam. This in principle appears to be sound, however, the mission understood that the proposal under consideration by the Government was submitted by suppliers. It is, therefore, recom- mended that the Government retain a firm of consulting engineers of international repute who are specialists in grain storage facilities to prepare a feasibility survey before proceeding with the project. If the project is recommended, the Government should then have the experts prepare the detailed design and specifications on which to invite tenders. This would ensure the Government of the most appro- priate and economical storage facilities* The Government should also give consideration to interesting private capital in this projectO

(6) Agricultural Credit. Agricultural credit is one of the big gaps in the rural economyO Farm and livestock holdings are usually quite small and the cash income derived from the meager cultivation is seldom adequate to buy more than the bare necessities of life. Bedouin and farmers need credit facilities at reasonable interest rates. The mission recommends that the Government set up an insti- tution to extend short, medium and long term credit to Bedouin and farmers for agricultural purposes. It should start on an experi- mental scale in one or two selected regions, such as the Abha areao It is also recommended that the Government secure the services of a small team from a friendly Government which already has a success- ful agricultural credit institution to advise with it on the esta- blishment and operation of such an organization. _ 62 -

VII. COWMTJGCATIONS

630 Great strides have been made in the development of transportation and communications in Saudi Arabia during the past decade. The major centers of economic activit-y are served by roads, scheduled air trans- portation and radio communications [I'Nap 2J . A railway connects Riyadh with the major cities in the east. The two deep.-ater ports of Jidc.ah on the Red Sea coast and Darmnam on the Persian Gulf are served by roads and Dammam is also served by railway. International airports are operating in both of these centers.

64. Most of the public transportation and communications facilities are maintained and operated by or for the Government. In addition private facilities have been constructed and maintained by ARAJ40C exclusively for the production and transportation of crude oil prcducts, The use o.f these private facilities, with the exception of several roads, is not available to the general public but the mission considers this arrangement sound and reasonable.

65, The Saudi Government Rai2ray, the ports of Jiddah and Daimiam and the telecommunications system were being run at the time of the mission's visit with remarkable efficiency. The Saudi Arabian Airlines has a good safety record but frequent and substantial deviation from published flight schedules prevents the airlines from providing reliable domestic and international service.

66. The mission's views on transportation and communications are based on its conclusion that existing centers of economic activity will retain their relative importance and that the development of the Kingdornts wiater resources will, in the first instance, result in substantial graoth around Jizan, Abha and in the Qasim. The development of transportation and communications should, therefore, be aimed at improving and enlarging existing facilities and-providing new connections between these areas. In plarnLing these works, howTever, account should be taken of the foliowiing:

(1) The existing transpcrtation and communications facilities are not being used to full capacity and immediate expansion beyond the works under execution is not urgently necessary.

(2) Time is thus available to prepare the feasibility and other studies necessary to a sound determination of the higher priority projects and of the best location and method and type of construction.

(3) Definitive and detailed engineering plans should not be made for overland transportation to the areas in which rapid gromtrh is expected (such as Jizan, Abha and in the Qasim) until it is de- termined that further explorations indicate substantial further development in these areas is economically feasible and sound.

67. Saudi Arabia differs from most countries in four aspects which also affect the planning of transportation and communications facilities as fo llows: _ 63 -

(1) The distances between centers of production and consumption are very great and the possibilities for economic development in the intervening regions are remote.

(2) The commercial possibilities in these centers are such that passenger and freight traffic will increase in volume but will change little in type; substantial public transportation of bulk freight, other than fuel oil, is unlikely to develop.

(3) Development of agriculture as a result of newly developed water resources will alwqays be confined to well determined and relative- ly limited areas.

(4) The favorable climatic, geological and topographic conditions permit the construction and maintenance of civil engineering works such as roads, ports and airports at relatively low cost.

68. On this basis the mission has reached the following general conclus- ions regarding the plarning for the development of transportation:

(1) The extension of the existing railwfay system is not the most efficient and economic method of linking the more important areas of the country and, therefore, should not be undertaken because, as mentioned earlier, substantial public transportation of bulk freight, other than oil, is unlikely to develop. Consequently,the reconstruction of the Hejaz railwfay or the extension of the exist- ing railway from Riyadh to Jiddah, or indeed, the construction of any other railway in the Kingdom, is not economically justified at this time.

(2) The overland transportation system should consist of a netwTork of main roads suited to low volumes of high speed traffic that would connect the main centers of economic activity and would be supplemented by secondary and feeder roads in these areas.

(3) The airlines provide lower cost transportation for the movement of passengers and certain commodities to the more remote comaunities of the Kingdom.

(4) Coastal shipping, particularly along the Red Sea coast, should be able to compete satisfactorily wqith overland transportation for the movement of agricultural proucts and the distribution of certain imported and locally produced industrial goods,

(5) All transportation and communications facilities except roads, airfields and small ports are revenue earning and, therefore, of a commercial nature. Consequently, the organizations concerned with construction, maintenance and operation should be given a maximum of freedom of decision and action and rates should be set so that revenues would cover at least operating cost, debt service, depreciation and a reasonable return on the capital investment. The preferable organizational set-up would be public corporations established along lines that wiould attract private investment0 - 64 -

(6) All public transportation and comnrunications activities should be- the responsibilit-y of tlhe tinistry of Communications. It is, therefore, reconmiended that the Department of Civil Avia- tion be transferred to the Mfinistry of Communications. Also, all port activities should be transferred to a Department of Ports and Shipping in the Ministry of Communications. The proposed autonomous railways organization should be responsible to the same Ministry,

(7) The planning, design, construction, operation and maintenance of transportation and communications facilities will require the employment of consulting engineering firms and foreign tech- nicians until sufficient numbers of Saudi Arabian personrel are trained to take over.

69. The mission's views with respect to the various sectors of commumica- tions are as follows:

(1) Roads. Progress is probably more advanced on the planning of the country's main road network than on any other government activity. The mission endorses, in principle, the objective of the three five-year programs,)which are presently being develop- ed and partly under execution, to complete the interconnection of the main centers of activity in the country with roads suit- able for relatively high speeds and, therefore, of relatively high geormtric standards. First priority is given to the inter- connection of the largest cities of the country. These high priority roads will be completed under present construction contracts with the exception of the Riyadh-Taif road. The mission considers that more importance should be attached to providing access to oases in the areas traversed in determining the layout of the Riyadh-Taif and other such roads.

The following roads are presently under construction:

Riyadh-Khurais 152 kms. Riyadh-Marat 173 kms. Arafat-Taif 60 kms. Madinah-Tebuk 740 kms.

