A $500bn Mega City – Saudis Try To Turn Country Into Dubai 20 Years Too Late

A promotional video released on Tuesday features a lifestyle so far unavailable in Saudi cities. It showed women free to jog in leotards in public spaces, working alongside men and playing instruments in a musical ensemble. (Bloomberg – see below)

Today the Saudi regime took another step forward in its effort (Vision 2030) to save itself by launching a $500bn project to build a futuristic mega city spanning three countries. From an Al Arabiya report:

Saudi Crown Prince Mohammed bin Salman (MBS) announced the launch of NEOM on Tuesday, a project that aspires to be the “safest, most efficient, most future oriented, and best place to live and work” in the kingdom.

NEOM’s land mass will extend across the Egyptian and Jordanian borders, rendering NEOM the first private zone to span three countries.

The project will be backed by more than $500 billion over the coming years by Saudi Arabia. Wind and solar power will allow NEOM to be powered solely by regenerative energy, while 70 percent of the world’s population will be able to reach it within eight hours.

Like us, you might have been wondering why such an uninspiring name was chosen? Fortunately, Al Arabiya had the answer to that one.

From the moment Saudi Crown Prince Mohammed bin Salman announced the launch of NEOM project on Tuesday, a project representing the next generation city and global center for innovation, trade and creativity in the kingdom, people wondered what does the project’s name stand for. According to Al Arabiya the first three characters “NEO” comes from the Latin word which means “new”. The fourth character “M” is the abbreviation of the Arabic word “Mostaqbal” which means “future.”

We can’t argue with the Saudis needing a new future.

The Crown Prince also announced that Bilderberg Steering Committee member, Klaus Kleinfeld, former CEO of Siemens and Alcoa, had been appointed CEO of NEOM.

Al Arabiya provided a handy, bullet point summary of the project.

• NEOM aspires to be the safest, most efficient, most future oriented, and best place to live and work
• NEOM is developed independent of the Kingdom’s existing governmental framework with investors, businesses, and innovators consulted at every stage of development
• NEOM’s unique location connects Asia, Europe, and Africa, will include the world’s most significant and promising economic sectors
• NEOM land expands over 26,500 km2; its location will facilitate NEOM’s rapid emergence as a global hub that has the potential to bring together the best of Arabia, Asia, Africa, Europe and America
• NEOM will be backed by more than $500 billion over the coming years by the Kingdom of Saudi Arabia, the Saudi Arabian Public Investment Fund, local as well as international investors

It seems that, unlike some of his predecessors, Crown Prince MbS has a high opinion of “human capital”.

Saudi Arabia’s Crown Prince Mohammed bin Salman said on Tuesday that the kingdom’s human capital will represent the kingdom’s biggest element to the success of NEOM…”the NEOM project is a huge economic undertaking and it is only meant for dreamers. Our human capital will be the biggest element to its future success. We want to secure our place in the future of the world and we’ll bring together creative, talented people from all over the world to make something unique,” the crown prince told the conference on Tuesday…Softbank Group CEO Masayoshi Son said at an investment conference in Riyadh on Tuesday that Saudi’s Crown Prince Mohammed bin Salman had asked him to get involved.

This was Bloomberg’s take:

Saudi Crown Prince Mohammed bin Salman announced plans to build a new city on the Red Sea coast, promising a lifestyle not available in today’s Saudi Arabia…The new project will likely surprise investors still trying to take stock of a series of major announcements made by the prince during his meteoric rise to power as he seeks to prepare Saudi Arabia for the post-oil era. In less than two years, he’s revealed plans to sell a stake in oil giant Saudi Aramco and create the world’s largest sovereign wealth fund, and has ended a long-standing ban on female drivers. The prince, 32, made a rare public appearance at the conference to promote the project, telling the bankers and economic policy makers in attendance that the kingdom is moving to a “new generation of cities.” NEOM will be powered by clean energy, he said, and will have no room “for anything traditional.” It will likely be met with the same mixture of optimism and doubt that has greeted his previous headline-grabbing announcements. His supporters can be expected to cheer what they see as a bold drive to transform the kingdom, while others will point to past failed attempts to overhaul the Saudi economy that also included industrial cities in the desert.”

We know which side of that debate we’d be on. Where are we on that $10bn project to create a financial district in Riyadh, again?

Here are some more details on the project courtesy of Bloomberg.

International Connections

The ambitious plan includes a bridge spanning the Red Sea, connecting the proposed city to Egypt and the rest of Africa. Some 10,000 square miles (25,900 square kilometers) have been allocated for the development of the urban area that will stretch into Jordan and Egypt. The project “seems to be broadly modelled on the ‘free zone’ concept pioneered in Dubai, where such zones are not only exempt from tariffs but also have their own regulations and laws, hence operating separately from the rest of government,” said Steffen Hertog, a professor at the London School of Economics and longtime Saudi-watcher. “In Dubai, this has worked well, but attempts to copy it have done less well in the region.”

Conservative Clerics

A promotional video released on Tuesday features a lifestyle so far unavailable in Saudi cities. It showed women free to jog in leotards in public spaces, working alongside men and playing instruments in a musical ensemble. The one woman wearing a hijab had her head covered with a patterned pink scarf. The kingdom has already announced a plan to transform hundreds of kilometers of Red Sea coast into a semi-autonomous world-class tourism destination and governed by laws “on par with international standards.”  

Details Needed

“Saudi Arabia has announced a number of mega-projects recently, but what investors will ultimately look for is greater details, progress with plans and initial investment,” said Monica Malik, chief economist of Abu Dhabi Commercial Bank. And while the planned, more liberal, regulatory framework for the city “could be positive for streamlining investment,” it didn’t gain traction with previous economic cities developed in the kingdom…Hertog said investors will want to see whether “circumventing some of the slow mainline bureaucracy and general social restrictions in Saudi Arabia in a special zone” can work. “If this is to be an international hub, it needs to offer something better than Dubai, which is a high bar to cross,” he said.

The crown prince indicated he understood the challenge. “Dreaming is easy, achieving it is difficult,” he said. Charlie Munger has an expression for that.

They also released this lovely emblem…