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Abu Dhabi, UAEFriday 25 May 2018

Saudi Arabia's Vision 2030: economic reform likely to bring political changes too 

UK think tank says the kingdom's blueprint for its future economy is unikely to come to fruition without some unintended political reactions. 

Mohammad bin Salman, Crown Prince of Saudi Arabia. Bandar Algaloud / Courtesy of Saudi Royal Court / Reuters
Mohammad bin Salman, Crown Prince of Saudi Arabia. Bandar Algaloud / Courtesy of Saudi Royal Court / Reuters

Saudi Arabia's Vision 2030 represents a serious attempt to address a future in which oil plays less of a role in the kingdom's economy but implementing the plan is likely to bring about unpredictable political change, a think tank said.

A report published by the UK-based Chatham House largely attributed the ambitious economic plan to the rise of Crown Prince Mohammed bin Salman.

The need to diversify and develop the kingdom's economy has put serious pressure on the highest levels of governments to make the long-overdue changes needed for Saudi Arabia to progress..

Senior research fellow at Chatham House and author of the report, Jane Kinninmont, said the blueprint for the future economy is unlikely to become reality without some unintended political reactions.

“The authorities may hope that the political system can remain largely unchanged, at least in terms of the dominant role of the monarchy,” she said. “But their economic reform plans imply major changes in the economic basis of the relationship with citizens, and potentially also to the traditional partnership between ruling family and clerics.”

As the plan looks to promote a more active citizenry, it will also encourage more independent thinking and a more entrepreneurial spirit - both of which will have to overcome the obstacle of religious conservativism.

But there is no doubt that Vision 2030 is focused on moulding a country that is less reliant on oil, a fact that both the rulers and the citizens of Saudi Arabia generally accept is necessary.

A main concern is that as the transition pushes for rapid change, the Saudi leadership will continue to support a private sector that will nonetheless still be at least semi-dependent on the good will of the government.

“This transition will be a difficult one, and will create winners and losers. In particular, a generation of less well-educated youth will find it extremely difficult to make a decent living in the private sector and are thus likely to need social and economic support,” the report said.

The ambitious plan, said the report, is likely to create divisions not only in economic standards but in social and political ones. Less-privileged residents working in private-sector industries in Saudi Arabia are likely to fall behind.

Economic reformists both within and outside Saudi Arabia hope that developing the economy will promote evolution in governance and institutions, or at least in the relationship between the authorities and the populace.

The Vision 2030 plan wants to implement changes throughout Saudi Arabia that will drive the young to seek careers less dependent on government subsidies and more based on private sector entrepreneurship.

Chatham House also said Vision 2030 pays too little attention to social change as Saudis strive to improve their quality of life. Making the country more “fun” would be a real gain for the leadership.

The think tank report also referred to Dubai’s development and modernisation plans.

“While Saudi Arabia is never going to be Dubai, the UAE model of social liberalization without political liberalization is one that influences the debate across the region,” Ms Kinninmont said..

Whatever the potential effect on quality of life, some in Saudi Arabia will regard any provision of entertainment as a step too far towards Westernisation and an expensive indulgence only available to the privileged few. Instead, the economic transformation of Vision 2030 could be used as an opportunity to create a more inclusive political system in Saudi Arabia, which would in turn lessen the need to appease its citizens with government handouts and bonuses.

However, the difficulties emerging from the gradual empowerment of parliaments in Kuwait and Bahrain have made engaging in politics less attractive.

Additionally, the calls for change inspired by the Arab uprisings of 2011 highlighted a need for greater government accountability and a more earnest fight against corruption.

“This regional climate has given the Saudi leadership a window of opportunity to push through painful austerity measures, which are not popular but which have not provoked any corresponding populist mobilization,” the report said.It also pointed out that “promises of transparency laid out in Vision 2030 have not been matched by a step change in press freedom or freedom of information.”

Although Vision 2030 lays out an economic path, it is hard to image the political status quo remaining unchanged until 2030, Ms Kinninmont said. Though the plan is ambitious, it would have a better chance of success if implemented over a longer period than 13 years.