The mission recommends that the Marat-Taif road be started as soon as the project has been prepared. It is also recommended that the prelimiinary engineering of the Taif-Abha-Jizan and the Riyadh-Qasim roads, including a feeder road from Jizan into the Mukaylah Valley, be commenced as s6on as a consulting engineering firm has been retained. lMeanwhile, it is sug,ested that con- sideration be given to repairing the most seriously damaged sections of the Riyadh-Qasim road in order to reduce the damage to produce brought into Riyadh from Qasim. - 65 -

The mission recommends a road from Taif to Abha to Jizan and a postponement of the proposed Yiecca-Jizan road, The top- ography of the terrain between Abha and Jizan will make this relatiVely short connection both difficult to construct and costly, but the mission considers that it will contribute more to the economic development of thle area and will be less expens- ive than the parallel roads of Taif--Abha and Tecca-Jizan pre- viously under consideration0 The tremendous importance of the Jizan-.Abha area is indicated in Chapter-VI and the proposed road wshich would connect it with a port, is considered indis- pensable to an achievement of the great potential of this region0 The road program as planned from time to time should be sufficiently flexible to permit the inclusion of new roads and the postponing of the construction of others in accordance with the results of the exploration of water resources or of any other major development affecting the rate of growth of an area. This may qlso be true fcr the construction of regional roads that would be desirable to give better access to the areas traversed by main roads. For example, the early improvement of the Darnaiam- Qatif road irould substantially improve the access to the agri- cul'tural produce of the Qatif oasis,

The design standards which the Lepartmen-r of Roads has set for the various classes of roads are reasonable with the exception of the width of the pavement which the mission con- siders too greato The prevailing and expected volume of traffic in the Kingdom indicates that roads with two traffic lanes are adequate. These two lanes should be relatively wide, since the roads are designed for high speed, but a width of 3.6 meters per lane or a total of 7.2 meters for the road is preferable to the 9.0 meters width used at present which is superfluous and even hazardous since it creates three narrow lanes. Experience has shown that the capacity of a 9.0 meter road is very little greater than that of a two-lane road of normal width.

The capacity of the Kingdom to construct and maintain the proposed road programs depends to a l rge extent on the capacity of the Department of Roads which at present is operating at about capacity performance0 In the absence of an adequate number of expetienced Saudi Arabian engineers, technicians and adminis- trators, any increase in capacity will depend on Vhe employment of consulting engineers and foreign specialists. The mission recomrends that the Ministry engage consulting engineers to prepare feasibility surveys, engineer and supervise the construc- tion and maintenance of its roads. In addition, it -,ill be necessary for some time to continue to employ foreign engineers to head the technical service of the department and to generally supervise the work of the consulting engineers0

The mission recommends that the Minis try of Coiiimunications re-examine its present procedure of-maintaining its roads through contractors under long term, fixed unit price contracts. - 66 -

It is questionable whether the contract system of maintenance is the most appropriate in a country like Sauidi Arabia. The most economical and best irans of maintaining the roads should be carefully studied before a se'lection is made between the contractor and direct administration system of maintenance. This is a matter that it would be well for the Ministry to get its road consultants to analyse and advise on.

The road transportation industry is in its infancy but can be expected to grow quite rapidly. The protection of the public interest will necessitate at some stage in the near future the regulation of the condition of vehicles using the roads and of rates charged by public buses and freight-carriers0 The en- forcing of legal provisions in this field, however, is quite difficult and the timing of their introduction should be delayed until the more important development matters have been satis- factorily launched and until adequate personnel have been re- cruited for this purpose,

The control of the weights and dimensions of vehicles, however, is not so difficult and can be regulated by customs officials and the regular police force, The Ministry wzould be w¢ell advised to issue as soon as possible reguolations limiting maximum dimensions, total weights and wheel and axle loads of road vehicles. This is particularly important at the beginning of the rapid expansion of the Kingdomts road system and of the trucking industry0 The habit of overloading would be difficult to overcome if it were to become well-established, and the over- loading of vehicles will ruin the newly constructed roads.. The longer the delay the more difficult it is to enforce restrictive measures. Regulations on vehicle weights and dimensions'should follow any of the international agreements in this field, such as the-Convention of Geneva in 1949. The regulations should be simple, reasonable and not unduly restrictive in order to ensure their successful implementation*

(2) Civil Aviationo Civil Aviation is administered by a new depart- ment in the Ministry of Defence which has not yet had an opportunity to prepare a detailed development program. However, the Department's program for the present budget year represents a coorrlinated effort to improve the coumtryt s domestic and inter- national air service facilities. The mission concurs in the assignment of high priority to the improvement of airports serving international and heavy domestic traffic and waishes to emphasize the importance of reliable air connections for the more isolated centers. It is suggested that a program for the improvement, strengthening and equipping of landing strips near these centers be prepared a.nd that the priority of each inivest- ment be carefully considered, The maintenance of air strips and installations in isolated locations will present special prohlems - 67 -

and the experience gained by the Saudi Government Railways in operating and maintaining isolated installations Will be useful in overcoming them. The future success of civil aviation in Saudi Arabia will depend largely on the Civil Aviation Training School to be opened in Jiddah shortly.

The mission does not ooncur, at this time, in the proposal to purchase jet aircraft for thle Saudi Arabian Airlines. There is no prospect of making the use of jet planes an economically viable operation in the foreseeable future. Also, the number of aircraft needed to provide reliable and-frequent service would be more costly than could-be prudently justified in present circumstances. Instead, the mission strongly recommends that the Airlines replace and expand their present fleet wyith units which are to a large ex-tent familiar to their personnel.. The proposal under consideration by the management of the Saudi Arabian Airlines to purchase several second-hand DC-6B aircraft is sound and reasonable. This type of aircraft wouild permit a great improvement of service on the Saudi Arabian Airline's internatior,al and principal domestic routes and would free some of the Airline:s aircraft for the improvement of service on the other internal routeso

The principal objective of the Airlines should be the further improvement of service, both for passengers and freight, on domestic routes. The improvement of grolund facilities is most important and urgent in fulfilling this objective0

ThM Airlinets aircraft are well operated and maintained. However, considerable iVrovement needis to be made in the administrative services, such as the control of flight schedules, the issuance of tickets, handling the public and passenger service aloft. The mission, therefore, recomrmends the employment of technicians to assist in raising the adminis- trative efficiency to that of aircraft operation and mainten- ance,

The mission heartily endorses the proposal of the Depart- ment of Civil Aviation to establish the Saudi Arabian Airlines as a corporate entity along lines that would attract private capital, The corporation may be launched with the Government holding most of the shares but operated so that a majority of the shares would eventually pass into private hands. The pub- lic could be fully protected through reasonable governmental regulation of a private airline as is done in other countries and as can be done in the case of other public utilities such as ports and power 0

