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4 January, 2018 00:00 00 AM
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Rapid changes in Saudi Arabia

The crown prince has wasted no time in implementing a strategy to revamp the kingdom, including plans for a brand new city, embracing technology and allowing women to drive
Damien McElroy
Rapid changes in Saudi Arabia

When Donald Trump chose Saudi Arabia as the focus of his first trip abroad as president in May, the US leader brought America’s support for a project of transformation with few historical parallels.

Within weeks, Mohammed bin Salman would become Saudi Arabia’s crown prince and immediately set about a root-and-branch reform of his homeland. Even as Mr Trump met with King Salman in Riyadh to discuss a Middle East peace initiative, dozens of decisions bearing the crown prince’s imprimatur were in the pipeline.

Taking tough strategic decisions firstly involved taking on an aberrant situation. The uniting of the Arab Quartet behind the policy of boycotting Qatar in June was a means of extracting significant reforms from Doha. So too with prosecuting the conflict in Yemen to restore president Abdrabu Mansur Hadi’s government over the Iranian-backed Houthi usurpers in Sanaa. When the Houthis fired Tehran-supplied ballistic missiles at Riyadh, the true nature of conflict was fully exposed at an international level.

The launch of the Islamic Military Counter Terrorism Coalition in Riyadh in November marked a first. The partnership of 41 Muslim-majority nations is designed to fight terrorism and defeat extremism throughout its member states and beyond. The new leadership’s commitment to reform are not just an internal matter but come with a broader goal of addressing problems felt worldwide. For the UAE, the clear direction set for Saudi Arabia has strengthened ties, with many analysts noting an empathy between the leading figures. “Mohammed bin Salman and Mohammed bin Zayed essentially have a zero-tolerance policy toward any sort of radical political project for the region,” observed Mokhtar Awad, a research fellow at George Washington University’s programme on extremism, when the Qatar measures were introduced in the summer.

At the heart of Saudi Arabia’s Vision 2030 is economic transformation. When Prince Mohammed first spoke publicly of his agenda in 2015 the price of oil languished around $35 a barrel, now it is rising above $65. Concerted diplomatic efforts at Opec helped ensure that output of members has been restricted, accounting for the higher prices.

While Vision 2030 is designed to ensure that Saudi Arabia’s non-oil economy grows, revenues from the oil sector are vital to its prospects. The budget published in December laid out just how important.

Under a six-year fiscal programme, officials predict rising prices and output will push income from oil sales to 801.4 billion riyals from 440bn riyals in 2017. The assumption is the price of oil will plateau at $75 a barrel. On the other side of the ledger, non-oil revenue, excluding income from the Public Investment Fund, would increase 32 per cent to 337bn riyals over the period.

This means the Saudi authorities expect oil production to increase from an average of 10 million barrels a day this year to 11.03m barrels in 2023. For 2020, they predict output of 10.45m barrels a day, generating 605bn riyals in revenue.

It is almost two years since the 32-year-old prince set out a blueprint for his thinking in a now pivotal interview with The Economist. In addition to confirming the goal of floating Saudi Aramco on an international stock exchange, he spoke of harnessing under-utilised assets in the Kingdom.

“We have a very magnificent area north of Jeddah, between the cities of Umluj and Wuj, there are almost 100 islands there, in one atoll. The temperature is ideal, five to seven degrees cooler than Jeddah,” he noted during a five-hour discussion of his views. “It’s virgin land, I spent the last eight holidays there. I was shocked to discover something like this in Saudi Arabia. This is one of the assets that we target, and we believe it has an added value other than generating income for state funds. So we have many unutilised assets.”

Fast forward to October 2017 and the crown prince was unveiling plans at the Future Investment Initiative in Riyadh for a $500bn new business city NEOM, which would harness the potential of a Red Sea region straddling Egypt and Jordan. A standalone futuristic metropolis, the city would embody opportunity for all. The name is a mix of “neo”, meaning new, with M, the first letter of the Arabic word for future.

Days later the crown prince made a dramatic statement of his determination to change the economic culture in Saudi Arabia, commandeering the Ritz Carlton hotel in Riyadh to hold some of the country’s richest people. The prince was named by King Salman as the new head of an anti-corruption commission, allowing him to oversee the return of multiple billions that had been siphoned off over years.

“His very visible anti-corruption posture forms part of an attempt to appeal to a younger generation of Saudis, rather than focusing on the traditional supporters among the royals, clerics and merchants,” wrote Jane Kinnimont, a researcher specialising in the region at Chatham House. “A large constituency of young Saudis wants to see radical change in the way the country is governed. He seems to want to harness that sentiment in support of change that is driven from the top down, by him, rather than the bottom up, be that by protests, activists or more radical challengers.”

It is worth recalling the 2/4/6 formula set out in a 2015 McKinsey report on the Saudi Arabia that has in part shaped the crown prince’s vision. It envisioned a productivity-led transformation of the economy that could enable Saudi Arabia to again double its GDP and create as many as six million new Saudi jobs by 2030. The consultancy estimated this would require about $4 trillion in investment.

“Eight sectors — mining and metals, petrochemicals, manufacturing, retail and wholesale trade, tourism and hospitality, health care, finance, and construction — have the potential to generate more than 60 per cent of this growth opportunity,” the report said.

Sophia the robot is an unlikely symbol of change in Saudi Arabia but one that says much about how Vision 2030 will transform not just one country but much of the region. A citizenship ceremony in October demonstrated how seriously Riyadh took the challenges of artificial intelligence.

Likewise granting women the right to drive was not just about a bureaucratic move to issue new licences but the creation a vast range of new economic opportunities for businesses in 2018 and beyond.

The most tantalising part of the changes is the cultural transformation. Amid hosting concerts by country and western singers and Arab stars – plus a fleeting visit by the star of Saturday Night Fever, John Travolta — the authorities announced cinemas would open their doors in major cities for the first time.

Perhaps the quote of the year that summed up the scope of changes sweeping through Saudi Arabia came from a pioneering film director who is now shooting her second feature film in her homeland.

"Saudi Arabia is always in the news, but it's nice to be in the news in this way," said Haifaa Al Mansour, the Los Angeles-based director responsible for the first full-length movie shot entirely in the kingdom, Wadjda.

The writer specialises on Middle

Easter affairs

 

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Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

Editor : M. Shamsur Rahman
Published by the Editor on behalf of Independent Publications Limited at Media Printers, 446/H, Tejgaon I/A, Dhaka-1215.
Editorial, News & Commercial Offices : Beximco Media Complex, 149-150 Tejgaon I/A, Dhaka-1208, Bangladesh. GPO Box No. 934, Dhaka-1000.

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