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"Thirty years from now, no one will consume oil even if there is a huge amount of oil. The oil will remain in the ground. The absence of stones did not mean the end of the Stone Age. Even if there is oil, the oil age is over."
This is the future of oil, predicted in June 2000 by former Oil Minister Ahmed Zaki Yamani, who led Saudi Arabia to become an oil-rich country. Yamani believes that oil will be easily discovered and produced, the technology to replace it will reduce oil consumption by almost 100 percent. With just seven years to go until 2030, Yamani's prediction has not come true, but given the global trend toward fossil fuels, the downfall of Saudi Arabia, which has 25% of the world's oil reserves and is poisoned by its over-reliance on oil, is unmistakable.
Crown Prince Mohammad's $1 billion blueprint, 'Saudi Vision 2030'
Mohammad bin Salman, who became deputy crown prince in 2015, sought a way for the Islamic holy city of Mecca and Medina to survive without oil, but the kingdom lacked experience and absolutely lacked manpower to establish reform measures. So Crown Prince Mohammad spent more than $1 billion a year borrowing the head of a Western consulting firm. I thought that outsiders would point out the problem more honestly and present solutions. Change was desperately needed.
In 2016, the results finally came out. It is the "Saudi Vision 2030" that will turn an oil-addicted kingdom into an oil-free economic powerhouse. Industry diversification is key. The goal is to list a portion of its stake in state-owned oil company Aramco, the world's largest oil company, to create seed money by 2030, and to transform the state-led economy into a private, market-friendly economy. In 2015, non-oil fiscal revenues were $43.6 billion (163.5 billion Saudi rials), with the goal of raising this to $160 billion (SR600 billion) in 2020 and $267 billion (SR1 trillion) in 2030.
Unprecedented changes have taken place, including the Ceer, the first car brand and electric car in Saudi history, tourism centered on Allulah and Hegra, and the reconstruction of a movie theater that closed in 1979. But what has attracted the world's attention above all is the new city "Neom" to be built in the northwestern Red Sea coast. The city is named after the first letter M of Neo, which means new in Greek, and Mustaqbal, which means future in Arabic. The line, a 500-meter-high, 200-meter-wide, 170-kilometer-long city with 9 million people and self-sufficient "automated to see everything," Oxagon, an eco-friendly high-tech industrial park floating on the Red Sea, which accounts for 15% of the world's volume of goods, and Trozena, an eco-friendly tourism complex where the 2030 Asian Winter Games will be held, are the three elements that make up NEOM.
Crown Prince Mohammad's 'antidote to oil poisoning', a changing kingdom
To become a private-led, market-friendly economy, a free social atmosphere is essential. In particular, the young population under the age of 35, who are the future leaders of the kingdom and make up 67% of the population, must be active to create an oil-free economic powerhouse. In announcing Saudi Vision 2030, Mohammed vowed to eliminate Islamic fundamentalism "right now" that has weighed on the liberal social climate, saying, "We cannot ruin our 30 years because of extremists." In particular, it opened up a wider space for activities for women who had been suffocated by the conservative atmosphere. This is because it is all too obvious that the country cannot develop normally by ignoring women, who make up half (49%) of the available working population aged 15~34. Women who had to cover themselves were freed from the hijab and were given the freedom to drive themselves and go where they wanted. Not only can men and women sit together in concert halls and sports arenas, but now female idols are on the verge of birth.
While the traditional Saudi monarchy is slow to carry out state business because the king consults and decides with members of the royal family, Crown Prince Mohammad is quite different. The process of determining, implementing and checking policies is expeditious. It is indeed a powerful momentum. Crown Prince Mohammad, who used to love entrepreneurs who broke the tradition and innovated like Bill Gates, Steve Jobs, and Mark Zuckerberg, thought how Saudi Arabia would change if he, who is incomparably richer, dreamed of innovation like them, is now acting as an antidote to awakening the kingdom from oil addiction.
Is it feasible?
The young Crown Prince Mohammad's steps toward reform are unstoppably fast, and NEOM is a revolutionary construction project that is rare in the history of human civilization. Crown Prince Mohammed Bin Salman highly values Israel's economic, military, and intelligence assets. Unlike my father's generation, Palestinian refugees show the characteristics of a generation that does not have a sense of moral debt. The establishment of NEOM on the Red Coast, close to Israel, can also be seen as an expectation of future cooperation with Israel. Of course, it can also be interpreted as a reflection of the US administration's willingness to resolve the Israeli-Palestinian issue. However, its feasibility is uncertain. Hearing of Crown Prince Mohammad's plan, the Obama and Trump administrations also tilted their heads.
The prevailing view is that the completion time will be only in 2045~2050 rather than in 2030, which is seven years from now. That would double the original construction cost of $500 billion, and the big question is what to do with the financial resources. We expect outside investment, but it is doubtful which companies will boldly enter a business with uncertain prospects. In addition, in order to provide new jobs for the younger generation, it is only natural to hire its own citizens at construction sites, but since it is impossible to hire its own citizens without skilled skills, it is difficult to expect economic growth due to the influx of foreign workers.
Even when completed, The Line raises the question of how it will meet the estimated 9 million residents. The 60 offices of the skyscrapers built in Riyadh are still vacant because they have not found tenants, and the Red Beach King Abdullah Economic City, which was aiming for 2 million residents, still has less than 10,000 people a decade later. This is why there is a worrying assessment that it is safe to refrain from long-term investments and focus on winning short-term construction contracts because the success or failure of the business is uncertain.
Still, the way to go is right
The road to the new Saudi Arabia is rough. But the direction is right. Moreover, the success or failure of the NEOM project is closely related to the dignity of the kingship that Crown Prince Mohammad will inherit. If it fails, the aftermath will lead to corrective changes that you don't even want to think about. Therefore, with the future of the kingdom, we will risk the life and death of the monarchy and make Neom a success. In fact, there isn't much time left to cure the addiction to oil. This sense of urgency is reflected in the fact that Saudi Aramco Chief Executive Nasser in September last year, ashamed of oil investment, called for a halt to the global move to hastily decommission oil-power plants and to make the energy transition more efficient.
If you go to Aramco's sophisticated facilities like the wealthy middle-class cities in the United States, visitors will be greeted by a monument called "The Well of Prosperity" on the site of the Dammam No. 7 oil well, which led the desert kingdom to an oil-rich nation in 1938. If Crown Prince Mohammed bin Salman's efforts to awaken the kingdom from oil addiction succeed in the era of energy transition, a monument to the "City of Prosperity" may be erected in NEOM. We support Crown Prince Mohammed bin Salman's dream to come true.
Park Hyun-do Daewoo Professor, Euromena Research Institute, Sogang University is an expert on Middle East-Islam. He studied religious studies at Sogang University, received a master's degree in Islamic studies from McGill University in Canada, and a Ph.D. in Islamic studies from the University of Tehran, Iran. He is a member of the Policy Advisory Committee of the Ministry of Foreign Affairs, a member of the National Situation Information Advisory Committee of the Ministry of Justice, and an expert member of the Middle East Research Council of the Korea Institute for Foreign Economic Policy. [HangukIlbo]