Crown Prince Mohammed bin Salman announced the coming creation of a $500 billion business and industrial megacity that links Saudi Arabia, Egypt, and Jordan together by focusing on growth in the energy, water, biotechnology, manufacturing and entertainment sectors.
A total of 10,000 square miles (25,900 square kilometers) of land will be dedicated to the new city, named NEOM. The move is the latest addition to the Kingdom’s Vision 2030, which aims to eliminate Saudi Arabia’s reliance on oil and gas revenues to run its government. That’s a tough goal for the world’s largest oil exporter, but three years of low oil prices from prolonged supply gluts have made it certain that 50 years from now, fossil fuels won’t be able to bolster the nation’s economy as they have in the past.
"This place is not for conventional people or conventional companies, this will be a place for the dreamers of the world," bin Salman said Tuesday at the Future Investment Initiative (FII) summit in Riyadh.
"The strong political will and the desire of a nation. All the success factors are there to create something big in Saudi Arabia.”
The city will sit on the banks of the Red Sea and the Gulf of Aqaba, acting as a gateway to the planned King Salman Bridge, which is due to directly connect Egypt with Saudi Arabia.
"NEOM is situated on one of the world's most prominent economic arteries,” the prince said. “Its strategic location will also facilitate the zone's rapid emergence as a global hub that connects Asia, Europe and Africa."
There’s a new a religious directive that comes along with the new industrial zone for Saudi Arabia. By 2030, Saudi Arabia is set to look like a mega-sized Dubai, complete with oil-independent free markets and social policies that don’t spook foreign investors. Still, Mecca and Medina are the centers of Islamic religious life, so we can’t really expect any liberalization agenda to move past the barometer set by neighboring Gulf nations.
Earlier at the FII summit, bin Salman also announced his plan to return Saudi Arabia to an open and tolerant form of Islam, blaming the current age of fundamentalism on 30 years of anti-Iran propaganda. The ultra-conservative Wahhabi doctrines currently propagated by Riyadh are “not normal” for the country, and only developed as a domestic reaction to the Iranian revolution, the prince said. Leaders in the KSA since Tehran’s 1979 political shake-up “didn’t know how to deal with” a new Islamic Republic in the neighborhood, he added.
“We are simply reverting to what we followed—a moderate Islam open to the world and all religions. Seventy percent of the Saudis are younger than 30. Honestly, we won’t waste 30 years of our life combating extremist thoughts; we will destroy them now and immediately,” the KSA’s newly crowned leader said earlier. Related: This Oil Rally May Be Short-Lived
Along with bin Salman’s drive to reform the nation’s economy, the prince’s anti-Iran foreign policy agenda runs rampant. That said, there are only so many social policies the Kingdom can lighten up about before it starts to lose its luster as the center of the Islamic world.
Though Saudi Arabia’s new leader may have good intentions for his nation’s future, some say his words should be taken with a grain of salt. The $500 billion project looks good on paper, but implementation is another ball game altogether. Plus, funding for this endeavor, as well as others on the Vision 2030 dossier, depends on the success of the Saudi Aramco IPO, due sometime next year. Financial officials are still sparring over the venue for the foreign listing. It has been London vs. New York for months, with no official announcement in sight.
The new plans glimmer on television screens as big headlines, but not all that glitters is gold.
By Zainab Calcuttawala for Oilprice.com
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