(3) Ports and Coastal Shipping0 The Saudi Arabian coastlines along both the Red Sea and the Persian Gulf are favorable for lighterage and coastal shipping, Topographic conditions at certain points along the Red Sea coast are particularly 68 - favorable for small deep-water ports at a low cost. However, the economic activity and potential in the hinterland do not justify the construction of deep-water ports at this time with the exception of Dammam and Jiddah. TIuch of the trade destined for the Bimaller ports could either be lightered from ships on roadsteads or trans-shipped at the deep sea ports to coastal vessels. Coastal shipping should be stimulated as much as possible, particularly along the Red Sea coast winere inhabited areas are far apart, This 'Tould provide a more economical means of transporting most commodities than a road system. The landings and other facilities at these small ports would, of course, have to he improved,

The mission recommends the employment of a firm of consulting engineers specialized inwport appraisal, construction and opera- tions-to survey the need, scope and cost of facilities at each port, Such a study would include an evaluation of the economic potential of the hinterlands in terms of traffic through the port, an investigation of topography and soil conditions, the preparation of preliminary designs and cost estimates and the determination of the priority in the execution of each of the ports. This firm should also be retained to prepare the detailed engineering and to supervise the construction of additional port facilities which the Government considers economically justified, The proposed study and evaluation would be much more comprehensive, with regard to both the economic and the engineering aspects, than the sketch plans and memoranda prepared by the several experts employed by various government agencies concerned with the development and operation of the countryts ports. Fortunate- ly, the time element is such that the Government does not have to make a decision on the construction of any specific port until the proper analysis and appraisal can be made, and the mission strongly recommends that no decision be taken on the expansion of such ports as Jizan and Yanbu until the engineering consultants have concluded their report.

The expansion of the port of Dammam is under way, It will have a much greater capacity than the present one and further expansion will not be required for a very long time, The o rganization for operating tlhe new facilitie s will have to be substantially different from the existing port organiza-tion since road vehicles will have access to the new berths and the small craft basin, and the customs warehouses will be located directly behind the quay walls. The customs area on shore will have to be maintained to handle traffic from the existing pier which will remain restricted to rail traffic and thereby complicate opera- tions, Consequently, the mission recommends a careful examination of thie organization and procedures of the future operation of the port, in light of the successful operation of the present port, and that the necessary changes be introduced at the earliest opportunity. - 69 -

An increase in the number of deep-water berths and the quay length for small craft at Jiddah will become necessary if the volume of traffic resumes the rate of growth attained during the first part of the past decade8 The timing of this expansion will depend on the growth of traffic through the port and on the division and relative economic advantages between the volume of goods unloaded over the pier and unloaded by lighter. The sketch plans prepared by experts employed by several government agencies indicated that vabious technical solutions for the expansion of the port are possible, and that it wlould not be too difficult to d-evelop a master plan which could be carried out, in stages in accordance with increased traffic, However, the mission recommends that no decision be talken regarding the type or any other aspect of the expansion until the port consultinig firm has concluded its evaluation. In the case of Jiddah, this evaluation should include elaborate studies of the future traffic through the port, the present and future methods of operating the port, the soil conditions and the various possible solutions in layout construction which would satisfy marine and port requirements.

Unlike the situation in other fields of transportation, the responsibilities regarding the operation of the ports and supervision over the movement of ships to and from these ports are not well astablished and differ from port to port. As a result, no integrated policy regarding the operation and develop- ment of ports and coastal shipping has been established, Con- sequently, the mission recommends that the Ministry of Communi- cations, which is now responsible for the port of Dammam and for other transportation actinities that require close coordination with the ports, be assigned the responsibility for formulating and implementing the GovernmentIs policy with respect to develop- ment and operation of all ports in the Kingdom. It is also recommended that special consideration be given to the establish- ment of port authorities in Jiddah and Dammam as set forth in Chapter IV.

(4) Railwayso No major investments in the improvement or expansion of the railways of the Kingdom are justified in the near future, with the possible exception of modest expenditures for neiT rolling stock. The mission fully concurs with the present policy of the Government to postpone indefinitely any extension of the present railroad and the reconstruction of the Hejaz railway0 The growing commercial activity in Riyadh and in the agricultur- al and oil-producing areas served by the Railrays will increase the traffic between these areas. The completion of the highwIj between the east coast and Riyadh this year will divert a large part of the freight and passenger traffic to trucks and buses, but the-railways should still enjoy a sizeable volume of business, particularly with respect to bulk items and heavy equipment0 The railroad is being well operated and maintained, despite restrictive governmental administrative procedures, and - 70 - should require little, if any, additional equipment in the near future. Freight and passenger traffic can be handled much more economically by roads than bv rail and consequently no further extension of the railways, including the reconstruction of the Hejaz railway, is prudently justified in present circumstances.

Telecommunications, The recently corstructed telecommunications installations should provide adequate service for some years to come between the major centers within Saudi Arabia and with the .outside world, with the exception of the connection between Riyadh and Jiddah wihere the mate of growth is very rapid. The mission concurs in the plans of the Directorate General of the Department of Post, Telegraph and Telephone to concentrate development efforts on the automation and expansion of the local telephone networks in the larger cities. Further development of the telecommunications network is sound but the pace of develop- ment shoould be related to the prospects for a reasonable return on the proposed investment and to the availability of funds for this purpose. Substantial investments in telecommunications at this time would not be of the highest priority but modest invest- ments over the next few years could be justified.

The mission also recommends th-at the Government corEider obtaining the advice of a team of experts on the merits of the various plans that have been invited from telephone equipment manufacturers for automatic telephone installations in a number of the larger cities. It is suggested that the Government con- tact the Governmant of a friendly country to make available a team of its own telecommunications experts who could give un- biased and impartial advice on the economic feasibility of the installations and on the amount and type of equipment that should be installed, - 71 -

VIII. POQER AND INDUSTRY

70. The Government of Saudi Arabia has left the development of power and industry to the private sector and this position is sound. The private sector has ample capital resources and recently has demonstrated an increasing interest in making substantial investments in the develop- ment of poaer and indus try in the Kingdom. Investment in this field by the private sector will relieve the Governmentts buoget of a potential drain on its resources and would also preclude it from further spreading its limited number of qualified administrators and technicians,

71. The role cf the Government, therefore, should be to stimulate and encourage private enterprise to provide the power and industries consider- ed appropriate to the needs of the Kingdom and to generally regulate power and other enterprises to which monopolistic franchises are given in order to ensure that the public will get adequate service at reasonable rates and prices.

