Saudi Arabia wants to create a new economy from the sands

In Riyadh, Jubail

Countless white, yellow or orange lights sparkle in the night, long flames come out of tall chimneys… Here is Jubail, in the desert, on the edge of the Persian Gulf. A site ten times the size of Paris where refineries, petrochemical plants and blast furnaces rub shoulders in the largest petrochemical complex in the world.

But, for the kingdom of Arabia, this is not enough. The city of iron, water and oil, which emerged from the sand in the 1980s, from a small fishing port, must double in size. More than 18 billion dollars are invested in new infrastructures, some 20.000 km of pipes, a university, dozens of factories and refineries, 50.000 homes and 55.000 jobs.

A little further north, another twin town, Ras al-Khair, dedicated to phosphate, zinc and other minerals, is also growing. Aramco, the gigantic Saudi oil tanker, has just launched the largest shipyard in the Gulf there, capable of producing more than 40 ships and supertankers a year.

Pharaonic construction sites are found in Saudi Arabia today. Giant wind farms, solar power plants, TGV, tourist sites or futuristic city... The kingdom of Arabia, pushed by the Crown Prince, Mohammed Ben Salman, impatient to see the country he will soon lead evolve, is launched in a new dynamic. It's urgent. The oil revenue, abundant for years, is now melting. While three-quarters of export earnings and public revenues come from black gold, the halving of the price of crude oil since the summer of 2014 has put the country in difficulty. With a deficit of 17,3% of GDP in 2016, he had to face cash flow problems, to the point of deferring certain payments. "The Saudi economy will most likely be in recession in 2017," predicts Pascal Devaux, economist at BNP Paribas. Suffice to say that the welfare state, in this country of 30 million inhabitants, four times the size of France and a member of the G20, is threatened.

Sophia, the unveiled robot

Arab leaders are well aware of this. In particular, Mohammed Bin Salman, known as MBS and favorite son of old King Salman Bin Abdelaziz al-Saud, 81 years old. Already endowed with many powers (he is notably Deputy Prime Minister and Minister of Defence), which he has just reinforced with a purge which at the beginning of November dismissed some of the ministers and the royal family, MBS launched in April 2016 the Vision 2030 plan to diversify the economy. On the menu, increased exploitation of petroleum products, but also of other resources of the kingdom: minerals, solar and wind energy, tourism. And openness to activities hitherto ignored or condemned. The objective is to reduce dependence on hydrocarbons by 2020 by increasing the contribution of the manufacturing sector to GDP to 20%, against 10% in 2012.

But the revolution is not only industrial. It is also social. And it relies on innovation. The country where women, who go out fully covered in black, will not be allowed to drive until 2018 and where they are subject to the guardianship of a man, is the first in the world to have granted, at the end of October, citizenship to a female robot, Sophia, not veiled!

MBS, from the height of his 32 years, understood that the new Arabia, where 70% of the population is under 30, had to be built with its youth, - the biggest user of Twitter in the world - and with its women. At an international forum in Riyadh last month, MBS promised to "return to a moderate, tolerant, world-open Islam". He is considering the opening of cinemas in the country. One of his pharaonic projects is the creation of a gigantic city of entertainment which will include a safari course, car races, and will be 17 times larger than the Disneyland amusement park near Paris.

With the end of the black gold bonanza, money is no longer at hand as before. The kingdom will partially privatize its economy. Starting with its flagship, the oil giant Aramco, whose turnover is estimated at 250 billion dollars, or a third of GDP, and of which it should sell 5% of the capital in 2018. The operation could bring in up to to 100 billion dollars, which will be placed in a sovereign wealth fund, the Public Investment Fund (PIF). This one, which already holds 230 billion, invests in Arabia or abroad, in projects that are sometimes just as pharaonic. He will thus bet 1,5 billion dollars in the space activities of the company Virgin.

Riyadh receives the equivalent of "less than 2% of its GDP from foreign investors, five times less than some emerging countries," says Pascal Devaux. The kingdom is therefore trying to seduce them, by organizing a “Davos of the desert” or tours of the capitals for its ministers. But, from the project to the realization, there is a gap. Other new towns, imagined fifteen years ago in Arabia, have never seen the light of day.

This does not prevent MBS from building plans on the comet. His latest project, the most disproportionate, is Neom, city of the future on the shores of the Red Sea. Three times larger than Corsica, this high-tech paradise will use the sun, the wind and rely on new technologies. Robots will be kings there, taxis will fly, deliveries will be made by drones, agriculture will be vertical... This future paradise will concern sectors as diverse as energy, water, biotechnology, food, digital , media and entertainment. To build it, Riyadh needs the modest sum of 500 billion dollars…