Could Saudi Arabia Build a Tech Mecca?

Could Saudi Arabia Build a Tech Mecca?

Saudi Arabia’s dreams of greatness have slowly been fading with the United States’ replacing it as the world’s largest oil producer and attempts at regional hegemony going poorly for the kingdom. But rather than withdraw into stubborn conservatism, its government plans to invest much of its sovereign wealth fund — the largest in the world — into a project that could give the kingdom the regional dominance that it sought through oil.

The Saudi Crown Prince Mohammed bin Salman announced on Tuesday that his country will invest over $500 billion in a new city that will span three countries and two continents, a city he says will be a “civilizational leap for humanity”.

The city of Neom he envisions, will span 10,000 square miles and straddle the northwest corner of Saudi Arabia and Jordan, while expanding via a new bridge, named for him, of course, across the Red Sea into Egypt. The official press release states: “Repetitive and arduous tasks will be fully automated and handled by robots, which may exceed the population, likely making the Neom's GDP per capita the highest in the world.

All these elements will put Neom at the world’s forefront in terms of efficiency which will make it the best destination in the world to live in.” Crown Prince Salman has appointed a German businessman, Klaus Kleinfeld, who has failed in numerous Western companies and faced charges of corruption and extortion, as the city’s official CEO.

The country plans to make Neom a hub for the energy, biotech, technological & digital sciences, advanced manufacturing, media, and entertainment sectors, and intends to power the city entirely through wind and solar power. By fully automating its service industry, it would essentially make it entirely a middle and upper class city. It’s a 12-year project and the government expects significant foreign investments to supplement the half a trillion it plans to pour into the city’s construction.

An ambitious plan for an almost sci-fi city on this level would appear to be a massive boondoggle, but Crown Prince Salman has multiple historic precedents to draw from, namely Seoul, Hong Kong, Singapore, and neighboring Dubai. All these cities transformed in a matter of decades from poverty to global, economic powerhouses.

But none of those countries are home to Mecca and Medina, or contain a thoroughly conservative culture like that of Saudi Arabia’s. For instance, women just this year gained the right to drive. But the lifting on the ban on women drivers could signal the beginning of a turning point for the kingdom, whose crown prince seems to understand that if Saudi Arabia is to overcome the declining global demand for its oil, it must diversify not only its economy, but its culture as well.

The location of Neom off the Red Sea, which sees ten percent of the world’s trade pass through its waters, makes the Saudis’ dreams of a megacity on its soil possible. Even the dream of powering such a city completely through renewable energy doesn’t defy logic in this location. But despite the country’s oil wealth, the project’s success will depend on foreign interest, and most importantly, foreign investment.

To attract the amount of investment necessary, the country would have to genuinely modernize culturally, particularly its policy toward women, who make up more than half of Saudi college graduates, but less than 20 percent of its workforce.

But despite the crown prince’s attacks on the clerics’ conservatism on October 24, when he vowed to destroy extremist ideas, no one could expect a country with the country’s values to transform its culture in a decade.

But that’s not what Crown Prince Salman is aiming for. He plans for Neom to exist outside of the legal framework of Saudi Arabia proper. This could potentially create a free trade, low tax zone that would spur the kind of investment and growth necessary to make Neom a reality, without the oppressive nature of the government in Riyadh. Furthermore, it would give Salman all the time he needs to reform Saudi Arabia proper without the external economic pressure to rush such changes.

The Saudis are making a wise move to look for ways to invest their sovereign wealth fund and diversify their economy. It remains to be seen if Neom will lead to their 21st century breakthrough, or if the idea will simply fizzle within the next few years. Much of that will depend on the Saudis’ ability to convince foreign investors to buy into the idea.


Follow this author on Twitter: @JD_Grandstaff

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