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the lunch

Fahd al-RasheedRachel Idzerda/The Globe and Mail

It is hot outside but I am freezing inside the five-star Bay La Sun hotel in King Abdullah Economic City, the new $100-billion (U.S.) city being carved out of the Saudi Arabian desert on the Red Sea. Saudis, like Americans, like to keep their buildings meat-locker cool and I regret not having packed a sweater even though it's 32C and humid this time of the year.

So when Fahd Al-Rasheed, the youthful CEO and managing director of King Abdullah Economic City, known as KAEC and pronounced "cake," as in having one and eating it too, suggests we move our lunch onto the hotel terrace outside, I am delighted. "Plus it means I can smoke," he says.

Mr. Al-Rasheed is dressed in a light cotton thobe, the traditional ankle-length robe worn by Saudi men. The thobe is so brilliantly white that I regret not bringing another item – my sunglasses – as it reflects the mid-afternoon sun.

"I buy 10 thobes every six months," he says, explaining that they cost $50 each. Now I get it. In my six days in the kingdom in December, I never spotted a thobe that was dirty, ripped or excessively wrinkled, probably because they are replaced so often.

Mr. Al-Rasheed removes his red and white shemagh, the traditional Saudi headdress, and relaxes back into his chair, the picture of serenity. Even when he is working or on stage, he exudes a Zen-like calm. The waiter appears within seconds and we order. I opt for the chicken sandwich and fries; he the tuna salad with tomatoes and cucumber. Alcohol is forbidden, of course.

I would like to say the view is lovely, but it is not. We are about half a kilometre inland and the terrace overlooks a wide canal that will eventually become a marina. But there are no docks yet and a single yacht is tied up to the near shore. The banks of the canal are composed of dirt populated by earth moving machines. In the distance, toward the sea, a few office buildings and condo blocks are visible. The rest of the city is pretty much an expanse of nothing, save for a suburb of villas, an international school and, a dozen kilometres to the north, a container-ship port and a few factories in an area that could double as a stage set for a Mad Max film.

But come back in 10 years or so and I am assured that I will see an urban dazzler, a megacity in one of the fastest growing economies. Indeed, after a brush with death during the financial crisis – "everyone said KAEC was a white elephant," he says – KAEC is again emerging from the sand. The PR team is confidently billing the city, about 100 kilometres north of Jeddah, as "the largest private development megaproject on earth." But the $100-billion investment has to be put into context – the spending is to be spread over 20 or 30 years.

As soon as our meals arrive, so do the flies and what must have looked like animated gesticulation between a Saudi and a foreigner was in reality fly swatting. The moment we finish our meal, the waiter appears again like magic and Mr. Al-Rasheed instructs him to "remove all the food so all the flies go away, then I want a cigar, please." Moments later, the waiter arrives with a chest of expensive-looking smokes. Mr. Al-Rasheed selects a rather brawny example and the waiter sets two small flat sticks of wood afire, which are used to light the cigar itself. He offers me one and I pass. He offers again, as if I am making a big mistake by not indulging and I pass again. Between the missing meal and the clouds of smoke, the flies vanish.

The first time I met Mr. Al-Rasheed was in London, in late October, during a cities conference produced by CityAge, out of Vancouver. He was wearing an elegant Tom Ford suit and took to the stage to talk about a city that few in the audience had heard of. King Abdullah Economic City, he explained, was one of four new cities under way in Saudi Arabia collectively designed to diversify an economy that is overly dependent on oil for its livelihood. It was also the only city in the world in which you could buy a share. KAEC is owned by Emaar Economic City, a company listed on the Saudi stock exchange that in turn is 30 per cent controlled by Emaar Properties of Dubai, one of the world's biggest developers. Its landmark property is Dubai's Burj Khalifa, the world's tallest tower, at 830 metres.

Mr. Al-Rasheed's London presentation was short and tantalizing and, after the conference, I asked him to tell me more about KAEC. "Then you will have to come to KAEC itself," he said, explaining that another cities conference, this one called Cityquest, organized by KAEC and the New Cities Foundation, was set for December. Equipped with a rare journalist's working visa, off I went.

KAEC is a revolution by Saudi standards, not just because it is enormous – it will be the size of Washington D.C., have housing for two million and one of the world's top 10 container ports – but because it is privately funded. In the past, almost all of the big infrastructure plays were sponsored by the government; that is, the monarchy. King Abdullah called the shots and still does, but this time he is allowing the market to drive development. "The government can't create all the jobs," Mr. Al-Rasheed says. "You can't use the same inputs and expect new outcomes. Engaging the private sector will become so important when the oil is not there. We need diversification."

