Saudi Arabia’s Great Transformation
With its Vision 2030 plan, Saudi Arabia is attempting to move away from economic dependence on hydrocarbons. Given the vast resources that the kingdom is deploying, the enthusiasm shown by young Saudis, and the speed at which reforms are moving forward, the strategy could ultimately benefit the entire Middle East.
JEDDAH/DOHA – An unprecedented experiment in economic and social transformation is playing out in Saudi Arabia, and the outcome could have profound implications for the entire Arab world. The main goal of the kingdom’s Vision 2030 plan is to shift the economy away from fossil fuels. It is a timely pivot, given that greenhouse-gas emissions must be reduced by 45% by 2030 and reach net zero by 2050 to achieve the Paris climate agreement’s goal of limiting global warming to 1.5° Celsius.
At the same time, the challenge is difficult to overstate. Most of Saudi Arabia’s wealth is derived from its vast petroleum reserves (the country is the world’s top crude exporter), and the risk of these assets becoming stranded is existential.
Saudi Arabia is not the first petrostate in the Middle East to attempt a move away from hydrocarbons. For several decades, other Arab economies have pursued similar diversification efforts with little success. A notable exception is Dubai, which reinvented itself as a logistics center, tourist destination, and offshore finance hub to offset declining oil reserves. But the city-state model that has succeeded elsewhere may not be scalable, which is why policymakers in the region and beyond will closely watch the ambitious development program in Saudi Arabia, a country with nearly 37 million inhabitants.