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By Tyler Durden
Submitted by Juan Cole via OilPrice.com,
Prince Muhammad Bin Salman, 30, the deputy crown prince of Saudi Arabia laid out his vision for Saudi Arabia on Monday in a plan called “Vision 2030.” He wants to get Saudi Arabia off its oil dependence in only 4 years, by 2020, and wants to diversify the economy into manufacturing and mining.
In an interview with Al Arabiya, the prince said the future of the kingdom would be based on:
1. Its possession of the Muslim shrine cities of Mecca and Medina and the “Arab and Muslim depth” that position gave the kingdom
2. The kingdom’s geographical centrality to world commerce, with 30 percent of global trade passing through the 3 major sea routes that Saudi Arabia bestrides (not sure what the third is, after the Red Sea and the Persian Gulf).
3. The creation of a $2 trillion sovereign wealth fund through a sale of 5 percent of shares in Aramco, the world’s largest oil company.
Prince Muhammad said Monday that he thought these assets would allow the kingdom to cease its dependence on petroleum in the very near future.
CNBC summarized other planks of his platform this way:
“The planned economic diversification also involved localizing renewable energy and industrial equipment sectors and creating high-quality tourism attractions. It also plans to make it easier to apply for visas and hoped to create 90,000 job opportunities in its mining sector.”
Saudi Arabia’s citizen population is probably only about 20 million, so it is a small country without a big domestic market. It is surrounded in the general region by huge countries like Egypt (pop. 85 million), Iran (pop. 75 million) and Turkey (75 million), not to mention Ethiopia (pop. 90 million) Without petroleum, it is difficult to see what would be distinctive about Saudi Arabia economically.
The excruciatingly young prince, who was born in 1985, has a BA in Law from a local Saudi university and his way of speaking about the elements of the economy is not reassuring. Take his emphasis on the maritime trade routes that flow around the Arabian Peninsula. How exactly does Saudi Arabia derive a dime from them? The only tolls I can think of are collected by Egypt for passage through the Suez Canal. By far the most important container port in the region is Jebel Ali in the UAE, which dwarfs Jedda. His estimate of 30 percent of world trade going through these bodies of water strikes me as exaggerated. Only about 10 percent of world trade goes through the Suez Canal.
As for tourism, in a country where alcohol is forbidden and religious police report to the police unmarried couples on dates, that seems to me a non-starter outside the religious tourism of pilgrimage to Mecca. The annual pilgrimage brought in $16.5 billion or 3 percent of the Saudi GDP four years ago, but that number appears to be way down the last couple of years. Unless the prince plans to highly increase the 2-3 million pilgrims annually, religious
Source: The $2 Trillion Gamble That Saudi Arabia Cannot Win
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