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 the Vision 2030 plan, 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 Mohammed bin Salman, is to cut the country’s dependence on oil and create new economic opportunities and resources. So much so, he promised, by 2020 Saudi Arabia could live without oil. After decades of 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 neighbors. Vision 2030 could be a game changer. The Saudi plan reminds one of the New Deal that the United States under the leadership of President Franklin Roosevelt came up after the ravages of the Great Depression in the 1930s.
The New Deal of 3 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.
Would Saudi Arabia be able to pull off a similar feat? That is something that the future would reveal in fullness of time. However, the leadership’s apparent resolve to push ahead with the new reforms 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 preeminence 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 the 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 1 billion barrels built up since 2014 will remain, weighing on prices. Inventories will keep accumulating until the end of 2017, the International Energy Agency forecasts, 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 stabilizes to recover its lost glory — and many believe it will, considering the perpetually growing global demand for energy — it makes sense for the Gulf 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 countries 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 less than 5 percent of its stake in the crown jewel, Aramco, the largest oil company in the world, through an IPO, Saudi Arabia is planning to raise $2 trillion in cash 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 vision document 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, the 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 Madinah and facilities and services offered there, in an effort to accommodate more pilgrims from around the world.
The total number of Umrah visitors could rise considerably. Besides, thes 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 treasure trove of history not just as the birthplace of Islam but as the cradle of many ancient civilizations and cultures. Understandably, the country has remained focused all these years on its responsibility to host Allah’s guests. Which 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 early centuries of the faith in Baghdad and Andalusia. More than anything, it is the world-class colleges, universities, research centers, think tanks and centers of excellence that would create generations who would not only enrich their nations but could help them face challenges of the future.
Saudi Arabia is at a crucial point in its history. And the steps that it takes in days and months ahead could not just shape its own destiny but could define the region’s future. The progress of Saudi Arabia is the progress of the whole of Islamic world. Godspeed!
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Aijaz Zaka Syed is a Middle East-based writer.
