Abu Dhabi--For grad students, it's easily one of the best deals on the map.

The Masdar Institute of Science and Technology (MIST)-- the graduate school for alternative energy created by the emirate of Abu Dhabi with help from MIT -- pays all of its students' expenses. That includes tuition, housing, food, travel, fees for taking the GRE, and more. Students even get a monthly stipend to help take the "starving" out of the student.

MIST, which has 88 students in its first class and will admit 130 more this fall, has an annual budget of $150 million, far higher than conventional tuition-charging universities.

And if one of the students comes up with some interesting intellectual property, there's a good bet that local backers will come to their aid: Abu Dhabi just closed a venture fund valued at $265 million.

The government is also recruiting multinationals to open R&D offices in Masdar City, the sprawling complex under construction that will house MIST. Boeing, Honeywell UOP, and Etihad Airways (a rapidly growing airline in Abu Dhabi) have already committed to funding a five-year project to study the feasibility of producing jet fuel from Salicornia, a plant that grows in salty wetlands. Side note: other Abu Dhabi organizations have invested in AMD and Tesla Motors.

The dream, ultimately, is to create a greentech version of Rockefeller University, the renowned medical center in New York, or KAIST, the intellectual epicenter of IT in South Korea, that will spawn start-ups, conduct R&D on a contract basis for multinationals, and, over time, will allow Abu Dhabi and possibly other parts of the Middle East to diversify from oil.

"It is very important for a country with these characteristics to become a more knowledge-based economy rather than just pump oil out of the ground...They have to develop their own intellectual advantage," said Fred Moavenzadeh, Director of the Technology & Development Program of Energy Initiative at MIT.  "There is no R&D-intensive institution, not just in Abu Dhabi, but in the region as a whole."

Still, the question remains: can money really lead to success?

The answer to that question will have tremendous implications for emerging nations, as well as the U.S. and Europe. The emirate of Abu Dhabi -- the oil-rich hub that wields the most power in the United Arab Emirates -- is not harnessing mostly local intellectual talent and experience, after all. It is importing it.

MIT gets paid $10 million a year to advise the Masdar Institute and to recruit faculty and students. The 22 faculty members come from ten countries. Before Masdar, John Perkins, the provost at MIST, chaired the physical sciences and engineering department at the University of Manchester. Sami Issa, an executive director of the Advanced Technology Investment Co. (ATIC), which is exploring how to build a semiconductor industry in the Middle East, hails from Intel.

Most of the students come from outside the region, too. Associate professor Scott Kennedy (from MIT) ticks off the home nations of his grad students: U.S., U.K., a local, India, Colombia, etc.

If the Institute can earn respect in the scientific world and create an innovation hub, other nations will try to emulate the plan.

A few nations, in fact, already are. Singapore has actively recruited U.S. academics and multinational pharmaceutical manufacturers to come to Biopolis, its rich, sprawling biotech hub. Duke University helped set up the medical school at the heart of the complex. Meanwhile, Qatar's Education City boasts campuses from Carnegie Mellon, Cornell med, Georgetown and Texas A&M among others.

And just so undergrads don't feel left out, NYU's Abu Dhabi campus will start teaching students this fall.

A global college market could lead to lucrative contracts for U.S. and European universities and start-ups. Intellectual exchanges could over time even help bridge some of the cultural and economic chasms that can divide nations. Think of it: who wants to go to war against a member of their graduating class?

Ominously, it could also lead to a brain drain that leaves U.S. and European politicians and citizens clamoring for the scalps of turncoat university professors and complaining about excessive overseas tax breaks.  

But to make Masdar a self-sustaining hub of innovation, these students and scientists will have to stay. And there's the sticking point. Abu Dhabi is flush with expatriates -- only twenty percent of the population consists of actual citizens -- but many only stay temporarily. U.S.-style immigration, where PhD students stay to start companies and raise eerily talented offspring, typically does not occur.

Will persistent immigration occur in a country with censorship, high prices, little in the way of outdoor activity, in a culture where individuals are often ranked according to strictly stratified categories like social class and ethnicity, and a locale that's a long plane flight from Palo Alto, London and other scientific/start-up hot beds? Good luck trying to job-hop here. 

Is it strict? One Westerner told me that if you get in a fender bender, expect to go to jail, even if no one is hurt. In the end, Masdar could succeed, but the premiums that Abu Dhabi would pay might not justify it.

"Who would want to live there?" asked one U.S. exec who visited Abu Dhabi in 2009.

