Did Aramco Exploit the Saudis?

MARCH 21, 2013

G. J. H. Dowling and R. I. Norberg, reply by Hugh Eakin

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IN RESPONSE TO:

Will Saudi Arabia Ever Change? from the January 10, 2013 issue To the Editors: The review of three recent books on Saudi Arabia by Hugh Eakin injects the contention by Dr. Robert Vitalis that Aramco brutally exploited its Saudi workers in the decades after World War II [Will Saudi Arabia Ever Change? NYR, January 10]. This assertion cannot go unchallenged. In the years following the signing of a concession agreement in 1933, many thousands of Saudis joined the company, attracted by regular wages, health care, and training. Saudi merchants were, in fact, critical of this development since they could offer nothing comparable. Following World War II, there were strikes by Saudi workers but the unrest was generated by the real and significant difference in living conditions between American and Saudi employees. There were no claims of actual exploitation denying just wages to pad the bottom linelet alone brutality. There were no Saudi communities with power, water, and sewage utilities. To recruit and retain the expatriate expertise required for the enterprise at that time, family-oriented enclaves that came to resemble small-town America in form and social mores were constructed by the company adjacent to oil fields and processing centers. The dominant faith of the kingdom, an orthodox understanding of Sunni Islam, was characterized by xenophobia and, from the outset, the Saudi government encouraged this insularity of these American towns.

Saudi employees demands for equal family housing and schools for their children presented a conundrum. Extending the enclave model to the thousands of Saudi employees and their families would be extraordinarily expensive and embed an American company in Saudi society in uncertain ways. At the same time, citing the concession terms as a legal way to rebuff legitimate societal needs was equally unattractive. The third way was crystallized in a seminal 1948 paper written by Thomas Barger. Barger, who joined Aramco in 1937 as a geologist and rose to the chairmanship, argued that a long-term relationship with Saudi Arabia required deploying its in-house expertise well beyond finding, processing, and exporting oil. Exemplifying this, Aramco laid out whole communities for Saudi family housing, granting employees liberal loans to build their own homes with the state providing the land and establishing new municipalities. Additionally, Aramco built schools in these and other communities for Saudi youth; staffing, curriculum, and administration were government responsibilities. If Aramco had acted as charged, dismissive of Saudi employee needs and aspirations, it is unlikely that the largest integrated oil company in the world Saudi Aramcowould now be totally Saudi-managed. Equally, it is doubtful that a group of Saudi employees, some of them from that early era, would be preparing to hostonce againtheir retired American coworkers at a reunion in the kingdom. G.J.H. Dowling Government Affairs Services Department Government Affairs Organization Aramco, 19781990 R.L.Norberg Government Affairs Services Department and Aramco Services Company Office Aramco, 19641995
Hugh Eakin replies:

Several former American employees of Aramco have taken issue with my passing reference to Americas Kingdom, a 350-page, extensively documented

study of the oil companys early decades in Saudi Arabia. I did not set out to review Robert Vitaliss book, which has been widely discussed elsewhere; nor to examine the very different, present-day reality of Aramco under Saudi control. But it is crucial to note that Professor Vitalis ends his study in the early 1960s, prior to the era in which Mr. Dowling and Mr. Norberg worked for the company. For more than a quarter of a century before that, both US State Department and other records are unambiguous about the policies that led to recurring strikes and sometimes violent confrontations. Workers, regardless of their skills, were segregated according to a strict racial and national hierarchy, in which, as Professor Vitalis writes, living conditions grew worse as you descended the ladder from whites, with their ranch-style homes, swimming pool, movie theater, and the rest, to the Italians, kind of like whites but with many fewer amenities, then the Indians, in what some called Servant Camp, and finally the miserable surroundings of Saudi Camp. As early as 1945, an American vice-consul was cabling to Washington that ARAMCOs medical director takes little interest in the health and care of Arabs; after a 1947 strike, another cable describes Aramcos worker camps as a disgrace to American foreign enterprise. And in 1951, the US labor attach in Riyadh observed that ARAMCO officials can ignore public opinion, which is neither a force or a voice, and concentrate their attention on the production of oil and purely economic considerations. There appear, in the immediate future, no barriers to continued domination of the few. This situation did not change until the late 1950s, when, as the Saudi historian Madawi al-Rasheed has written, riots pushed ARAMCO to reconsider the material and social conditions of the camps and raise wages. That Aramco did everything it could to maximize profits at the least cost is hardly surprising. The more important question of Aramcos long-term influence on Saudi Arabian development is considered at length by Sarah Yizraeli, who concludes that rather than being the motor of change, as the company portrayed itself, it had a more modest part in the countrys social development, while its extraordinary revenues provided crucial support to the ruling house.

What is interesting today is the extent to which Saudi Aramco has become a different sort of model for the regime, one whose very success has made it a powerful tool of the kind of defensive change I described in my article. At the sparkling Aramco campus, both Saudi and foreign workers now inhabit what the scholar Steffen Hertog has called an island of efficiency in a country otherwise plagued by corruption, oppressive social strictures, and red tape. When I visited last year, it was hard not to miss the radical contrast between life on the campuswhere there are no religious police and women are unveiled and permitted to driveand the situation in the underdeveloped Shia villages only thirty minutes away. In this sense, Aramcos dramatic transformation of its own working conditions, on display to the world, has paradoxically provided the regime with another way to resist the more urgent systematic changes the rest of its population has begun to demand.