72, Power, Electric power service is available in the major cities of the Kingdom and used principally by residential and commercial consumers; industrial establishments generally provide their own power. The power companies are relatively new3 several companies are operating in certain markets that are appropriate for only one, and the standards of performance are rather low and service is generally unreliablee Thq installed capacity under construction is in some instances insufficient to meet- po-tential demand. The distribution facilities are usually inadequate, maintenance is poor and trained personnel are insufficient to carry on necessary operations. Po.wyer rates have recently been lowiered by Crovernment regulation but are still among the highest in the world.

73. The mission recommends that a well defined policy be formulated which would encourage the expansion of pmzer facilities to meet the growing needs of the Kingdom and would ensure adequate and uninterrupted service to' consumers, including industrial as (iell as residential and commercial, at reasonable rates. For this purposey it is recommended that the Government retain an experienced firm of consulting engineers to review the power situation in Saudi Arabia and to advise the Government on the forTmlation of its power development policy. The terms of reference of such consultants should. include a statement of the objectives of the Goverrmnnt and provide for recommendations and technical assistance on: - 72 - (1) General conditions of the supply of povrer;

(2) Standardization of voltage and frequency;

(3) Standardization of accounting practices;

(4) Basic regulations for the determination of rates, which shouild allow an equitable retlurn on investment and a retention of earnings sufficient to provide a reasonable contribution to the cost of expansion;

(5) The standard provisions which should be included in concession agreements;

(6) The provisions of a national power code; and

(7) The organization and staff that is necessary to implement the policy recommendeds

7h4 N-atural gas, obtained as a by-product of the oil industry, is both abundant and cheap in the Eastern Province, Some use is currently being made of it for industrial purposes and undoubtedly increasing use will be made of it for commercial and residential purposes as well. The distribu- tion and transmission of natural gas is another activity suitable for private enterprise that, like powzer, falls into the category of a public utility, Consequently, it is recommended that the consulting firm retained to ourvey the power situation also advise the Government with respect to its policy on the transmission, distribution

75. Industar, Industrial development in Saudi .irabia is in its infancy. Most of Saudi Arabiats building materials, nearly all of her chemicals and pharmaceutical products, most of her manufactured consumer goods and all capital goods are, of course, purchased abroad. There are only a few hundred manufacturing establishments in the Kingdom and, with few exceptions, these are small units with relatively simple technical processes0 Some of the new industries are finding it quite difficult to compete with imported products.

76. The prospects in the near future are reasonably good for a relatively large percentage increase in the present induistrial production but are definitely limited, in terms of actual production, pending further develor- mnts and changes in the economic situation. The principal factors which are impeding rapid industrial expansion ar'e the scarcity of internally produced raw materials, the lack of technical skills, the relatively small and scattered home market and the high wage level combined with low labor p roductivity.

77. The possibilities of gradual expansion are greatest wuhere indigenous raw materials are available and where transport costs of imported goods are proportionately very high. Such industries would include those related to the processing of crops (such as date fumigation and wheat milling); slaughterhouses, including the freezing and preserving of meat; leather - 73 -

tanning and leather products; fish canning, drying and freezing; salt refining, and building materials, including brick, cement and cement block 3 A further exploration of mineral. deposits may also indicate the possibil- ity of extraction and processing industries.

78e The developnent of a petrochemical industry in Saudi. Arabia is a special problem that should be handled entirely separate and apart from general industrial development and in much the same way that the oil industry is handled. Petrochemicals require a huge pl3.nt with a high rate of productivity, a diverse range of products that necessitates a wide market to sustain, and a large and experienced management and staff, The development of petrochemicals in Saudi Arabia should, therefore, be ap- proached through association with a successful petrochemicals manufacturers, The possibility of such an association should be fully explored and arrange- ments consummated as soon as satisfactory terms can be agreed. Most or a:LI of the concessions granted local entrepreneurs would likely have to be ex- tended to such firm, or any other foreign firm coming into association with local entrepreneurs, Also, and in general, special consideration should be given to the tax rate on foreign profits which at present is quite high, particularly in the upper brackets, and to making the Investment of Foreign Capital Ordinance less restrictivee.,

79. The Government's role should be to promote and encourage the develop- ment of private industry without undue interference and paternalism. Primary attention should be given to creating an appropriate industrial investment environment. A continuation of the Government's present policy of granting exemptions of import duties on machinery and equipment for newt or expanding industries and of making tax concessions to new industries would cohtribute to the creation of such an investment environment0 In addition, consideration should be given to the introduction of a standard company code and arrangements for the registration of public companies that would give reasonable protection to the public in investing in such companies and would provide a uniform basis for the handling of corporate affairs. The granting of temporary protection, in the form of import duties on competing prcducts from abroad or related methods, is sound and is in the public interest where the type of enterprise gives reasonable prospects of eventually becoming competitive. In the present stage of industrial development in Saudi Arabia, it would also appear most appropriate for the Government to provide potential investors with pre- liminary feasibility surveys on specific industries which they could con- sider and followy up on; an intensive study of the Kingdom's industrial potentialities does not appear necessary at this time.

80. The Government should refrain from undue regulation of industry, or substituting its judgment for decisions that should be taken by the investors, or otherwise taking an unduly paternalistic attitude. Private inivestors will inevitably make some decisions which are uneconomic and which may, prima facie, aprear to be unnecessary duplication or economically undesirable, However, investors risking their own resources are usually more'apt to make sound investments than are Government bureaucracies, Alsos private enterprise thrives on competition and the public thereby berefits, - 74 -

810 The Governm.ent has granted a number of monopolistic franchises to private entrepreneurs for specific undertakings that are of an industrial nature0 The mission understands that these franchises do not adequately protect the general public inasmuch as they do not ensure adequate services at reasonable prices. Also, in some instances, they do not require the concessionaire to diligently exploit the situation for which the concess- ion has been granted- Consequently, it is recommended that the Government carefully reconsider the monopolistic concessions which have been granted w--ith a view to cancelling or amending them in such a way as to adequately protect the public's interest, It is also recommended that the Government refrain from granting further monopolistic concenssions for businesses other than public utilities and mining.

82, The mission recommends that the Ministry of Commerce engage one, or possibly two, persons with broad experience in advising Governments on the formulation and implementation of a policy that would promote and encourage the establishment of private industry and the rendering of general techni- cal assistance to such industry, It is also recommended tnat the Govern- ment engage competent consulting firms to undertakce preliminary- feasibilitYr surveys from time to time on specific industries that appear to have merit,

83. The proposal of an industrial development bank is premature at this time but should be reconsidered from time to time in light of changing circumstances. - 75 -

APPENDIX: AGRICULTURAL PRODUCTION, fIMPORTS AND EXPORTS

At present there are only very few data available on agricultural pro- duction in Saudi Arabia, and on the volume and value of imports and exports of food and agricultural productso The Government of Saudi Arabia however is eadeavoring the improve its statistical services and the collection of data., Therefore all estimates on cultivated areas and production can only be considered as rough approximations. Also, statistics on import and ex- port are usually incomplete.

