VISION 2030 HAS BEEN ACTIVATED BY THE COVID-19 CRISIS

The pandemic has forced Saudi policymakers to make more urgent progress toward economic diversification. This is a much-needed agenda reevaluation.

A look back at history shows that desperate times  call for desperate measures. After all, Vision 2030 wasn't born until 2016, when Saudi officials watched in horror as oil prices plummeted by 70%. The reform  is the most ambitious yet. The year 2020 should mark the  first success of the agenda. Instead, the oil price war, the disastrous 

 bombing  campaign against Yemen, and World War 5The 4% fall in GDP has set a different tone than the UK was expecting. 

 The disruptions caused by the COVID-19 pandemic have devastated economies and markets around the world, but no one has seen the sharp decline the oil industry has suffered. To make matters worse, Saudi Arabia and Russia went head to head in a price war that led to more carnage. Despite the final deal on production cuts, the global slowdown and ongoing oil glut have peaked, with US crude falling dramatically into negative territory for the first time in history. 

 Taking stock of progress 

 As the dust began to settle, there was a sense of urgency  among leaders about the fallout from the crisis.Not only has COVID-19 exposed the risk of oil dependency,  it has also exposed oil-exporting economies to fiscal vulnerabilities. With growth slowing in the MENA region, the current price of oil is well below the breakeven point required for a balanced budget. With the exception of the UAE, oil accounts for more than 50% of GCC budgets, underscoring the urgent need for diversification to pay off the budget bill. While the impact of COVID-19 on Vision 2030 is unclear, an analysis of existing 

 global outcomes and targets could provide a clearer picture of how Saudi Arabia should reassess its grand plan in the face of the pandemic.

Just a year after its announcement,  Vision 2030 seemed insufficient to satisfy the Saudi appetite for big ideas. In 2017, Crown Prince Mohammed bin Salman announced the construction of a $500 billion NEOM smart city. Alongside fake moon talk and flying cars, the Saudis have managed to make a more tangible note with investors with the city's $5 billion green hydrogen power plant. By 2025, the plant is expected to produce 650 tons of hydrogen per day and 1.2 million tons of  green ammonia for export.

 Despite the challenges of hydrogen, the project offers Saudi Arabia an unprecedented opportunity to pioneer a market that is gaining "unprecedented political and commercial momentum," according to the International Energy Agency. While there is little publicly available information on the Kingdom's key achievements in terms of key performance indicators, visible progress has been made in what the Kingdom does best: government-managed tasks. Notable regulatory reforms in 2018-2019 ranked Saudi  Arabia the among the top 10 countries that have improved the global business climate, according to the World Bank. 

 Strong growth can also be seen in the capital markets and  banking system, with the development of  the Saudi Tadawul Stock Exchange being a notable achievement. These laudable steps have also been accompanied by advances in  digitization and social reforms.Is not enough. 

 While the kingdom  certainly achieves its goal of being an ambitious nation, less can be said of its cornerstone: a prosperous economy. Job creation, foreign direct investment (FDI), entrepreneurship and private sector growth are the main areas where Saudi Arabia is underperforming. A  string of recent PR disasters, such as the 2018 assassination of Washington Post reporter Jamal Khashoggi  and the widely publicized 2017  purge that included the arrest of 11 senior princes, have further bolstered the Kingdom 

's image clouded and investor confidence damaged. only 057% of GDP, current FDI levels just aren't enough to fund a diversification plan. 

 It goes without saying that the economic challenges brought on by the pandemic will require a tightening of  Saudi conditions to contain the growing budget deficit. Such fiscal caution will inevitably feed into an increasingly needed reform agenda, suggesting that a rigorous reassessment of  Vision 2030 goals will be required to deliver on  the promise of  existing revenue streams  and to attract and hold investor financing. This requires more foreign direct investment through greater transparency, greater accountability and  better  international self-protection.In the longer term, focusing on strategically justifiable projects with high impact and delaying projects with low real-time value will be an essential part of program re-evaluation.

Much to Saudi Arabia's chagrin, that means abandoning NEOM in favor of  the less glamorous task of real economic reform. But as if NEOM wasn't enough,  now there's The Line, a linear city run by AI, with no coal, no cars, and a sense of realism. Regardless of the supposed economic benefits, the fact is that procrastination doesn't solve any problems, even if it costs billions. 

Perhaps the most difficult but most important step for Saudi Arabia will be to abandon state control and give way to  a diversified, competitive and independent private sector. The  strategy of dividing the kingdom across all sectors is not only inefficient but also unattractive.A more market-oriented approach will encourage entrepreneurship and competition, and most importantly attract foreign investment. 

 This is related to the second important step: optimizing the business environment. This means fighting for better access to capital, easier doing business, a stricter and more transparent legal system, and encouraging entrepreneurship  at home and  abroad. The third and most important step is the development of human capital. In a country where 67% of the population is under the age of 34, ignoring young people would be ignoring Saudi Arabia's greatest asset.

Quality  education and  the promotion of young talent must be given priority, together with the creation of decent jobs for the existing workforce. The importance of human capital cannot be underestimated: to create a thriving economy that  serves people best, investing in people must be at the heart of the 2030 Vision, which puts enormous pressure on their budgets and international image. To truly attract investors, Saudi Arabia must actively shift efforts  from conflict to long-term economic reform. 

 Despite some notable achievements, overall progress has been slow and the Kingdom of Saudi Arabia still has a long way to go.However, COVID-19 has prompted a much-needed overhaul of the agenda, uncovering some shortcuts and forcing Saudi leaders to act with  greater  urgency. The World Bank itself warns that “higher-than-expected oil and gas revenues could lessen reform pressures on [GCC] governments,” as reflected in its own Vision 2030 resulting from such a price shock. However, with  oil prices volatile in 2020, COVID-19 may have been the clear wake-up call Saudi leaders needed. 

 The challenge now is to bring about change and stimulate the economy in a world experiencing its worst recession since  World War II. It's certainly not easy, but the key to success is to focus on projects that really add value.This means giving up control to facilitate private sector development, optimize the business environment and engage citizens by investing in young people. Only then can Saudi Arabia unleash its potential and become what it envisions as "the epicenter of trade and the gateway to the world."