Saudi Arabia Approves Plan for ‘Post-Oil’ Economy

Oil derricks are silhouetted against the rising sun at an oilfield in the Baku October 16, 2005. Saudi Oil Minister Ali al-Naimi said on Sunday that the rise in oil prices to a record high had been determined by market forces. REUTERS/DAVID MDZINARISHVILI

On Monday, Saudi Arabia’s King Salman bin Abdulaziz addressed his nation by television, announcing cabinet approval for the “Saudi Vision 2030” plan — in essence, the Kingdom’s plan to decouple its economy from oil.

As the UK Guardian observes, it can also be seen as a plan for moving past a “fraying” Saudi relationship with the United States, and preparation for a more intense regional conflict with Iran. Among other factors, Iran’s refusal to participate in a much-touted coalition of oil-producing states to cap production and stabilize prices may have heightened Saudi awareness that they are permanently losing control of the oil market.

The plan approved by the Saudi cabinet includes the major elements of the reforms associated with deputy crown prince Mohammed bin Salman, including the creation of a $2 trillion “sovereign wealth fund,” the sale of stock in the Saudi national oil company Aramco, a tax system that makes the Saudi government less dependent on oil revenue, cuts to expensive government subsidies, and a more ambitious program of job creation through foreign investment and tourism for the Kingdom’s young population.

The plan is seen by analysts as “the biggest economic shakeup since the founding of Saudi Arabia,” and also a clear indication of Mohammed bin Salman’s growing influence, remarkable for a man in his 30s.

The Guardian describes him as “genuinely popular” with the Saudi public, making him an effective spokesman for the 15-year reform package, but also “resented for his unprecedented concentration of power,” serving as both Defense Minister and chairman of the Council of Economic and Development Affairs.

Reuters quotes the deputy crown prince describing Saudi Vision 2030 as a plan to break the Kingdom’s “clear case of oil addiction,” vowing that “we will not allow our country ever to be at the mercy of commodity price volatility or external markets.”

Prince Mohammed was optimistic about the reform package, predicting that the sales of Aramco stock could make the Public Investment Reform more like a threetrillion-dollar behemoth than its declared $2 trillion target. The Saudi stock market bounced 2.5 percent upward after the plan was announced, suggesting that at least some of the Prince’s optimism is contagious.

The Saudi Vision 2030 plan can be read in full at the Saudi Gazette.


Please let us know if you're having issues with commenting.