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How Saudi Arabia's spending spree reached the end of the line

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Autocratic monarchs once left an echo of their glory in the ruins of the megaprojects they commanded at the peak of their unchallenged power. Those monumental physical traces are to be found in the fertile plains, mountainsides and deserts of the Middle East. But one of their most prominent modern counterparts may only have a digital footprint to leave behind for some of his most ambitious concepts.

A decade ago, the Crown Prince of Saudi Arabia Mohammed bin Salman – or MBS as he is widely known – decreed a revisioning of his country that leapt from the realm of science fiction. It was called Vision 2030. Extraordinary monolithic structures were to help bring forth new technological marvels not just for the Kingdom but for the world.

Those ideas were made manifest in lavish PR material conjuring up fantastical landscapes that attracted reams of coverage that mingled awe and derision. It was made possible by the near $1trn (£744bn) sovereign wealth fund of Saudi Arabia (PIF) whose riches, so dependent on oil, were to be used to create the foundation for a future without oil.

Four years from 2030, there has now been, perhaps predictably, a retrenchment. Part of that is down to financial imperatives, as a big fall in oil prices before the current war in the Middle East meant that even Saudi Arabia's extraordinary wealth took a hit.

Even though those prices have now shot up because of the war, the uncertainty created by the conflict will continue to put constraints on Saudi revenue and spending. And the influx of foreign investment in these hyper-expensive visionary projects has never materialised to the degree on which the Saudis had been banking.

Some of the most striking projects are now being watered down, put on hold or even abandoned. Several come under the once all-embracing umbrella of the $500bn Neom mega-project.

It looks like The Line, which was meant to redefine the concept of a city as it stretched ramrod straight across more than 100 miles (161km) of untapped land in the north west of Saudi Arabia, looming taller than The Shard, is being turned into something considerably more prosaic.

The winter resort of Trojena in the mountains of the north west has also been reined in. There is snow up there, belying the image of Saudi Arabia as an unyielding desert, but it doesn't last very long. The concept of a year-round mountain resort took the area into a realm of artificiality that is no longer seen as viable. There were to have been miles of ski slopes and a full-on ski village with a man-made lake and luxury hotels and shops – a mini St Moritz in the mountains of Arabia. It was meant to have been ready in time to host the Asian Winter Games in 2029, but that has now been cancelled, with the Games to be held in Kazakhstan instead.

The Cube – a massive structure of flats and offices that could have contained the Empire State Building 20 times over – has been jettisoned entirely. It was set to cost an estimated $50bn.

Most recently, one of the apparent crown jewels of the Kingdom's vaulting ambition to become a world powerhouse of sport from a standing start, the LIV Golf tour, has been reassessed as a hugely expensive dud that's cost some $5bn to date and brought neither a financial nor a reputational return.

Some longtime observers of Saudi Arabia, such as Ellen R Wald, the author of Saudi, Inc., feel like they've seen it all before.

"This is the same playbook, the same thing again with The Line. You know, 'We're going to build this huge thing. Oh wait, well now we're going to significantly downscale it.' And it's the same thing over and over again, and it's been that way even since before Mohammed bin Salman. They make these big announcements, they're very splashy, and then it either doesn't get built or it gets built in a significantly scaled down or [in a] 'not what it was' way."

Wald recalls the new cities that were to be built in the 2000s under a previous monarch, King Abdullah.

The "Economic Cities" programme was also aimed at diversifying the Saudi economy away from oil, which has been a perennial imperative in the Kingdom for decades. Relying almost entirely on one natural resource that will not last for ever has long been seen as an obstacle to the development of a much more well-rounded and resilient economy.

The results were largely underwhelming even as billions of dollars were expended. Several of the proposed cities never got off the ground, others were recast as more modest enterprises. The biggest, the $100bn King Abdullah Economic City on the Red Sea coast north of Jeddah, did come to fruition, but the goal of it becoming a business and tourism hub hasn't materialised.

The hope had been to bring in major new foreign investment and create jobs – real ones, away from the calcified state sector – for Saudi Arabia's large and ever-growing young population. But by 2016, the rate of unemployment still stood at around 12%.

Wald thinks there is a fundamental failure to take a realistic view of the potential of such projects by the officials behind them. "Where did they think the market was? Who told them that this was a possibility? There's a big 'yes man' mentality. You get people telling the king what he wants to hear. And that goes for consultants too, because they want the big contracts. So, they'll say what they think their Saudi clients want to hear – and then these things fall short."

That pattern goes back decades, with foreign companies often not wishing to risk the highly lucrative contracts they've secured by asking questions.

Some believe that when MBS became de facto ruler of the Kingdom in 2017, he inherited a system that badly needed overhauling.

Ghanem Nuseibeh, an economic analyst who's followed the shifts in Saudi Arabia for years, says MBS inherited "a social economic system that was very much out of touch with the modern world" that was "heading towards total stagnation."

Vision 2030 was designed to change Saudi Arabia in three ways: economically, politically, but also socially. "The very, very tricky thing for them was that they needed to implement those in concert."

The social control exerted by the powerful and very conservative Islamic leadership of the country was seen by MBS and his advisors as a major obstacle in the ability of Saudi Arabia to achieve its full economic potential. Political change under MBS was presented as the handing over for the first time of the reins of power to a more dynamic, younger generation. But this did not mean that any new space for political discourse was allowed.

Indeed – as Nuseibeh acknowledges – MBS himself was responsible for some of the issues that have impeded the scope and rate of change – as well as casting a long shadow over his rule.

Just as he became de facto ruler in 2017, he ordered the mass detention of Saudi Arabia's elite officials and businessmen in the Ritz-Carlton hotel in Riyadh, which the Saudi government portrayed as a crackdown on corruption, but others saw as a shakedown. And the savage killing of the Saudi journalist Jamal Khashoggi in the country's consulate in Istanbul in 2018 left a stain on the Crown Prince's reputation, which may have faded but remains indelible.

One Saudi who has direct experience of how the authorities there deal with dissent is Abdullah al-Ouda, an academic and human rights activist based in the US. His father, Salman al-Ouda, a prominent Saudi Islamic scholar, has been detained in prison since 2017 on charges including "stirring up unrest".

Abdullah believes that episodes like the Ritz-Carlton purge have been counterproductive to the aim of funding Vision 2030, even if those held in that gilded cage did cough up an estimated $100bn.

"Long term, it's actually scared away investors, he said. "And all the oppression also affected how investors see Saudi Arabia as a government, as a country, that lacks what investors want, which is predictability. When you have no predictability, you can simply be an in

📰 மூல செய்தி (Source): https://www.bbc.com/news/articles/cx21g0828reo?at_medium=RSS&at_campaign=rss

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