A futuristic, sustainable city to house one million residents without cars, streets, or emissions and all built in a straight 170-kilometre line? It sounds like something out of a science fiction novel, but it’s part of Saudi Arabia’s plan to diversify its economy.
Saudi Crown Prince Mohammed bin Salman unveiled his most ambitious project, a 170-kilometer city called The Line, related to the proposed city Neom in January 2021 with a slick promotional video.
A diverse megacity with an emphasis on sustainability, contouring urban life to nature, and artificial intelligence-driven public services, the project is not short on ambition. But, international media and independent observers have noted the lack of details thus far.
Furthermore, critics question the feasibility of the project considering past Saudi projects to build cities in the desert including the incomplete King Abdullah Economic City.
The Line and Neom are also not being built on ‘virgin land’ as some consultants claim, with activists and tribal community members outraged as the Huwaitat tribe is forced off their land. Activist and Huwaitat tribal member Abdul-Rahim al-Howeiti was killed by Saudi police forces in April 2020.
So why build a $500 billion speculative city project on desert land partially occupied by tribal members? Is it part of MBS’s plan to modernize the Saudi economy and revolutionize Saudi society or is it a cash grab for Western firms as Saudi Arabia spends its petrodollars?
Forward Thinking or Petrodollar Problem?
During the Crown Prince’s tenure thus far, Saudi Arabia has aggressively emphasized economic diversification. Saudi’s Public Investment Fund has been routinely injecting cash into tourism projects and paying Western influencers to promote Saudi tourism to American and European travellers.
Since the inception of the petrodollar, OPEC nations and other oil-producing nations are paid for oil in US dollars, Saudi Arabia has been a frequent investor in American firms. In 2016, Uber received $3.5 billion from the Public Investment Fund.
But as concerns about Saudi Arabia’s dependency on oil grow, or if read more generously, growing worry about climate change and resulting ecological disaster, MBS and Saudi Arabia have looked to depart from their traditional petrodollar economy.
As the petrodollar became widely used in the 1970s, Saudi Arabia became awash in US dollars. Since it’s not easy to simply convert the massive amounts of US dollars into local currency, oil-rich nations had to turn to different spending measures.
During periods of peak oil prices, a phenomenon known as petrodollar recycling was employed. The Saudi Public Investment Fund was founded in 1971, giving the Saudi state the ability to spend this money abroad on foreign firms that could use American dollars.
This economic model has also led to a wide array of ambitious vanity projects as OPEC nations periodically are pumped with more petrodollars than they can efficiently spend in their domestic economy.
This economic structure has largely remained intact and the PIF has ratcheted up investments in foreign firms in recent years including a shrewd $7.7 billion purchase of blue-chip American stocks during the COVID-fuelled stock market downturn.
But recently, MBS has shown a preference to perhaps turn away from this oil-dependent petrodollar model. Saudi Arabia announced a plan called “Programme HQ” a project to lure multinationals away from Dubai and increase foreign investment in their country.
The plan highlights the Kingdom’s struggle to attract large foreign investment outside of the oil industry. Saudi Arabia has always been able to attract foreign companies to throw petrodollars at, but it has long been a one-way street.
Even under Programme HQ, Saudi Arabia is offering massive tax breaks, but due to political controversies, foreign money might elect to stay away from investing in Riyadh.
Neom and The Line are incredibly ambitious, but they are not completely unprecedented in Saudi or regional history. If it succeeds, the project would be a great shift in the economy of Saudi Arabia, and a potential way out of the petrodollar trap as it would greatly increase foreign investment.
However, this is dependent on turning the ambitious plans on paper into reality and convincing the international community that a line city in the middle of the desert is a desirable location to visit, do business in and move to.
Can it Succeed
As stated before, The Line is scant on details. A promotional video on the official Neom YouTube channel mentions “invisible technology” that will generate “carefree and open urban space” as an animated underground network called “The Spine” displays a metro and high-speed rail.
The project is also billed to be zero emissions and powered by “100% clean energy” while preserving 95% of the surrounding nature. Alongside the environmental promises, developers say The Line will create nearly 400,000 jobs and massively increase the country’s GDP.
The Line is part of the larger Neom project, a metropolis being built in Tabuk, Saudi Arabia in the northwest of the country.
Without getting too far into the weeds on the feasibility of the speculative city based on the limited public information, what we can investigate is what geopolitical ramifications such a project could have.
Neom and The Line are set to be built on the Gulf of Aqaba, an area of water that borders Jordan, Israel, and Egypt.
Saudi Arabia has been one of the leading Arab nations seeking rapprochement with Israel in recent years. Some of the more ambitious plans for Neom and The Line would require normalized diplomatic relations with Israel, a prospect that would anger Palestinians.
Riyadh has also shifted its diplomatic tone in recent months as it prepared for the new Biden Administration in Washington. President Biden said he would be much harsher on Saudi Arabia than his predecessor as the US and Saudi Arabia enjoyed close ties during President Trump’s four years in the Oval Office.
But President Biden has refused to sanction Saudi Arabia or the Crown Prince despite American intelligence linking MBS with the 2018 Jamal Khashoggi assassination.
The Khashoggi assassination continues to dog bin Salman’s public image, but the West’s reluctance to exact retribution exemplifies Saudi Arabia’s close ties with the West and the pivotal role it plays diplomatically in the region.
If Neom and The Line are to even get off the ground, MBS will likely have to regularly pull out the pocketbook and continue splashing the cash in foreign economies. Whether or not they will return the favour to Saudi Arabia is the massive bet the Crown Prince is making with Neom and The Line.