Issa said that not everyone will stay. They don't expect them to. But on the other hand, the atmosphere in Abu Dhabi may not be as restrictive as one might think. Branches of the Louvre and Guggenheim Museums, along with an island dedicated to Ferraris and Formula One cars, are under construction just down the road.

First, The Good News

The structure of Masdar is somewhat complex, and can be a bit difficult to understand. In 2006, Abu Dhabi launched the Masdar Initiative to create a self-sustaining green hub. The initiative is a wholly owned subsidiary of the Mubadala Development Company, which in turn is wholly owned by the government.

The initiative has many facets: MIST; Masdar PV, a solar manufacturer with a factory in Germany and one coming to Abu Dhabi; Masdar City, the housing complex; Masdar Carbon, a subsidiary working on carbon-capture projects; and Masdar Power, which is building green power plants in Europe and will come to the U.S. soon. Sultan al Jaber, a graduate of U.S. and U.K. universities, serves as CEO.

Abu Dhabi initially approached MIT about building a branch MIT campus, but the school turned it down, said Moavenzadeh. Later, the parties devised something of a compromise. Abu Dhabi would build the school and manage it, but MIT would provide advice on curriculum, train faculty and recruit students.

"One of the most important things we've learned is not to do it for them," Moavenzadeh said. "If they [nations considering this model] think they can buy this as a service, they are wrong."

It is not a passive role. MIT actually wields veto power over faculty and admissions to prevent potential favoritism, preferences or nepotism.

Masdar also made the crucial decision not to create an undergrad institution. Statistically speaking, undergrads are expensive and graduate schools are more closely tied to economic growth.

Despite the wealth linked to the institution, Masdar is not waging an outright checkbook war, said Perkins. The school pays a premium, but not a huge one, to faculty. MIT gets a flat fee, not a huge donation to the endowment.

"We are not in a bidding war with other universities," Perkins said. "it is not a problem to attract the right people."

MIST also hopes to charge tuition one day, "but we need to establish our reputation before we can do that," he added.  

It is likely that MIST will grow because of the inherent appeal of the idea. Students and faculty will live and work in a self-contained net-zero-energy city inland from Abu Dhabi's skyscraper-filled shoreline: it's a 21st-century version of the Renaissance campus. Besides offering ample lab and living space, robotic electric cars will ferry people around the 6-square-kilometer campus. (Right now, with the campus under construction, students study at the Petroleum Institute nearby.)

So far, students seem to like the concept: 1,200 applied from 22 countries for the 88 spots available in the first class. 

MIST, meanwhile, isn't recruiting established "name" professors. Rather, it wants to find post-doctorates that see the school as a vehicle to pursue a project that might get lost in the shuffle at a big U.S. university.

For instance, Mateo Chiesa, a former MIT post doc, serves as an assistant professor at the school. He's also erecting a novel solar thermal tower that he claims could reduce the cost of generating power from heliostats.

Still, the money doesn't hurt, particularly at a time when college budget crunches are endemic in America. The $150 million annual budget is one-tenth the size of MIT's, but MIT has nearly 10,000 students and 1,000 faculty members. MIST right now has five two-year master's programs with an emphasis on solar and green building and will soon add programs for power engineering and microelectronic devices. A PhD program and three more master's programs will commence in 2011.

And Now The Negative

So what could go wrong? History shows that laying the groundwork for a technology hub and actually having it take off are two entirely different things. Intel Capital and a few other VCs ventured into Russia in the middle of the decade. It has not yet yielded the hoped-for fruit.

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Dubai began to try to attract chipmakers and Internet companies around 2004. The numbers were tough to argue with: corporations would enjoy a 50-year tax holiday and expatriates wouldn't have to worry about personal income tax. One of the biggest tenants for the chip center turned out to be an airline.

Oddly, hardship often seems to work better than incentives. Taiwan, South Korea, Israel and Denmark founded their tech industries in the midst of periods of forced austerity. In China, engineering represents a path to Western-style middle- and upper-class living. These nations also all had established histories in modern math and science: the Technion, Israel's premier tech institution, was founded in 1925, 23 years before the country itself even existed.

Abu Dhabi will also have to balance its own needs against the needs of the incoming scholars.

Perhaps the biggest hurdle will lay in perception. If you ask someone if they'd move to Shanghai, they will likely give you a list of reasons why they'd like to do it or why it sounds attractive. If you ask the same question about the Middle East, the first comment might be about metal detectors. 

 

 

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