From Neom to wartime logistics, Saudi Arabia has learned to pivot

When Neom was unveiled in 2017, it embodied the maximalism of early Vision 2030: a futuristic city on the Red Sea, powered by clean energy and data, that would leapfrog the constraints of an older state. The renderings were dazzling and the ambition genuine. But so, in retrospect, was the risk that the concept would outrun its execution.

What matters today is not simply that Saudi Arabia has recalibrated Neom. It is that the Kingdom did so decisively, without pretending that the original blueprint had to remain sacrosanct. This willingness to pivot is not a weakness. It is becoming one of the Saudi state’s defining strengths.

Critics have treated Neom’s rescoping as evidence of failure. A more sober interpretation is that Riyadh chose discipline over vanity. The Public Investment Fund’s new strategy shifts Neom away from its earlier emphasis on tourism and futuristic urban design, and toward renewable energy, industry, and data centers. The wider PIF strategy is also placing greater weight on logistics, minerals, artificial intelligence, and clean energy.

Saudi officials have been unusually candid about the change. Economy and Planning Minister Faisal Alibrahim told Reuters that the government would not “shy away” from acknowledging when a project needed to be shifted, delayed, or rescoped. That is not the language of retreat. It reflects a government learning to allocate capital more rigorously under increasingly demanding circumstances.

The war that began in late February has provided a much harsher test of that mindset. In recent months, Saudi Arabia has had to operate not in the world of master plans but under direct military and market pressure. The same government that was prepared to redesign Neom before its costs became overwhelming has demonstrated an ability to absorb shocks, redirect trade, and make difficult operational decisions quickly. In both cases, the principle is the same: When circumstances change, the Saudi system does not blindly defend its original plan. It adjusts.

Critics have treated Neom’s rescoping as evidence of failure. A more sober interpretation is that Riyadh chose discipline over vanity.

Ali Shihabi

Nothing illustrates this better than the East-West Pipeline. When the war effectively halted crude exports through the Strait of Hormuz, Saudi Arabia’s route to Yanbu on the Red Sea became a key crude export outlet. The pipeline can carry as much as 7 million barrels a day to the west coast, with about 5 million available for export.

That infrastructure gave Saudi Arabia an option its neighbors largely lacked. Iraq, Kuwait, and other producers were forced into deeper cuts because they had fewer alternatives once Hormuz became unusable. Redundancy, sometimes dismissed as costly insurance during normal times, proved to be an essential strategic asset.

Yanbu also gives Saudi Arabia flexibility within the Red Sea itself. If the Bab Al-Mandab Strait at its southern entrance is threatened, crude shipped from the Kingdom’s west coast can move north through the Suez Canal toward Mediterranean and European markets. Even customers in Asia can still be supplied by routing cargoes through Suez and then around the Cape of Good Hope, although the much longer journey would impose higher shipping costs on Saudi Arabia. This additional layer of flexibility leaves the Kingdom better positioned to adapt not only to a closure of Hormuz but also to disruption at the Red Sea’s other principal chokepoint — another example of how geographic options and infrastructure investment reinforce national resilience.

The same has been true for imports. Saudi Arabia’s Red Sea coast has emerged as a logistical backstop for the wider Gulf. Cargo volumes into Jeddah rose massively after the conflict began, with other Red Sea ports, including Neom, also dramatically increasing traffic as the crisis disrupted access to Gulf ports east of Hormuz.

In practice, Saudi Arabia has become not only more resilient itself, but also a logistical lifeline for its neighbors. That is a strategic development with implications well beyond the present crisis.

None of this means that Saudi Arabia is invulnerable. It plainly is not. Its energy facilities have been attacked, at times temporarily reducing production. But resilience does not mean avoiding damage altogether. It means retaining the ability to operate, reroute supplies, restore capacity, and keep markets functioning after a blow.

Saudi Arabia has institutional experience on which to draw. Following the September 2019 attacks that removed 5.7 million barrels a day of production, Aramco restored capacity to 11.3 million barrels a day within 11 days, according to Reuters. Last October, Aramco’s chief executive said the company could maintain production of 12 million barrels a day for a year, while the International Energy Agency estimated Saudi spare capacity at 2.43 million barrels a day. Spare capacity, alternative export routes, and recovery plans may appear excessive in peacetime. In wartime, they look like prudent statecraft.

This is why the Neom story should be reconsidered. The shift from spectacle to sequencing, and from futuristic design toward industrial and logistical assets, is more than a correction to one project. It reflects a decisiveness in Saudi policymaking. A state willing to confront difficult questions about what can be built, when it should be built, and in what order is less likely to become paralyzed when conditions deteriorate.

China offers a cautionary comparison. Its decentralized development model encouraged local officials to build aggressively in pursuit of economic growth. The result was trillions of dollars invested in underused infrastructure, empty developments, and excessive industrial capacity. Saudi Arabia risked moving in a similar direction but applied the brakes much earlier. It reassessed priorities before ambition hardened into an irreversible burden.

California’s high-speed rail project offers another cautionary example. Initially presented to voters with an estimated cost of about $33 billion, the planned San Francisco-Los Angeles system is now projected to cost about $126 billion under a revised and streamlined design — and as much as $231 billion without those proposed optimizations. Despite years of expenditure and extensive civil construction, the project has yet to lay its first section of high-speed track. The contrast reinforces the value of reassessing an ambitious project early: Changing course may invite criticism, but postponing difficult decisions can allow costs and institutional commitments to compound until adjustment becomes vastly more expensive.

Saudi Arabia’s transformation remains unfinished, and much can still go wrong. But a country that can rescope Neom before costs spiral, redirect crude exports when Hormuz closes, retain the ability to supply customers when Bab Al-Mandab is threatened, turn Jeddah into a supply artery for the Gulf, and maintain operations after an attack is demonstrating something more valuable than futuristic imagination. It is demonstrating the ability to recognize changing realities and act on them. In today’s Middle East, that may matter more than any rendering.

• Ali Shihabi is an author and commentator on the politics and economics of Saudi Arabia.

X: @aliShihabi