In recent years we have seen an increasing flow of pronouncements from Saudi Arabia regarding its aspirations and dreams for its future, that drummed up a cautious optimism about that countries future.
First we heard of Vision 2030, an ambitious project to diversify the economy off oil, through capital raised by the world’s largest IPO of the countries oil company, Saudi Aramco.
The idea was that the country would invest in developing tourism along the Red Sea, economic zones and industry, all with the goal of diversifying the economy and turning Saudi Arabia into a world class destination for all things modern and advanced. Essentially, this is already the strategy deployed by the UAE, which has spent its great resources based wealth on building a vast array of shiny and modern amenities in order to promote tourism and posit itself as an advanced country.
With progress, comes human rights, so we also saw reform in womans rights to drive, cinemas and a slow liberalization of society, through cracking down on extremism. There was also talk of a potential of a thawing of ties with Israel, with prospects of an exciting alliance that could turn a new page in the Middle East.
The world watched with cautious optimism and excitement, to see where this was leading and how serious the country is, and indeed many companies and businessman, such as SoftBank and Richard Branson took a keen interest in the prospects of the opportunities that could be presented by the liberalisation of such a wealthy kingdom.
With Khashoggis killing however, the world got a reality check, that perhaps despite its best intentions, the values of the country were still stuck in the past. Khashoggi himself was a radical Islamist, who sympathised with the Muslim Brotherhood and was a critic of Saudis reform, however the way they silenced him reviled the West, and brought into stark clarity the greater fundamental blockage to reform in Saudi Arabia – a lack of liberal values.
For now, the West has lost all apetite for SA, or its prospects, however with time, Saudi will resume to promote its projects, such as the $500b super city of Neom, to which has been given grandiose plans of having more robots than people, a futuristic hub for all sorts of competencies and a world leader in basically everything.
Besides for the opaque and generally grandiose description given to it last year when it was launched, it has largely disappeared from the headlines, almost as fast as it came. This follows a pattern that we have seen with other projects such as the $10b King Abdullah Economic Zone, which was built and largely remains empty. Or the King Salman Bridge to Egypt, as yet unbuilt, and many other grandiose projects which usually amount to a collossal waste of money.
The truth is, you cannot just buy your way out of oil dependency, unlike what consultancy firm McKinsey advised them. Just like you cant remove critics like Khashoggi the way it was done. There are fundamental issues such as liberalisation of the economy and freeing up the people that are imperative to reforming the nature of a country.
For Israeli companies who have been reported to be interested in this city and similar projects, they should look hard and close look to see if there is real change in the Saudi marketplace, values and ideology, before putting themselves into projects like Neom. Otherwise their efforts and capital could well end up sinking into the hot sands of the Arabian desert.