Saudi Arabia: Economic progress lags but social progress is real

By Politics FOXBusiness

Crown Prince of Saudi Arabia: We will eradicate extremism very soon

Crown Prince of Saudi Arabia Mohammad bin Salman Al Saud on the political shift in the country.

As top investors and executives from across the world gather in Riyadh, Saudi Arabia for a summit this week, the country’s progressive ideas not only economically, but socially, have risen to the forefront of the discourse.

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During a panel moderated by FOX Business’ Maria Bartiromo on Tuesday, Crown Prince of Saudi Arabia Mohammad bin Salman said the country wants to emphasize that it is open and accessible to the rest of the world.

“We only want to go back to what we were, the moderate Islam that is open to the world, open to all the religions,” the Crown Prince said. “Seventy percent of the Saudi people are less than 30 years old and quite frankly, we will not waste 30 years of our lives in dealing with extremist ideas … We want to live a normal life, a life that translates our moderate religion and our good customs, we coexist and live with the world and contribute to the development of our country and the world.”

In addition to efforts to open up its economy through a grand economic strategy, the kingdom also has plans to build a new $500 billion city, called NEOM, to allow for “a new way of life” in the region, part of the royal family’s “Vision 2030” campaign.

Under the ongoing transformation process, the kingdom has been making advancements in social modernization, recently topping headlines for lifting a ban on women drivers. Giving women rights, including the right to drive, has clear economic benefits for the country. But in Saudi Arabia, where oil revenue has been unstable, broader social reform could be an appeal to a restless public.

“Inside Saudi Arabia … whenever oil prices come down there’s always pressure to show the country is still going to be able to move forward,” Amy Myers Jaffe, David M. Rubenstein senior fellow for energy and the environment at the Center on Foreign Relations, told FOX Business. [This is] the Crown Prince and the new king’s way of saying ‘we are moving forward and yes we are taking dramatic reform.’”

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In the first quarter of 2017, Saudi Arabia’s unemployment rate hit 12.7% as the kingdom battles with the challenge of low oil prices. Additionally, civilians are dealing with fewer government subsidies and smaller government stipends.

The kingdom is hoping supplement oil revenue with its own investments around the world through its Public Investment Fund, in addition to attracting foreign investors to the country.

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Against that backdrop, some believe the social progress could be part of a premeditated economic strategy.

“Aside from its economic impact, the decision to allow women to drive is also likely a calculated political move: It allows Saudi Arabia’s leaders to portray themselves as reformers, and buys them positive goodwill and PR in the west,” Emma Ashford, a Cato Institute research fellow specializing in international security and the politics of energy, told FOX Business, adding that there are many other steps that could be more impactful in boosting women’s role in the workforce than lifting the driving ban.

Still, when it comes to economic versus social progress, some see the material gains in the latter area as a more promising sign than delays in the former. Saudi Arabia has been slow to make necessary economic changes: Its exports have still been primarily driven by oil throughout recent years, according to the International Monetary Fund, making up more than 80% of total export volume. While non-oil exports have grown, they still remain a small overall share of the country’s total exports and generally consist of oil-related products.

The Saudi Aramco IPO has also been delayed multiple times and there are ongoing discussions that China may simply buy a direct 5% stake in the company.

“They’re doing much better in the social modernization than they are getting [to Vision] 2030,” David Ottaway, Middle East fellow at The Wilson Center, told FOX Business. “The social changes are coming, you can see them. There’s no progress on political change. Try [bringing] about economic change without bringing about economic change.”

Ottaway added that in addition to driving, women are being permitted to work in sectors that had previously been unavailable to them. The kingdom has also curtailed the authority of its religious police. And, as mentioned by the Crown Prince on Tuesday, the Saudis are putting an emphasis on bringing entertainment into the kingdom, such as movies.

While many believe Vision 2030 is ambitious, most experts agree it lays out a promising agenda for the Saudis as they seek to become less oil dependent.

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