Mark the date: April 25, 2016.
With the announcement of the $2 trillion dollar “The Vision For the Kingdom of Saudi Arabia”, we may well be seeing what Bloomberg Business Week’s Peter Waldman has called, “an historic plan encompassing broad economic and social changes includ[ing the creation of the world’s largest sovereign wealth fund”.
Waldman, reporting at length on his recent interview with the Saudi official in charge of the sovereign wealth fund (and “the power behind the throne”) — 31-year-old Crown Prince Mohammed bin Salman — traces the potential for “tectonic” economic and social change in the desert kingdom. He writes that, according to Prince Mohammed, the diversification of the massive fund “will technically make investments the source of Saudi government revenue, not oil” and that “within 20 years, we will be an economy or state that doesn’t depend manly on oil.”
The Prince may well exert influence in Saudi Arabian social mores as well. Waldman: “Saudi Arabia can’t thrive while curbing the rights of half of its population, and the prince has signaled he would support more freedom for women — ‘We believe women have rights in Islam that they have yet to obtain.’ “
There are, of course, formidable obstacles to these mighty aspirations: Entrenched members of the royal family and a mountainous bureaucracy; plummeting oil revenues and a recent $200 billion budget shortfall; and about half of the population under 25 with youth unemployment estimated at 30%. The Prince and his associates will have a tough sell when, for instance, the government issues a planned IPO to sell off about 5 percent of Saudi Aramco, the world’s leading oil producer.
The significance — and the inherent risk — in the Saudi “Vision” plan was well summarized in a Saturday New York Times op-ed by geopolitical experts at Princeton University and The London School of Economics: “The plan to sell off a share of the highly prized asset [Aramco] as well as privatizing parts of the health and education sectors, shows how far Riyadh is prepared to go … A clear signal that the United States, the Saudis’ biggest investor, will continue security cooperation, would ease foreign investors jitters, as well as calm the Saudi leadership.”
Still, for all the still unanswered questions, there is excitement in the region — perhaps best captured in the Al Arabiya English headline just hours before the plan’s release: “What Saudis expect from the kingdom’s future vision”.