SAUDI ARABIA Riyadh “reduces” its Neom ambitions, first layoffs among workers

“The Line” was supposed to accommodate 1.5 million people in 2030, but updated plans speak of less than 300,000 by then. Of a total development of 170 km, in 2030 only 2.4 km will have been completed. At least one contractor has already started cutting staff and the Saudi Public Investment Fund is looking for liquidity.

Riyadh () – First cracks in the development and investment objectives of Mohammed bin Salman (Mbs): Riyadh would be reducing its medium-term ambitions for the Neom desert, the main project in the crown prince's plans to diversify the economy far of oil dependence. In fact, by 2030, the Saudi government hoped to have 1.5 million residents in The Line, the beating heart of the futuristic city; In fact, according to a report published by Bloomberg, the authorities predict that by then there will be fewer than 300,000 inhabitants.

Neom is the futuristic city desired by Mbs, within the framework of the economic reforms promoted in the context of “Vision 2030”, a modernization plan in open competition with other Gulf metropolises. A place built from scratch in the desert overlooking the Red Sea, where everything must be environmentally sustainable and accessible on foot in five minutes, but with the possibility of traveling from one end to the other in 20 minutes by high-speed train. Plans include an industrial city, ports and tourism infrastructure, as well as holding the Asian Winter Games in 2029 in a hill station called Trojena.

The development of the “Line” is planned to take place in several phases and ultimately cover a stretch of coast of about 170 km; The first was to be completed in 2026 and have between 1.5 and 2 million inhabitants in 2030, reaching nine million in 2045. However, according to the latest updates, only 2.4 km are expected to be completed in 2030. and, because of this, at least one contractor has begun to lay off some of the construction workers. Representatives of Neom and the Kingdom's Public Investment Fund did not want to comment on the news, but the first signs of problems seem evident.

The staff reduction comes at a stalemate, as the Saudi sovereign wealth fund has yet to approve Neom's 2024 budget. This shows that the financial reality of a trillion-dollar investment is beginning to worry the highest echelons of the government for its real sustainability and effectiveness. Industry officials have already announced that some of the projects will be delayed beyond 2030. A longer period is needed to “build factories and sufficient human resources,” Finance Minister Mohammed Al Jadaan said in December, adding that “the delay, or rather the extension [temporal] of some projects will serve the economy.

Meanwhile, the Public Investment Fund is considering a number of options to increase liquidity, including accelerating debt sales and a share offering of portfolio companies. The sovereign fund's cash reserves fell to $15 billion in September, the lowest level since 2020. In 2022, the crown prince stated that the first phase of Neom is expected to cost 1.2 trillion rials (320 billion dollars) by 2030. Half of this amount is expected to come from the FPI, in the hands of the “de facto ruler” bin Salman.

By freeing the country from its dependence on oil, the basis of “Vision 2030”, bin Salman has put his hand – albeit carefully – on the radical structure of the muslim faith and the social life of the nation. The reforms introduced since 2019 have touched the social sphere and rights, including the green light for women to drive, (controlled) access to stadiums and boosting the entertainment industry and new technologiesas well as the sphere religious with a gradual abandonment of “Wahhabism”. However, the arrests of senior officials and businessmen, the repression of activists and critical voices and the Khashoggi case They have overshadowed the true change more than necessary, which even lacks one last and definitive word: religious freedom.