Over the course of Trump’s presidency, outraged politicians across the US system took many principled stands against Saudi Arabia. With a president who was so shamefully subservient to crown prince Muhammad Bin Salman, Congress, and every democratic politician running for president was free to condemn the country, and propose a number of concrete ways to punish and humiliate the Kingdom’s out of control leadership. My guess is that it is going to be shocking how quickly all of that evaporates.
But, as I lay out in today’s video, that’s not necessarily a reason for despair. An emotionally satisfying blow-up with Saudi Arabia is vastly less important than the end of the invasion of Yemen and the speedy restoration of the Iran Nuclear Deal. That ought to be our true measure of success in dealing with Saudi Arabia.
So let’s talk about King Abdullah Economic City. In today’s video, I may give the impression that it doesn’t exist. It totally does! It was established in 2005, and much like NEOM, the mega city the Saudis are currently pushing, it was supposed to revolutionize everything!!! 13 years later only about 15% of the 100 billion dollar city has been built. The other three cities that were meant to be built at the same time are somewhere between 30% and 0% completed. Theirwikipediapages make for some depressing reading. Depressingly familiar reading.
The objective of SAGIA’s “10 x 10” program, which ran from 2005 to 2010, was to place Saudi Arabia among the world’s top ten competitive investment destinations by 2010.
Launched in 2006, the Economic Cities program was designed to drive toward greater competitiveness, job creation, and economic diversification.
In developing economic cities, over a thousand of the world’s free zones were surveyed. The sixty deemed most successful were studied to determine key success factors. The objectives of the Economic Cities were to promote regional development, achieve economic diversification, create jobs, and enhance competitiveness in Saudi Arabia. Four new cities were identified and thus developed: King Abdullah Economic City, Jazan Economic City, Prince Abdulaziz Bin Mousaed Economic City, and the Knowledge Economic City, Medina.
When you read some of this 15 year old public relations copy, you realize just how familiar it all is. It’s the same thing as Vision 2030, but it’s Vision 2010. It’s all very sad. Back in King Abdullah’s time it was possible to imagine that Saudi Arabia could pull it off. Their oil was still one of the most valuable commodities in the world. An Aramco IPO back then would have yielded hundreds of billions of dollars. Instead the economic cities plans just sort of fizzled out during the extraordinary expenditures the government made to bribe the populace out of an Arab Spring. After Abdullah died in 2015, the focus shifted to new projects.
A sensible ruler ca. 2015 would have recommitted to all the plans Abdullah had made, and brought them to fruition. It would have made a lot of sense. But that wasn’t ambitious enough for King Salman, and Crown Prince Muhammad Bin Salman. They are diverting scarcer and scarcer funds to all of their new cities, and losing investments in foreign companies. They’ve gotten a lot of uncritical support in the Western Press, but that’s because they are paying for it. So yes, the King Abdullah Economic city exists, as a shell of what it could be. The bottom third is the only section of this BBC article on King Abdullah Economic City that is worth reading. After repeating the standard public relations texts, it lays out what a disappointment the project has been. NEOM might get there too. But it won’t ever become what was promised. Today’s video lays out why.
Over the past year Saudi Arabia has experienced a perfect storm of factors in its favor. Asset prices in the US economy and elsewhere have gone nuts. Saudi Arabia is a country that owns a lot of stock, land and everything else, so that’s been very helpful. On the oil market front, the most important front there is for Saudi Arabia, they’ve had unprecedented cooperation on the OPEC production slow-down, and a series of competitors have given up millions of barrels a day in production due to sundry wars and dictatorships.
If Saudi Arabia’s ambitious plans for the future were ever going to work, 2017 would have been the year for it. But as this video shows, some of the key metrics that illustrate the hole Saudi Arabia is in haven’t changed much at all. As I said in last year’s video, and as I repeat in today’s video… Saudi Arabia is still finished.
A lot of Saudi Arabia coverage focuses on the loose cannon effect the country has been having on Middle East politics for the past year. Little attention has been paid to the promises that have been made to the country, and the way those promises have not been honored. I thought it might be interesting to tell the story of 2017 from the perspective of Saudi Arabia’s rulers for once. I think it illuminates something many have been missing.
This video started out as a central idea I wanted to deliver about the Trump administration’s relationship with Saudi Arabia. Then it evolved into more of a Saudi Arabia year in review thing. This video is different from the recent ones in a number of ways. It tries to cover a lot, quickly. Not sure whether it’s worthwhile or not. Let me know @robbolaw
