Winds of change in Saudi Arabia

Dubai eye

The writer is a Middle East based
columnist.

When the going gets tough, the tough get going. The ambitious Saudi plan preparing and positioning the Kingdom for the new realities of a post-oil world is truly transformational in its nature and impact. The enthusiastic response of the regional and world markets and the popular reaction in and outside the kingdom suggests that Vision 2030, pushing for the most audacious reforms yet, may have gotten off to a good start.

The chief idea of the plan, unveiled by deputy crown prince and influential son of King Salman bin Abdul Aziz Prince Mohammed bin Salman this week, is to cut the country’s dependence on oil and create new economic opportunities and resources. The young prince has even promised that by 2020 Saudi Arabia could live without oil.

After long decades of exclusive reliance on oil, which has doubtless helped transform the region beyond recognition, making it one of the richest in the world, this is perhaps the most decisive step that the world’s largest oil producer has undertaken to chart itself a new trajectory of growth. In doing so, the kingdom, the regional heavyweight and undisputed leader of the Arab and Islamic world, has shown the road ahead to other oil producing nations and Arab-Muslim neighbours. Vision 2030 could be a game changer.

The Saudi plan reminds one of the New Deal that the US came up with during then president Franklin Roosevelt after the ravages of the Great Depression in the 1930s.

The New Deal of the three Rs – Relief, Recovery and Reform – set off a new wave of unprecedented construction boom, development and economic resurgence that eventually helped America beat the worst recession in its history and spring back with a new confidence to the height of global leadership.

Will Saudi Arabia be able to pull off a similar feat? The leadership’s apparent resolve to push ahead with the new reform agenda suggests that the Kingdom means business and failure is not an option. Indeed, considering all that is at stake, Saudi Arabia just cannot afford to turn away from the long awaited and much needed change. This is a question of the very future and wellbeing of its people. Given the pre-eminence of the country in the Arab and Islamic world, any change in Saudi Arabia is bound to have a far-reaching impact on the entire region and beyond.

Of course, thanks to the long years of high oil prices and the ever growing global thirst for liquid gold, the Gulf oil producers have had a good, long run. But now that oil has touched historic new lows because of a number of factors – global recession and fall in demand, reckless greed of US shale oil producers and sharp differences among global producers on the question of stabilizing prices and cutting production – it is time for the Gulf states, and everyone else, to adapt themselves to the new economic realities.

According to a recent Bloomberg report, owing to the sustained low oil prices and an oversupply, the world is now sitting on an unprecedented glut of oil. Even when overproduction ends, a stockpile surplus of more than one billion barrels built up since 2014 will remain, weighing on prices. The International Energy Agency forecasts that inventories will keep accumulating until the end of 2017, and clearing the glut could take years.

The constant low oil prices over the past two years have had an impact across the region, forcing even the richest of Gulf States like Saudi Arabia and Qatar to review their economic priorities and putting in place austerity measures, in sync with changing times.

Even if oil stabilises to recover its lost glory – and many believe it will, considering the perpetually growing global demand for energy – it makes sense for the Gulf oil states to reduce their acute and asymmetrical reliance on oil as the single source of revenue and backbone of their economies.

As a matter of fact, the Gulf States have long envisioned and talked about economic diversification and investing in other sectors for a more balanced growth. Clearly now is the time to take those urgently needed steps to ensure the region is well prepared to face the new challenges and opportunities of a new era.

By offloading – through an IPO – less than five percent of its stake in the crown jewel, Aramco, the largest oil company in the world, Saudi Arabia is planning to raise $2 trillion dollars – creating the world’s largest sovereign wealth fund.

What is heartening is that the Saudi plan does not merely address economic reforms but is all-encompassing in its approach and scope. The plan spells out in fascinating detail the road ahead focusing on all areas of national growth.

From investing in human capital to building a vibrant society offering equal opportunities to all, and from forging national identity based on the best of Islamic values and principles to ensuring greater transparency, all-round progress and empowerment of all, including women and expatriate workers, Vision 2030 pretty much covers everyone and everything.

The proposed green card for long-time expatriates is aimed at encouraging greater economic participation and a sense of belonging among the guest workers.

The kingdom also appears determined to make the most of its celebrated position as the birthplace of Islam and home to its holiest of cities and mosques. The country is constantly working to expand the capacity of the holy cities of Makkah and Madina and facilities and services offered there, in an effort to accommodate more pilgrims from around the world.

In the next four years, the total number of Umrah visitors could reach 60 million, with an average of 1.25 million visas being issued each year. Besides, Umrah visas can now be turned into tourist visas, encouraging pilgrims to visit the various historical, cultural and Islamic sites across the country. There are also plans to welcome thousands of tourists a year as part of its reform plan aimed at showcasing the country’s rich heritage, including pre-Islamic sites, and encouraging Saudis and expats to spend some of their holiday money at home.

This sounds like a winning idea. Saudi Arabia is a rich treasure trove of history not just as the birthplace of Islam but as the cradle of many ancient civilisations and cultures. It is a pity that all this has remained largely unexplored and unknown to much of the world. No conscious effort has been made to exploit this immense tourism and economic potential. Understandably, the country has remained focused all these years on its responsibility to host Allah’s guests. That is, of course, of paramount importance but it does not have to be at the expense of tourism and the massive economic opportunities that it could unleash.

Also, while the focus on the economic reforms is welcome and much needed, Saudi Arabia and other Arab and Muslim countries have to also pay greater attention to building educational and scientific institutions, creating a knowledge-based society in the pursuit of excellence, as the Muslims consciously did in the early centuries of the faith in Baghdad and Andalusia.

More than anything else, it is the world-class colleges, universities, research centres, think tanks and centres of excellence that would create generations who would not only enrich their nations but could also help them face the challenges of the future.

Saudi Arabia is at a crucial point in its history. And the steps that it takes in the days and months ahead could not just shape its own destiny but also define the region’s future. The progress of Arabia is the progress of the whole of the Islamic world.

Email: aijaz.syed@hotmail.com