Saudi Arabia’s Mohammed bin Salman has proved to be both a man of his word and one of real action over the past two years.
Back in early 2016, the then deputy crown prince – he has since been elevated to crown prince – gave a series of unprecedented media interviews to The Economist and Bloomberg and others, outlining historic plans for the kingdom’s future.
Naturally, given his relative low profile up until then and the slow pace of change in Saudi Arabia in the past, much of what he said was met with a moody scepticism both within the kingdom and abroad.
However, the majority of pledges made then have proved to be more than just talk.
Here is a breakdown of the reform agenda as discussed by Prince Mohammed and how it has progressed so far.
Pushing ahead with the Saudi Arabia Vision 2030 to wean the kingdom off its reliance on revenues from hydrocarbons was the central part of Prince Mohammed’s message. He promised back in early 2016 that a National Transformation Plan would soon be revealed. It was and then was approved in June of that year. Since then the NTP has been tweaked, expanded and updated to ensure it remains as effective and realistic to achieve as possible.
The most well-known and discussed item of all of Prince Mohammed’s plans is the stock market flotation of a five per cent stake in state-owned oil producer Aramco. The IPO is on track for this year following a number of important developments over the course of the last two years.
As part of the changes necessary at Aramco he also said at the time that investments would be made in refineries in Asia.
While Prince Mohammed said that the Aramco IPO would significantly boost state fund the PIF’s assets under management, he also outlined plans to increase non-oil holdings as part of the diversification strategy.
Another key part of his message was that subsidies reform would be brought in. It is on track and has been set at a gradual pace.
Prince Mohammed has also stuck to his pledge to ensure subsidies benefit those on middle and low incomes and not the rich.
He told Al Arabiya in April 2016:
“When we open the lists of 2015, we will find that seventy per cent of the subsidies go to the rich. That is not permissible. The income should go to the people on average and below-average incomes, who constitute thirty per cent. The people who deserve and need subsidies are those who are on average incomes and less.
He was asked: “Don’t you fear that this rich category will be angered by this policy?”
Prince Mohammed replied: “I will apply it to myself, and those who fail to accept are free to clash with people in the streets.”
Those words have again proved to be the case with those who have failed to heed them have been given short thrift.
In April 2016, he spoke about the importance of building the kingdom’s first solar plant as part of its push away from its reliance on oil. The 9.5 gigawatt renewable energy programme, worth up to US$50 billion, has moved forward. In October, it was announced that the world’s lowest ever prices to supply electricity generated by solar power were submitted by project bidders after Saudi issued its tender for companies interested in building the 300 megawatt plant in Sakaka, in the north of the country. A final decision on the award of the tender is expected this month.
Prince Mohammed had said that the health care sector was one of the most important in terms of privatisation. While the transfer of public health care assets has yet to begin in earnest, new committees have been created to develop a regulatory framework for individual sectors up for private participation.
This push to grow the private sector is key to creating the new jobs that Prince Mohammed talked about. He mentioned the importance of entertainment and culture to improving the quality of life of Saudi citizens as well as being a source for employment. The ban has now been lifted on cinemas boosting the entertainment industry and the tourism sector has huge plans in the works.
No word on the Green card-style visa programme that he spoke about – although that is on a five-year horizon – but a tourist visa has been launched in the interim, supporting the overall diversification effort.
The famous Nixon era quote of “watch what we do, not what we say” could now be updated to “watch what we say as well as what we do” and applied to Saudi’s Prince Mohammed in what is proving to be an exciting era of change for the kingdom and the wider region.
Extrapolating further, given Prince Mohammed’s track record, we can expect the Aramco IPO to happen before the end of this year and also to see more non-oil related investments made by Saudi around the world. We should also expect more job creation-focused announcements at home. In Yemen, don’t expect the Saudis to waver on their commitment, as the Crown Prince made clear his country’s readiness to find a peaceful conclusion if at all possible while at the same time being prepared for a continued military course of action. In particular, he has recently showed a willingness to stand up to any kind of interference from Iran in defence of Saudi’s people and territory. This echoes his stance back in early 2016, when he said that while the kingdom would not allow any kind of direct and open conflict with Iran, Tehran would never be allowed to get away with its attempts to escalate tensions between the two countries.
Interestingly, in early 2016 Prince Mohammed would not be drawn on making any commitment on changes to the role of women in the kingdom. Yet since then we have had the landmark decision on women being granted driving licences and sporting events. He also launched the mega-city of the future Neom out of the blue.
So we should also be ready for a few more surprises in 2018.