Financially, Saudi Arabia is flying by the seat of its pants. But for how much longer?
Saudi Arabia's most extravagant and outrageous giga-project - the futuristic city called "Neom", carved out of the country's northwest border region - is trying a reboot after funding and other challenges over the past year appeared to put key elements of Neom in jeopardy.
Nadhmi al-Nasr, an Aramco veteran who had been in charge since 2018, was pushed out after months of bad headlines that began with reports in March that Neom's signature project, The Line - a linear city 170km in length, 500m high and 200m wide - would open in 2030 at less than 5km.
Further reports emerged of a toxic work environment, massive salaries for senior foreign nationals and the deaths of hundreds if not thousands of labourers in the project's construction - although the work has not yet moved beyond laying down the foundations as low oil prices punch a dent in the giga-project timetable.
Nasr was a convenient scapegoat, but his replacement, the head of Neom's local real estate division, Aiman al-Mudaifer, will be charged with convincing global investors, especially Chinese bankers whom Neom's parent company, the Public Investment Fund (PIF), has tried to court, that The Line is going ahead.
The Line is not Neom's sole project. A series of 12 ultrarich resorts along the Gulf of Aqaba are in the early stages of construction. They each bear improbable sci-fi names straight from the head of a gamer, such as Xaynor, Zardun and Siranna, but are marketed collectively as Magna. Reputed global architects have been paid to design them.
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More within the realm of convention and normality is a resort island called Sindalah, which will start receiving tourists next year, an industrial city called Oxagon focused on fashionable industries such as green hydrogen, and a mountain resort called Trojena, which is scheduled to host the 2029 Asian Winter Games.
But it is The Line that has come to be seen as the signature project of the broader Saudi "Vision 2030" plan to completely transform what was only a decade ago a closed, highly conservative society into a playground for the new class of tech bro overlords and other segments of the global ultrarich.
It seems telling that PIF's governor, Yasir Al-Rumayyan, was recently spotted in conversation with incoming US President Donald Trump and Elon Musk at a UFC wrestling event in New York the other day.
Think Logan's Run
Just as news dropped of Neom's new acting CEO, the leaders of The Line were on stage for a highly scripted forum talk at a real estate exhibition in Riyadh on 12 November. They had come to sell what they described as a pioneering city of nine million people for the human society of the future, but it sounded like a dystopian vision of life shielded inside a vast glass box from an apparently uninhabitable world. Think Logan's Run.
Modelled on Manhattan, one of the earliest linear cities, the basic idea was to take the communities along each side of a Central Park-like area and stack them up as two elongated walls encasing an open public space running the length of the city.
The Line is seen as the signature project to transform a highly conservative society into a playground for the new class of tech bro overlords and the global ultrarich
The idea of folding a city up along this green corridor is attributed to Crown Prince Mohammed bin Salman himself - and the world's top architects, such as Peter Cook, whose Cook Haffner Architecture Platform is the lead designer, have been happy to go along with it.
According to Tarek Qaddumi, the executive director for The Line's design, the city will solve the problems of modern living. "We've all been experiencing traffic, pollution and isolation in the cities of today, and they're only getting larger, whereas cities were meant to bring people together. All we've done now is just sprawl," he said. "So you put away the old model and go back to first principles."
Ian Mulcahey, principal strategy director for urban design at recently hired US architects Gensler, talked of the project as a milestone in human ingenuity.
"It's the scale of the collaboration - the world's best engineers, designers, landscapers, all coming together like a Nasa project to try to achieve almost the unachievable," he told the forum.
The city's controllers are closely studying human behavioural models and injecting them into the design of the building, which from the outside appears as a massive elongated mirror of the surrounding sand and mountains.
"The 3D dimensionality of the city is quite amazing. You have this multilayered public [space]. It's thrilling that you have floating villages on top of retail boulevards, you have cultural assets that are under the sports areas. Imagine fans coming from different parts of the city, you have a different perspective inside the city, you're not blocked by buildings, you can look up, you can see in all directions - this gives a bit of goosebumps feeling," said Martin Josst, a partner at Austria's Delugan Meissl Associated Architects (DMAA), sounding like Dr Strangelove.
Herd of white elephants
One of the key questions is, who is going to live there? Neom has generally pitched its utopian new society as a place for foreigners, suggesting it will operate according to a different set of laws from the rest of the country, including the regular sale of alcohol.
But there are signs of government sensitivity to unease among the Saudi public over the foreign face on Neom and other giga-projects and the government's ambition to swamp the country with foreign tourists and entrepreneurs.
British and Indian CEOs were recently replaced with Saudis at the housing company Roshn and the King Abdullah Financial District. In an abrupt switch, luxury apartments at the Trojena winter resort are now being pitched at Saudis.
"So many Saudis have second homes in Dubai, London and elsewhere, but now we have something we can show off and we can provide for Saudis and Saudi families, it's more a product for them," residential sales adviser Hani Alharbi told the forum. And in February, King Salman issued a decree requiring ministers to wear gold-rimmed black cloaks at formal events and a further decree in April ordered all government employees to stick to the traditional white robes and headdress.
A close look at the available information from the Public Investment Fund shows an organisation haemorrhaging money the country can't afford
As for the handling of public finances and the risk of bankrupting the country with a herd of white elephants, a close look at the available information from PIF shows an organisation haemorrhaging money the country can't afford. PIF's 2023 financial statement showed that employee costs - covering salaries and benefits - rose a whopping 40 percent in 2023 to 59.9bn riyals ($15.9bn).
Although the statement was audited by KPMG, it did not make clear what employees the figure covered - all of those in PIF’s 168 subsidiaries, or the 2,553 working in its four global offices. If the latter, that would mean an average annual pay of $6.2m, which for senior executives is certainly believable. A gap of $212bn between PIF's assets and assets under ownership could also imply huge spending on fixed assets such as its swanky office buildings in New York, London and Singapore.
For now, Saudi Arabia is managing to fly by the seat of its pants. With foreign exchange reserves still at around $411bn in September, the government could still support the riyal's dollar peg and avoid the instability that would make the population desire more say in government.
Debt at 28.3 percent of GDP this year is still within the range of global averages, and western credit ratings agencies are still giving it top marks as the $1.25tn development plan continues to make Saudi Arabia party town for financiers, consultants, builders and designers.
A blind eye is being turned to the fast-and-loose accounting and creative ways of raising debt without it appearing on the government's balance sheet, such as Aramco borrowing money to ensure massive dividend payouts to shareholders like PIF, which owns 16 percent of the state energy giant.
The elephant in the room is always oil prices, which, although they have hardly collapsed, are already proving disappointing for the Saudi leadership as they trade below $80 per barrel, considerably below the $96 currently given by the IMF as the break-even price.
With major events on the horizon, such as the Asian Winter Games, the World Expo 2030 in Riyadh and - the jewel in the crown of sporting events - football's Fifa World Cup in 2034, Saudi Arabia will avoid real scrutiny from foreign financial backers and its own population for at least a decade.
Only then will people begin to ask why the projects are empty and how they are going to pay these debts.
The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye.
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