This paper examines International Bechtel Inc.’s failed attempt to establish a monopoly on engineering and construction projects in the Kingdom of Saudi Arabia in the late 1940s and early 1950s. It illustrates the risks of undervaluing the abilities of an indigenous, non-Western government and argues that although Bechtel was initially in exploiting the Saudis’ pre-modern situation, ultimately the Saudis possessed greater business acumen and agency over their own affairs, and turned the tables on their relationship with Bechtel.
From the moment Bechtel signed a contract for the Saudi Public Works Program in 1946, the unequal distribution of power in the company’s relationship with its client, the Saudi royal family, was evident. Bechtel had used its existing contracts with Aramco and other Persian Gulf monarchies to quickly push through a new multiyear, multimillion-dollar for development projects in the cities of Jeddah and Riyadh. Over the course of this contract Bechtel went on to treat its Saudi clients as incompetent primitives and consistently attempted to bypass the monarchy’s authority for financial gain.
Bechtel’s policies backfired, however, when the Saudis quietly reversed the established system of inequality. Unbeknownst to Bechtel, the Saudis had negotiated cheaper rates with other construction companies. Furious at Bechtel’s attempt to directly siphon their oil revenues, the Saudis unilaterally cancelled Bechtel’s contract. This spectacular miscalculation and devaluation of Saudi shrewdness, business acumen, and absolute power left Bechtel out of the job and unable to even collect on their debts.