Saudi Arabia wants to sow a new economy

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INFOGRAPHICS - Faced with the decline of its oil revenue, the kingdom is betting on futuristic and expensive megaprojects.

INFOGRAPHICS - Faced with the decline of its oil revenue, the kingdom is betting on futuristic and expensive megaprojects.

In Riyadh, Jubail

Innumerable white, yellow or orange fires 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 as large as Paris where refineries, petrochemical plants and blast furnaces meet in the largest petrochemical complex in the world.

But for the kingdom of Arabia, that is not enough. The city of iron, water and oil, out of the sand in the 1980s, a small fishing port, must double in size. More than $ 18 billion is invested in new infrastructure, some 20,000 km of pipes, a university, dozens of factories and refineries, 50,000 homes and 55,000 jobs.

"The Saudi economy will most likely be in recession in 2017"

Pascal Devaux, economist at BNP Paribas

A little further north, another city, twin, Ras al-Khair, dedicated to phosphate, zinc and other minerals, also grows. Aramco, the giant Saudi oil, has just launched the largest shipyard in the Gulf, capable of producing more than 40 vessels and supertankers per year.

The Pharaonic shipyards, it is in Saudi Arabia that we find them today. Giant wind farms, solar power stations, high-speed trains, tourist sites or futuristic cities ... The Kingdom of Arabia, pushed by the crown prince, Mohammed Ben Salman, impatient to see evolving the country he will lead soon, is launched in a new dynamic. It's urgent. The oil rent, abundant for years, melts today. While three-quarters of export earnings and government revenues come from black gold, the collapse of half the price of crude since summer 2014 puts the country in trouble. 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," says Pascal Devaux, an economist at BNP Paribas. In other words, the welfare state, in this country of 30 million inhabitants, as big as four times France and a member of the G20, is threatened.

Sophia, the unveiled robot

Arab leaders are well aware of this. In particular, Mohammed Ben Salman, known as MBS and son of the late King Salman Ben Abdelaziz al-Saud, 81 years old. He already has many powers (he is notably Deputy Prime Minister and Minister of Defense), that he has just reinforced with a purge that dismissed early November some of the ministers and the royal familyIn April 2016, MBS launched the Vision 2030 plan to diversify the economy. On the menu, increased exploitation of oil products, but also other resources of the kingdom: minerals, solar energy and wind, tourism. And the opening to activities hitherto ignored or reprobated. The objective is to reduce dependence on hydrocarbons by 2020, bringing the contribution of the manufacturing sector to GDP at 20%, compared to 10% in 2012.

But the revolution is not just industrial. It is also social. And it's about innovation. The country where women, who come out fully covered in black, will only be allowed to drive in 2018 and where they are subject to the tutelage of a man, is the first in the world to have granted, at the end of October, the citizenship to a feminine robot, Sophia, unveiled!

 

 

 

 

Le prince Mohammed Ben Salman.
Prince Mohammed Ben Salman. - Photo credits: FAY NURELDINE / AFP

MBS, at the age of 32, understood that the new Arabia, where 70% of the population is under 30 years old, had to be built with its youth - the greatest 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, open to the world". He plans to open cinemas in the country. One of his pharaonic projects is the creation of a gigantic entertainment city that will include a safari course, motor racing, and will be 17 times larger than the Disneyland amusement park near Paris.

"Saudi Arabia will return to what we were before 1979: a country with moderate Islam, open to all religions and the world" Mohammed Ben Salman

With the end of the jackpot of black gold, money is no longer at hand as before. The kingdom will privatize part of its economy. Starting with his flagship, the oil giant Aramco, whose turnover is estimated at $ 250 billion, a third of GDP, and it should dispose of 5% stake in 2018. The operation could bring up $ 100 billion, which will be invested in a sovereign wealth fund, the Public Investment Fund (PIF). The latter, which already holds 230 billion, invests in Arabia or abroad, in sometimes equally pharaonic projects. It will thus bet $ 1.5 billion 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," said Pascal Devaux. The kingdom tries to seduce them, by organizing a "Davos of the desert" or tours of capitals for its ministers. But from project to completion, there is a gap. Other new cities, imagined fifteen years ago in Arabia, never came into being.

Vue d'artiste de Neom.
Artist's impression of Neom. - Photo credits: Neom

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

This article is published in the Le Figaro edition of 18/11/2017.

 

Source: ©  Saudi Arabia wants to sow a new economy

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One Response to "L’Arabie saoudite veut faire jaillir des sables une économie nouvelle"

  1. Jean Pierre Colin
    Jean Pierre Colin   18 November 2017 at 11 h 26 min

    Twisted as always

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