Vision 2030 is Saudi Arabia's grand plan to future-proof its oil-based economy

Insider has published an article claiming that Vision 2030 is Saudi Arabia's grand plan to transform its economy and reduce its reliance on oil. Caliber.Az reprints the article.

It was the discovery of oil under the plains of Dhahran in Saudi Arabia's eastern province in the 1930s that transformed the Middle Eastern peninsula from a modest land of bedouins steeped in religious lore into a kingdom with the power to turn the world with black gold.

That power is no longer guaranteed.

Almost a century after the country stumbled upon its oil riches, changing times have pushed the House of Saud dynasty to confront the critical turning point it has reached — one that demands another radical transformation.

A global climate crisis shifting the world away from oil, a growing population of young hopefuls desperate for opportunity, and the rising star of a king in waiting who's ready to build a nation in his image. These factors have coalesced to create a singular mission to keep the kingdom thriving.

It's called Vision 2030. By the end of the decade, Saudi Arabia aims to pull off the ambitious, three-pronged feat of creating an economy no longer dependent on oil, improving the lives of its nearly 40 million people, and keeping its place on the global stage.

"This isn't just about diversifying the economy — it's transforming society with the aim of creating an agile economy that can respond to the challenges of the modern world," professor Simon Mabon, a senior research fellow at the Foreign Policy Center in London, said.

But time is ticking: Seven years after announcing Vision 2030, Saudi Arabia has reached the midway point of its timeline, with just seven years left to the finish line. It means the kingdom is about to get more serious than ever — or risk being left in the dust.

Inside the Vision 2030 master plan

As the brainchild of the 37-year-old Saudi Crown Prince Mohammed bin Salman, the country's master plan — shaped with the help of McKinsey — has several moving parts, with the standouts being its "gigaprojects."

In particular, its crown-jewel project, Neom, represents the synthesis of Vision 2030's moving parts. In the country's northwestern corner, Neom's centrepiece is set to be a $1 trillion megacity known as The Line.

Early renderings show a vast, mirrorlike structure in the desert set to be about 650 feet wide – and 100 miles long. Saudi Arabia says the cutting-edge car-free city will run on 100% renewable energy and put services within a five-minute walk of 9 million people.

In other words, The Line symbolizes everything Saudi Arabia is setting out to achieve through Vision 2030: commit itself to a post-oil future, build livable spaces with economic opportunity, and set the standard of a futuristic city for others around the world to emulate.

There are more than 20 other Vision 2030 projects, such as the Red Sea holiday destination and Qiddiya, an arts and entertainment capital — conceived as ways of building a Saudi Arabia that has jobs for all its citizens.

Gerald Feierstein, the US ambassador to Yemen under President Barack Obama and a senior fellow at the Middle East Institute, told Insider that involving the private sector both locally and internationally had become crucial in Saudi Arabia's bid to create jobs.

"The old system of providing primarily public-sector employment for any Saudi coming into the workforce was no longer going to be achievable because the size of the population had grown beyond the capacity of the public sector," Feierstein said.

That said, much of this is being financed by the Public Investment Fund, Saudi Arabia's powerful sovereign wealth fund, which manages assets worth about $700 billion.

In recent years, the fund has been on a global spending spree, placing bets on technology through its $45 billion backing of SoftBank's Vision Fund, the Newcastle United soccer club, private equity, the Tesla rival Lucid, and golf.

By becoming a marquee investor in several high-profile names internationally, the fund — led by Crown Prince Mohammed and its governor, Yasir Othman al-Rumayyan — hopes to generate returns on bets powering the West, while incentivizing leaders to invest and open shop in the kingdom.

Saudi Arabia is buoyed by its status as the world's largest oil exporter — a position reinforced as Russia's war with Ukraine disrupts Russian crude exports. Last year, the state-owned oil company Saudi Aramco posted an astonishing net profit of $161 billion.

But Saudi royals are acutely aware that the country's nonoil revenues will become increasingly important in the years to come as the climate crisis pushes nations toward clean energy.

It explains why it's investing so heavily locally and internationally, and why it has set a target for increasing the contribution of nonoil exports to its nonoil GDP from 16% to 50% as part of Vision 2030's goals.

Success is far from certain

There are conflicting signals about whether Saudi Arabia's efforts will pay off.

Last year, it became the fastest-growing G20 economy, according to the International Monetary Fund, while its unemployment rate fell to 4.8%. It has already exceeded the 30% target of female participation in the workforce set by Vision 2030.

Mabon of the Foreign Policy Center said that most of the population favoured the crown prince. The people support the leader because of the promises set out in his grand plan.

"You just have to talk to young Saudis to get a sense of how popular he is," Mabon said.

However, success is far from guaranteed. Feierstein said "we need to be clear that it's young urban Saudis in places like Riyadh and Jeddah and Dhahran" who are galvanized by Vision 2030. He added: "When you talk about the hinterland, they're not necessarily as enthusiastic."

Mabon agreed, adding that another point of tension revolved around Crown Prince Mohammed's ability to maintain the nation's "legitimacy within Islam whilst embarking upon a project that is leaning to the trappings of Western modernity." Saudi Arabia has traditionally been deeply conservative.

For Farea Al-Muslimi, a Chatham House research fellow, there's even more at stake socially. Despite reports of nomadic tribes being displaced to make way for Neom, he said, Saudis continue to have goodwill toward the monarchy because of its long-term promises.

Failure to deliver on those promises given the sacrifices being made could spell trouble.

"It's something people are willing to forgive and forget — if it pays off," Al-Muslimi said. "If it doesn't, they're not going to be easy. It can backfire."

On a broader level, experts told Insider, the gathering pace of the Vision 2030 mission threatens to create deeper tensions between Saudi Arabia and the United Arab Emirates as they vie for the region's economic crown, while its financial payoff could take many years.

"All of these megaprojects, there's not a single guarantee that they will work," Al-Muslimi said. "It's a huge risk."

In July, the Public Investment Fund reported an $11 billion loss for last year as global markets were roiled, Bloomberg reported.

A key factor that could determine this project's success involves Saudi Arabia's changing appeal to the West. Concerns have been raised by the likes of Amnesty International on its human-rights record; it will need to be conscious of this when courting Western business and investment.

That said, the sheer scale and glamour of Vision 2030 could prove to be plenty in Saudi Arabia's pitch to observers abroad and give it a winning ticket to the future.

Saudis will rest their hopes on Crown Prince Mohammed to deliver. Fortunately for them, Mabon said, "there's a lot of confidence it can be done."