Saudi Arabia’s economy has been drained by high spending and low prices of oil. Oil is going to be increasingly less important in the world, and oil-based economies must reinvent themselves.
Saudi Vision 2030 was born during the Arab Revolutions. The House of Saud was caught by surprise when protests spread also within the kingdom, especially in the Shiite eastern province.60% of the saudi population is made up of people under 25 years of age. This means that in the next years the amount of working people will increase, and the revenue from oil alone is not sufficient to cover the costs of a growing population. The government understood that it was time to inverse direction, and in 2016 the Saudi Vision 2030 was presented to worldwide investors. SV2030 attempts to move away from the current social contract, whereby the state provides all the welfare to the citizen, at the cost of a quasi-total social control over their lives. For this reason, the downsizing of the public sector, which now employs nearly 70% of the kingdom’s labor, and the empowerment of the private sector, is a big part of SV2030.
SV2030 promises to triple non-oil revenues and to encourage more women to enter the workforce. Some of the sectors in which Riyadh plans to invest in order to encourage private enterprise are tourism, defense, construction, healthcare, and manufacturing. More importantly, the government intends to sell Saudi Aramco, the state-owned oil extraction company, in the public financial market. Currently, the private share in the economy in general is a mere 20% of Saudi GDP, and SV2030 aims at significantly increasing this figure.
Religious tourism in saudi Arabia is currently at an all-time high, and after oil, it is the second greatest source of income for the kingdom. By speeding the visa process and making it easier to travel to the KSA, the saudis hope to boost the revenues from tourism as well.As for its military, Saudi Arabia has been relying on the USA and has no domestic military industry. SV2030 seeks to modify also this state of things by producing weapons indigenously, thereby also expanding the job market.One of the problems with SV2030 is that its model is based on Western job projections. In Saudi society, 80% of the labor market in the private sector is filled by migrant workers from South and Southeast Asia. Saudi citizens are accustomed to high-paying public job, and they will not necessarily be eager to enter the private sector.
Moreover, the Saudi leadership will likely not risk its relationship with the Wahhabi clerics, who will oppose a greater role for Shi’a clerics, businessmen and merchants. SV2030 will not resolve the country’s sectarian divisions in just twelve years. On the other hand, if only Sunnis will benefit, Shiites will be even more marginalized and therefore even more dangerous for the security of the state. In such a scenario, Iran would certainly profit from Shi’a resentment and would gain more influence among the Shiites of Saudi Arabia.
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