Introduction
Until recently, the international community had been animatedly discussing the topic of generational change in Saudi leadership, but the country made a decision that reversed all predictions. The second Crown Prince of the Kingdom, Mohammed bin Salman, after his father, King Salman, came to power, was given wide powers, becoming one of the iconic figures of the state. At the initiative of the Crown Prince and the King, the Saudi government adopted a project to restructure the country’s economy and diversify state budget revenues. The country’s development concept was called “Vision 2030” and involved reducing dependence on crude oil to a minimum.
The Main Goals of SV 2030
The main goal of Saudi Vision 2030 is to ensure that the country, fabulously rich in oil, will cease to depend on the source of its wealth as soon as possible. This program means that the key player in the world oil market – along with the U.S. and Russia – has proclaimed the end of the oil era. The Stone Age is not known to have ended because of a lack of stones, and the Oil Age will not end because every last field is depleted. In the rapidly changing world of the XXI century, oil production has stopped or is about to stop being the motor of economic and social development, as it was in the XX century. Now it is just one of the industries, but no more than that.
The main goals of the national project “Vision 2030” are to develop the private sector and create a dynamic society, strengthen the economy through diversification, and improve the competitiveness of the kingdom in international trade. Moreover, tourism is at the heart of this new vision. Saudi leaders are beginning to realize that their country could be left behind in the global economy if oil remains their only source of prosperity (Mitchell & Alfuraih, 2018). As the kingdom fears an approaching peak oil, a situation in which the supply exceeds the oil demand, the government is anxious to ensure the planned reforms.
The Leader’s Operating Principles and Values
It was King Salman who initiated the transformation of Saudi Arabia. King Salman bin Abdulaziz’s accession to power in January 2015 completed the transformation of the dynasty begun by his predecessor. In October 2006, a law regulating the succession to the throne, the “Oath of Office Committee,” was passed, giving the heads of all dynasty factions the right to choose the heir to the throne. The dynasty took on the features of a corporate community united by the task of preserving power. Before coming to the throne, Salman was Minister of Defense (a position inherited by his son Mohammed bin Salman).
In May 2015, at a meeting in Jeddah, the “business capital,” with representatives of chambers of commerce, heads of banks, and high-ranking officials from line ministries, King Salman expressed the views of the Council of Economy and Development. He proposed an outline of the economic restructuring program. It included the main parameters of the future course – cooperation with private enterprise, including foreign business, development of small and medium-sized enterprises, abandonment of the policy of economic dirigisme, and opening the country to foreign investment. Anticipating Vision 2030, the monarch declared that the Saudi economy should become an “investment economy.
The Crown Prince added that the Kingdom is constantly trying to take advantage of its latent potential – its ideal strategic position, its innovative investment opportunities, and its Arab-Islamic stance. The national investment strategy will play an important role in developing the national economy and diversifying sources of income. It will allow many of the goals of Vision 2030 to be realized. These include increasing the private sector’s share of the country’s GDP to 65%, foreign direct investment to 5.7%, and non-oil exports from 16% to 50% of the GDP (Moshashai et al., 2020). The unemployment rate is expected to fall by 7%, and by 2030 Saudi Arabia will be in the top ten in the global competitiveness ranking (Amran et al., 2020). These changes are the goal of Prince and King Salman, for which they are already taking action.
Concepts Followed by the Leaders
The leaders of the movement in Saudi Arabia use a strategy of maximizing shareholder wealth. Most companies are owned by their shareholders, and the main objective of company operations is to maximize shareholder wealth (achieved in two ways – by increasing shareholder value and dividend payments). Leaders use the product differentiation method to keep the state competitive in a growing arena. They create completely new projects and introduce innovations. For example, The Line, which the prince is building. The Line is a human-centered, futuristic city concept created by NEOM in Saudi Arabia. The project is considered a revolution for traditional urban life and urbanism.
Conclusion
Thus, Saudi Arabia announced Vision 2030 not at a time of historically high oil prices but at a time of catastrophic price declines, which hit the country’s budget and forced Riyadh to tap the country’s financial reserves. Saudi Arabia’s new development strategy, which is indirectly or directly involved in the wars in Syria and Yemen, is also an indicator of the Saudis’ determination for rapid change.
References
Amran, Y. A., Amran, Y. M., Alyousef, R., & Alabduljabbar, H. (2020). Renewable and sustainable energy production in Saudi Arabia according to Saudi Vision 2030; Current status and future prospects. Journal of Cleaner Production, 247, 119602. Web.
Mitchell, B., & Alfuraih, A. (2018). The Kingdom of Saudi Arabia: Achieving the aspirations of the National Transformation Program 2020 and Saudi vision 2030 through education. Journal of Education and Development, 2(3), 36. Web.
Moshashai, D., Leber, A. M., & Savage, J. D. (2020). Saudi Arabia plans for its economic future: Vision 2030, the National Transformation Plan and Saudi fiscal reform. British Journal of Middle Eastern Studies, 47(3), 381-401. Web.