Saudi Arabian regime uses ‘petrodollars’ to transform its economy beyond black gold

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Saudi project for a futuristic eco-city Line (line) a few months ago made the splash on the media and networks of half the world. The video of the computer recreation that went viral showed a residential area in the middle of the desert where two huge mirror walls facing each other are 500 meters high and 170 kilometers long. Inside was a city with blocks of flats, air taxis, and abundant vegetation in the shadow of mirrors, as well as a train line connecting the structures of the pharaohs from one end to the other.

This is a real plan (there are already excavators, architects and builders developing it). Tabuk, northwest of Saudi Arabia), but its future is uncertain. The line is part of one of five megaprojects under the Vision 2030 plan, which includes a series of economic and investment initiatives in which Saudi Arabia wants to take a giant leap forward, move away from oil and become one of the most vibrant economies in the region.

The line also symbolizes the hopes and meanness of the gulf country. First, it shows the megalomania of the de facto head of government, Crown Prince Mohammed bin Salmán (popularly known as MBS). It also reveals your abundance in financial resources, black gold petrodollars. It was the world’s economy that grew the most last year, well above India or China: its GDP rose 8.7% to 1.52 trillion euros (Spain’s 1.33 trillion).

But the pharaoh project is also a reflection of the totalitarian system that rules the country, the suppression of the absolute monarchy with the systematic violation of human rights. Some of those who criticized MBS’s plans were arrested and jailed. Famous architect Norman Foster had to leave the project The Line follows the murder of critical Saudi journalist Jamal Khashoggi, who was torn apart at the Saudi consulate in Istanbul by Saudi government agents sent by Prince Mohammed bin Salman.

“Saudi Arabia is immersed in a strategy of modernizing and diversifying its economy, which has gone hand in hand with a certain modernization and community opening, which has been carried out since MBS became crown prince and began to seek major international consultancies”, Explain. Edward SolerProfessor of International Relations at the Autonomous University of Barcelona and Senior Associate Researcher at CIDOB. “There is a real urge to shake an economic structure that they consider unsustainable: A global decarbonization process is underway and they are also highly vulnerable to price increases and decreases”.

Vision 2030 is the star initiative that MBS wants to achieve. Among its main goals is to diversify an economy that depends almost entirely on oil revenues. They plan to increase the rate export of non-oil products From the current 16% to 50% over the next seven years. They liberalized some sectors of a wholly state-owned economy controlled by the palace. They even want to attract tourism and investment; big companies are settling in the desert country. And to increase the private sector’s contribution to GDP to 65 percent before 2030. Oil reserves are estimated to last another 90 years. So how will the population of 35 million live?

In this context, Saudi Arabia’s largest telecommunications operator Saudi Telecom (STC Group) purchased 9.9% of Telefónica’s shares for 2 billion 100 million euros. Saudi Telecom is controlled by the royal family 64% is owned by the Saudi Public Investment Fund (PIF). PIF, on the other hand, is the main investment instrument used by the Crown Prince to implement his Vision 2030 plan: It is one of the largest investment instruments in the world with its assets of 730,000 million Euros.

Saudi Arabia wants to buy and eat the world. The regime used its checkbook to acquire big names in the football world: from Cristiano Ronaldo to Roberto Mancini, through the acquisition of Newcastle or deals with the Spanish League and the RFEF.

Things are not going as expected for the Saudi regime. The COVID-19 pandemic and the drop in fuel demand were a warning. But not alone. Later, youth unemployment rose to double digits (15%) and some of the educated population began to do manual labor that was previously reserved for foreign immigrants. This year, Growth forecasts for the economy fall. The International Monetary Fund cut its GDP growth forecast to below 1.9 percent, according to data on Wednesday.

Modernization yes, democratization no

In the geopolitical arena, Saudi Arabia competes peacefully with the powerful United Arab Emirates regionally. But above all, it is a country at war with its neighbor Yemen, one of the worst ongoing humanitarian crises that has killed almost half a million people according to the United Nations. There the Houthis overthrew the Riyadh-backed government. The Houthis, who came from the Shiite branch of Islam against the Saudi Sunnis, were supported, for all intents and purposes, by Iran, the archenemy of the Saudi Arabian region. But something is changing in this historical and religious rivalry. After surprise mediation by China in March this year, Riyadh and Tehran decided to re-establish diplomatic relations.

In the context of this war, the Government of Pedro Sánchez committed to sell five more Navantia warships to Saudi Arabia in November last year. estimated total of approximately 2,000 million euros. If the delivery is complete, human rights activists criticize, ten warships will have already been sold by the state group to the Gulf’s absolutist monarchy.

There is significant openness inside compared to previous decades. “Saudi Arabia is changing so fast, but It is not democratization. Driving licenses for women, movie theaters, concerts or tourism aims to address the concerns of a significant segment of the population, especially youth and women,” explains Soler.

But it remains an absolute monarchy where all power is concentrated in the royal family, political parties are banned, freedom of association is absent, and freedom of the press is very limited.

The main political change in the recent period is the breaking of the ancestral tradition of the Arab country where power passes from brother to brother. in such a place active polygamyWhen it came to one of the brothers, it caused him to be older and his view of government time-limited. Soler explains. King Salmán bin Abdulaziz decided to foil this plan and handed over all authority to his 38-year-old son, MBS. Therefore, he will have a decades-long reign before him to re-transform the country and free it from total and absolute dependence on oil.

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