MEDINA, Saudi Arabia (AFP) – Saudi Arabia is pouring billions of dollars into Medina, burial place of the Prophet Mohammed and the cradle of Islam, to turn the religion’s second holiest site into a high-tech bastion.

The so-called Knowledge Economic City (KEC) is the fourth in a series of projects launched by the oil powerhouse in December 2005 aimed at attracting foreign investment and bolstering development.

It is being promoted by the Saudi Arabian General Investment Authority (SAGIA) and financed by the private sector a few miles from the centre of Medina and the Mosque of the Prophet, a top pilgrimage destination.

SAGIA governor Amr al-Dabbagh told AFP that the projects were inspired by some 3,000 “special economic zones” that exist around the world to promote investment.

“In our case we call them Economic Cities because they have more ingredients,” he said. “They are places where people can work, enjoy life and make money.”

KEC is the latest in a series of mammoth development schemes in the kingdom, where the first project known as King Abdullah Economic City is being built at Rabigh on the west coast.

The KEC is being built around a special theme to promote knowledge and sciences with through education, health and information technology.

The history of Medina was one of the reasons it was chosen to host the new city.

Medina is a cradle of Muslim civilisation and the birthplace of Islam along with Mecca, the holiest city in Islam, which is also in the Hijaz in western Saudi Arabia.

“Medina was the springboard for Islamic civilisation,” said Tahir Mohammed Bawazir, chairman of Knowledge Economic City Developers Company Ltd. “This is the place where it all started. So there is history.”

The Prophet Mohammed fled along with the first followers of Islam from Mecca to Medina — which means “city” in Arabic — in 622 AD to escape persecution. His tomb is in Medina.

The KEC project’s backers hope that Medina’s rich past will attract Muslim scientists as well as companies wanting to do business with the Arab and Muslim world, bolstering development on all fronts.

“It’s an attractive proposition for people to live here,” said Bawazir.

But there are also question marks over the real aim of these artificial cities emerging from the Saudi sands, and also over their long-term viability.

“They are into buildings. They are into real estate. Real estate is something they do well,” one Asian professor teaching in a Saudi university said about the promoters of KEC and the other so-called “economic cities.”

For him KEC is just that, a real estate project rather than a bid to develop scientific knowledge or boost the economy.

“So they do it in different places under different names,” he said on condition of anonymity.

The construction drive coincides with an unprecedented economic boom generating colossal oil revenues for Saudi Arabia, the world’s top crude exporter.

Saudi Arabia earned 194 billion dollars in oil income in 2007 and it is estimated that combined revenues for 2008 and 2009 will amount to 700 billion dollars because of the skyrocketing cost of crude.

But the head of the state-run SAGIA insisted that the projects “are all developed by the private sector.”

“Our role is to iron out any obstacles and ensure that the environment is pro-business,” Dabbagh said.

It is estimated that the KEC, expected to house 130,000 people, will cost eight billion dollars.

Dabbagh said that SAGIA is also conducting feasibility studies on two other projects “to see if they are commercially viable.”

By the year 2020 new cities that have mushroomed from the Saudi desert could be home to 4.8 million inhabitants and generate 1.2 million jobs.

Employment is a high political and economic priority for the authorities of the kingdom in which half of the total population of around 23 million is under 18.

Expatriates make up more than a quarter of Saudi Arabia’s total population, according to official figures published in September 2004.