Area.

Only an estimated 12% of the population of Saudi Arabia consists of settled farmers, as against sorme 65% Bedouin and semi-nomads.

According to the Food and Agriculture Organization Production Yearbook of 1958, an area of 210,000 hectares of the country is arable land or land under tree crops, while some 93 million hectares are in use for grazing purposes; 400,000 hectares are under forest and the remaining area, esti- mated at approximately 67 million hectares is wasteland (estimates for 1952). Recent photographs of the country indicate that the area under cultivation may be as much as 300,000 hectares.

About 80% of the land cultivated by s.edentary cultivators is irrigable; the remaining 20%, mainly in the southern Asir mountains, is rainfed. An estimated 70% of the irrigated area receives its water from pits and wells from which the water is lifted by pumps or animal power. Around 10% of the irrigated area gets its water supply from springs, and approximately 20% is supplied writh occasional flood water which is directed by means of earthen diversion dams into the bordered fields.

Crops.

The date palra is one of the most imnportant crops of the country. Al- though in the last 15 years dates have been replaced to a large extent in the diet of the population by rice, meat and various other often imported products, the date pala~is still one of the major sources of agricultural wealth in most agricultural regions, with the exception of the Asir and the adjacent Tihamah coastal plain. The approximate distribution of date palms by districts of the country and their production is as follows (FAO Report No. 31): - 76 -

Annual Production Number of Palms in thousand tons,

Al Hasa 1,600,000 30 - 38 Qatif 1,000,000 24 - 30 Jebrin 300,°000 4 - 6 Qasim 1,500,000 28 - 35 Riyadh and Barliyah 700,000 13 - 17 Al Kharj 300,000 5 - 7 Al Aflaj 100,000 2 - 3 Munfahad, Jabel Shammar 100o000 6 - 10 Madinah 7'50°0 13 - 20 Wadi Yanbu and W4adi El-Safra 350,000 3 - 4 Wadi Turabah 2009000 1,75 - 2 lAladi Bishah 400,000 5 - 7 Wadi Najran 500,000 4 - 6 Wadi Fatima, Khurma, , Khaybar 800,000 6 - 8 o,600,000

This makes Saudi Arabia the fourth in importance among date producing coun- tries in the world, after Iraq, the Egyptian region of the United Arab Republic and Iran.

A detailed study of the date crop in the Eastern Province by the Asso- ciated Consulting Engineers, Beirut, mentions that the present annual pro- duction in the two most important date areas, Al Hasa and Qatif, should be estimated at respectively 32,000 tons and 11,000 tons, excluding the quantity consumed as rutab. The yield per palm, according to this study, averages 60 lbs. in Al Hasa and only 25 lbs. in Qatif. Both values apply to gardens considered by local standards as "healthy" and during normal climatic con- ditions.

Other crops of significance are wheat, barley, sorghum, millet, corn, various fruits and vegetables and alfalfa.

According to data supplies by the Linistry of Agriculture, production figures for wheat and barley in 1376 and 1377 were as follows:

1376 (1956/57) 1377 (1957/58)

Production Area under Production Area under in metric Cultivation in metric Cultivation tons in acres tons in acres

Wheat 37,215 106,328 44,000 110,000 Barley 23,033 57,582 27,000 60,000

The areas cultivated during these years with fruits and vegetables amounted to respectively 12,000 acres and 7,000 acres in 1376 and 13,500 acres and 8,000 acres in 1377. Fruit trees include oranges, lemons and tangerines, pomegranates, bananas, mangos, guavas, papayas, figs and olives, some grapes, apricots, peaches, apples and pears. Of the vegetables, tomatoes, cucumbers, squash, pumpkins, watermelons, onions, eggplants, okra - 77 -

(ladyls fingers), cauliflower, lettuce, cabbage, beans, carrots, radish, potatoes and sweet potatoes, turnips and peppers should be mentioned.

The main fodder crop is alfalfa, which is widely grown in most oasesc Probably some 100,000 acres are cultivated with this crop,

Sesame and lentils are of importance in the South Tihamah region,, Lentils are spread over other areas as well. According to the Mlinistry of Agriculture, production figures are as follows:

1376 (1956/57) 1377 (1957/58)

Production Area under Production Area under in metric Cultivation in metric Cultivation tons in acres tons in acres

Sesame 1,1 4,416 130 ,500 Lentils 323 1,615 308 1,h00

The cultivation of coffee is mainly restricted to Jebal Fayfa and Bani lMalik in the southern Asir. The production of coffee is estimated at some 150 metric tons per year.

Livestock.

Livestock is the predominant source of wealth in the rural economy. According to FAO statistics for 1950/51, there are some 3,600,000 sheep, 1,900,000 goats, 60,000 cattle and 20,000 donkeys; the number of camels is estimated at approximately 265,000, excluding those owned by the nomadic tribes. The number of horses has been considerably reduced in the last 10-15 years, and may be estimated now at 3,000. Estimates of poultry are not available. Practically every farmler has a small number of chickens* They are seldom adequately fed, but produce reasonably well on foraging near the farm house0 A small number of poultry farms has recently been established for instance in Al Kharj, El Khobar and Dammam.

Fishing.

The fishing industry is in its infancy. According to the FAQ Yearbook of Fishery Statistics, 1958, Saudi Arabia's catch in 1953 both in the Red Sea and the Persian Gulf amounted to 4X000 metric tons.

Imports.

