THUWAL, Saudi Arabia (Reuters) - Saudi Arabia opened its first co-educational university on Wednesday, a high-tech campus with massive funds which reformers hope will spearhead change in the Islamic state.

Western diplomats hope the King Abdullah University of Science and Technology (KAUST), which has attracted more than 70 professors and 800 students from abroad, will stimulate reform after recent setbacks such as shelving municipal elections and cancelling cultural events opposed by clerics.

King Abdullah has promoted reforms since taking office in 2005 to create a modern state, stave off Western criticisms and lower dependence on oil.

But he faces resistance from conservative clerics and princes in Saudi Arabia, one of the world’s top oil exporters.

Al Qaeda militants launched a campaign against the state in 2003, blaming the royal family for corruption and opposing its alliance with the United States. It was mainly Saudis who carried out the September 11, 2001 attacks on U.S. targets.

Officials who back Abdullah fear that without reforms young people will be drawn to militancy in the future.

“Undoubtedly, scientific centres that embrace all peoples are the first line of defense against extremists,” Abdullah told regional leaders such as Presidents Bashar al-Assad of Syria and Abdullah Gul of Turkey, Western officials and Nobel laureates during the inauguration.

Supporters are presenting KAUST as a tangible gain for the king’s plans, which have included more long-term projects such as an overhaul of courts, the education system, and building “economic cities” to create jobs for the young population.

“KAUST is eventually some tangible result after so much was planned and so little done,” said a Western diplomat in Riyadh.

Former U.S. diplomat John Burgess wrote in his Saudi blog “Crossroads Arabia”: “There is truly no other university in the world so well-equipped. Anywhere. The issue is, of course, what is to be done with the equipment and that remains to be seen.”

One of the main goals is to produce Saudi scientists but so far locals, who had to compete in a tough admission process, make up only 15 percent of students coming from 61 countries, said KAUST President Choon Fong Shih of Singapore.

MIDDLE OF NOWHERE

Located next to the Red Sea village of Thuwal north of Jeddah, the 36-square-mile campus has lured scientists from abroad with luxury packages and a life far from the reality of the Islamic state, where clerics have wide powers over society in an alliance with the Saudi ruling family.

“The community’s design facilitates access to the Red Sea and encourages active, healthy living and group interaction,” says the KAUST website. Unlike in Saudi universities, male and female students can attend classes together and mix in cafes.

With more than 70 green spaces, gyms, clinics, spacious residential districts and staff driving around in electric cars there is no reason to leave the campus, which is far from the prying eyes of the religious police.

Staff were full of praise for the university.

“One of the motivations (to come here) was that ... anything that I would dream of is here,” said India’s Kultaransingh Hooghan, a computer researcher who just relocated to Thuwal.

“There is no barrier in science,” said Canada’s Jasmeen Merzaban, an assistant professor of biochemistry. “Whether you are a woman or a man, working side by side you don’t look at the gender at all. It’s all based on science.”

KAUST is run by the state oil company Aramco, which has a similar liberal enclave at its headquarters in Dhahran on the Gulf coast. It is outside the control of the education ministry.

Columnist Abdullah al-Alami, who worked at Aramco, said more Saudis must enrol to make KAUST a success.

“Fifteen percent is a small start, but remember that when Aramco was established the percentage of Saudis was less than 5 percent. Today, Saudi employees make up more than 90 percent of the Aramco population,” he said.

Analysts and diplomats say it is the state education system that Saudi Arabia needs to reform.

“KAUST is impressive but starts at the wrong end. Instead of pumping billions into universities you need to reform primary schools focusing on religion,” said another Western diplomat.