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Saudi Arabia’s Vision 2030 was announced on 25 April 2016 with much fanfare. In the days preceding the disclosure of the plan, there was much expectation and speculation from the Saudi public eager for change. And when the announcement came, it received a positive reception from many quarters. In a nutshell, this ambitious plan calls for the weaning off of the country’s near total dependency on its oil resources and the introduction of a more diversified economic portfolio, with 2030 set as the target by which oil resources would factor insignificantly in the total GDP.
King Salman of Saudi Arabia said: “We plan to achieve a better future for the country and its people by utilizing our country’s capabilities and potential and benefiting from its location and resources. So we directed the Council of Economic Affairs and Development to set the Kingdom’s economic and development vision to achieve and hopefully to make our country a model for the world.”
The chief architect of the plan, Prince Mohammed Bin Salman, the son and deputy crown prince of the present king, the current Minister of Defense and the head of the Council of Economic Affairs and Development, unveiled the salient points of the plan last week, molding it around three themes: a vibrant society, a thriving economy and an ambitious nation.
To finance such an ambitious venture, the prince announced the Kingdom’s intentions to set up a $2 trillion sovereign wealth fund, by far the largest fund of its kind in the world, which would be managed by a team of financial institutions including foreign ones. The revenues generated would provide an alternative to oil revenues and be spent on developing the Kingdom’s cities, as well as finance other aspects of the plan. In order to raise the money for the fund, the prince added that, “We plan to sell less than 5% of Aramco. Aramco’s size is very big. It is estimated at between $2 trillion and $2.5 trillion.” The sale of less than 5% of state oil giant Saudi Aramco will be the largest ever initial public offering (IPO).
The prince has been frank in his assessment of current economic realities, campaigning tirelessly for a new vision that would steer his country away from its dependency on oil. “We have all developed an oil addiction in Saudi Arabia and this is dangerous and has hampered development in many sectors during past years,” he said. “I think by 2020, if oil stops we can survive. We need it, we need it, but I think in 2020 we can live without oil.”
The fund will also be bolstered by current Saudi fiscal assets of an estimated $600 billion, as well as the income generated from the sales of Aramco shares and government-owned real estate, and enterprises estimated to be worth $1 trillion, he said. “Initial data say the fund will have control over more than 10% of global investment capacity. It will be by far the largest on the planet. There will not be any investment or development in any region of the world without the Saudi sovereign wealth fund having a say. The vision is a road map of our development and economic goals. Without a doubt, Aramco is one of the main keys of this vision and the Kingdom’s economic renaissance.”
Vision 2030 is wide-ranging in its scope and includes the introduction of a ‘Green Card’ similar to the USA, a holding company for military industries that will eventually be listed on the Saudi stock exchange, boosting non-religious tourism, major structural reforms, privatizations and an overall increase in government efficiency. Vision 2030 also anticipates positioning the country as ‘a logistics hub for East-West trade, becoming a financial services centre and developing more small and medium-sized enterprises’.
It remains to be seen whether this vision will become reality in a country where government is opaque, where the private sector depends on millions of expat workers, where unemployment among Saudis is above 11% and youth unemployment is even higher, where education is not well attuned to the demands of the labour market and where women are generally segregated from men. One Saudi, speaking on the condition of anonymity, said: “Mohammed Bin Salman is young, dynamic and the son of a king. He is known to be a no-nonsense guy and will not put up with any bureaucracy or government official that may stymie his efforts. However, he is carrying a heavy load with a number of portfolios including minister of defense. To oversee this vision is a massive commitment that would need his tireless attention. Does he have the time for all of this in addition to his existing obligations? Does he have the right people around him?”
The Saudi media personality Samar Fatany foresees several roadblocks: “The plan seems very promising on paper. However, when it comes to implementation, there are many obstacles that could obstruct the transformation path… The leadership needs to curb the dominance of ultra-conservatives who could obstruct the transformation plan with their intolerant sectarian, extremist and racist attitudes. Reforming the judiciary remains critical for the success of the national transformation plan. Social justice calls for effective, codified sharia to make both men and women aware of their legal rights and make them law-abiding and contributing citizens. These are daring ideas that do not sit well with extremists who have destroyed many archaeological sites and historical monuments deeming them un-Islamic. To implement such a worthy plan, we need to engage moderate imams who can respect diversity and embrace modernity… Only then can we implement the transformation plan to help Saudi Arabia assume its role as the leader of the Arab and Muslim world.”
Ali al-Yami, director of the Center for Democracy and Human Rights in Saudi Arabia in Washington, DC is also cautious about the success of Vision 2030. “Unless Prince Mohammed’s economic reform knife is applied to all, including the thousands of royals who siphon the treasury to live lavishly in and outside of the desert kingdom while doing no more than defaming their religion, kingdom and family, the prince’s dream of reform will face the same fate as King Abdullah‘s economic cities, which Mohammed promised to revive in his economic manifesto. How does the ambitious prince propose to reform an 80-year-old primitively and secretively managed economy in a country where about 70% of the workforce consists of non-natives, where the religiously-based educational system is controlled by zealots, where non-governmental civil society is banned, where denying women the right to drive in the 21st century is a state policy, where advocates of human rights and political reforms are considered terrorists and where criticism of the royals and their clerics is considered not only subversive but an act of terrorism? Finally, how can massive economic reform that requires domestic and global investments of $2 trillion and assurances of short- and long-term success be feasible in a country threatened by royal discord and mired in costly regional conflicts and domestic instability, not to mention rampant corruption, especially at the top?”
The road to making Vision 2030 a success is fraught with uncertainties that will begin to play out in the coming months. How Prince Mohammed and his father address the obstacles that will almost certainly arise will determine the future of this vision.