Saudi Arabia is heavily dependent on imports of foodstuffs to meet domestic requirements* During the years 1373 to 1378, the following food- stuffs and agricultural products were imported (Source: Saudi Arabian Customs Report): - 78 -

(Millions of Saudi Riyals)

1373 1374 1375 1376 1377 13 78 (l-S>g7'Q> (19-75) (1-9776) (1795777) (1,7778) (19-79) Live animals, 4.6 3,2 14ol 196 lBoO n.a, chiefly for food M'eat and meat 6.6 102 6o8 8Q6 9.2 n.a, preparations W.theat 5,L 7.5 7.6 26,1L 9.3 13.6 Maize 2-l C,4 0,8 5.3 1,2 noao Rice 38r2 28,2 33n3 49,0 39%9 n.aa AWheat flour 13c9 13.o3 11D4 54.5 15.9 16,8 Sugar 12s,6 16,2 16,2 28,9 31.3 n,ao Coffee 10,5 14.2 11.7 20.3 16.8 n.a. Tea 7,,0 13.7 15.5 12.3 10,3 n.a. Tobacco 8,5 7,2 7,5 8.7 10.0 naa For 1375 (1955/56) the following volume datja are available (again from Customs Reports):

(In metric tons)

Rice 844 660 Wheat 23;495 Barley 16,280 Maize 2,677 Millet -227 Flour 36; 926 Sugar 36,105

The import of live animals consists mainly of sheep (in 1375 217,500 sheep to a value of SR 13.9 million ($3 million). They came mainly from , and Somaliland. The import from Iran, although much smaller than from those African countries, is also of significance.

Imports of fruit and vegetables have greatly increased in the last 10 years reflecting the rise in incomes and a substantial change in food habits. In an FAO study on marketing of fruit and vegetables in the Persian Gulf area, Saudi Arabia's imports of fresh fruits and vegetables and dried fruits were accounted for in the following way: (In metric tons)

Average 1369/70-1372/73 1373/74 1374/75 1375/76 1376/77 (1950/53 (1954) (1955) (1956) (1957) Fresh fruit 1/ 2,349 4,980 4,586 10,507 11,128 Vegetables £/ 2,918 6,850 7 677 7 946 12,832 Total: 5,267 12,2630 1B423 23,90 Dried fruit 2/ 5,293 8,755 9.,206 8,250 13,945 - 79 -

g/ Mainly oranges, tangerines, lemons, grapefruit, limes, apples, pears, quinces, grapes, bananas, melons, apricots and peaches,

/ Mainly potatoes, onions, aarlic, tomatoes, cucuwbers, cauliflowers.

y/ Mainly dates, raisins, currants, figs, apricots and peaches.

These inmpoIrts cormie mainly from the Lebanon, Iraq, Jordan, and the United Arab Republic (Egypt), Iran and Ethiopia, but as far as fruits are concerned also from far away countries such as Greece, Italy and Solth Africa. Imports reach the country mainly by boat through Jiddah (with final destinations Jiddah, Mecca, Taif,iladinah and even Riy-dh), by truck through Turaif on the Trans-Arabian Pipeline in the north (with final destinations the various places in thie Eastern Province and atiyadh) and since recent times by plane thirough Dhahran, Demand for high quality fruits and vegetables has been stimulated by AP-AIVO ARAMCOts mwn share in the consumption of imported fr.iits and vegetables is relatively small, and could probably be satisfied by the production of an irrigated area not bigger than 150 hectares (see UtTRA, Quarterly Bulletin of Economic Development, No.12: Reconnaissance Survey of the Marketing of Fruits and Vegetables in the Arab Middle East, 1956).

Exports

The export of agricult-aral products from Saudi Arabia is of no significance. - 80-

SAUDI ARABIA

Table 1. ANNUAL PFRODUCTION OF CRFUDE OIL

(m{llicns of barrels) Year Arabian Gregorian Aramco Getty Oil Co. Total

1357/58 1938 0.5 - 0.5 1358/59 1939 3.9 - 3.9 1359/60 1940 5.1 _ 5.1 1300/61 1941 4.3 14.3 1361/62 1942 4.5 14.5

1362/63 1943 4.9 - 4.9 1363/64 1944 7.8 - 7.8 1364/65 1945 21.3 - 21e3 1365/66 1946 59.9 - 59,9 1366/67 1947 89.9 - 8909

1367/68 1948 142.9 - 142.9 1368/69 1949 174.0 - 174.0 1369/70 1950 199.5 - 199.5 1370/71 1951 278.0 - 278,0 1371/72 1952 301*9 - 301.9

1372/73 1953 308.3 - 308.3 1373/74 1954 347.8 3.0 350.8 1374/75 1955 352.2 4.4 356,6 1375/76 1956 360.9 5.8 366.7 1376/77 1957 362.1 11..6 373.7

1377/78 1958 370.5 14.7 385X2 1378/79 1959 399.8 21.2 42100 - 81 -

SAUDI AkABIA

Table 2e, OIL RE TJTElUES BY SOURCE

(millions of U.eSa dollars)

Arabian Year Aranco Getty Oil Coo Oil Co. Total

Arabian Gregorian 1358/1359 1939 3.2 3.2

1365/1366 19h6 10.4 -- 104

1369/1370 1950 56.7 -- 56.7 -1370/1371 1951 113e6 -- 113.6 1371/1372 1952 210.7 - 210.7 1372/1373 1953 169.6 -- 169.6 1D73/1374 1954 234.3 l.5 - 235.8

1374t/1375 1955 336.7 2.6 - 339.3 1375/1376 1956 286.3 3°4 - 289.7 1376/1377 1957 265.9 9.8 - 295.7 1377/1378 1958 - 286.7 10.2 _ 296 9 1378/,1379 1959- 94.02 12.0 2 2- 296

I/ Provisional. - 82

SATDI ARIABIA

Table 3: CRUDE OIL REFIiNED AT RAS TANURA

(millions of barrels)

Year Amount

Arabian Gregorian

1364/1365 1945 3 1365/1366 1946 29 1366/1367 1947 39 1367/1368 1948 44 1368/1369 1949 46

1369/1370 1950 38 1370/1371 1951 5& 1371/1372 1952 62 1372/1373 1953 74 1373/1374 1954 80

1374/1375 1955 74 1375/1376 1956 73 1376/1377 1957 70 1377/1378 1956 61

1/ Refinery reached full operation in December 1945.

NOTE: The capacity of Ras Tanura Refinery is 240,000 barrels per day. SAUDI ARABIA

Table 4. COWgTIIIPTTON C' pg'TROLLUN PRODUCTS INT SAUDI ARABIA

(thousands of barrels)

Arabian Year 1369/70 1370/71 1371/72 1372/73 1373/74 1374/75 1375/76 1376/77 1377/78

Gregorian Year 1950 1951 1952 1953 1954 1955 1956 1957 1958

Gasoline 386 502 672 811 974 1,114 1,384 1,481 1,651

Diesel fuel 131 181 270 361 430 510 632 678 812

Kerosene 23 51 109 155 193 253 309 368 423

Asphalt 1 36 34 102 96 138 128 221 73

Liquified gas - - 3 8 12 12 28 21 28

Others 12 12 27 28 45 69 134 267 215

Total 553 782 1,115 1,465 1,750 2,096 2;615 3,036 3,202 - 84 -

SAUDI ARABIA

Table 5. PETROLEU11 AND Dl4PORTS

Oil Production Government (millions of Direct Oil Year barrels) Revenues Imports_ Arabian Gregorian (millions of (mLillions of U.S.dollars) U.S,dollars)

1357/58 1938 0.5 12o3

1367/68 1948 142,9 40-2/ 116.0 (50)_/ 1372/73 1953 308.3 169.6 156.6 1374/75 1955 356.6 339.3 196.1 (222)3/

1375/76 1956 366.7 289.7 225.3 (286)W

1376/77 1957 373.7 295.7 231,6 (23h)J/ 1377/78 1958 385.2 296.9 217.3 (257)3/

1/ Source: Direction of International Trade. Derived from trade returns of partner countries.

