On Monday the Deputy Crown Prince of Saudi Arabia, Mohammed bin Salman, announced and detailed the kingdom’s ambitious new plan to restructure its economy by the year 2030. The prince admitted that they “have developed an oil addiction in the kingdom of Saudi Arabia”.
Last year 70% of the Kingdom’s revenue came from the oil industry, since then the price of oil has fallen dramatically and has resulted in the cutting of many government paid utilities and subsidies that are provided to the population. From its peak in June of 2014 at $115 per barrel the price of oil has cascaded to less than $30 a barrel at the start of 2016, only rising back above $40 recently.
Prince Mohammed outlined the plan for economic diversification in the pre-recorded interview with the state owned media company Al Arabiya. Included in the details was the creation of $2 trillion sovereign wealth fund, that would be able to dictate global economic affairs. In order to pay for part of the fund Saudi Arabia will be selling all shares in Aramco that are worth less 5%, the state owned oil juggernaut is believed to be the most valuable company in the world at a $2.5 trillion evaluation.
Also included in the plan was the creation of a new visa system that allows expatriate Muslims and Arabs to work for longer periods in the kingdom, increased investment in mineral mining and military production, and greater participation of women in the Saudi workforce.
The prince, who is not only chairman of the Council of Economic and Development Affairs but also the Minister of Defence, noted that the 15 year vision is not a response to low oil prices and if prices were to rise it would simply assist the process of economic reform. He also said that the kingdom will be able to function without oil by 2020, a statement similar to promises made by other oil dependant states that never came to fruition.
The plan has so far been seen as a move in the right general direction, with greater action on climate change likely to massively reduce the importance of oil in the future. Though, the plan has been criticised for being a too optimistic about the timeline and fluidity of implementation that the kingdom is hoping for.