By: Joe Clark
Photo Credit: Saudi Arabia Vision 2030
The Arab Spring was a monumental turning point in the history of the Middle East and North Africa. In late 2010, after decades of rising youth unemployment, diminishing economic opportunities, and growing resentment toward widely authoritarian and corrupt governments, protests erupted across the region. The ensuing wind of change upended its political order, with revolutions occurring in multiple states which either established democracies or devolved into civil war. Despite the mixed results of these mass uprisings, one country can claim to have not experienced any of its impacts at all: Saudi Arabia. The Kingdom only saw minor protests at the time, which were quickly crushed, an example of the not-so-hidden ways that the state has been able to placate Saudi society.
The reason Saudi Arabia managed to escape the turmoil was not some hidden state secret. It was because the rules of society simply worked differently there. Saudi Arabia lacks the social contract of many states in which citizens pay taxes and expect the state to act in their interests. Instead, the state provides everything Saudi citizens need to survive and therefore they do not feel the need to be involved with their government, but this unique situation is unlikely to last.
When it gained its independence from the Ottoman Empire following World War I, the Arabian Peninsula was considered to be a wasteland inhabited by poor and violent nomads, by Western observers. Different Bedouin tribes who followed different Islamic sects and adhered to tribalist monarchism, engaged in wars over land which was considered to be worthless. But shortly after the House of Saud managed to establish control over most of the peninsula in the 1930s, large quantities of oil were discovered under the sands. Overnight, Saudi Arabia became a primary player on the global stage, rising to become the world’s largest oil exporter, and allowing a unique social contract to form: Saudi citizens would support an Islamist Absolutist Monarchy with very few social freedoms, so long as the royal family gave them everything they financially needed.
Saudi citizens pay few taxes and have most expenses subsidized by the government, including housing, healthcare, and education. This was funded through the operations of Aramco, the state-owned oil company. The Saudi economy did not Industrialize and diversify when government investment was placed entirely on the oil sector, and political opponents could simply be bribed into submission.
Saudi Arabia was able to maintain this political system as most of the world embraced democracy. The Saud family saw no problems with enforcing strict regulations such as outlawing movie theaters or banning women from driving or traveling without a male partner because there was no incentive to do otherwise.
But in the mid 2000s, this all changed. Oil prices began to fluctuate and at times, ran too low for Aramco to make a profit, which the Saudi government realized would not be temporary. In recent years, the world has begun to shift away from oil as most major economies attempt to reach net-zero carbon emissions by 2050, and the price of renewable energy declines. Global oil demand is expected to decline by 71% that year, with its growth further anticipated to slow significantly in the next five years alone. Due to this, a 2015 assessment stated that by 2030, Saudi household income would drop by 20%, unemployment would nearly double and government assets would drop from $900 billion USD to negative $2 trillion.
For these reasons, the Saudi government has recognized that a system that relies on a commodity for over 40% of its GDP is unsustainable and vulnerable. Currently, 63% of the Saudi population is under 30 years old, of which 65% remain unemployed with little economic opportunities. Roughly a quarter of the population lived in poverty when statistics were collected a decade ago. Efforts to alleviate the situation have been hampered by corruption within the royal family and strict restrictions on women employment, which makes it significantly harder for female-led households to have a stable income. These conditions, similar to those experienced in other countries prior to the Arab Spring, could lead to resentment and revolt unless the Saudi government implemented major reforms.
The man who has chosen to undertake this task has been Mohammad Bin Salman. After coming to power as Crown Prince in 2016 through an internal coup, Salman has essentially ruled as de facto king. He quickly consolidated power by imprisoning his rivals in the Ritz- Carlton Hotel in Riyadh in 2017, during which billions of dollars were confiscated in a supposed anti-corruption operation. Most importantly in 2016, he unveiled Vision 2030, a project seeking to overhaul the Saudi economy through incentivizing private investment through economic and limited social reforms, pushing to rapidly diversify the economy. Salman amassed hundreds of billions of dollars worth of Saudi assets into a Public Investment Fund which he intended to spend on achieving this goal. It included launching a foreign tourism sector which required lifting movie theater bans and attracting music festivals, sporting events, and a planned Six Flags park. Women can now drive, leave the country without permission from male guardians, and dress more liberally under relaxed rules. The Saudi government has attempted to improve its public image around the world through sports leagues and other forms of global entertainment, and has abolished the radical Islamist doctrine once espoused and taught in schools, with the royal family distancing itself from other radical Islamists.
Nevertheless, Saudi Arabia still remains a highly authoritarian state, with Salman himself greatly playing a role in the 2017 assassination of American journalist and government critic Jamal Kashoggi and a brutal war in Yemen which has left countless civilians dead. These stains on the Kingdom’s reputation has made investing in the country controversial, which coupled with continual royal infighting and harsh business restrictions has reduced the efficacy of Vision 2030.
Case in point, the Saudi economy has vastly underperformed against the project’s targets, with. The percentage of GDP of the private sector and foreign direct investment (FDI) expected to reach 65% and 5.7% respectively from a start of 40% and 3.8% in 2016, but with the former only increasing by 2.7 points and the latter decreasing to 0.57% by 2021. Diversification has also not occurred at the pace needed with non-oil exports only reaching 22.4% of GDP in 2021 from a 2016 start of 16%, much away from a 2030 goal of 50%, and unemployment has grown by 0.1 points to 11.7% while the plans calls for a decrease to 7% within the next seven years.
Saudi Arabia is facing a similar dilemma that the Soviet Union did in the late 1980s: the trade-offs that greater political liberalization may entail, between improved economic conditions or the encouragement of regime dissent or resistence. Current and proposed ideas, such as “The Line City” mega project are unlikely to fix this situation and are likely to cause further problems due to their vulnerability to corruption.
Saudi citizens are highly educated (58% have college degrees), and are disillusioned about the current state of affairs, recognizing that greater change will be needed to bring the economy into the 21st Century. Information and new ideas spread quickly throughout the highly digitized nation, and as citizens are compelled to pay a higher and higher tax burden, and may become increasingly hostile towards a royal family viewed as not carrying their fair share, calls for action could spread, and a full-out uprising might begin.
One potential off-ramp that could be used to avoid this confrontation is to replicate the “Chinese Model” of economic liberalization without democratization. In the Chinese model, a diverse semi-free market economy is allowed to exist although control of the market is still centralized in the government and social liberalization such as civil rights and democratization does not occur. The Vision 2030 appears to push for a similar model albeit with some limited social reforms. In fact, after the failures of the post-Arab Spring democracies to alleviate economic grievances and to stabilize, their political elites turned towards this Model to maintain their dominance. But, in examining Chinese conditions, where economic growth has stalled in recent years, while citizens and corporations have only supported the current system due to its previous economic success, and are still quite open to democracy; this may not be fruitful for the Saudi regime to adopt.
Forced between two paths, the Saudi royal family must choose to continue with the political and economic liberalization which would help it move beyond oil, or to stick with its autocratic structures and society. Nonetheless, the question is not whether Saudi Arabia’s theocratic monarchy will end but how, as current and future trends will place pressure for the regime to inevitably change. Will the Saud family rule a prosperous democracy as constitutional monarchs or will a democracy be established through an uprising? The choice is theirs.
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