Hopes for a Kingdom reformed
The National Council on US-Arab Relations held its annual conference this Wednesday and Thursday in Washington DC. The conference focused primarily on the changing dynamics between the US and its Gulf allies, particularly Saudi Arabia.
A morning panel on Thursday titled “Strategic Dynamics in Perspective: Looking Closer at Saudi Arabia Vision 2030” picked apart the implications of Saudi Arabia’s planned redesign. The panel featured Ambassador James Smith, former US ambassador to Saudi Arabia, Seema Khan, former Chief Strategy Officer and Senior Advisor for the Saudi Arabian General Investment Authority, Julie Monaco, Global Head of Public Sector Group, Corporate and Investment Banking, Institutional Clients Group and Citi, and Newton Howard, Professor of Computational Neuroscience and Neurosurgery, University of Oxford and Director of the Synthetic Intelligence Lab, Massachusetts Institute of Technology (MIT).
Saudi Vision 2030 is a blueprint for moving Saudi Arabia away from total reliance on oil sales. By 2030, Saudi Arabia plans to attract more foreign investment, diversify its economy away from hydrocarbon exports, develop essential service sectors such as health, education and tourism, and to develop the private sector. The result will hopefully be a more sustainable and successful Saudi Arabia in the face of declining oil prices.
Smith opened the panel by identifying four things to be optimistic about when looking at Saudi Vision 2030 and four things to be concerned about. His four points of optimism were:
- The program builds on over 10 years of investment and commits 26% of the national budget.
- It was planned entirely by young Saudis, who have the biggest stake in the country’s future.
- Saudi Vision 2030 has garnered commitment from the highest levels of government and everyone is holding each other accountable.
- Putting Prince Salman in charge of the project, who is barely 30 years old, emphasizes the importance of young, educated Saudis to the country’s progress.
The concerns were these:
- There is a cultural aversion to risk and failure in Saudi Arabia, which means that innovation isn’t highly valued and new technologies are often brought in from the outside.
- There is also an aversion to letting small, new businesses take root in Saudi Arabia since they have a higher propensity for failure compared to well established international businesses.
- There is a lack of viable policy changes that would attract investment into the country.
- There is no regional organization charged with making the Gulf competitive in the global economy—it is organizations like these that have led to the growth in East Asia.
Khan said that by pursuing Saudi Vision 2030 Saudi Arabia is finally making itself fully accessible to the world. This is incredibly important because the Kingdom is widely misunderstood. One of the key features of Saudi Vision is that is ensures better communication between Saudi Arabia and its allies. This could potentially lead to more effective goal sharing and coordination in the region. Aside from greater accessibility, the plan will result in Saudi Arabia boasting a more innovation-based economy rather than one based solely on investment.
Monaco expressed great optimism for the project, due to the practicality of the plan and the abundance of political will behind it. One potential cause for concern is that Saudi Arabia may not be able to divert enough funding to the project over the next 14 years. They will need to increase taxes, cut budgets, and increase domestic bond insurance in order to ensure long-term funding. They need to maintain a good credit profile as well if they wish to enter foreign debt markets. The Kingdom needs to commit to good governance to ensure that the project is successful.
Howard emphasized that Saudi Vision needs to managed effectively from the top. He said that the government needs to focus on innovation and make good use of the infrastructure that they already have. The government also needs to start working on looking past the beliefs and ethnicities of their personnel and instead focus on their qualifications—doing so will bring Saudi Arabia into the modern age.
For somewhat less sanguine views of Vision 2030 and its implementation prospects, see the last two speakers at this recent Middle East Institute/Johns Hopkins School of Advanced Studies event:
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