Saudi Deputy Crown Prince Mohammed bin Salman announced an economic reform plan to diversify the Saudi economy over the next 14 years (Al Jazeera). The prince presented a plan to develop a Saudi services-based economy, boosting non-oil exports (FT) from 16 percent to 50 percent by 2030, saying he wanted the kingdom to "live without oil by 2020." The "Vision 2030" plan involves a green-card system for expatriates to invest in the country, increasing the supply of affordable housing, and selling shares in the oil giant Saudi Aramco to set up a wealth fund. The prince also discussed women's participation in the workforce and said he hoped for "positive changes in future" regarding the ban on women driving (Saudi Gazette).
"With a pledge to end Saudi Arabia’s reliance on oil in a mere four years, Mohammed bin Salman, the 30-year-old deputy crown prince, is attempting nothing less than a transformation of the conservative kingdom. The overarching aims of his 'vision' for 2030 — to slash wasteful government spending, develop the non-oil economy and boost private sector job creation — are the right ones. Yet Saudi rulers have talked of diversification for decades and failed to deliver it. The question is whether MbS, as the powerful son of King Salman has become known, stands a better chance of overcoming resistance from the bureaucracy, rivals for power within the royal family and ultra-conservative clerics," writes theFinancial Times.
"The indolence of a society brought up to expect that oil riches will be lavished upon them is another hurdle. For years efforts to end the kingdom’s unhealthy addiction to oil have run up against a wall of apathy. As one Saudi commentator puts it, 'it’s been like a father telling his 40-year-old son that it’s time to go out and get a job.' Prince Muhammad’s youth in a country used to gerontocratic rulers makes it easier for him to motivate young people, and social media give him better access to the pulse of the country. But with oil revenues weak and unemployment at 11.6%, the chances of disillusionment are strong," writes theEconomist.
"It’s hard to read about how Saudi Arabia’s rulers are handling the collapse of oil prices without recalling the end of the Soviet Union. Every petro-state has to ponder this precedent, but for the Saudis the parallels must be unnerving. Consider: Their economy is inefficient and undiversified, based on irrational pricing and vast subsidies. There’s no modern taxation system; money just sloshes around, Soviet-style, on the basis of insider connections. There are no mechanisms of meaningful political representation, and after years of senescent leadership a new generation is clamoring to take over. Growing ethnic divisions and the military’s huge share of the economy round out the picture. To all this, add a sharp drop in export earnings, and it’s no surprise that people worry about systemic failure," CFR's Stephen Sestanovich writes in the Wall Street Journal.
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