Vision 2030 is the latest and most ambitious iteration of Saudi Arabia’s policy for economic diversification, intended to adapt one of the world’s most oil-dependent economies for a transition to a post-oil future. Despite never explicitly mentioning politics, it has profoundly political implications. If it were to be actually implemented, Vision 2030 would seem to dismantle the political economy model of the rentier state, where the state’s primary economic function is to allocate unearned wealth in return for political acquiescence.
The rentier state model is a caricature that has a point. Oil wealth enables Saudi Arabia to have one of the lowest tax burdens in the world, at around 4 percent of gross domestic product. Citizens expect the state to pay for services, subsidies and public sector jobs, while poorly paid non-nationals do most of the private sector’s work.
Oil revenues have also enabled royals to dispense patronage directly to allies. This patronage economy has shaped the nature of state-citizen relations for decades.
But now, Crown Prince Mohammed bin Salman has introduced Vision 2030 – a glossy, consultant-heavy plan to make the private sector the engine of growth and jobs.
There are two main drivers of this change. One is that the old model has become economically unsustainable. Even with the recent recovery in oil prices, the government cannot afford to maintain the current benefits for its 20 million citizens, nor can it act as the main driver of growth in any sustained way. Second, the crown prince has a window of opportunity to cut the state’s economic provision with seemingly limited political costs – at least for now. Saudis who might have called for political reform have been demoralized by the results of uprisings elsewhere in the region.
Read More: Saudi Arabia Purge or Power Struggle?
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