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Riyadh maintains Vision 2030 focus

28 March 2024

Commentary
John Bambridge
Analysis editor

Riyadh is not allowing anything to distract it from its ambitious goals for economic diversification as part of the country’s Vision 2030 development plan. This includes the war in Gaza and the secondary conflict escalating in the Red Sea, despite its proximity and its direct implications for Saudi Arabia.

After nearly a decade of a destabilising, demoralising and ultimately fruitless war in Yemen, the court in Riyadh appears to have lost not only its appetite for military adventurism, but also the will to get involved in regional conflict in any way. In this regard, Saudi Arabian foreign policy has drawn much closer to the default position of much of the rest of the Gulf, which is to avoid regional tension and focus on the business angle – and this is partly born of necessity. Riyadh has ambitious plans not just for its own development, but for the volumes of foreign direct investment that it can draw into the country with those plans. Conflicts risk poisoning investor sentiment.

Saudi Arabia’s reforged foreign policy of relative quiescence, detente with Iran and peace negotiations with the Houthis is working wonders. Non-oil growth is soaring, business sentiment is well-stoked and private equity managers, venture capitalists, consultants and other business hopefuls are swarming its high-profile investment events. And Riyadh is committed. In February it invited companies to prequalify to develop a new airport terminal at Abha, the capital of the Yemen-adjacent Asir Province, as a public-private partnership – a clear sign that it believes the south’s risk-prone days are behind it.

Riyadh is now so disinclined to lower the music at its own party that it has sat on the sidelines as the US has put together a naval coalition to deter Houthi attacks on shipping – leaving its close ally Bahrain to provide a comparatively inconvenient port of call for Western destroyers. This has remained true even though the two most grievously damaged commercial vessels have both been linked to Saudi trade, with one carrying outbound fertiliser and the other inbound steel and vehicles. The crisis has also contributed to the steep inflation of construction material costs. Still Riyadh remains unmoved.

The sum of all of this leaves no doubt as to where the full attention of the Saudi state now lies – and that is laser-focused on the delivery of its Vision 2030 and the country’s associated suite of gigaprojects. This is good for the country, and good for investors. If Riyadh is to deliver on its promises, it needs to watch the practical implementation of its plans with a steely and hawk-eyed gaze. With the sums of money involved, any deviation, any waste, could prove catastrophic not just to the budget, but also to the country’s prospects for long-term prosperity. The stakes could not be higher, and foreign affairs are a distraction by comparison.

 

MEED's April 2024 special report on Saudi Arabia includes:

> GVT & ECONOMY: Saudi Arabia seeks diversification amid regional tensions
> BANKING: Saudi lenders gear up for corporate growth
> UPSTREAM: Aramco spending drawdown to jolt oil projects
> DOWNSTREAM: Master Gas System spending stimulates Saudi downstream sector
> POWER: Riyadh to sustain power spending
> WATER: Growth inevitable for the Saudi water sector
> CONSTRUCTION: Saudi gigaprojects propel construction sector
> TRANSPORT: Saudi Arabia’s transport sector offers prospects

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John Bambridge

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