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.

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Instead, Mohammed bin Salman seems to be emulating the Emirati model, whereby economic liberalization is accompanied by social, not political, liberalization. Investing heavily in private opinion polls, focus groups, and social media surveillance, MBS has identified a critical mass of young people who want the strict social rules to change.

In turn, they support his political push to disempower religious clerics and conservatives – a politically diverse group that has provided both support for the ruling family and a breeding ground for opposition.

The crown prince is also promising this young constituency future jobs and opportunities created by a newly thriving and innovative private sector. He has announced vast mega projects, like the high-tech city Neom. But the government does not actually have the financial capacity to fund these projects, a fact that is often ignored. These ambitious promises will only materialize if international investors can be persuaded to fund them. However, in 2017, private investment in Saudi Arabia contracted by 6 percent. Local investors are struggling to cope with the disruption to their traditional business models as the government cuts their contracts and imposes new labour fees, and international investors are unconvinced by the risk-reward ratio when growth is slow and uncertainty is high. The dramatic, populist move of the 2017 Ritz-Carlton episode worried investors, who want more predictability and transparency, and clearer, institutionalized governance.

Concerns about transparency are also an obstacle to internationally listing Saudi Aramco’s proposed initial public offering. Questions remain about how the government can reconcile the need for more institutionalized economic governance with its authoritarian political system. This dilemma could become more acute in the coming years if job opportunities do not improve – the same youth who are currently cheering Mohammed bin Salman could turn against him.

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