2/ Estimate: Govermnent oil income in 1950, when oil production amounted to almost 200 million barrels amounting to $56.7 million.

3/ The figures between brackets are the dollar equivalents of imports according to Saudi custoras figures for the years 1368, 1375, 1376, 1377, and 1378 A.H. respectively. - 85 - SAUDI ARABIA

Table 6: DJTECTIO:C. OF EXPOMTS (millions of U.S.. dollars)

Arabian Year 1357/58 1367/68 1374/75 1375/76 1376/77 1377/78 Gregorian Year 1938 1948 1955 1956 1957 1958

North America .7 16.1 66.3 101.9 77.2 142.9 of which United States .7 16.1 59.2 76.6 41.0 72.8 Canada 7.1 25.3 35.7 7001

South America 7.4 18.6 20.3 21.0 21,0 of which Argentina 704 1.9 Brazil 1L.4 18.5 18.3 18.5 Uruguay 4.2 1.8 .8

TWestern Europe .7 121.8 318.7 375.1 494.1 437.2 of which United Kingdom .1 21.4 8.8 14.1 i5.5 20.9 B1lgium, Lux. 1.6 6.9 19D9 18.4 18C2 France 48.6 63.7 64.3 6L,3 92.9 Germany Fed,. Rep. .1 61.5 73.9 6149 67.9 Italy 214.3 87.1 106.9 209.8 119.6 Wetherlands .1 2.1 7.0 1.7.6 22.0 Spain 8.6 52.2 47.2 68.3 66.5

Eastern Europe .1 .7 - - 1.5 - Middle East .7 2.7 37.2 39.9 49.5 38.5 of which Egypt .7 1.1 15.1 11.3 17.2 8,5 Syria, UAR 6.8 10.2 8.6 5.3

Other Africa - 27.1 40.6 36.2 21.2 19.3 of which Union South Africa - 17.3 35.1 31.3 11.3 13.3

Other Asia .4 4.7 162.0 210.4 239.5 198.1 of which .2 3.4 31.3 47.1 29.L 41r3 Japan .1 - 97.7 138.3 190.9 144.8

Oceania - 18.5 13.5 13.2 9.3 12.8

TOTAL 10.0 210.2 658.6 797.7 913.3 867.3

Source: Direction of International Trade (derived fron the trade returns of partner countries). - 86 - SAUDI ARABIA

Table 7: COiVOSITION OF IMPORTS

(millions of Saudi riyals)

Arabian Year 1374 1375 13761/ 1377 1378 -~(u3~ t~r ^ (Aug 20 ,'$- (Aug 8', -(- Jy 27 i57- (July i6i-$58- Gregorian Year Aug 19, 55) Aug 7,156) July 27, t57) July 17, 58) July 8, 59)

Total imports 597 83h 1,073 878 965 of which

Foodstuffs, etc., 177 201 331 261 317 of which animals & meat 15 21 28 27 n.a. wheat 8 8 16 9 14 wheat flour 13 11 55 16 17 rice 28 33 49 40 n.a. tea and coffee 28 27 33 49 n,a. sugar 16 16 29 31 n.a. tobazco and 7 8 9 10 n.a. to)Lcco products

Buflding Materials ho 58 63 68 652/ of which wood, timber, etc. 19 23 26 25 n.a. cer .:at 21 35 36 43 n.a.

Tex;iles & Clothing 71 98 110 111 117

Machinery and "'ransport equipment 174 208 255 184 256 of which cars (incl. buses & 100 104 62 52 n.a. ambulances) mar-hinery (excl. agr. 12 10 21 15 n.a, machinery) agricultural 4 7 - 3 n.a, machinery trucks & tractors 3 4 5 2 n.a.

Chemical products 3Q0/ 352/ 46 36 57 of which fertilizers - - 1.0 0.3 n,a,

Yiscellaneous 105 234 268 218 153

1/ Customs statistics for the year 1376 AH are reported to be rather uinreliable; 1376 was the base year on which subsequent allocations of import licences were calculated.

2/ Estimates.

Source: Ministry of Finance, Director General of Customs, . - 87 - SAUDI ARABIA

Table 8. SOURCE OF DIFPOP.TS.

(million's of U.So dollars)

Arabian Year 1357/58 1367/68 1374/75 1375/76 1376/77 1377/78

Gregorian Year 1938 1948 1955 1956 1957 1958

North America 4.1 83.9 73.3 79*5 71.8 60.8 of which United States 4.1 83.9 71.8 76.6 68.9 58.6

South America - .8 - - - - of which Brazil - .8 - - -

Western Europe .8 9.7 68.4 85.8 86.7 87.9 wt which United Kingdom .4 6.6 22.1 25.5 21.3 22.5 Cermany F.R. .1 11.0 15.5 22.2 21,0 Italy .1 .5 6.5 11.1 9eO 12.4 1N½therlands .2 .2 6.7 10.8 804 9.6 S-witzerland .1 1.0 7.4 2.9 5.3 3.1

.astern Europe - .6 1.1 1.5 1.9 .5

IPiddle East 1.2 14.2 21.5 27.3 36.1 3401 Egypt .7 2.8 6.2 5.2 9.7 9.2 Syria, UAR - - 3.0 5.4 6.2 7.0

Other Africa .1 .3 .3 .4 .7 .6 Other Asia 5.8 6.4 29.6 28.7 32.8 31.1 of which India 2.7 2.7 11.2 11.2 11.2 8.5 Japan 1.4 - 6.6 8.1 8.6 15.4

Oceania - - 1.8 2.0 1.5 2.2

TOTAL 12.0 116.0 196.o 225,2 231.6 217.2

(50)1/ (222)%/ (286)1/ (234)1/ ( 2 57 )j

1/ The dollar equivalents of total imports according to Saudi customs figures in the years 1368, 1375, 1377 and 1378 A.H. respectively, roughly coinciding with 1948/492 1955/56, 1956/57, 1957/58 and 1958/59 respectively.

