Royal rivalries, oil uncertainties, and premature optimism about reform initiatives could jeopardize Saudi Arabia’s hopes for transformative economic change, says a leading American think tank.
It advised Donald’s Trump’s administration to steer clear of taking sides in tensions within the royal family, especially over the succession of the 81-year-old King Salman, and to offer public support for the country’s long term economic vision (Vision2030) while working to steer the kingdom away from overambitious targets that could undermine the plan’s potential.
In its one year review of the state-funded Saudi Vision 2030, the Washington Institute for Near East Policy says that the ambitious plan to reduce Saudi Arabia’s dependence on oil and move towards an alternatives diverse economy is fraught with challenges.
Although evidence suggests that the programme is popular with Saudi youths, who are tantalised by the prospect of a more liberal society, said the institute, several obstacles loom: the persistent slump in oil prices; costly financial and political distraction of the war in Yemen; the kingdom’s basic resistance to change, epitomised by the deep conservatism of the clerical leadership; uncertainty about whether the current crown prince will actually become king and, if so, whether he will endorse the project.
The institute questions the $2 trillion evaluation of the Kingdom’s sovereign wealth fund. Quoting the Financial Times, it said: “While Riyadh has valued the IPO at $2 trillion, leaving hordes of investment bankers and lawyers salivating at the potential slew of contracts…the $2 trillion figure [is] hard to believe.” It believes that the valuation is roughly half that size, while citing also an article in the London Sunday Times which offered a similarly incredulous headline: “$2 trillion for Saudi oil? Forget it.”
A “fundamental contradiction” exists in the plan, said the institute. The key to Vision 2030 is the release of funds from the state oil company Aramco, but asking foreign investors to put their money into the Saudi hydrocarbon sector while the country seems eager to move away from oil sends a mixed message.
War in Yemen
The institute believes that the war in Yemen is also taking its toll on the country’s ability to realise its 2030 vision. The campaign has become stalemated, costing tens of millions of dollars per day and its military has had to fend off constant accusations of attacks on civilian targets, which spurred Washington to cut off the supply of some munitions
The report also cites conservative backlash as an obstacle. Author, Simon Henderson, believes that previous reform attempts in Saudi Arabia have been cautiously framed but Vision 2030 breaks this mould, which may lead to a religious and cultural backlash.
Like all long term projects, Vision 2030 faces the challenge of continuity. It is widely seen as a vehicle for the personal ambition of Crown Prince Mohammed Bin Salman but it’s not entirely clear if the young prince can leapfrog his older cousin Muhammad Bin Nayef, the kingdom’s interior minister and key counterterrorism interlocutor with Washington, as the successor to King Salman.
In its recommendation to Trump, the institute, which advances American interests in the Middle East and promotes policies that secure them, advises caution by pointing to the policy differences between Riyadh and Washington, especially on oil and Yemen.