SAUDI ARABIA - Nayef Ibn Abdul-Aziz.

Interior Minister for many years, Prince Nayef controls the security sector and the border guard. He is the third most powerful man in Saudi Arabia. Being in charge of the emirs (governors) of the kingdom's 13 provinces, which he has said will eventually increase to 18, Prince Nayef is overseeing a decentralisation of the Saudi economy. By implication, this means some degree of socio-political decentralisation of which he is extremely careful - being conservative and close to the Wahhabi religious establishment.

Efforts to diversify the Saudi economy away from petroleum are already giving more power to the regions as they compete for resources and investment. In addition to the petroleum sector, which makes up bulk of state income but only about 63% of GDP, Saudi Arabia is one of the world's largest date producers. Qassim province alone is one of the world's biggest exporters. Yet the economic contribution of this business is dwarfed by the booming petroleum sector. In 2006, agriculture produced only 4% of GDP, down from 8% in 1998, despite the sector growing 16% in that period. But limits on wheat production imposed by Riyadh have stunted the sector's growth.

Riyadh is prioritising economic and geographic diversification, including manufactur-ing, agriculture and financial services - with emphasis on huge economic cities being built in various parts of the kingdom. One consequence of these is to place greater emphasis on the work of the country's 13 provincial governors as they vie with each other to attract government and foreign investment (see down13SaudiEnBasSep24-07).

Further reforms in this direction are on hold while their outcome is uncertain, though there is talk of women being allowed to vote in elections in 2009. One benefit of the elections will be that local interests will at least be heard by Prince Nayef. People of the regions will be able to more directly send demands to his ministry. While they may not get all what they ask for, the ministry will be able to make much more informed decisions on the allocation of funds to local projects.

These reforms leave little room for real change as the head of each "baladiya" (local council or municipality). The provincial emirs are still appointed by the king. If the diversification programmes and new economic cities are successful, the future of the economy will be much more dependent on local Saudis' achievements, rather than just the oil price. In 2006, overall GDP growth was driven by the non-oil sector for the first time as oil output decreased slightly. One of the key contributors to continuing the growth of the Saudi economy will be lowering the unemployment rate, presently at 12%. With Saudi nationals reluctant to travel for work even within their own country, boosting the employment rate will rely on taking jobs to the regions. This will mean an increasingly regional focus on the provision of education.

Jordan has 24 universities for a population of 5m, while in Saudi Arabia there are 10 universities and they are mainly in the Eastern Province, Riyadh, Makkah and Medina. Improving the provision of education locally, key to long-term development, means raising the number of universities and other centres of learning at top speed in the coming years; the people able to influence this are the emirs.

Many question whether the desire exists among the kingdom's regional emirs, as the incentive to lobby central government hard enough to affect change is still largely absent. But this may change as, with increasing investment and international interest, local emirs are likely to find new scrutiny falling on their region. So far, there has been a great inertia within local politics. But if $100-120 bn are to be channelled into parts of the country foreign investors have previously never visited, emirs may find themselves having to compete against each other on the world stage, as well as on the domestic front.

On Oct. 15, 2005, Prince Nayef announced that the government intended to increase the number of its regions to improve services to a rapidly growing Saudi population. He told reporters: "A study on this matter will be completed shortly and will be presented to higher authorities". Arab News then said the plan was to establish five more regions bringing the total to 18. It said the greater Riyadh region would be divided into three - Riyadh, Sudair and Dawadmi. Two more regions will be formed in the Northern Province, and one in the Southern Province. In a wide-ranging news conference after presiding over a meeting of regional emirs in Jeddah in mid-October 2005, Prince Nayef disclosed also plans to expand the powers of regional governors.