Source: Direction of International Trade (derived from the trade returns of partner countries. - 88 - SAUDI ARABIA

Table 9. BUDGETS FOR 1378/1379 A-I AID 1379/1380

(millions of Saudi riyals)

Arabian Year 1378/79 1379/80

Gregorian Year Jan.11, 1959 to Dec.30, 1959 Dec.31,1959 to Dec.18,1960 Revenues % Oil Royalties and Income Tax 1,145 84 1,382 87 Custom duties 120 9 120 8 Others 1/ 90 7 77 5 - TM 579 IM

Expenditures Royal family, royal cabinet & bodyguard 252 18.5 267 16.9 Council of ministers 7 0.5 9 o.6 Ministry of Defense!/ & National Guards 251 18,5 252 16.0 Ministry of Foreign Affairs 19 1.4 28 1.8 Ministry of Interior 90 6.6 103 6.6 Ministry of Education 118 8.7 130 8.2 TIVi1Lstry of Cormunications2/ 24 1.8 8 0.5 Mini3try of Agriculture 20 1.5 23 1.5 Ministry of Finance & National Economy 39 2.9 53 3.4 Miristry of Health 60 4.4 55 3.5 Miinrstry of Commerce 3 0.2 4 0.3 Juclni iaries 18 1.3 18 1.2 Religious organizations, muezzins, etc. 23 1.7 23 1.5 Emirates of Provinces 20 1.5 21 1.3 Saudi Airways, Railways, and PIT 58 4.4 48 3.0 New projects & extension of holy mosques 55 4.1 110 7.0 Other expenditures 130 10.2 112 7.0 Cost increases & subsidies due to devaluation of riyal - - 78 4.9

Total 1,195 88.2 1,344 85.2 Repayment of Government debt / 160 11.8 235 14.8

Grand Total 1,355 100.0 1,579 100.0

1/ On the revenue side gross receipts from Saudi Airways, Railways and PTT have been deducted. On the expenditure side gross expenditures (for Saudi Airways under Ministry of Defense; for Railways and PTT ander Ministry of Communications) have been deducted. Net expenditures of the three institutions (i.e. operating deficit plus capital investment) have been accounted for under a separate heading.

j/ Includes service charges (SR 20 million budgeted for 1959, SR 10 million for 1960). - 89 -

SAUDI AiABTh

Table 10. 13lNETA3Y SITUATION

A. CU1i&hNCY CIICULAT-Ir- A-D (X EUCy CO -Er2

(millions of Saudi riyals)

Mronetary agency's % of Currency Currency Holdings of Gold Issue Covered. in and Foreign by Foreign Date Circulation!/ Exchange Assets

in P in 5? 2/ million million-

January 20, 1957 n.a. 23.7 88.9 14 July 27, 1958 670 62X5 234.4 35 July 8, 1959 663 149.7 561.4 81 December 12, 1959 637 185.7 696.4 104 February 4, 1960 543 170.7 763.4 128 larch 3, 1960 520 177.8 800.2 133 IMarch 31, 1560 537 180.9 814.4 142 April 18, 1960 510 162.2 730.4 129 June 9, 1960 572 175.8 791.1 127 July 21, 1960 585 196.2 891.8 152 Septaember 15, 1960 595 188.o 8L5-02 142

1/ Betw-een SR 100 and 200 million of-this is normally held in Banks. j At SR 3.75 = ,1`until December 30, 1959 and SR 4,50 = thereafter.

B. :AS';Y!;:SUPPLY

(milliors of Saudi riyals)

Currency in Circulation (including cash Demand iJoney Date with banks) Deposits Supply July 17, 1958 670 473 1143 July 8, 1959 663 584 1247 December 12, 1959 637 512 1149 February 4, 1960 543 429 / 9721 i',arch 31, 1960 537 388 j 925 1 j Provisional - 90 -

SAUDI a'hBIIL

TABLE 10. 14?NEThNY SI?UATfJN (CoIT1inED)

C. ks>T GO'.-^Li.T POSITION UITH i-lNETARY AGENCY

(millions of Saudi riyals)

April 19, 1953 - 653.9

July 17, 1958 - 548.1

January 10, 1959 - 330.1

July 6, 195/9 - 201.5

November 1, 195f9 - L1.8

December 30, 1959 4 8.4

February 4, 1960 - 45.5 (and 140.8 in the special account)!/

i'larch 3, 1960 J. 28.2 (and 14o.8 in the special account)

March 31, 1960 + 48.2 (and 138.4 in the special account)

April 28, 1960 + 132.1 (and 87.6 in the special account)

July 21, 1960 + 176.4 (and 85,9 in the special account)

The special accourt i..as created. from the book profit resulting from the revaluation of the riyal. Part of it has been used to pay the counter- value of the. inc:-eased sub5criptibn to the World Bank and tthFiiicrbased DlIF quota.

Source: Saudi Arabian Monetary Ar.ency. - 91 - SAUDI A.RkBIA

T'able 11. ALLOQC.l.iG iJOR DEVELOPIiE,T IN THE 1379/80 (1960) BUDGET

(millions of Saudi riyals)

Construction 24.7 of whiich: l5o sques 12.0 Government Buildings (excluding Schools and. Hospitals) 12.7

Roads 48.,`

Communications 25.9 of which: Saudi Arabian Airlines 2.8 PTT 1.6 Railways 6.0 Civil Service 6 .0 J1 Ports and Customs Facilities 9.53/ lhater i?esourcesL/ 5.8 Agriculture

Education 16.9

Health 6.9 lhis cellaneous 5

Unallocated 18.1

TOTAL 200.3

1/ Including SR 3.6 million for smaller projects, such as Damr.am-Qatif road, maintenance of desert roads, etc.

2/ Of which SIZ 2.6 million in 1960 for newJ projects -;.hich in total wrill cost SR 7 million and also including SR 3.3 million for projects previously approved.

3/ Of which SR 7 million for the Jeddah port and. SR 1 million for light- houses in Jeddah.

4/ Divided betwaeen 11inistry of Interior, Iinistry of Agriculture and Department of Potable -iater.

5, Of which SR 3.1 million for `.ladi Jizan; SfL.0.8 million for establishing five agricultural units and SP 04 million for agricultural statistics.

6/ Inlcludes SR 10 million for broad.casting activities; SR 13 million for expropriation of properties; S-R 5.3 million for defense. Y. SAUDI ARABIA 7 ~~~~~~~~~~GROUNDWATER

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MED/TERRANA/tAN/ DAMASCUS / SAUDI ARABIA SEA 7 I R A Q COMMUNICATIONS

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NOVEM8ER 1960 IBRD-696RI2