Mr. Al-Rasheed is only 37, which makes him as unusual as the city he is creating. Probably no other CEO in the kingdom, perhaps not in all the Middle East, has taken on so much responsibility at such a young age. He is among the new wave of Western-educated Saudi men and women – 150,000 have gone overseas for schooling – who have returned to inject some entrepreneurial flare into a rigid, unadventurous economy dominated by a finite commodity whose price happens to be plunging.

Mr. Al-Rasheed, who is married to a Saudi and has three young children, was born in Saudi Arabia's oil-rich Eastern Province, the son of a Saudi national railway executive and a Syrian mother. His father died when Mr. Al-Rasheed was 10 and the family moved to Damascus to be close to his mother's relatives. He had a happy childhood in what was then a tolerant society. "Up to sixth grade, I went to a school that was Shia. From seventh to ninth grade, I went to school that was Christian. For the rest of high school, I went to a Sunni school," he says (he is Sunni, like most Saudis).

He is one of 15 siblings and half siblings, now ranging from ages 10 to 70, the products of his parents' several marriages. He admits to having been no better than an average student, one who was captivated by American action heroes, such as Superman, and films such as Star Wars. "These were all mythical stories, about good versus evil and doing well for the world," he says. "Their values had a big impact on me."

The American cultural influence may have triggered his desire to go to a U.S. university. He found an American universities ranking in a magazine, applied to the top 20, a laborious process given his then poor English, and landed at Washington University in St. Louis, where he studied business and finance. He almost didn't make it, then says a "mental switch" went off in his head and he discovered the confidence to excel.

After graduating, he joined Saudi Aramco, the state-controlled oil giant, which was then the default employer for aspiring young managers. Aramco sponsored his MBA at Stanford. But he had second thoughts about returning to the company, where even the most talented could toil in obscurity for decades.

A connection landed Mr. Al-Rasheed an interview at the Saudi Arabian General Investment Authority (SAGIA), which hired him, reimbursed Aramco for his $200,000 in MBA costs and fast-tracked him into the finance chief's suite.

With King Abdullah's encouragement, SAGIA launched the economic cities concept to diversify the Saudi economy; the KAEC project was inaugurated by King Abdullah himself in 2005. The king later had video cameras installed on the site so he could see its progress. Riveting viewing it was not because progress was slow. KAEC milled through two CEOs in two years. "The king came here and wasn't happy," Mr. Al-Rasheed said. "He didn't see enough happening, so I said I would like to interview for the CEO's job."

At the start of 2008, when he was just 30, Mr. Al-Rasheed was appointed boss of Saudi Arabia's biggest development. Then came the financial crisis, which almost sank the whole show. There were other problems too, including the city designers' failure to take climate change into account. That changed when Mr. Al-Rasheed found himself trapped in a New York hotel during 2012's Hurricane Sandy. "I realized the power of nature," he says. "I came back to KAEC and said, no way. We pulled the residential area back from the sea and eliminated the new canals."

Today, KAEC is about 10 per cent built but alive with activity. Mars Inc., the U.S. confectionery company, recently opened a Galaxy chocolate bar factory in KAEC. Sanofi, the French pharmaceuticals company, opened a drug-making and packaging factory the day Mr. Al-Rasheed and I got together. The port is open and a high-speed rail line that will connect KAEC to Jeddah and the holy cities of Mecca and Medina will be completed in 2016.

KAEC's future is not entirely secure. The plunging oil prices threaten to tear a hole in the Saudi economy and, if it goes into recession, development work could retreat, as it did during the financial crisis. Still, Mr. Al-Rasheed is confident KAEC will survive because it's being built for the long haul. Economic downturns along the way were always inevitable. "This is not a vanity project at all," says John Rossant, founder and chairman of the New Cities Foundation. "It has all the ingredients for success."

Mr. Al-Rasheed admits he does not intend to see KAEC to completion; he'd be about 60 years old if that were his goal. "Honestly, I don't know how long I will be here" he says. "But this is my country and I will stay here. I feel the kingdom has invested in my education and my professional experience. They have given me the privilege of building a city. I owe everything to this country."

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AL-RASHEED'S TOP TEN

Favourite movie: The Godfather

Book: The Happiness Hypothesis, by Jonathan Haidt

Holiday spot: Italy, especially Portofino and Rome

Cuisine: Italian

Sport: Basketball. "I am an avid fan."

Team: Los Angeles Lakers

Tailor: Tom Ford

Cigar: Romeo y Julieta Churchills, from Cuba

Music: Frank Sinatra

Car: He won't say, meaning it's not an econobox.

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